l:\secfiles\10-Q\1995\3rdqtr95\part-1.doc 25
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
- ---
ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
- ---
ACT OF 1934
For the transition period from to
------------------- -------------------
Commission file number 1-143
-----
GENERAL MOTORS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-0572515
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153-0075
3044 West Grand Boulevard, Detroit, Michigan 48202-3091
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
--------------
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 September 30, 1995, there were outstanding 749,398,949 shares
of the issuer's $1-2/3 par value common stock, 438,902,399 shares of Class E
$0.10 par value common stock and 96,142,226 shares of Class H $0.10 par value
common stock.
- 1 -
2
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Index
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Statement of Consolidated Operations 3
Consolidated Balance Sheet 5
Condensed Statement of Consolidated Cash Flows 7
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 12
Part II - Other Information
Item 1. Legal Proceedings 29
Item 6. Exhibits and Reports on Form 8-K 30
Signatures 30
Exhibit 11 Computation of Earnings Per Share Attributable
to Common Stocks for the Quarters and Nine Months Ended
September 30, 1995 and 1994 31
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges for
the Nine Months Ended September 30, 1995 and 1994 35
Exhibit 21 Subsidiaries of the Registrant 36
Exhibit 99(a) Electronic Data Systems Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion
and Analysis 37
(b) Hughes Electronics Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion
and Analysis 45
Exhibit 27 Financial Data Schedule (for SEC information only)
- 2 -
3
GENERAL MOTORS CORPORATION PART I
AND SUBSIDIARIES ITEM 1. FINANCIAL STATEMENTS
STATEMENT OF CONSOLIDATED OPERATIONS
Nine Months Ended
Third Quarter September 30,
-------------------- --------------------
1995 1994 1995 1994
-------------------- --------------------
(Dollars in Millions)
Net Sales and Revenues
Manufactured products $31,226.1 $29,420.8 $106,816.7 $97,774.2
Financial services 2,959.6 2,351.5 8,594.6 6,819.2
Computer systems services 2,107.8 1,643.3 5,953.7 4,472.1
Other income (Note 1) 1,169.4 1,094.7 3,529.1 3,332.4
-------- -------- --------- ---------
Total Net Sales and Revenues 37,462.9 34,510.3 124,894.1 112,397.9
-------- -------- --------- ---------
Costs and Expenses
Cost of sales and other
operating charges, exclusive
of items listed below 28,803.1 26,954.3 93,397.7 85,176.4
Selling, general, and
administrative expenses 3,189.0 2,962.4 9,572.7 8,691.8
Interest expense 1,413.8 1,377.8 4,298.8 3,930.0
Depreciation of real estate,
plants, and equipment 2,163.3 1,833.2 6,323.5 5,181.1
Amortization of special tools 661.9 596.3 2,407.9 2,121.9
Amortization of intangible
assets 58.9 52.1 167.1 175.4
Other deductions (Note 1) 369.5 280.6 1,226.1 1,129.4
-------- -------- --------- ---------
Total Costs and Expenses 36,659.5 34,056.7 117,393.8 106,406.0
-------- -------- --------- ---------
Income before Income Taxes 803.4 453.6 7,500.3 5,991.9
United States, foreign, and
other income taxes (credit) 161.0 (98.4) 2,433.8 1,905.3
-------- -------- --------- --------
Income before cumulative
effect of accounting change 642.4 552.0 5,066.5 4,086.6
Cumulative effect of accounting
change (Note 3) - - - (758.1)
-------- -------- --------- --------
Net Income 642.4 552.0 5,066.5 3,328.5
Preference shares tender offer
premium (Note 9) - - 153.4 -
Dividends on preference stocks 41.4 72.1 159.5 248.6
-------- -------- --------- --------
Income on Common Stocks $601.0 $479.9 $4,753.6 $3,079.9
======== ======== ========= ========
Reference should be made to the Notes to Financial Statements.
- 3 -
4
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES STATEMENT OF CONSOLIDATED OPERATIONS - Concluded
Nine Months Ended
Third Quarter September 30,
--------------- -----------------
1995 1994 1995 1994
--------------- -----------------
(Dollars in Millions
Except Per Share Amounts)
Earnings Attributable to
Common Stocks (Note 4)
$1-2/3 par value before cumulative
effect of accounting change $316.7 $306.0 $4,009.0 $3,333.4
Cumulative effect of accounting change
(Note 3) - - - (751.3)
----- ----- ------- -------
Net earnings attributable
to $1-2/3 par value $316.7 $306.0 $4,009.0 $2,582.1
===== ===== ======= =======
Net earnings attributable to Class E $222.9 $117.3 $551.1 $315.9
===== ===== ======= =======
Class H before cumulative effect
of accounting change $61.4 $56.6 $193.5 $188.7
Cumulative effect of accounting change
(Note 3) - - - (6.8)
---- ---- ----- -----
Net earnings attributable
to Class H $61.4 $56.6 $193.5 $181.9
===== ===== ======= =======
Average number of shares of common stocks
outstanding (in millions)
$1-2/3 par value 748.2 752.7 749.0 737.1
Class E 438.8 261.2 393.0 259.7
Class H 95.9 92.7 95.2 91.7
Earnings Per Share Attributable
to Common Stocks (Note 4)
$1-2/3 par value before cumulative
effect of accounting change $0.42 $0.40 $5.32 $4.46
Cumulative effect of accounting change
(Note 3) - - - (1.05)
---- ---- ---- ----
Net earnings attributable to
$1-2/3 par value $0.42 $0.40 $5.32 $3.41
===== ===== ======= =======
Net earnings attributable to Class E $0.51 $0.45 $1.40 $1.22
===== ===== ======= =======
Class H before cumulative effect of
accounting change $0.64 $0.61 $2.03 $2.06
Cumulative effect of accounting change
(Note 3) - - - (0.08)
---- ---- ---- ----
Net earnings attributable to
Class H $0.64 $0.61 $2.03 $1.98
===== ===== ======= =======
Cash Dividends Per Share of Common
Stocks (Note 4)
$1-2/3 par value $0.30 $0.20 $0.80 $0.60
Class E $0.13 $0.12 $0.39 $0.36
Class H $0.23 $0.20 $0.69 $0.60
Reference should be made to the Notes to Financial Statements.
- 4 -
5
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
Sept. 30, Dec. 31, Sept. 30,
ASSETS 1995 1994 1994
- -----------------------------------------------------------------------------
(Dollars in Millions)
Cash and cash equivalents $8,998.3 $10,939.0 $9,806.1
Other marketable securities 4,891.3 5,136.6 5,036.3
--------- --------- ---------
Total cash and marketable securities 13,889.6 16,075.6 14,842.4
--------- --------- ---------
Finance receivables - net 54,803.3 54,077.3 51,093.5
--------- --------- ---------
Accounts and notes receivable (less
allowances) 11,183.7 8,977.8 8,620.7
--------- --------- ---------
Inventories (less allowances) (Note 5) 11,968.5 10,127.8 10,345.4
--------- --------- ---------
Contracts in process (less advances and
progress payments) 2,670.5 2,265.4 2,725.2
--------- --------- ---------
Net equipment on operating leases (less
accumulated depreciation) 22,742.5 20,061.6 18,528.3
--------- --------- ---------
Deferred income taxes 16,997.3 19,693.3 20,983.8
--------- --------- ---------
Other assets (less allowances) 22,020.4 20,625.5 19,519.1
--------- --------- ---------
Property
Real estate, plants, and equipment-at cost 73,343.3 69,807.9 69,611.7
Less accumulated depreciation 44,662.5 42,586.4 43,039.0
--------- --------- ---------
Net real estate, plants, and equipment 28,680.8 27,221.5 26,572.7
Special tools - at cost (less amortization) 7,847.4 7,559.1 7,564.2
--------- --------- ---------
Total property 36,528.2 34,780.6 34,136.9
--------- --------- ---------
Intangible assets - at cost (less
amortization) 12,305.5 11,913.8 13,076.6
--------- --------- ---------
Total Assets $205,109.5 $198,598.7 $193,871.9
========= ========= =========
Certain September 1994 amounts were reclassified to conform with 1995
classifications.
Reference should be made to the Notes to Financial Statements.
- 5 -
6
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - Concluded
Sept. 30, Dec. 31, Sept. 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 1994
- -----------------------------------------------------------------------------
(Dollars in Millions Except
Per Share Amounts)
Liabilities
Accounts payable $11,408.7 $11,635.0 $9,597.7
Notes and loans payable 77,885.1 73,730.2 69,182.2
United States, foreign, and other income
taxes - deferred and payable 2,569.6 2,721.0 3,329.6
Postretirement benefits other than
pensions (Note 6) 41,227.7 40,018.2 39,389.0
Pensions (Note 7) 5,371.2 14,353.2 20,304.3
Other liabilities and deferred credits 43,788.8 42,867.3 41,999.2
--------- --------- ---------
Total Liabilities 182,251.1 185,324.9 183,802.0
--------- --------- ---------
Stocks Subject to Repurchase (Note 8) - 450.0 450.0
--------- --------- ---------
Stockholders' Equity
Preference stocks (Note 9)
Series B 9-1/8% Depositary Shares,
$0.5 and $1.1;
Series C Depositary Shares, $0.3;
Series D 7.92% Depositary Shares,
$0.1 and $0.4; and
Series G 9.12% Depositary Shares,
$0.3 and $0.6 in September 1995,
and in December and September 1994 1.2 2.4 2.4
Common stocks
$1-2/3 par value (issued, 749,945,166,
754,345,782, and 753,639,264 shares) 1,249.9 1,257.2 1,256.1
Class E (issued, 442,811,864, 268,125,255,
and 267,321,168 shares)(Notes 7 and 12) 44.3 26.8 26.7
Class H (issued, 96,308,464, 78,720,022,
and 78,190,823 shares) (Note 8) 9.6 7.9 7.8
Capital surplus (principally additional
paid-in capital) (Notes 7 and 8) 18,702.4 13,149.4 13,027.0
Net income retained for use in the
business (Note 10) 5,726.6 1,785.8 486.5
--------- --------- ---------
Subtotal 25,734.0 16,229.5 14,806.5
Minimum pension liability adjustment (3,548.4) (3,548.4) (5,311.2)
Accumulated foreign currency translation
adjustments 230.2 (100.4) (66.1)
Net unrealized gains on investments in
certain debt and equity securities (Note 3) 442.6 243.1 190.7
--------- --------- ---------
Total Stockholders' Equity 22,858.4 12,823.8 9,619.9
--------- --------- ---------
Total Liabilities and Stockholders' Equity $205,109.5 $198,598.7 $193,871.9
========= ========= =========
Reference should be made to the Notes to Financial Statements.
- 6 -
7
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
Nine Months Ended Sept. 30,
--------------------------
1995 1994
--------------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $9,144.9 $6,776.8
-------- --------
Cash Flows from Investing Activities
Expenditures for real estate, plants, and
equipment (4,320.4) (3,097.5)
Expenditures for special tools (2,595.4) (1,564.1)
Other 430.5 685.8
Change in other investing assets
Investments in other marketable securities -
acquisitions (13,855.6) (11,395.0)
Investments in other marketable securities -
liquidations 14,100.1 10,859.4
Finance receivables - acquisitions (121,008.7) (114,308.9)
Finance receivables - liquidations 103,345.2 103,828.6
Proceeds from sales of finance receivables 18,660.7 13,533.3
Operating leases - net (7,213.2) (7,655.4)
-------- --------
Net Cash Used in
Investing Activities (12,456.8) (9,113.8)
-------- --------
Cash Flows from Financing Activities
Net increase (decrease) in short-term
loans payable 1,138.6 (1,761.7)
Increase in long-term debt 9,318.8 10,769.5
Decrease in long-term debt (6,918.0) (10,931.4)
Repurchases of preference stocks (1,286.7) -
Repurchases of common stocks (394.0) -
Proceeds from issuing common stocks 341.3 1,113.7
Cash dividends paid to stockholders (972.3) (839.1)
-------- --------
Net Cash Provided by (Used in)
Financing Activities 1,227.7 (1,649.0)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 143.5 1.6
-------- --------
Net decrease in cash and cash equivalents (1,940.7) (3,984.4)
Cash and cash equivalents at beginning of
the period 10,939.0 13,790.5
-------- --------
Cash and cash equivalents at end of the period $8,998.3 $9,806.1
======== ========
Certain 1994 amounts were reclassified to conform with 1995 classifications.
Reference should be made to the Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
In the opinion of management, the interim financial statements reflect all
adjustments, consisting of only normal recurring items (with the exception of
the accounting changes in 1994 to adopt Statement of Financial Accounting
Standards (SFAS) No. 112, Employers' Accounting for Postemployment Benefits,
and SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, as described in Note 3), which are necessary for a fair
presentation of the results for the interim periods presented. The results
for interim periods 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 Corporation's 1994 Annual
Report to the SEC on Form 10-K.
- 7 -
8
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS - Continued
Note 1.
Other income and other deductions consist of:
Third Quarter Nine Months
----------------- ------------------
1995 1994 1995 1994
----------------- ------------------
(Dollars in Millions)
Other Income
Insurance premiums $217.1 $224.3 $655.7 $657.1
Nonfinancing interest 387.1 411.6 1,263.1 1,118.0
Equity in earnings
of associates, net 79.6 60.5 161.4 108.7
Claims, commissions, and grants 163.9 123.4 410.5 317.7
Gain on the sale of finance receivables - 5.2 38.2 25.0
Revenue from mortgage operations 106.1 50.6 249.6 150.1
Other 215.6 219.1 750.6 955.8*
------- ------- ------- -------
Total Other Income $1,169.4 $1,094.7 $3,529.1 $3,332.4
======= ======= ======= =======
Other Deductions
Insurance losses and loss adjustment
expenses $82.8 $215.4 $401.6 $556.8
Provision for(recovery of) financing
losses 118.9 (8.5) 307.2 110.4
Loss on sale of NCRS net assets** - - 147.8 -
Other 167.8 73.7 369.5 462.2*
------- ------- ------- -------
Total Other Deductions $369.5 $280.6 $1,226.1 $1,129.4
======= ======= ======= =======
* Includes gains and losses on the sale of assets in the first quarter of
1994. The net impact of these sales of assets was not material.
** On June 9, 1995, GM completed the sale of National Car Rental System's
(NCRS) net assets. The nine month results include $162.6 million net
income, or $0.22 per share of GM $1-2/3 par value common stock. The net
income reflects $310.4 million of tax benefits related to the
restructuring for NCRS in 1992. The tax benefits were not previously
recorded due to the uncertainty of ultimate realization.
Note 2.
Financial data of General Motors Acceptance Corporation (GMAC) and its
subsidiaries were as follows:
Third Quarter Nine Months
----------------- ------------------
1995 1994 1995 1994
----------------- ------------------
(Dollars in Millions)
Net financing revenue and other $1,361.3 $1,157.3 $4,066.4 $3,470.7
Net income including the unfavorable
cumulative effect of accounting
change of $7.4 million in
nine months 1994 $253.7 $244.6 $767.8 $678.2
Cash dividends paid to GM $225.0 $250.0 $625.0 $750.0
Note 3.
Effective January 1, 1994, the Corporation adopted SFAS No. 112,
Employers' Accounting for Postemployment Benefits. The Standard requires
accrual of the costs of benefits provided to former or inactive employees
after employment, but before retirement. The unfavorable cumulative effect of
adopting this Standard, determined on a discounted basis, was $1,220.1 million
($758.1 million after tax), or $751.3 million ($1.05 per share) attributable
to $1-2/3 par value common stock and $6.8 million ($0.08 per share)
attributable to GM Class H common stock. The non-cash charge is primarily
related to GM's extended-disability benefit program in the U.S. which, under
the new accounting Standard, will be accrued on a service-driven basis.
- 8 -
9
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
Also effective January 1, 1994, the Corporation adopted SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which
resulted in a $241.0 million after-tax increase in Stockholders' Equity. This
Standard requires the recording at fair value of debt securities which are not
expected to be held to maturity and equity securities which have a readily
determinable fair value. Unrealized gains and losses resulting from changes
in fair value are included as a separate component of Stockholders' Equity.
The primary effect of this Standard for the Corporation relates to debt
securities held by a subsidiary of GMAC and certain equity securities.
Marketable securities, other than certain securities held by GMAC and its
subsidiaries, are considered available for sale.
Note 4.
Earnings per share attributable to common stocks have been determined based
on the relative amounts available for the payment of dividends to holders of
$1-2/3 par value, Class E, and Class H common stocks. The allocation of
earnings attributable to such common stocks and the calculation of the related
amounts per share are computed by considering the weighted average number of
common shares outstanding and common stock equivalents, to the extent the
effect of such equivalents is not antidilutive. Operations of the incentive
plans and the assumed exercise of stock options do not have a material
dilutive effect on earnings per share at this time.
Dividends on the $1-2/3 par value common stock are declared out of the
earnings of GM and its subsidiaries, excluding the Available Separate
Consolidated Net Income of Electronic Data Systems Corporation (EDS) and
Hughes Electronics Corporation (Hughes), previously known as GM Hughes
Electronics Corporation. Dividends on the Class E and Class H common stocks
are declared out of the Available Separate Consolidated Net Income of EDS and
Hughes, respectively, since the acquisition by GM.
The Available Separate Consolidated Net Income of EDS and Hughes is
determined quarterly and is equal to the separate consolidated net income of
EDS and Hughes, respectively, excluding the effects of purchase accounting
adjustments arising at the time of acquisition, multiplied by a fraction, the
numerator of which is a number equal to the weighted average number of shares
of Class E (438.8 million for the third quarter of 1995) or Class H (95.9
million for the third quarter of 1995) common stock outstanding during the
period and the denominator of which was 483.7 million for Class E stock and
399.9 million for Class H stock during the third quarter of 1995. Comparable
denominators for the third quarter of 1994 were 481.7 million for Class E
stock and 399.9 million for Class H stock. The weighted average number of
shares of Class E common stock outstanding (numerator) during the third
quarter of 1995 and 1995 nine months reflects the impact of the March 13, 1995
Class E common stock pension contribution which is described in Note 7.
The denominators used in determining the Available Separate Consolidated Net
Income of EDS and Hughes are adjusted as deemed appropriate by the Board of
Directors to reflect subdivisions or combinations of the Class E and Class H
common stocks and to reflect certain transfers of capital to or from
EDS and Hughes. The Board's discretion to make such adjustments is limited by
criteria set forth in GM's Certificate of Incorporation. In this regard, the
Board has generally caused the denominators to decrease as shares are
purchased by EDS or Hughes, and to increase as such shares are used, at EDS or
Hughes expense, for EDS or Hughes employee benefit plans or acquisitions.
Dividends may be paid on common stocks only when, as, and if declared by the
Board of Directors in its sole discretion. The Board's policy with respect to
$1-2/3 par value common stock is to distribute dividends based on the outlook
and the indicated capital needs of the business. The current policy of the
Board with respect to the Class E and Class H common stocks is to pay cash
dividends approximately equal to 30% and 35% of the Available Separate
Consolidated Net Income of EDS and Hughes, respectively, for the prior year.
- 9 -
10
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
Notwithstanding the current dividend policy, the Board of Directors declared a
dividend on the Class H common stock for each of the quarters of 1994 which
was based on an annual rate higher than 35% of the Available Separate
Consolidated Net Income of Hughes for the preceding year. In February 1995,
the Board increased the quarterly dividend from $0.20 per share to $0.23 per
share (which is based on an annual rate of approximately 35% of the Available
Separate Consolidated Net Income of Hughes for 1994).
Note 5.
Major classes of inventories are as follows:
Sept. 30, Dec. 31, Sept. 30,
1995 1994 1994
-----------------------------------
(Dollars in Millions)
Productive material, work in process,
and supplies $6,925.0 $5,478.3 $5,836.8
Finished product, service parts, etc. 5,043.5 4,649.5 4,508.6
-------- -------- --------
Total inventories (less allowances) $11,968.5 $10,127.8 $10,345.4
======== ======== ========
Note 6.
The Corporation has disclosed in the financial statements certain amounts
associated with estimated future postretirement benefits other than pensions
and characterized such amounts as "accumulated postretirement benefit
obligations", "liabilities", or "obligations". Notwithstanding the recording
of such amounts and the use of these terms, the Corporation does not admit or
otherwise acknowledge that such amounts or existing postretirement benefit
plans of the Corporation (other than pensions) represent legally enforceable
liabilities of the Corporation.
Note 7.
On March 13, 1995, GM contributed to the General Motors Hourly-Rate
Employees Pension Plan (Hourly Plan) 173,163,187 shares of Class E common
stock, having an aggregate fair market value of approximately $6.3 billion
(determined by an independent valuation expert retained by the Trustee). The
contribution was made under the terms of an agreement between GM and the
Pension Benefit Guaranty Corporation (the PBGC). Subject to the terms of the
agreement, GM will defer the use of the funding credits that would otherwise
result from such cash and stock contributions. Consequently, GM will continue
to make regular cash contributions to the Hourly Plan over the next several
years. The agreement with the PBGC also provides flexibility to GM by
granting a release of EDS from liability, if any, under Title IV of ERISA for
GM's U.S. pension plans, in the event EDS were to leave the GM control group
under certain circumstances. In addition, in connection with the contribution
of the shares of Class E common stock, the U.S. Department of Labor granted an
exemption with respect to, among other things, limits otherwise applicable
under ERISA on the amount of Class E common stock that could legally be held
by the Hourly Plan.
Note 8.
Stocks Subject to Repurchase at December 31, 1994 and September 30, 1994
consisted of 15 million shares of Class H common stock subject to put options
issued to the Howard Hughes Medical Institute (HHMI) and exercisable at $30
per share on March 1, 1995. The Corporation held an option to call HHMI's
shares until February 28, 1995 at $37.50 per share. The put and call rights
expired unexercised. As a result, $1.5 million was transferred to Class H
common stock and $448.5 million was transferred to capital surplus. In 1995,
GM and HHMI entered into an agreement under which GM assisted the Institute in
selling 15 million shares at $38.50 per share.
- 10 -
11
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
Note 9.
On May 23, 1995, General Motors concluded a tender offer, which began on
April 25, 1995, under which it purchased for $1.3 billion of cash (i)
24.3 million depositary shares, each representing one-fourth of a share of its
Series B 9-1/8% Preference Stock, at a purchase price of $27.50 per depositary
share, (ii) 9.6 million depositary shares, each representing one-fourth of a
share of its Series D 7.92% Preference Stock, at a purchase price of $26.375
per depositary share, and (iii) 12.9 million depositary shares, each
representing one-fourth of a share of its Series G 9.12% Preference Stock, at
a purchase price of $28.25 per depositary share. The repurchase had an
unfavorable impact of $0.22 per share of GM $1-2/3 par value common stock.
This was comprised of tender offer expenses of $13.5 million after-tax, or
$0.02 per share, that were charged to income and the purchase price in excess
of the carrying amount of the preference shares amounting to $153.4 million,
or $0.20 per share, that was not charged to income but was charged to earnings
attributable to $1-2/3 par value common stock. The number of shares remaining
outstanding is 20.0 million depositary shares of Series B Preference Stock,
6.1 million depositary shares of Series D Preference Stock, and 10.1 million
depositary shares of Series G Preference Stock.
Note 10.
At September 30, 1995, December 31, 1994, and September 30, 1994, net income
retained for use in the business (accumulated deficit) attributable to the
common stocks was as follows:
Sept. 30, Dec. 31, Sept. 30,
1995 1994 1994
-----------------------------------
(Dollars in Millions)
$1-2/3 par value $2,631.5 ($778.8) ($1,939.9)
Class E 2,066.7 1,663.9 1,566.7
Class H 1,028.4 900.7 859.7
------- ------- -------
Total $5,726.6 $1,785.8 $486.5
======= ======= =======
The Corporation's capital surplus plus net income retained for use in the
business at September 30, 1995, December 31, 1994, and September 30, 1994, as
allocated pursuant to GM's Certificate of Incorporation, was as follows:
Sept. 30, Dec. 31, Sept. 30,
1995 1994 1994
-----------------------------------
(Dollars in Millions)
$1-2/3 par value $11,113.6 $9,013.8 $7,775.0
Class E 10,485.3 3,752.1 3,628.7
Class H 2,830.1 2,169.3 2,109.8
-------- -------- --------
Total $24,429.0 $14,935.2 $13,513.5
======== ======== ========
Note 11.
The Corporation and its subsidiaries are subject to potential liability
under government regulations and various claims and legal actions which are
pending or may be asserted against them. Some of the pending actions purport
to be class actions. The aggregate ultimate liability of the Corporation and
its subsidiaries under these government regulations, and under these claims
and actions, was not determinable at September 30, 1995. In the opinion of
management, such liability is not expected to have a material adverse effect
on the Corporation's consolidated operations or financial position.
- 11 -
12
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Concluded
Note 12.
On August 7, 1995, the Corporation announced that it intends to pursue a
split-off of its wholly owned subsidiary, EDS, to its GM Class E stockholders
in a tax-free exchange of stock.
To achieve a split-off, GM would exchange EDS capital stock for outstanding
GM Class E common stock. GM would not recognize a gain on the transaction.
At September 30, 1995, there are 438.9 million shares of GM Class E common
stock outstanding, and 44.8 million shares reserved for issuance upon
conversion of Series C Preference Stock. The process of establishing
definitive terms for a split-off transaction which will be fair to all holders
of GM common stocks will, among other things, consider differences between the
values of GM Class E and EDS common stocks in order to establish any
adjustment deemed appropriate by the GM Board of Directors.
A split-off would be subject to the appropriate stockholder approvals, and a
favorable Internal Revenue Service ruling that the transaction would be tax-
free. The specific terms of a transaction, which are yet to be developed,
must also be approved by the GM Board of Directors. Subject to these and
other approvals and conditions, GM and EDS expect that a split-off could occur
in the first half of 1996. However, it should be noted that due to the
numerous uncertainties involved in these matters, there can be no assurance
that any split-off of EDS will be proposed or completed.
A split-off would be proposed only in a manner that would not result in the
recapitalization of GM Class E common stock into GM $1-2/3 par value common
stock at a 120 percent exchange ratio, as currently provided for under certain
circumstances in the GM Certificate of Incorporation.
In the event of a split-off, GM and EDS would enter into a long-term
agreement under which EDS would provide substantially the same information
technology services for GM that it does today.
* * * * *
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
The following management's discussion and analysis should be read in
conjunction with the management's discussion and analysis included in the
Corporation's 1994 Annual Report to the SEC on Form 10-K and Management's
Discussion and Analysis relating to Electronic Data Systems Corporation (EDS)
and Hughes Electronics Corporation (Hughes) included in Exhibits 99(a) and
99(b) to such Form 10-K and each Form 10-Q on file with the SEC. The
competitive position and environmental matters discussions included in Part I,
Item 1 of the 1994 Form 10-K are specifically incorporated by reference
herein.
Due to the seasonal nature of the business, third-quarter results are
generally lower than other quarters during the year.
General Motors Corporation's consolidated net income for the third quarter
of 1995 totaled $642.4 million, or $0.42 per share of GM $1-2/3 par value
common stock. That represents an improvement of $90.4 million, or 16.4%,
compared with the year-ago period. Net income totaled $552.0 million, or $0.40
per share, in the comparable 1994 quarter.
- 12 -
13
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Sales and revenues in the third quarter of 1995 totaled $37,462.9 million -
an increase of 8.6% compared with the same period last year. GM's gross-
profit margin for the third quarter of 1995 (with General Motors Acceptance
Corporation (GMAC) on an equity basis) was 14.1%, compared with 13.5% in
1994's third-quarter period. Selling, general, and administrative expenses
(with GMAC on an equity basis) were $180.0 million higher in the 1995 third
quarter, primarily due to higher administrative expenses. On a percent of
sales basis, selling, general, and administrative expenses were 8.2% in both
periods.
Pretax income (with GMAC on an equity basis) of $312.8 million in the third
quarter of 1995 is an improvement of $286.4 million over the comparable period
last year, when pretax income was $26.4 million. The low third-quarter-1995
corporate-income-tax rate (with GMAC on an equity basis) of 1.2% results
mainly from tax benefits at International Operations (IO). The Corporation's
third-quarter-1995 net-profit margin (with GMAC on an equity basis) was 1.9%,
compared with 1.8% in the prior-year period.
Consolidated net income for the nine-months of 1995 was $5,066.5 million.
Net income for the nine-month-1994 period was $3,328.5 million, including the
$758.1 million unfavorable effect of Statement of Financial Accounting
Standards (SFAS) No. 112, Employers' Accounting for Postemployment Benefits,
accounting change in the first quarter. Excluding the impact of the SFAS No.
112 accounting change, income for the 1994-nine-month period was $4,086.6
million, or $4.46 per share. Sales and revenues totaled $124,894.1 million in
the 1995 period, an increase of 11.1%, or $12,496.2 million, over 1994 sales
and revenues of $112,397.9 million.
After preference stock dividend payments and the apportionment of earnings
attributable to GM Class E and Class H common stock, the income attributable
to $1-2/3 par value common stock in the 1995 third quarter amounted to $316.7
million, or $0.42 per share, compared with third quarter 1994 income of
$306.0 million, or $0.40 per share. In the nine months of 1995, income
attributable to $1-2/3 par value common stock including the impact of the
premium paid on the repurchase of preference stocks was $4,009.0 million, or
$5.32 per $1-2/3 par value share, compared with $2,582.1 million, or $3.41 per
share, in the 1994 period. Excluding the first quarter accounting change,
nine-month 1994 earnings attributable to $1-2/3 par value common stock
amounted to $3,333.4 million, or $4.46 per share.
- 13 -
14
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Following are highlights of 1995 third-quarter and nine-month financial
performance by GM's major business sectors:
Nine Months Ended
Third Quarter September 30,
----------------- --------------------
Major Business Sector Results 1995 1994 1995 1994
- ------------------------------ ----------------- --------------------
(Dollars in Millions)
NAO
Income (Loss) Before Acctg.Change ($93) ($363) $1,845 $784
Cumulative Effect of Acctg.Change - - - (705)
----- ------- ------- -------
NAO Income (Loss) (93) (363) 1,845 79
----- ------- ------- -------
IO Income 111 232 1,146 1,121
----- ------- ------- -------
GMAC
Income Before Accounting Change 254 245 768 685
Cumulative Effect of Acctg. Change - - - (7)
----- ------- ------- -------
GMAC Income 254 245 768 678
----- ------- ------- -------
EDS Earnings 246 216 670 585
----- ------- ------- -------
Hughes
Earnings Before Acctg. Change 256 244 813 824
Cumulative Effect of Acctg. Change - - - (30)
----- ------- ------- -------
Hughes Earnings 256 244 813 794
----- ------- ------- -------
Other *
Income (Loss) Before Accounting
Change (132) (22) (176) 88
Cumulative Effect of Acctg. Change - - - (16)
----- ------- ------- -------
Other Income (Loss) (132) (22) (176) 72
----- ------- ------- -------
Consolidated Net Income $642 $552 $5,066 $3,329
===== ======= ======= =======
Income Before Cumulative Effect
of Accounting Change $642 $552 $5,066 $4,087
===== ======= ======= =======
Certain amounts for 1994 were reclassified to conform with 1995
classifications.
* Includes NCRS (through the date of sale - June 9, 1995), Allison
Transmission Division, GM Locomotive Group, and purchase accounting
adjustments.
Worldwide Wholesale Sales
- -------------------------
Third quarter 1995 worldwide wholesale vehicle sales totaled 1,848,000
units, 3.2% more than the 1994 third quarter level of 1,790,000 units,
reflecting higher sales in the United States, partially offset by a decline in
Other North America, as shown in the table on the next page. Worldwide
wholesale vehicle sales of 6,430,000 units during the nine months of 1995 were
up 286,000 units, or 4.7%, over the year ago period, reflecting an increase in
the United States and Overseas, partially offset by a decline in Other North
America.
- 14 -
15
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Third Quarter Nine Months
-------------- --------------
1995 1994 1995 1994
-------------- --------------
Worldwide Wholesale Sales (Units in Thousands)
United States
Cars 649 577 2,349 2,243
Trucks 446 436 1,515 1,444
----- ----- ----- -----
Total United States 1,095 1,013 3,864 3,687
Other North America 73 96 334 396
----- ----- ----- -----
Total North America 1,168 1,109 4,198 4,083
Overseas 680 681 2,232 2,061
----- ----- ----- -----
Total All Sources 1,848 1,790 6,430 6,144
===== ===== ===== =====
Dealer Vehicle Unit Deliveries of Cars and Trucks Worldwide
- -----------------------------------------------------------
During the 1995 third quarter, GM dealer vehicle deliveries of cars and
trucks worldwide were up 3.5% to 2,059,000 units, resulting in a 17.4%
worldwide market share, compared with 1,990,000 units in the same period last
year. Worldwide GM dealer vehicle deliveries of cars and trucks during the
nine months of 1995 were 6,290,000 units, 0.8% below the 6,338,000 units
delivered in the comparable 1994 period.
Employment and Payrolls
- -----------------------
As detailed in the table below, third quarter 1995 worldwide employment
averaged 700,000 men and women, a 1.6% increase from the 689,000 in the third
quarter of 1994. Worldwide payrolls were $8,177.3 million for the third
quarter of 1995, compared with $7,675.2 million in the comparable 1994 period.
Nine month average worldwide employment increased by 15,000 men and women from
the 1994 nine-month period, while 1995 worldwide payrolls totaled $25,119.9
million, a 6.9% increase over 1994 payrolls of $23,506.6 million.
Third Quarter Nine Months
------------- -------------
1995 1994 1995 1994
------------- -------------
(in thousands)
Average Worldwide Employment
GM (excluding units listed below) 513 510 520 518
GMAC 17 18 17 18
EDS 89 78 87 74
Hughes 81 77 80 77
NCRS - 6 4 6
--- --- --- ---
Average Number of Employees 700 689 708 693
=== === === ===
Certain amounts for 1994 were reclassified to conform with 1995
classifications.
North American Automotive Operations
GM NAO, including GM's Delphi Automotive Systems, reported a net loss of
$92.8 million in the third quarter of 1995, an improvement of $270.4 million,
compared with a net loss in the third quarter of 1994 totaling $363.2 million.
NAO results reflect strong market performance and continued cost reductions.
While NAO incurred a seasonal loss in the quarter, NAO vehicle unit deliveries
of cars and trucks increased 26,000 units compared to the 1994 third quarter
deliveries. NAO's gross margin improved from 8.2% in the 1994 third quarter
to 10.6% in the 1995 period reflecting cost-cutting measures and NAO's
strategies for improving the vehicle development process. The 1995 third
quarter's effective income tax rate dropped from the 1994 period, which
included a $200 million tax benefit.
- 15 -
16
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
NAO's pretax loss of $184.5 million in the third quarter of 1995 is an
improvement of $798.0 million over the comparable period last year, when the
pretax loss was $982.5 million. The third quarter of 1994 included a
nonrecurring tax benefit of more than $200 million that impacted NAO's
results. NAO's net-profit margin was a negative 0.4% in the third quarter of
1995, compared with a negative 1.8% in the prior-year period.
Delphi Automotive Systems continues to show profitable performance as a
strategic business sector as it globalizes its operations and grows its
business outside GM's North American Operations. Delphi's sales outside the
NAO vehicle groups accounted for 31.5% of its sales in the third quarter of
1995. Delphi is growing its business, not only through existing operations
but through acquisitions and joint ventures around the world.
During the third quarter of 1995, Delphi announced six new business ventures
in areas such as China, Malaysia, South Africa and Germany, bringing the total
number of announced new ventures to 14 for the year. Successful establishment
of these new operations will help position Delphi to meet its goal of 50
percent sales outside the NAO vehicle groups by 2002 as it strengthens its
customer base worldwide.
GM dealer vehicle deliveries in the United States in the third quarter of
1995 totaled 1,235,000 units, resulting in a 32.2% share of the U.S. vehicle
market, up from the 31.5% market share in the third quarter of 1994. GM
passenger car deliveries totaled 775,000 units and truck deliveries totaled
460,000 units, up 3.6% and 2.0%, respectively, from the 1994 third quarter.
Passenger car market share increased from 33.4% in the 1994 third quarter to
34.6% in the 1995 quarter, while the truck share stayed even at 28.8%.
Nine-month 1995 NAO earnings were $1,845.4 million, an improvement of
$1,765.9 million over the 1994 nine-month income of $79.5 million, including
the unfavorable effect of the $704.6 million accounting change in the 1994
first quarter, partially offset by the $200 million nonrecurring tax benefit
in 1994. Excluding the accounting change in 1994, NAO earnings improved
$1,061.3 million period to period. NAO's net profit margin improved from 0.1%
(1.1% excluding the accounting change) in the 1994 nine-month period to 2.4%
in the 1995 nine months. GM dealer U.S. vehicle deliveries in the 1995 period
were 3.5% below comparable 1994 deliveries, including a 5.6% car decline and a
0.3% decrease in truck deliveries. Nine-month market share dropped from 32.7%
in 1994 to 32.0% in 1995, with cars down 0.6 percentage points and trucks down
0.5 percentage points.
International Automotive Operations
GM International Operation's net income for the third quarter of 1995
totaled $111.0 million, compared with $231.8 million in the same period of
1994. GM's automotive operations in Europe reported a net loss of $98 million
in the third quarter of 1995, compared with a net loss of $14 million in the
same period of 1994. For the remainder of GM's International Operations,
including Latin American Operations and Asia-Pacific Operations, net income
totaled $209 million in the third quarter of 1995, compared with $246 million
in the prior-year period. International GM vehicle deliveries in the third
quarter of 1995 were 717,000 units, up 6.4% from the 674,000 units delivered
in the 1994 quarter, reflecting improved deliveries in Latin America and in
the Asia/Pacific region. IO's pretax loss of $117.1 million in the third
quarter of 1995 represents a decline of $360.4 million compared with the same
period last year, when pretax income was $243.3 million. The lower pretax
earnings were largely due to results of the European automotive operations,
which were affected by the start-up costs for the new Vectra. Exchange-rate
movements and a weaker sales mix were also factors in Europe and the remainder
of GM's International Operations. In addition, increased labor- and material-
cost pressures had an adverse impact in Latin America. Tax benefits at IO
- 16 -
17
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
came from the mix of foreign earnings. Losses were incurred in Europe where
generally high effective tax rates were in effect, while income was earned at
other international operations, which had generally lower effective tax rates.
These items equate to approximately $110 million of benefit above a normalized
U.S. rate of 37 percent. The results for the quarter include short-term
unfavorable items and are not representative of IO's future earnings. The net-
profit margin for International Operations was 1.6% in the third quarter of
1995, compared with 3.4% in the prior-year period
Nine month 1995 IO income was $1,146.4 million compared to $1,120.9 million
in the nine months of 1994. GM's European automotive operations reported nine-
month 1995 net income of $548 million compared to $515 million in the 1994
period. For the remainder of GM's IO, including Latin American Operations and
Asia-Pacific Operations, net income totaled $598 million, compared to $606
million in the 1994 nine months. Net-profit margins decreased from 5.5% in
the 1994 period to 4.8% in the 1995 nine-month period.
General Motors Acceptance Corporation
GMAC serves the financing and insurance needs of GM customers. The
Corporation hereby encourages reference to the GMAC Third Quarter 1995
Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission.
GMAC reported third-quarter-1995 net income of $253.7 million, compared with
$244.6 million in the third quarter of 1994. The third-quarter-1995 increase
primarily resulted from a 5% increase in net income from financing operations
which resulted from more favorable funding margins and increased average
earning asset levels, principally wholesale receivables and operating leases.
For the nine months of 1995, GMAC's consolidated net income totaled $767.8
million, compared to nine-month 1994 net income of $678.2 million, including
the $7.4 million unfavorable effect of the first quarter 1994 SFAS No. 112
accounting change. The 15% increase in the nine month net income from
financing operations resulted from more favorable funding margins and
increased average earning asset levels, principally wholesale receivables and
operating leases.
GMAC financed 26% of new General Motors vehicles delivered in the U.S.
during the third quarter of 1995, a three percentage point increase compared
to the second quarter of 1995 and the third quarter of 1994. Penetration for
the nine months of 1995 decreased to 24% of new GM deliveries, one percentage
point lower than the comparable 1994 period. The recent increase in
penetration of retail delivery financing is primarily related to improved
competitive conditions for GMAC.
GMAC also provides wholesale financing for GM and other dealers' new and
used vehicle inventories. In the United States, inventory financing was
provided for 770,000 and 2,752,000 new GM vehicles in the third quarter and
nine months of 1995, compared with 782,000 and 2,747,000 new GM vehicles
during the same periods in 1994. GMAC's U.S. wholesale financing represented
71.6% of all GM sales to dealers during the nine months of 1995, a decrease
from 74.8% for the comparable period a year ago.
Consolidated net pre-tax margin after interest and discount and depreciation
expense for the third quarter and nine months of 1995 increased by $152.6
million and $293.2 million over the comparable 1994 periods. The period-to-
period improvements primarily reflect increased revenue from higher earning
asset levels and more favorable funding margins. Interest and discount
expense increased $181.3 million and $621.1 million for the third quarter and
nine months of 1995 over the comparable periods in 1994 due to increased
funding levels and higher interest rates.
The Company's worldwide cost of funds for the third quarter of 1995 averaged
6.99%, an increase of 36 basis points from a year ago. The worldwide cost of
funds averaged 7.13% for the nine months of 1995, an increase of 57 basis
- 17 -
18
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
points from the comparable 1994 period. The higher funding costs are
primarily attributable to a significant increase in the general level of short-
term interest rates in the United States where the bank prime lending rate
climbed from an average 7.50% in the third quarter of 1994 to an average 8.77%
in the third quarter of 1995. Total borrowing costs for United States
operations averaged 6.90% for the third quarter and 6.98% for the nine months
of 1995, compared with 6.41% and 6.32%, respectively, for the same 1994
periods.
Expenses increased $159.9 million and $370.7 million for the third quarter
and nine month periods ended September 30, 1995, respectively, due principally
to an increase in the provision for financing losses.
Earning assets were $87.5 billion at September 30, 1995 compared to $82.1
billion and $77.4 billion at December 31, 1994 and September 30, 1994,
respectively. The higher asset levels are primarily attributable to increased
operating lease assets and retail finance receivables.
During the third quarter of 1995, GMAC completed its second sale of
wholesale receivables in the amount of $1.9 billion. Outstanding amounts
related to these receivable sales comprise GMAC's wholesale finance servicing
portfolio which totaled $4.3 billion at September 30, 1995 compared to $2.6
billion at December 31, 1994 and $1.9 billion at September 30, 1994.
As of September 30, 1995, GMAC's total borrowings were $69.4 billion
compared with $66.7 billion at December 31, 1994 and $61.6 billion at
September 30, 1994. The Company's ratio of borrowings to equity capital was
8.4:1 at September 30, 1995, as compared to 8.4:1 at December 31, 1994 and
7.8:1 at September 30, 1994.
Summary Financial Data - GMAC Nine Months Ended
Condensed GMAC Consolidated Third Quarter September 30,
---------------- -----------------
Statement of Income 1995 1994 1995 1994
---------------- -----------------
(Dollars in Millions)
Financing Revenue
Retail and lease financing $857.6 $660.7 $2,380.3 $2,167.2
Leasing 1,618.9 1,300.4 4,591.2 3,486.0
Wholesale and term loans 483.1 390.4 1,623.1 1,166.0
------- ------- ------- -------
Total financing revenue 2,959.6 2,351.5 8,594.6 6,819.2
Interest and discount 1,222.9 1,041.6 3,718.0 3,096.9
Depreciation on operating leases 1,135.6 861.4 3,176.6 2,315.5
------- ------- ------- -------
Net financing revenue 601.1 448.5 1,700.0 1,406.8
Insurance premiums earned 269.9 282.6 814.7 848.2
Other income 490.3 426.2 1,551.7 1,215.7
------- ------- ------- -------
Net Financing Revenue and Other 1,361.3 1,157.3 4,066.4 3,470.7
Expenses 950.4 790.5 2,770.1 2,399.4
------- ------- ------- -------
Income before income taxes 410.9 366.8 1,296.3 1,071.3
Income taxes 157.2 122.2 528.5 385.7
------- ------- ------- -------
Income before cumulative effect of
accounting change 253.7 244.6 767.8 685.6
Cumulative effect of accounting change - - - (7.4)*
------- ------- ------- -------
Net Income $253.7 $244.6 $767.8 $678.2
======= ======= ======= =======
*Effective January 1, 1994, GMAC adopted SFAS No. 112.
Financing Operations $222.2 $211.6 $666.8 $582.2
Insurance Operations 31.5 33.0 101.0 96.0
------- ------- ------- -------
Consolidated Net Income $253.7 $244.6 $767.8 $678.2
======= ======= ======= =======
Consolidated Return on Average Equity 12.2% 12.3% 12.5% 11.4%
======= ======= ======= =======
- 18 -
19
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed GMAC Consolidated Sept. 30, Dec. 31, Sept. 30,
Balance Sheet 1995 1994 1994
-------------------------------------
(Dollars in Millions)
Cash and cash equivalents $758.7 $1,339.5 $1,774.4
Investments in securities 4,282.2 3,891.7 3,937.1
Finance receivables - net 55,324.3 54,625.1 51,567.5
Net investment in operating leases 21,502.7 17,809.2 16,481.8
Notes receivable from General Motors
Corporation 1,600.0 1,080.5 1,296.4
Other assets 6,891.2 6,791.4 6,151.5
-------- -------- --------
Total Assets $90,359.1 $85,537.4 $81,208.7
======== ======== ========
Short-term debt $37,563.3 $35,114.8 $30,451.5
Accounts payable and other
liabilities (including
GM and affiliates - $2,787.3,
$1,867.3 and $2,712.9) 12,636.2 10,989.3 11,739.5
Long-term debt 31,856.0 31,539.6 31,173.4
Stockholder's equity 8,303.6 7,893.7 7,844.3
-------- -------- --------
Total Liabilities and
Stockholder's Equity $90,359.1 $85,537.4 $81,208.7
======== ======== ========
Certain amounts for September 1994 have been reclassified to conform with 1995
classifications.
Nine Months Ended
Condensed GMAC Consolidated September 30,
--------------------
Statement of Cash Flows 1995 1994
--------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $4,902.2 $4,389.4
-------- --------
Cash Flows from Investing Activities
Finance receivables-acquisitions (121,008.7) (114,308.9)
-liquidations 101,821.6 103,828.6
Notes receivable from General Motors Corporation (519.5) 59.1
Operating leases-acquisitions (10,535.5) (9,742.2)
-liquidations 3,943.9 2,544.4
Investments in securities-acquisitions (9,828.6) (9,802.4)
-liquidations 9,529.3 9,563.6
Net increase in short-term investments - 6.2
Proceeds from sales of receivables - wholesale 13,396.4
8,786.3
- retail 5,264.3 4,747.0
Due and deferred from receivable sales 60.2 282.7
Other 818.9 (112.9)
-------- --------
Net Cash Used in Investing Activities (7,057.7) (4,148.5)
-------- --------
Cash Flows from Financing Activities
Debt with original maturities 90 days and over
-proceeds 35,755.2 37,041.4
-liquidations (36,366.6) (37,053.0)
Debt with original maturities less than 90 days
-net change 2,808.4 (1,764.5)
Cash dividends paid to GM (625.0) (750.0)
Proceeds from issuance of stock - 35.0
-------- --------
Net Cash Provided by (Used in) Financing Activities 1,572.0 (2,491.1)
-------- --------
Effect of exchange rate changes on cash
and cash equivalents 2.7 (3.5)
-------- --------
Net decrease in cash and cash equivalents (580.8) (2,253.7)
Cash and cash equivalents at beginning of the period 1,339.5 4,028.1
-------- --------
Cash and cash equivalents at end of the period $758.7 $1,774.4
======== ========
Certain amounts for 1994 have been reclassified to conform with 1995
classifications.
- 19 -
20
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Electronic Data Systems Corporation
Electronic Data Systems Corporation (EDS) reported earnings totaling $245.7
million for the 1995-third-quarter period, or $0.51 per share of GM Class E
common stock. That compares with $216.4 million earned in the third quarter
of 1994, or $0.45 per share. EDS results in the third quarter of 1995 reflect
increased business activity in virtually every part of the world, which
increased its total revenues 21 percent year-over-year. Business from sources
outside of GM increased 27 percent in the third quarter of 1995. Non-GM
business accounted for 69 percent of EDS' total revenues during the period.
Nine month EDS earnings of $669.4 million resulted in earnings per Class E
share of $1.40, compared with $585.4 million, or $1.22 per share a year
earlier.
Earnings per share attributable to GM Class E common stock are based on
the Available Separate Consolidated Net Income of EDS as described in Note 4
to the Financial Statements. Reference should be made to EDS' Management's
Discussion and Analysis in Exhibit 99(a) which is incorporated herein by
reference.
EDS financial statements do not include the amortization of the $2,179.5
million initial cost to GM of EDS customer contracts, computer software
programs, and other intangible assets, including goodwill, arising from the
acquisition of EDS by GM in 1984. This cost, plus the $343.2 million cost of
contingent notes purchased in 1986, less certain income tax benefits, was
assigned principally to intangible assets, including goodwill, and is being
amortized by GM over the estimated useful lives of the assets acquired. The
costs assigned to customer contracts and computer software programs were fully
amortized prior to 1992. Such amortization is charged against Other Sector
Income and amounted to $38.8 million and $14.4 million, respectively, in the
1995 and 1994 nine-month periods.
Condensed EDS Consolidated Statement Nine Months Ended
of Income and Available Separate Third Quarter September 30,
---------------- -----------------
Consolidated Net Income 1995 1994 1995 1994
---------------- -----------------
(Dollars in Millions
Except Per Share Amounts)
Revenues
Systems and other contracts
GM and affiliates $965.9 $879.5 $2,846.4 $2,577.4
Outside customers 2,107.8 1,643.3 5,953.7 4,472.1
Interest and other income 35.4 42.1 56.1 88.7
------- ------- ------- -------
Total Revenues 3,109.1 2,564.9 8,856.2 7,138.2
Costs and Expenses 2,725.1 2,226.8 7,810.2 6,223.6
Income Taxes 138.3 121.7 376.6 329.2
------- ------- ------- -------
Separate Consolidated Net Income $245.7 $216.4 $669.4 $585.4
======= ======= ======= =======
Available Separate Consolidated Net Income*
Average number of shares of Class
E common stock outstanding
(in millions) (Numerator) 438.8 261.2 393.0 259.7
Class E dividend base (in millions)
(Denominator) 483.7 481.7 483.3 481.6
Available Separate Consolidated
Net Income $222.9 $117.3 $551.1 $315.9
===== ===== ===== =====
Earnings Attributable to Class E
Common Stock on a Per Share Basis $0.51 $0.45 $1.40 $1.22
==== ==== ==== ====
Cash dividends per share of Class E
common stock $0.13 $0.12 $0.39 $0.36
==== ==== ==== ====
* Available Separate Consolidated Net Income is determined quarterly.
- 20 -
21
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Hughes Electronics Corporation
Hughes Electronics Corporation (Hughes) reported record third-quarter
earnings of $256.1 million during the third quarter of 1995, or $0.64 per
share of GM Class H common stock. That compares with 1994-third-quarter
earnings of $244.2 million, or $0.61 per share. The earnings improvement at
Hughes is primarily attributed to increased revenues in each of the Hughes
business segments, ongoing cost-reduction efforts, and a decrease in the
effective tax rate, partially offset by a decrease in other income. Revenues
for the 1995 period were $3,441.3 million, a 2.6% increase from the $3,354.5
million reported in the third quarter of 1994. For the nine months of 1995,
Hughes earnings were $813.4 million, or $2.03 per share of GM Class H common
stock, on revenues of $10,743.7 million. In the nine months of 1994, earnings
were $793.6 million, including the $30.4 million unfavorable effect of SFAS
No. 112, or $1.98 per share of GM Class H common stock, on revenues of
$10,477.7 million.
Earnings per share attributable to GM Class H common stock are based on
the Available Separate Consolidated Net Income of Hughes as described in
Note 4 to the Financial Statements. Reference should be made to Hughes'
Management's Discussion and Analysis in Exhibit 99(b) which is incorporated
herein by reference.
Condensed Hughes Statement of
Consolidated Operations and Nine Months Ended
Available Separate Consolidated Third Quarter September 30,
------------------ ------------------
Net Income 1995 1994 1995 1994
------------------ ------------------
(Dollars in Millions
Except Per Share Amounts)
Revenues
Net sales
Outside customers $2,341.6 $2,264.1 $6,850.3 $6,760.5
GM and affiliates 1,126.7 1,056.7 3,893.3 3,638.9
Other income(loss)-net (27.0) 33.7 0.1 78.3
------- ------- ------- -------
Total Revenues 3,441.3 3,354.5 10,743.7 10,477.7
Costs and Expenses 3,130.7 2,993.1 9,593.5 9,238.4
Income Taxes 121.6 148.2 465.8 508.2
------- ------- ------- -------
Income before cumulative
effect of accounting change 189.0 213.2 684.4 731.1
Cumulative effect of accounting
change - - - (30.4)(1)
------- ------- ------- -------
Net Income 189.0 213.2 684.4 700.7
Adjustments to exclude the effect
of GM purchase accounting
adjustments related to Hughes
Aircraft Company (2) 67.1 31.0 129.0 92.9
------- ------- ------- -------
Earnings Used for Computation of Available
Separate Consolidated Net Income $256.1 $244.2 $813.4 $793.6
======= ======= ======= =======
Available Separate Consolidated Net Income (3)
Average number of shares of Class H
common stock outstanding
(in millions) (Numerator) 95.9 92.7 95.2 91.7
Class H dividend base (in millions)
(Denominator) 399.9 399.9 399.9 399.9
Available Separate Consolidated
Net Income $61.4 $56.6 $193.5 $181.9
==== ==== ===== =====
See notes on next page.
- 21 -
22
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed Hughes Statement of
Consolidated Operations and Nine Months Ended
Available Separate Consolidated Third Quarter September 30,
------------------ ------------------
Net Income - Concluded 1995 1994 1995 1994
------------------ ------------------
(Dollars in Millions
Except Per Share Amounts)
Earnings Attributable to Class H
Common Stock on a Per Share Basis
Before cumulative effect of
accounting change $0.64 $0.61 $2.03 $2.06
Cumulative effect of acctg. change - - - (0.08)(1)
---- ---- ---- ----
Net earnings attributable
to Class H common stock on a
per share basis $0.64 $0.61 $2.03 $1.98
==== ==== ==== ====
Cash dividends per share of Class H
common stock $0.23 $0.20 $0.69 $0.60
==== ==== ==== ====
(1) Effective January 1, 1994, Hughes adopted SFAS No. 112 ($30.4 million or
$0.08 per share).
(2) Amortization and write-off of intangible assets arising from GM's
acquisition of Hughes Aircraft Company.
(3) Available Separate Consolidated Net Income is determined quarterly.
Liquidity and Capital Resources
With GMAC on an equity basis, cash and marketable securities totaled
$8,848.7 million at the end of the 1995 third quarter, compared with $9,345.2
million at June 30, 1995, $10,976.4 million at December 31, 1994 and $9,321.9
million at September 30, 1994. The decline in liquidity at the end of the
third quarter of 1995, compared with the end of June this year, is more than
accounted for by the $800 million cash contribution to the U.S. pension plans
during the third quarter, and cash expenditures at EDS, including its
acquisition of A.T. Kearney.
Cash and cash equivalents, including GMAC, at September 30, 1995 amounted
to $8,998.3 million, compared with $10,939.0 million at December 31, 1994 and
$9,806.1 million at September 30, 1994. The decrease in 1995 was due to an
excess of net cash used in investing activities over the net cash provided by
operating and financing activities. The decrease in 1994 was due to an excess
of net cash used in investing and financing activities over the net cash
provided by operating activities. Net cash provided by operating activities
was $9,144.9 million in the nine months of 1995, compared to $6,776.8 million
in the 1994 period, reflecting the net effects of higher net income, an
increase in depreciation of equipment on operating leases, increases in other
investments, miscellaneous assets, and deferred credits, decreases in deferred
income taxes and income taxes payable, and a decrease in proceeds on sale of
mortgage loans.
Net cash used in investing activities in the 1995 nine-month period
amounted to $12,456.8 million, consisting primarily of capital expenditures
and the increase in equipment on operating leases. Net cash used in investing
activities in the 1994 period amounted to $9,113.8 million, consisting
primarily of capital expenditures and the net increase in equipment on
operating leases. Total capital expenditures were $6,915.8 million in the
nine months of 1995 compared with $4,661.6 million in the 1994 period. Net
cash provided by financing activities in the 1995 period of $1,227.7 million
- 22 -
23
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
primarily reflected a net increase in short-term loans payable of $1,138.6
million and the net increase in long-term debt of $2,400.8 million, offset in
part by the $1,286.7 million repurchases of preference stock and $972.3
million in cash dividends paid to stockholders. Net cash used in financing
activities of $1,649.0 million in the 1994 nine-month period primarily
reflected the net decrease in short-term loans payable of $1,761.7 million and
cash dividends paid to stockholders of $839.1 million, offset in part by
$1,113.7 million in proceeds from issuing common stocks, primarily for
employee benefit plans.
During the first nine months of 1995, notes and loans payable increased
$4,154.9 million to $77,885.1 million at September 30, 1995 from a balance of
$73,730.2 million at December 31, 1994 reflecting primarily a net increase in
long-term debt. GM's fully consolidated ratio of debt to stockholders' equity
(excluding stocks subject to repurchase) was 3.41 to 1 at September 30, 1995
compared to 5.75 to 1 at December 31, 1994 and 7.19 to 1 at September 30,
1994, reflecting higher stockholders' equity due to the Class E common stock
contribution to the U.S. hourly pension plan and improved profitability.
On May 30, 1995, Moody's Investors Service (Moody's) raised the long-term
credit ratings of General Motors Corporation, GMAC, Hughes and certain related
affiliates. In this action, the credit rating of GMAC's commercial paper was
also raised. The ratings for commercial paper and term debt of EDS and the
rating for the commercial paper of Hughes were not affected by the action
announced by Moody's. The rating of senior debt issued by GM, GMAC and
certain of their affiliates was raised to A3 from Baa1. Moody's defines A3
bonds as having "upper-medium grade" quality, whereas the Baa1 rating
signifies "medium grade" quality. The rating for GM preference stock was
upgraded two levels, to baa1 from baa3 (baa3 is the lowest investment grade
category). The rating of commercial paper issued by GMAC was raised to P-1
from P-2. Moody's employs its P-1 rating to indicate that an issuer's ability
to repay is superior relative to other issuers, while the P-2 rating indicates
that the issuer has a strong ability for repayment relative to other issuers.
On April 4, 1995, Standard & Poor's Corporation (S&P) affirmed its positive
outlook and its rating of General Motors Corporation and related entities. It
raised its commercial paper rating of EDS to A-1 from A-2, second highest
within the four investment grade ratings available from S&P for commercial
paper, indicating a strong degree of safety regarding timely payments, and
removed the rating from CreditWatch, where it was placed on February 6, 1995.
On October 26, 1995, S&P raised the long-term debt ratings of GM, GMAC,
and Hughes from BBB+ to A-, seventh highest within the 10 investment grade
ratings available from S&P for long-term debt, based on a strong capability to
pay interest and repay principal, although somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt
in higher rated categories. Additionally, S&P raised its rating on GM's
preference stock from BBB to BBB+, eighth highest within the 10 S&P investment
grade ratings. S&P affirmed its A-2 rating on GMAC's and Hughes' commercial
paper. The senior debt (A) and commercial paper (A-1) rating on EDS remain on
CreditWatch with positive implications for a possible upgrade.
A security rating is not a recommendation to buy, sell, or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each rating should be evaluated independently of any
other rating.
A third quarter cash dividend on $1-2/3 par value common stock of $0.30
per share was paid on September 9, 1995. On November 6, 1995, the Board of
Directors declared a cash dividend of $0.30 per share on $1-2/3 par value
common stock for the fourth quarter of 1995 payable December 9, 1995. This
dividend declaration continues the level established in the second quarter of
1995, and raises 1995 cash dividends to $1.10 per share, compared with $0.80
per share in 1994.
- 23 -
24
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
A third quarter cash dividend on Class E common stock of $0.13 per share
was paid on September 9, 1995. On November 6, 1995, the Board of Directors
also declared a cash dividend of $0.13 per share on Class E common stock
payable December 9, 1995. This continues the level established in the first
quarter of 1995 and raises 1995 cash dividends to $0.52 per share compared
with $0.48 per share in 1994.
A third quarter cash dividend on Class H common stock of $0.23 per share
was paid on September 9, 1995. On November 6, 1995, the Board of Directors
also declared a cash dividend of $0.23 per share on Class H common stock
payable December 9, 1995. This continues the level in effect since the first
quarter of 1995 and raises 1995 cash dividends to $0.92 per share, compared
with $0.80 per share in 1994.
Book value per share of $1-2/3 par value common stock increased to $23.90
at the end of the 1995 third quarter from $11.18 at the end of 1994. Book
value per share of Class E common stock increased to $3.05 from $1.43 at the
end of 1994 and book value per share of Class H common stock increased to
$11.97 from $5.59 at the end of 1994.
At year-end 1994, GM's total unfunded pension position decreased to
$12.6 billion ($9.4 billion U.S. and $3.2 billion non-U.S.) from $22.3 billion
at December 31, 1993. GM contributed $800 million and $3.3 billion to its
U.S. pension plans during the third quarter of 1995 and 1994, respectively,
for a total of $10.4 billion (cash and stock) and $5.2 billion in pension
contributions during the nine months of 1995 and 1994, respectively. In the
nine months of 1995, the Corporation contributed approximately 173 million
shares of Class E common stock, valued at $6.3 billion, to its U.S. hourly
pension plan (see Note 7 to the Financial Statements).
The March 13, 1995 Class E common stock contribution to the U.S. hourly
pension plan increases the weighted average number of Class E shares
outstanding which increases the allocation of EDS earnings to Class E common
stock and decreases the allocation of EDS earnings to $1-2/3 par value common
stock. The reduction in EDS earnings allocated to $1-2/3 par value common
stock was more than offset by reduced pension expense as a result of the stock
contribution. The relationship between the reduction in EDS earnings
allocated to $1-2/3 par value common stock and reduced pension expense will
vary from period to period. The stock contribution has no impact on Class E
earnings per share since the increased allocation of EDS earnings to Class E
common stock is offset by the higher weighted average number of Class E shares
outstanding.
Under SFAS No. 87, Employers' Accounting for Pensions, any year-to-year
movement in the rate of interest on long-term, high quality corporate bonds
necessitates a change in the discount rate used to calculate the actuarial
present value of the plans' obligations. The decrease in long-term interest
rates which has occurred in the U.S. between December 31, 1994 (the latest
measurement date of GM's pension plans) and September 30, 1995 would, if there
were no further changes in long-term interest rates during 1995, require the
Corporation to calculate its December 31, 1995 pension obligation using a
discount rate approximately 100 basis points below that used at the last
measurement date. GM's reported unfunded pension position would be adversely
affected by such a change in interest rates. The unfunded pension position
would also be affected by contributions during the year, the actual return on
pension investments and various other factors. A change in the unfunded
pension position will also affect the minimum pension liability adjustment to
stockholders' equity.
The change in long-term interest rates described above similarly impacts
the calculation of the Corporation's postretirement health care obligations
under SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions. There has been a 125 basis point decrease in long-term
interest rates between October 1, 1994 (the most recent valuation date) and
September 30, 1995. However, a change to the accumulated postretirement
benefit obligation would have no impact on GM's stockholders' equity in 1995
and no cash impact.
- 24 -
25
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Neither changes in the Corporation's unfunded pension obligations under
SFAS No. 87 nor changes in the Corporation's postretirement obligations under
SFAS No. 106 would have an impact on the earnings to be reported by the
Corporation for 1995. However, in accordance with applicable accounting
standards, any change in these obligations would impact the Corporation's 1996
and subsequent years' earnings as non-cash increases/decreases in pension and
other postretirement benefit expense.
In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, effective January 1, 1996. The Statement
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles
to be disposed of. The Corporation has not yet determined the effect of this
Standard.
On August 7, 1995, the Corporation announced that it intends to pursue a
split-off of its wholly owned subsidiary, EDS, to its GM Class E stockholders
in a tax-free exchange of stock.
To achieve a split-off, GM would exchange EDS capital stock for outstanding
GM Class E common stock. GM would not recognize a gain on the transaction.
There are currently 438.9 million shares of GM Class E common stock
outstanding, and 44.8 million shares currently reserved for issuance upon
conversion of Series C Preference Stock. The process of establishing
definitive terms for a split-off transaction which will be fair to all holders
of GM common stocks will, among other things, consider differences between the
values of GM Class E and EDS common stocks in order to establish any
adjustment deemed appropriate by the GM Board of Directors.
A split-off would be subject to the appropriate stockholder approvals, and a
favorable Internal Revenue Service ruling that the transaction would be tax-
free. The specific terms of a transaction, which are yet to be developed,
must also be approved by the GM Board of Directors. Subject to these and
other approvals and conditions, GM and EDS expect that a split-off could occur
in the first half of 1996. However, it should be noted that due to the
numerous uncertainties involved in these matters, there can be no assurance
that any split-off of EDS will be proposed or completed.
A split-off would be proposed only in a manner that would not result in the
recapitalization of GM Class E common stock into GM $1-2/3 par value common
stock at a 120 percent exchange ratio, as currently provided for under certain
circumstances in the GM Certificate of Incorporation.
In the event of a split-off, GM and EDS would enter into a long-term
agreement under which EDS would provide substantially the same information
technology services for GM that it does today.
The FASB's Emerging Issues Task Force (EITF) is considering an issue
(Issue No. 95-1) that may require the Corporation to delay the timing of when
it records revenues and profits on a significant portion of the vehicles sold
to daily rental car companies. The effect of such a delay would not be
material in 1995 if adopted on a prospective basis. If adopted on a one-time
cumulative effect basis in the first quarter of 1995, the effect would be
material in the period of adoption. In either case, there would be no effect
on the Corporation's cash flows.
The Financial Accounting Standards Board issued SFAS No. 123, Accounting for
Stock-Based Compensation, in October 1995 that encourages companies to record
expense for stock options and other stock-based employee compensation plans
based on their fair value at date of grant. As allowed by the Standard, the
Corporation plans to continue to apply its current accounting policy under APB
Opinion No. 25 in 1995 and future years. In the 1996 annual financial
- 25 -
26
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
statements, the Corporation will increase its note disclosure to include the
pro-forma impact on net income and earnings per share of the application of
the fair value based method of accounting encouraged by the Standard.
GENERAL MOTORS OPERATIONS WITH GMAC ON AN EQUITY BASIS
In order to facilitate analysis, the following financial statements
present financial data for the Corporation's manufacturing, wholesale
marketing, defense, electronics, and computer service operations with the
financing and insurance operations reflected on an equity basis. This is the
same basis and format used in years prior to GM's adoption of SFAS No. 94,
Consolidation of All Majority-owned Subsidiaries.
Statement of Nine Months Ended
Consolidated Operations Third Quarter September 30,
-------------------- --------------------
With GMAC on an Equity Basis 1995 1994 1995 1994
-------------------- --------------------
(Dollars in Millions)
Net Sales and Revenues (1)
Manufactured products $28,881.3 $27,148.2 $99,953.6 $91,022.3
Hughes manufactured products 2,360.5 2,282.6 6,909.3 6,833.3
Computer systems services 2,187.9 1,710.9 6,187.2 4,675.0
-------- -------- --------- ---------
Total Net Sales and Revenues 33,429.7 31,141.7 113,050.1 102,530.6
-------- -------- --------- ---------
Costs and Expenses
Cost of sales and other operating
charges, exclusive of items
listed below 28,728.1 26,931.8 93,315.6 85,213.7
Selling, general, and
administrative expenses 2,729.7 2,549.7 8,148.0 7,453.1
Depreciation of real estate,
plants, and equipment 1,018.8 965.7 3,120.9 2,849.7
Amortization of special tools 661.9 596.3 2,407.9 2,121.9
Amortization of intangible assets 37.9 45.2 113.2 135.7
-------- -------- --------- --------
Total Costs and Expenses 33,176.4 31,088.7 107,105.6 97,774.1
-------- -------- --------- --------
Operating Income 253.3 53.0 5,944.5 4,756.5
Other income less income
deductions - net 270.0 338.4 762.4 965.6
Interest expense (210.5) (365.0) (664.4) (910.1)
-------- -------- -------- --------
Income before Income Taxes 312.8 26.4 6,042.5 4,812.0
Income taxes (credit) 3.7 (220.5) 1,905.2 1,519.7
-------- -------- -------- --------
Income after Income Taxes 309.1 246.9 4,137.3 3,292.3
Earnings of nonconsolidated
affiliates 333.3 305.1 929.2 786.9
-------- -------- -------- --------
Income before cumulative
effect of accounting change 642.4 552.0 5,066.5 4,079.2
Cumulative effect of accounting
change (2) - - - (750.7)
-------- -------- -------- --------
Net Income $642.4 $552.0 $5,066.5 $3,328.5
======== ======== ======== ========
Certain amounts for 1994 were reclassified to conform with 1995
classifications.
(1) Includes sales to nonconsolidated affiliates of $277.6 million and $231.1
million in the third quarter and $834.1 million and $810.5 million in the
nine months of 1995 and 1994, respectively, including $80.1 million and
$67.6 million in computer systems services revenues for the third quarter
and $233.5 million and $202.9 million for the nine months.
(2) Effective January 1, 1994, the Corporation adopted SFAS No. 112,
Employers' Accounting for Postemployment Benefits. Not included is the
unfavorable cumulative effect on GMAC earnings of $7.4 million of adopting
SFAS No. 112 because the cumulative effect is included in earnings of
nonconsolidated affiliates.
- 26 -
27
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
With GMAC on an Equity Basis
Sept. 30, Dec. 31, Sept. 30,
ASSETS 1995 1994 1994
-----------------------------------
(Dollars in Millions)
Current Assets
Cash and cash equivalents $8,239.6 $9,731.4 $8,222.8
Other marketable securities 609.1 1,245.0 1,099.1
--------- --------- ---------
Total cash and marketable securities 8,848.7 10,976.4 9,321.9
Accounts and notes receivable
Trade 9,887.8 7,873.1 7,584.8
Nonconsolidated affiliates 1,794.5 2,080.4 2,902.5
Inventories 11,968.5 10,127.8 10,345.4
Contracts in process 2,670.5 2,265.4 2,725.2
Prepaid expenses and deferred
income taxes 6,667.0 6,455.6 8,613.2
--------- --------- ---------
Total Current Assets 41,837.0 39,778.7 41,493.0
Equity in Net Assets of
Nonconsolidated Affiliates 9,874.2 9,204.3 8,859.2
Deferred Income Taxes 14,117.1 16,318.6 15,283.6
Other Investments and Miscellaneous
Assets 14,619.4 14,835.5 14,276.5
Property - Net 36,428.2 34,661.4 34,036.7
Intangible Assets 11,756.6 11,536.4 12,713.9
--------- --------- ---------
Total Assets $128,632.5 $126,334.9 $126,662.9
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $10,413.2 $10,905.0 $8,775.4
Loans payable 1,705.3 993.7 992.0
Income taxes payable - 144.7 996.9
Accrued liabilities and deferred
income taxes (including current
portion of postretirement benefits
other than pensions) 25,857.9 26,584.4 28,277.1
Stocks subject to repurchase - 450.0 450.0
--------- --------- ---------
Total Current Liabilities 37,976.4 39,077.8 39,491.4
Long-Term Debt 6,760.3 6,082.3 6,565.4
Payable to GMAC - 1,212.5 1,487.6
Capitalized Leases 137.1 136.4 154.2
Postretirement Benefits Other Than
Pensions 38,660.5 37,348.0 36,863.4
Pensions 3,748.6 11,223.1 15,055.8
Other Liabilities and Deferred
Income Taxes 16,991.8 16,752.2 16,178.7
Deferred Credits 1,499.4 1,678.8 1,246.5
Stockholders' Equity 22,858.4 12,823.8 9,619.9
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $128,632.5 $126,334.9 $126,662.9
========= ========= =========
- 27 -
28
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed Statement of Consolidated Cash Flows Nine Months Ended
With GMAC on an Equity Basis September 30,
-------------------
1995 1994
-------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $6,258.5 $2,990.5
-------- -------
Cash Flows from Investing Activities
Expenditures for real estate, plants,
and equipment (4,255.1) (3,015.0)
Expenditures for special tools (2,595.4) (1,564.1)
Change in other investing assets
Investments in other marketable
securities - acquisitions (4,021.9) (1,585.0)
Investments in other marketable
securities - liquidations 4,657.8 1,208.4
Other (1,045.9) 130.1
-------- -------
Net Cash Used in Investing Activities (7,260.5) (4,825.6)
-------- -------
Cash Flows from Financing Activities
Increase in long-term debt 1,708.1 791.7
Decrease in long-term debt (1,029.9) (444.7)
Net increase in payable to GMAC 311.5 132.1
Repurchases of preference stocks (1,286.7) -
Repurchases of common stocks (394.0) -
Proceeds from issuing common stocks 341.3 1,113.7
Cash dividends paid to stockholders (972.3) (839.1)
Other 691.4 (463.4)
-------- -------
Net Cash Provided by (Used in)
Financing Activities (630.6) 290.3
-------- -------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 140.8 5.1
-------- -------
Net decrease in cash and
cash equivalents (1,491.8) (1,539.7)
Cash and cash equivalents at beginning of
the period 9,731.4 9,762.5
-------- -------
Cash and cash equivalents at end of the period $8,239.6 $8,222.8
======== =======
* * * * * * * *
- 28 -
29
GENERAL MOTORS CORPORATION PART II
AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
Material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Corporation became, or was, a party
during the quarter ended September 30, 1995 are summarized below.
It was previously reported that GM had filed a petition for writ of
certiorari seeking review by the U.S. Supreme Court of the U.S. Court of
Appeals for the Third Circuit decision which had reversed approval by the
Pennsylvania Federal Court of a nationwide C/K pickup truck class action
settlement. On October 2, 1995, the U.S. Supreme Court denied certiorari. As
a result, the action has been returned to the Federal District Court in
Pennsylvania for further proceedings.
* * *
Other Pending Legal Proceedings Reported
in Previous 1995 Current Report and Quarterly Reports
Reference is made to the Registrant's Current Report dated March 24, 1995
(Item 5(a)) and Quarterly Reports on Form 10-Q for the quarters ended March 31
and June 30, 1995.
* * *
(b) Previously reported legal proceedings which have been terminated, either
during the quarter ended September 30, 1995, or subsequent thereto, but before
the filing of this report are summarized below.
With respect to the previously reported matter in which the Region II office
of the U.S. Environmental Protection Agency (EPA) had issued a Civil
Administrative Complaint alleging that a plant operated by the GM Powertrain
Division in Massena, New York had improperly disposed of polychlorinated
biphenyl contaminated sludge, the EPA, on November 3, 1995, dismissed the
complaint with prejudice.
* * *
- 29 -
30
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
Exhibit Number Exhibit Name Page No.
- -------------- ------------------------------------------------ --------
11 Computation of Earnings Per Share
Attributable to Common Stocks for the
Quarters and Nine Months Ended September 30,
1995 and 1994. 31
12 Computation of Ratios of Earnings to Fixed
Charges for the Nine Months Ended September 30,
1995 and 1994. 35
21 Subsidiaries of the Registrant 36
99(a) Electronic Data Systems Corporation and
Subsidiaries Consolidated Financial
Statements and Management's Discussion
and Analysis. 37
(b) Hughes Electronics Corporation and
Subsidiaries Consolidated Financial
Statements and Management's Discussion
and Analysis. 45
27 Financial Data Schedule (for SEC information only)
(b) REPORTS ON FORM 8-K.
No report on Form 8-K was filed during the quarter ended September 30,
1995.
* * * * * *
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 hereunto duly authorized.
GENERAL MOTORS CORPORATION
-------------------------------
(Registrant)
By
s/Leon J. Krain
-------------------------------
Date November 13, 1995 (Leon J. Krain, Vice President
- ---------------------- and Group Executive)
By
s/Wallace W. Creek
-------------------------------
Date November 13, 1995 (Wallace W. Creek, Comptroller)
- ----------------------
- 30 -