L:\secdraft\version4\jun-97.doc 13
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 June 30, 1997
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.)
100 Renaissance Center, Detroit, Michigan 48243-7301
3044 West Grand Boulevard, Detroit, Michigan 48202-3091
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 556-5000
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 June 30, 1997, there were outstanding 720,199,762 shares of the
issuer's $1-2/3 par value common stock and 101,446,357 shares of Class H $0.10
par value common stock.
- 1 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Statements of Income for the Three and Six
Months Ended June 30, 1997 and 1996 3
Consolidated Balance Sheets as of June 30, 1997,
December 31, 1996 and June 30, 1996 4
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Part II - Other Information (Unaudited)
Item 1. Legal Proceedings 27
Item 4. Submission of Matters to a Vote of Security Holders 29
Item 6. Exhibits and Reports on Form 8-K 31
Signature 32
Exhibit 3(ii) By-Laws of General Motors Corporation, as amended 33
Exhibit 11 Computation of Earnings Per Share Attributable to
Common Stocks for the Three and Six Months Ended
June 30, 1997 and 1996 62
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges
for the Six Months Ended June 30, 1997 and 1996 66
Exhibit 99 Hughes Electronics Corporation and Subsidiaries
Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and
Results of Operations 67
Exhibit 27 Financial Data Schedule (for SEC information only)
- 2 -
PART I
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1977 1996 1997 1996
------- -------- -------- -------
(Dollars in Millions Except Per Share Amounts)
Net sales and revenues
Manufactured products $39,724 $40,169 $77,164 $74,826
Financial services 3,204 3,125 6,401 6,304
Other income (Note 4) 2,218 1,486 3,822 2,892
------- ------- ------- -------
Total net sales and revenues 45,146 44,780 87,387 84,022
------ ------ ------ ------
Costs and expenses
Cost of sales and other operating charges,
exclusive of items listed below 33,008 33,116 64,038 63,247
Selling, general, and administrative
expenses 3,984 3,578 7,575 6,648
Depreciation and amortization expenses 3,101 3,018 6,166 5,990
Interest expense 1,500 1,414 2,961 2,835
Plant closing expense - - 80 -
Other deductions (Note 4) 320 452 568 866
-------- -------- -------- -------
Total costs and expenses 41,913 41,578 81,388 79,586
------ ------ ------ ------
Income from continuing operations
before income taxes and minority
interests 3,233 3,202 5,999 4,436
Income taxes 1,153 1,098 2,142 1,530
Minority interests 18 (8) 37 (10)
------- --------- ------- ---------
Income from continuing operations 2,098 2,096 3,894 2,896
Income (loss) from discontinued
operations (Note 3) - (209) - 10
------- ------ ------- -------
Net income 2,098 1,887 3,894 2,906
Dividends on preference stocks 20 20 40 40
------- ------- ------- -------
Earnings on common stocks $2,078 $1,867 $3,854 $2,866
===== ===== ===== =====
Earnings attributable to common stocks (Note 10)
$1-2/3 par value from continuing
operations $1,941 $2,001 $3,658 $2,705
Loss from discontinued operations - (15) - (5)
--------- ------- --------- -------
Net earnings attributable to
$1-2/3 par value $1,941 $1,986 $3,658 $2,700
========= ====== ======== ======
Income (loss) from discontinued
operations attributable to
Class E $ - $(194) $ - $ 15
===== === ===== ====
Net earnings attributable to
Class H $137 $75 $196 $151
=== == === ===
Average number of shares of common
stocks outstanding (in millions)
$1-2/3 par value 724 756 736 756
Class E - 479 - 470
Class H 101 98 101 98
Earnings per share attributable to
common stocks (Note 10)
$1-2/3 par value from continuing
operations $2.68 $2.65 $4.98 $3.58
Loss from discontinued operations - (0.02) - (0.01)
------- ---- ------- ----
Net earnings attributable to
$1-2/3 par value $2.68 $2.63 $4.98 $3.57
===== ===== ===== =====
Income (loss) from discontinued
operations attributable to
Class E $ - $(0.41) $ - $0.04
===== ==== ===== ====
Net earnings attributable to
Class H $1.35 $0.77 $1.94 $1.55
==== ==== ==== ====
Cash dividends per share of common
stocks
$1-2/3 par value $0.50 $0.40 $1.00 $0.80
Class E $ - $0.15 $ - $0.30
Class H $0.25 $0.24 $0.50 $0.48
Reference should be made to the notes to consolidated financial statements.
- 3 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
1997 Dec. 31, 1996
(Unaudited) 1996 (Unaudited)
(Dollars in Millions)
ASSETS
Cash and cash equivalents $11,674 $14,063 $12,461
Other marketable securities 9,343 8,199 5,903
------- ------- -------
Total cash and marketable securities 21,017 22,262 18,364
Finance receivables - net 60,357 57,550 58,432
Accounts and notes receivable (less allowances) 7,461 6,557 7,249
Inventories (less allowances) (Note 5) 13,528 11,898 11,755
Contracts in process (less advances and
progress payments) 2,264 2,187 2,440
Deferred income taxes 19,291 19,510 20,415
Equipment on operating leases (less accumulated
depreciation) 32,300 30,112 28,944
Property
Real estate, plants, and equipment 69,671 69,770 68,386
Less accumulated depreciation (40,911) (41,298) (41,299)
------ ------ ------
Net real estate, plants, and equipment 28,760 28,472 27,087
Special tools - net 8,893 9,032 8,324
------- ------- -------
Total property 37,653 37,504 35,411
Intangible assets - net 15,029 12,691 10,282
Other assets - net 23,005 21,871 19,605
-------- -------- --------
Total assets $231,905 $222,142 $212,897
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable (principally trade) $14,197 $14,221 $13,231
Notes and loans payable 89,918 85,300 80,756
Deferred income taxes 4,199 3,207 3,424
Postretirement benefits other than
pensions (Note 6) 44,007 43,190 42,393
Pensions 7,774 7,599 6,442
Other liabilities and deferred credits 46,661 45,115 45,628
-------- -------- -------
Total liabilities 206,756 198,632 191,874
------- ------- -------
Minority interests 716 92 163
Redeemable preferred stock of subsidiary
(Note 11) 402 - -
Stockholders' equity
Preference stocks 1 1 1
Common stocks
$1-2/3 par value (Note 9; issued, 721,480,932;
756,619,625; and 756,619,913 shares) 1,202 1,261 1,261
Class H (Note 2; issued, 101,641,092;
100,075,000 and 98,853,477 shares) 10 10 10
Capital surplus (principally additional
paid-in capital) 17,250 19,189 19,080
Retained earnings 9,201 6,137 4,773
------- ------- ------
Subtotal 27,664 26,598 25,125
Minimum pension liability adjustment (3,490) (3,490) (4,742)
Accumulated foreign currency translation
adjustments (642) (113) 44
Net unrealized gains on investments in
certain debt and equity securities 499 423 433
------- ------- --------
Total stockholders' equity 24,031 23,418 20,860
------ ------ ------
Total liabilities and stockholders'
equity $231,905 $222,142 $212,897
======= ======= =======
Reference should be made to the notes to consolidated financial statements.
- 4 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1997 1996
(Dollars in Millions)
Net cash provided by operating activities $9,773 $9,583
------ -----
Cash flows from investing activities
Expenditures for property (4,268) (4,313)
Investments in companies, net of cash acquired (1,652) (54)
Investments in other marketable securities
- acquisitions (18,147) (10,177)
Investments in other marketable securities
- liquidations 17,595 9,862
Finance receivables - acquisitions (79,997) (73,871)
Finance receivables - liquidations 63,304 56,095
Proceeds from sales of finance receivables 12,930 18,466
Operating leases - acquisitions (10,649) (9,724)
Operating leases - liquidations 6,227 5,701
Special inter-company payment from EDS - 500
Other 954 798
Net cash used in investing activities (13,703) (6,717)
------ ------
Cash flows from financing activities
Net increase (decrease) in loans payable 3,269 (3,610)
Increase in long-term debt 8,485 10,155
Decrease in long-term debt (7,061) (6,862)
Proceeds from issuing common stocks 281 191
Repurchases of common stocks (2,292) -
Cash dividends paid to stockholders (829) (837)
Proceeds from sale of minority interest in
DIRECTV(R) - 138
------ ------
Net cash provided by (used in) financing activities 1,853 (825)
----- ------
Effect of exchange rate changes on cash and
cash equivalents (312) (179)
----- -----
Net cash (used in) provided by continuing operations (2,389) 1,862
Net cash provided by discontinued operations - 103
------ ------
Net (decrease) increase in cash and cash equivalents (2,389) 1,965
Cash and cash equivalents at beginning of the period 14,063 10,496
------ ------
Cash and cash equivalents at end of the period $11,674 $12,461
====== ======
Reference should be made to the notes to consolidated financial statements.
- 5 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Significant Accounting Policies
Financial Statement Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. The consolidated financial statements include the
accounts of General Motors Corporation (hereinafter referred to as the
Corporation) and domestic and foreign subsidiaries that are more than 50% owned,
principally General Motors Acceptance Corporation and Subsidiaries (GMAC) and
Hughes Electronics Corporation and Subsidiaries (Hughes) (collectively referred
to as General Motors or GM). In the opinion of management, all adjustments
(consisting of only normal recurring items), which are necessary for a fair
presentation have been included. 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. For further information, refer to the consolidated
financial statements and notes thereto included in the GM 1996 Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
Certain amounts for 1996 were reclassified to conform with the 1997
classifications.
Derivative Instruments
GM is party to a variety of foreign exchange, interest rate, and commodity
forward contracts and options entered into in connection with the management of
its exposure to fluctuations in foreign exchange rates, interest rates, and
certain commodities prices. These financial exposures are managed in accordance
with corporate policies and procedures.
GM established the Risk Management Committee to develop and monitor the
Corporation's financial risk strategies, policies and procedures. The Committee
reviews and approves all new risk management strategies, establishes approval
authority guidelines for approved programs and monitors compliance and
performance of existing risk management programs. GM does not enter into
derivative transactions for trading purposes.
As part of the hedging program approval process, GM's management is
required to identify the specific financial risk which the derivative
transaction will minimize, the appropriate hedging instrument to be used to
reduce the risk, and the correlation between the financial risk and the hedging
instrument. Purchase orders, letters of intent, vehicle production forecasts,
capital planning forecasts, and historical data are used as the basis for
determining the anticipated values of the transactions to be hedged. If it is
determined that the correlation between the financial exposure and the hedging
instrument is below a specified level, the transaction is generally not
approved. In those infrequent instances in which approval is received for a
hedging transaction that does not meet the correlation requirement, the
derivative is marked to market for accounting purposes. The hedge positions, as
well as the correlation between the transaction risks and the hedging
instruments, are reviewed by management on an ongoing basis.
Foreign exchange forward and option contracts are accounted for as hedges
to the extent they are designated, and are effective as, hedges of firm foreign
currency commitments. Additionally, certain foreign exchange option contracts
receive hedge accounting treatment to the extent such contracts hedge certain
anticipated foreign currency transactions. Other such foreign exchange contracts
and options are marked to market on a current basis.
Interest rate swaps that are designated, and effective as, hedges of
underlying debt obligations are not marked to market, but are used to adjust
interest expense recognized over the lives of the underlying debt agreements.
Gains and losses from terminated contracts are deferred and amortized over the
remaining period of the original swap or the remaining term of the underlying
exposure, whichever is shorter. Open interest rate swaps are reviewed regularly
to ensure that they remain effective as hedges of interest rate exposure.
Written options (including swaptions, interest rate caps and collars, and swaps
with embedded swaptions) and other swaps that do not qualify for hedge
accounting are marked to market on a current basis.
GM also enters into commodity forward and option contracts. Since GM has the
discretion to settle these transactions either in cash or by taking physical
delivery, these contracts are not considered financial instruments for
accounting purposes. Commodity forward contracts and options are accounted for
as hedges to the extent they are designated, and are effective as, hedges of
firm or anticipated commodity purchase contracts. Other commodity forward
contracts and options are marked to market on a current basis.
- 6 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 1. Significant Accounting Policies (concluded)
New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income,
and SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. SFAS No. 130
requires that an entity classify items of other comprehensive income by their
nature in that financial statement. In addition, the accumulated balance of
other comprehensive income must be displayed separately from retained earnings
and additional paid-in capital in the equity section of the statement of
financial position. Reclassification of financial statements for earlier
periods, provided for comparative purposes, is required. SFAS No. 131
establishes standards for reporting information about operating segments in
annual financial statements and requires selected information about operating
segments in interim financial reports issued to stockholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. SFAS No. 131
requires reporting segment profit or loss, certain specific revenue and expense
items and segment assets. It also requires reconciliations of total segment
revenues, total segment profit or loss, total segment assets, and other amounts
disclosed for segments to corresponding amounts reported in the financial
statements. Restatement of comparative information for earlier periods presented
is required in the initial year of application. Interim information is not
required until the second year of application, at which time comparative
information is required. GM will adopt SFAS No. 130 and No. 131 on January 1,
1998, as required.
Note 2. Hughes Transactions
On January 16, 1997, GM and Hughes announced a series of planned transactions
designed to address strategic challenges and unlock stockholder value in the
three Hughes business segments. The transactions would include the tax-free
spin-off of the Hughes defense business to holders of $1-2/3 par value and Class
H common stocks, followed immediately by the tax-free merger of that business
with Raytheon Company. The spin-off will not be proposed in a manner that would
result in the recapitalization of Class H common stock into $1-2/3 par value
common stock at a 120% exchange ratio, as currently provided for under certain
circumstances in the GM Restated Certificate of Incorporation, as amended. At
the same time, Delco Electronics, the automotive electronics subsidiary of
Hughes, would be transferred from Hughes to GM's Delphi Automotive Systems unit.
Finally, Class H common stock would be recapitalized into a GM tracking stock
linked to the telecommunications and space business of Hughes.
On July 14, 1997, GM received a ruling from the Internal Revenue Service that
it's contemplated spin-off of the Hughes defense business would be tax-free to
GM and its stockholders. The planned transactions must be approved by holders of
$1-2/3 par value and Class H common stocks, among a number of other conditions.
In addition, the merger of the Hughes defense business and Raytheon is subject
to antitrust clearance and approval by Raytheon stockholders. No assurance can
be given that the above transactions will be completed. GM expects to solicit
stockholders' approval of the planned transactions during the fourth quarter of
1997, after certain conditions are satisfied.
In May 1997, Hughes and PanAmSat Corporation (PAS) completed the merger of
their respective satellite service operations into a new publicly-held company.
Hughes contributed its Galaxy(R) satellite services business in exchange for a
71.5% interest in the new company. Existing PAS stockholders received a 28.5%
interest in the new company and $1.5 billion in cash.
For accounting purposes, the merger was treated by Hughes as an acquisition of
71.5% of PAS and was accounted for using the purchase method. Accordingly, the
purchase price was allocated to the net assets acquired, including intangible
assets, based on estimated fair values at date of acquisition. In addition, the
merger was treated as a partial sale of the Galaxy business by Hughes and
resulted in a one-time pre-tax gain of $490 million ($318 million after-tax or
$0.33 per share of $1-2/3 par value common stock and $0.80 per share of Class H
common stock).
- 7 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 3. EDS Split-Off
On June 7, 1996, GM split-off Electronic Data Systems Corporation (EDS) to
former Class E stockholders on a tax-free basis for U.S. federal income tax
purposes. The financial data related to EDS for the three and six month periods
ended June 30, 1996 are classified as discontinued operations. The GM unaudited
consolidated financial statements for 1997 exclude the assets, liabilities and
operating results of EDS.
EDS systems and other contracts revenues from outside customers included in
income (loss) from discontinued operations totaled $1.9 billion and $4.3 billion
for the three and six month periods ended June 30, 1996, respectively. Income
(loss) from discontinued operations of $(209) million and $10 million for the
three and six month periods ended June 30, 1996 is reported net of an income tax
benefit of $109 million and income tax expense of $14 million, respectively.
Note 4. Other Income and Other Deductions
Other income and other deductions consisted of the following (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Other income
Nonfinancing interest $483 $406 $949 $779
Gain on PAS merger (Note 2) 490 - 490 -
Insurance premiums 261 232 516 475
Mortgage servicing and processing
fees 196 130 367 236
Mortgage investment and other income 177 85 307 168
Claims and commissions 137 138 258 333
Gain on sale of interest in Avis
Europe (1) 128 - 128 -
Income from sales of receivables
programs 85 128 213 256
Insurance capital and investment gains 73 112 210 208
VW Settlement (2) - - 88 -
Gain on sale of interest in DIRECTV (3) - - - 120
Other 188 255 296 317
------ ------ ----- -----
Total other income $2,218 $1,486 $3,822 $2,892
===== ===== ===== =====
Other deductions
Insurance losses and loss adjustment
expenses $153 $191 $292 $334
Provision for financing losses 127 135 257 290
Other 40 126 19 242
---- --- ---- ----
Total other deductions $320 $452 $568 $866
=== === === ===
(1) During the 1997 second quarter, the sale of GM Europe's equity interest in
Avis Europe resulted in a pre-tax gain of $128 million ($103 million
after-tax or $0.14 per share of $1-2/3 par value common stock).
(2) During the 1997 first quarter, an agreement with Volkswagen A.G. (VW) that
settled a civil lawsuit GM brought against VW resulted in a pre-tax gain of
$88 million ($55 million after-tax or $0.07 per share of $1-2/3 par value
common stock), after deducting certain legal expenses.
(3) During the 1996 first quarter, the sale of a 2.5% interest in DIRECTV to
AT&T resulted in a pre-tax gain of $120 million ($72 million after-tax or
$0.07 per share of $1-2/3 par value common stock and $0.18 per share of
Class H common stock).
Note 5. Inventories
Major classes of inventories were as follows (in millions):
June 30, Dec. 31, June 30,
1997 1996 1996
Productive material, work in process,
and supplies $6,789 $6,590 $6,428
Finished product, service parts, etc. 6,739 5,308 5,327
------- ------- -------
Total inventories (less allowances) $13,528 $11,898 $11,755
====== ====== ======
- 8 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 6. Postretirement Benefits Other Than Pensions
GM has disclosed in the consolidated 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, GM does not admit or otherwise acknowledge that such
amounts or existing postretirement benefit plans of GM (other than pensions)
represent legally enforceable liabilities of GM.
Note 7. Plant Closings and Restructuring
GM previously recorded charges to realign its North American plant capacity
and to provide for a reduction of Hughes' worldwide employment, a major
facilities consolidation, and a reevaluation of certain non-strategic
businesses.
The following table summarizes the activity in the GM plant closings
(excluding environmental) and Hughes restructuring reserves for the period from
January 1, 1997 to June 30, 1997 (in millions):
Balance at January 1, 1997 $1,397
1997 first quarter charges against reserves (44)
Interest expense 16
------
Balance at March 31, 1997 $1,369
-----
1997 second quarter charges against reserves (52)
Interest expense 16
-----
Balance at June 30, 1997 $1,333
=====
GM and Hughes periodically evaluate the adequacy of reserve balances and
estimated future expenditures, including assumptions used and the period over
which costs are expected to be incurred.
Note 8. Contingent Matters
Hughes has maintained a suit against the U.S. Government since September 1973
regarding the Government's infringement and use of a Hughes patent (the
"Williams Patent") covering "Velocity Control and Orientation of a Spin
Stabilized Body," principally satellites. On June 17, 1994, the U.S. Court of
Claims awarded Hughes damages of $114 million. Because Hughes believed that the
record supported a higher royalty rate, it appealed that decision. The U.S.
Government, contending that the award was too high, also appealed. On June 19,
1996, the Court of Appeals for the Federal Circuit (CAFC) affirmed the decision
of the Court of Claims which awarded Hughes $114 million in damages, together
with interest. The U.S. Government petitioned the CAFC for a rehearing. That
petition was denied in October 1996. The U.S. Government then filed a petition
with the U.S. Supreme Court seeking certiorari. On April 21, 1997 the U.S.
Supreme Court, citing a recent decision it had rendered in Warner-Jenkinson v.
Hilton Davis, remanded Hughes' suit over the Williams Patent back to the CAFC in
order to have the CAFC determine whether the ruling in the Williams Patent
matter was consistent with the U.S. Supreme Court's decision in the
Warner-Jenkinson case. The previous liability decision of the Court of Claims in
the Williams Patent matter, and its $114 million damage award to Hughes,
currently remain in effect pending reconsideration of the case by the CAFC.
Hughes is unable to estimate the duration of this reconsideration process. While
no amount has been recorded in the financial statements of Hughes to reflect the
$114 million award or the interest accumulating thereon, a resolution of this
matter could result in a gain that would be material to the earnings of GM
attributable to Class H common stock.
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 June 30, 1997. After discussion with counsel,
it is the opinion of management that such liability is not expected to have a
material adverse effect on the Corporation's consolidated operations or
financial position.
Note 9. Common Stock Repurchases
During the first six months of 1997, GM used $2 billion to acquire 35.5
million shares of $1-2/3 par value common stock, completing 80 percent of the
Corporation's $2.5 billion stock repurchase program announced in January 1997.
GM also used approximately $300 million to repurchase shares of $1-2/3 par value
common stock for certain employee benefit plans during the first six months of
1997. Subsequently, on August 4, 1997, GM announced that it had completed the
$2.5 billion stock repurchase program that began in the first half of 1997 and
announced an additional $2.5 billion stock repurchase program of $1-2/3 par
value common stock to be completed over a 12 month period. The stock repurchases
to be made under the second repurchase program would represent about 5% of the
outstanding shares of $1-2/3 par value common stock based on the New York Stock
Exchange's closing price of $64.44 per share on Friday, August 1, 1997.
- 9 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 10. Earnings Per Share Attributable to Common Stocks
Earnings per share attributable to each class of GM common stock was
determined based on the attribution of earnings to each such class of common
stock for the period divided by the weighted average number of common shares for
each such class outstanding during the period, respectively. Common stock
equivalents were not included in the calculation of earnings per share
attributable to common stocks, as they were not material. In February 1997, the
Financial Accounting Standards Board issued SFAS No. 128, Earnings Per Share,
and SFAS No. 129, Disclosure of Information about Capital Structure. SFAS No.
128 specifies the computation, presentation and disclosure requirements for
earnings per share for entities with publicly-held common stock or potential
common stock. SFAS No. 129 requires an entity to explain the permanent rights
and privileges of outstanding securities. GM has determined that the impact of
adopting these new accounting standards will require it to provide additional
information in its consolidated financial statements concerning basic and
diluted earnings per share. The effects of adopting these new accounting
standards will not be material to GM's consolidated financial statements, when
adopted in the fourth quarter of 1997, as required.
Net earnings attributable to $1-2/3 par value common stock for the period
represent the earnings attributable to all GM common stocks for the period,
reduced by the Available Separate Consolidated Net Income (ASCNI) of Hughes and
EDS (Note 3) for the period.
Net earnings attributable to Class H common stock for the period represent
the ASCNI of Hughes for the period. The ASCNI of Hughes for any quarterly period
represents the separate consolidated net income of Hughes for such period,
excluding the effects of purchase accounting adjustments arising at the time of
the Corporation's acquisition of Hughes, calculated for such period and
multiplied by a fraction, the numerator of which is a number equal to the
weighted average number of shares of Class H common stock outstanding during the
quarter (101 million and 98 million during the second quarters of 1997 and 1996,
respectively) and the denominator of which was 400 million during the second
quarters of 1997 and 1996.
During the time that EDS was an indirect wholly-owned subsidiary of the
Corporation, net earnings attributable to Class E common stock for the period
represented the ASCNI of EDS for such period. The ASCNI of EDS for any quarterly
period represented the separate consolidated net income of EDS for such period,
excluding the effects of purchase accounting adjustments relating to the
Corporation's acquisition of EDS, calculated for each such quarterly period and
multiplied by a fraction, the numerator of which represented the weighted
average number of shares of Class E common stock outstanding during the period
(479 million for the second quarter of 1996) and the denominator of which was
479 million for the second quarter of 1996.
Note 11. Preferred Stock
Redeemable Preferred Stock of Subsidiary
The preferred stock of PAS outstanding at the time of the merger (Note 2) is
included in the accompanying consolidated balance sheet as redeemable preferred
stock of subsidiary. Dividends on such redeemable preferred stock are payable
quarterly in arrears. On or after April 15, 2000, the preferred stock is
redeemable at the option of PAS, in whole or in part from time to time at a
redemption price of 106.375% declining to 100% of liquidation value plus accrued
and unpaid dividends. The redeemable preferred stock is subject to mandatory
redemption in whole on April 15, 2005, at a price equal to the liquidation
preference thereof plus accrued and unpaid dividends. Subject to certain
conditions, PAS will be required to exchange all of the outstanding shares of
redeemable preferred stock into 12 3/4% Senior Subordinated Notes due 2005. PAS
currently expects the redeemable preferred stock to be exchanged for senior
subordinated notes in the second half of 1997.
Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts
During July 1997, the General Motors Capital D Trust ("Series D Trust")
issued $76 million in aggregate stated liquidation amount of its 8.67% Trust
Originated Preferred Securities ("TOPrS") Series D ("Series D Preferred
Securities") in a one-for-one exchange for 3,055,255 of the outstanding GM
Series D 7.92% Depositary Shares, each representing one-fourth of a share of GM
Series D Preference Stock, $0.10 par value per share. In addition, the General
Motors Capital G Trust ("Series G Trust") issued $127 million in aggregate
stated liquidation amount of its 9.87% TOPrS Series G ("Series G Preferred
Securities") in a one-for-one exchange for 5,064,489 of the outstanding GM
Series G 9.12% Depositary Shares, each representing one-fourth of a share of GM
Series G Preference Stock, $0.10 par value per share.
Concurrently with the exchanges and the related purchases by GM from the
Series D and Series G Trusts (the "Trusts") of the common securities of such
Trusts, representing approximately 3 percent of the total assets of such Trusts,
GM issued to the wholly-owned Trusts, as the Trusts' sole assets, its 8.67% and
9.87% Junior Subordinated Deferrable Interest Debentures, Series D and Series G,
due July 1, 2012 (the "Series D Debentures" and "Series G Debentures" or
collectively the "Debentures"), having aggregate principal amounts equal to the
aggregate stated liquidation amounts of the Series D and Series G Preferred
Securities and the related common securities, respectively.
- 10 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Concluded
(Unaudited)
Note 11. Preferred Stock (concluded)
The Series D Debentures are redeemable, in whole or in part, at GM's option
on or after August 1, 1999, at a redemption price equal to 100% of the
outstanding principal of the Series D Debentures plus accrued and unpaid
interest, or, under certain circumstances, prior to August 1, 1999, at a
redemption price equal to 105% of the outstanding principal of the Series D
Debentures from the Series D expiration date through July 31, 1998, declining
ratably on each August 1 thereafter to 100% on August 1, 1999, plus accrued and
unpaid interest.
The Series G Debentures are redeemable, in whole or in part, at GM's option
on or after January 1, 2001, at a redemption price equal to 100% of the
outstanding principal of the Series G Debentures plus accrued and unpaid
interest, or, under certain circumstances, prior to January 1, 2001, at a
redemption price equal to 114% of the outstanding principal of the Series G
Debentures from the Series G expiration date through December 31, 1997,
declining ratably on each January 1 thereafter to 100% on January 1, 2001, plus
accrued and unpaid interest.
GM has guaranteed the payment in full to the holders of the Series D and
Series G Preferred Securities (collectively the "Preferred Securities") of all
distributions and other payments on the Preferred Securities to the extent not
paid by the Trusts only if and to the extent that the Trusts have assets
therefor i.e., GM has made payments of interest or principal on the related
Debentures. These guarantees, when taken together with GM's obligations under
the Debentures and the Indentures relating thereto and the obligations under the
Declaration of Trusts of the Trusts, including the obligations to pay certain
costs and expenses of the Trusts, constitute full and unconditional guarantees
by GM of each Trust's obligations under its Preferred Securities.
* * * * * *
- 11 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial condition and
results of operations (MD&A) should be read in conjunction with the MD&A
included in the General Motors (GM) 1996 Annual Report on Form 10-K (the 1996
Form 10-K), the Hughes Electronics Corporation (Hughes) consolidated financial
statements and MD&A for the period ended December 31, 1996, included as Exhibit
99 to the 1996 Form 10-K, the GMAC Annual Report on Form 10-K for the period
ended December 31, 1996, the Hughes consolidated financial statements and MD&A
for the period ended June 30, 1997, included as Exhibit 99 to this GM 1997
Quarterly Report on Form 10-Q, and the GMAC Quarterly Report on Form 10-Q for
the period ended June 30, 1997, filed with the Securities and Exchange
Commission.
The disaggregated financial results for GM's automotive sectors (GM's North
American Operations (GM-NAO), Delphi Automotive Systems (Delphi) and GM's
International Operations (GMIO)) have been prepared using a management approach,
which is consistent with the basis and manner in which GM management internally
disaggregates financial information for the purposes of assisting in making
internal operating decisions. In this regard, certain common expenses were
allocated among sectors less precisely than would be required for standalone
financial information prepared in accordance with generally accepted accounting
principles (GAAP) and certain expenses (primarily certain U.S. taxes related to
non-U.S. operations) were included in GM's "Other" sector. The financial results
represent the historical information used by management for internal decision
making purposes; therefore, other data prepared to represent the way in which
the business will operate in the future, or data prepared on a GAAP basis, may
be materially different.
GM-NAO Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions)
Net sales and revenues $25,823 $26,929 $50,682 $48,612
------ ------ ------ ------
Pre-tax income 683 1,074 1,810 557
Income taxes 225 387 603 165
Earnings of nonconsolidated affiliates 16 18 31 34
---- ---- ------ ----
Net income $474 $705 $1,238 $426
=== === ===== ===
Net profit margin (1) 1.8% 2.6% 2.4% 0.9%
- --------------------
(1) Net profit margin represents net income as a percentage of net sales and
revenues.
Vehicle Unit Deliveries of Cars and Trucks - GM-NAO
Three Months Ended June 30,
1997 1996
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
(Units in Thousands)
United States
Cars 2,211 712 32.2% 2,424 842 34.7%
Trucks 1,893 540 28.5% 1,863 532 28.5%
----- ----- ----- -----
Total United States 4,104 1,252 30.5% 4,287 1,374 32.0%
Canada and Mexico 524 162 30.9% 422 131 31.2%
------ ------ ------ ------
Total North America 4,628 1,414 30.6% 4,709 1,505 32.0%
===== ===== ===== =====
Wholesale Sales - GM-NAO
Cars 803 888
Trucks 612 638
------ ------
Total 1,415 1,526
===== =====
- 12 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Vehicle Unit Deliveries of Cars and Trucks - GM-NAO (concluded)
Six Months Ended June 30,
1997 1996
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
(Units in Thousands)
United States
Cars 4,238 1,351 31.9% 4,475 1,503 33.6%
Trucks 3,585 1,024 28.6% 3,506 1,023 29.2%
----- ----- ----- -----
Total United States 7,823 2,375 30.4% 7,981 2,526 31.6%
Canada and Mexico 908 283 31.2% 751 234 31.3%
------ ------ ------ ------
Total North America 8,731 2,658 30.4% 8,732 2,760 31.6%
===== ===== ===== =====
Wholesale Sales - GM-NAO
Cars 1,589 1,544
Trucks 1,228 1,148
----- -----
Total 2,817 2,692
===== =====
GM-NAO Financial Review
GM-NAO reported net income of $474 million for the 1997 second quarter
compared with net income of $705 million in the prior year quarter. The decrease
in net income was primarily due to lower production volumes associated with the
current year work stoppages at two assembly plants in Oklahoma City, Oklahoma,
and Pontiac, Michigan, as discussed below, combined with higher retail
incentives ($1,060 per unit in the second quarter of 1997 compared with $695 per
unit in the second quarter of 1996) and increased commercial spending to support
the numerous vehicle launches in progress. Lower material and manufacturing
costs and sales of more profitable vehicles partially offset these increased
costs. Excluding the effect of the current year work stoppages, GM-NAO's
wholesale sales volumes would have been essentially unchanged at approximately
1.5 million units, while net income would have increased by approximately $144
million or more than 20% in the 1997 second quarter compared with the 1996
second quarter. Net income for the six months ended June 30, 1997 totaled $1.2
billion compared with $426 million for the prior year six month period. The
increase in net income for the first six months of 1997 primarily reflected
higher wholesale sales volumes and lower material and manufacturing costs. With
all major industry participants increasing their focus on efficiency and cost
improvements and with the announced increases in capacity by certain
manufacturers, competition in the North American automotive industry will
continue to intensify. In order to maintain and accelerate the positive product,
operating, and earnings momentum it has experienced in recent years, GM-NAO is
currently studying the long-term competitiveness of each of its lines of
business. The findings of this study may result in changes to or the
restructuring of those activities of GM-NAO that are not performing as
effectively as necessary to help meet GM-NAO's objective of increasing market
share, customer satisfaction, and profitability. The study is expected to be
completed in late 1997 or early 1998. Presently, GM-NAO cannot estimate the
impact that the findings of this study may have on its operations and on its and
GM's results of operations.
Local union members in Oklahoma City, Oklahoma, and Pontiac, Michigan, ceased
production at two assembly plants on April 4 and April 22, 1997, respectively,
where new local union agreements had not been completed. The work stoppage at
the Oklahoma City facility ended on May 27, 1997, after GM and representatives
of the local union reached a tentative agreement, that was subsequently ratified
by the members of the local union. A tentative agreement between GM and
representatives of the local union at the Pontiac facility was ratified on July
18, 1997 and production resumed on July 21, 1997. The work stoppages in Oklahoma
City and Pontiac resulted in a loss of 96,000 units of production which had an
aggregate unfavorable after-tax impact of approximately $490 million, or $0.67
per share of $1-2/3 par value common stock, on the 1997 second quarter results.
The above estimated unfavorable after-tax impact represents the combined effects
for GM-NAO ($375 million), Delphi ($85 million), and the Delco Electronics unit
of Hughes ($30 million) and does not take into account the effect of possible
recoveries that may occur through truck production increases that GM is likely
to pursue in future periods. To the extent that future work stoppages disrupt
the production and shipment of vehicles, the resulting deferral or decline in
revenues may have an unfavorable impact on GM's results of operations.
Net sales and revenues for the 1997 second quarter were $25.8 billion, which
represented a decrease of approximately $1.1 billion or 4.1% compared with the
prior year quarter. The decrease in net sales and revenues resulted from lower
wholesale sales volumes primarily due to the current year work stoppages
previously discussed. While sales of new models are gaining strong consumer
acceptance, 1997 second quarter wholesale sales volumes were also somewhat
constrained by restricted availability of certain new models. Net sales and
revenues for the six months ended June 30, 1997 totaled $50.7 billion, which
represented an increase of approximately $2.1 billion or 4.3% compared with the
prior year six month period and was primarily due to a 125,000 increase in
wholesale sales volumes. Wholesale sales volumes for the first six months of
1996 reflected the unfavorable impact of the 17-day work stoppages at the two
component plants in Dayton, Ohio.
Pre-tax income in the second quarter of 1997 decreased by $391 million
compared with the prior year quarter primarily due to lower wholesale sales
volumes and higher retail incentives, partially offset by lower material and
manufacturing costs and sales of more profitable vehicle models. Pre-tax income
for the six months ended June 30, 1997 increased by approximately $1.3 billion
over the prior year period primarily due to increased wholesale sales volumes
and lower material and manufacturing costs.
- 13 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GM-NAO Financial Review (concluded)
GM vehicle deliveries in North America were 1,414,000 units in the 1997
second quarter, which represented a market share of 30.6% compared with 32.0% in
the prior year quarter. The decrease was primarily due to restricted
availability of certain models during the 1997 second quarter and the fact that
vehicle deliveries in the 1996 second quarter included volumes for certain
models that have since been discontinued. GM's North American market share for
the six months ended June 30, 1997 was 30.4% compared with 31.6% in the prior
year period. Although GM's market share was down compared with the second
quarter of 1996, even with the impact of the current year work stoppages, the
second quarter 1997 market share of 30.6% represented an increase over the first
quarter 1997 market share of 30.3%. Increased market penetration is anticipated
in the second half of 1997 with improved inventory of high demand products.
Delphi Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions)
Net sales and revenues $6,778 $7,307 $13,442 $13,496
----- ----- ------ ------
Pre-tax income 468 528 705 649
Income taxes 170 184 242 231
Minority interests 5 (5) 6 (4)
Earnings of nonconsolidated affiliates 7 16 21 20
---- ---- ---- ----
Net income $310 $355 $490 $434
=== === === ===
Net profit margin (1) 4.6% 4.9% 3.6% 3.2%
- --------------------
(1) Net profit margin represents net income as a percentage of net sales and
revenues.
Delphi Financial Review
Delphi reported net income of $310 million for the 1997 second quarter
compared with $355 million in the prior year quarter. The 1997 second quarter
net income decreased primarily due to lower production volume at GM-NAO related
to the current year work stoppages previously discussed. Excluding the $85
million after-tax effect of these work stoppages, Delphi's net income would have
increased by approximately $40 million or 11.3% in the 1997 second quarter
compared with the 1996 second quarter. Net income for the six months ended June
30, 1997 increased to $490 million compared with $434 million for the prior year
six month period. The increase in net income for the first six months of 1997
primarily reflected low 1996 net income due to the unfavorable impact of the
work stoppages in the 1996 first quarter.
Net sales and revenues for the 1997 second quarter were $6.8 billion, a
decrease of $529 million or 7.2% compared with the prior year quarter, due to
the current year work stoppages. Delphi's 1997 second quarter sales to customers
outside the GM-NAO vehicle groups increased more than $170 million compared with
the prior year period and represented approximately 37% of total sales,
including all joint ventures. Net sales and revenues for the six months ended
June 30, 1997 totaled $13.4 billion, compared with $13.5 billion in the prior
year six month period.
Pre-tax income in the second quarter of 1997 decreased by $60 million
compared with the prior year quarter primarily due to the work stoppages,
partially offset by lower material and manufacturing costs. Pre-tax income for
the six months ended June 30, 1997 increased to $705 million from the prior year
amount of $649 million reflecting higher production volume at GM-NAO and lower
material and manufacturing costs.
During the second quarter of 1997, Delphi continued its drive to
strategically grow its operations worldwide through acquisitions, alliances, and
joint ventures in Central and Eastern Europe, Asia, and the United States.
On January 16, 1997, GM and Hughes announced a series of planned transactions
that would include the transfer of Delco Electronics from Hughes to Delphi. See
the Hughes Transactions section on page 22 for additional information.
Delphi, with 63% of its consolidated and non-consolidated operations' sales
to GM-NAO, is GM-NAO's principal supplier of automotive components and systems.
Delphi also supplies 26 other original equipment manufacturers (OEMs) worldwide.
Various factors impact Delphi sales to GM-NAO including production of vehicles
in North America, the level of Delphi-supplied content per GM-NAO vehicle, the
price of such automotive components and systems, and the competitiveness of
Delphi's product offerings. Delphi's strategy is to supplement its existing
strong supplier relationship with GM-NAO with additional OEM relationships
around the world related to the design, development, and production of
automotive components and systems. The global automotive components and systems
market is highly competitive
- 14 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Delphi Financial Review (concluded)
and is presently undergoing significant restructuring and consolidation
activities. As a result, Delphi is reviewing the adequacy of its strategy which
focuses on the competitiveness of its operations, growth opportunities and
increasing market share through technology leadership, quality, cost and
responsiveness. In connection with this ongoing review, Delphi will continue to
study the outlook for some of its major product lines and their capacity to
achieve Delphi's goal of increased growth and profitability. The findings of
this study may result in the modifying, selling or closing of certain lines of
business that are not performing as effectively as necessary to enable Delphi to
meet its strategic plans, while further expanding and growing product lines
which will help to meet corporate objectives. The study is expected to be
completed in late 1997 or early 1998. Presently, Delphi cannot estimate the
impact the findings of this study may have on its existing lines of business and
Delphi's and GM's results of operations.
GMIO Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions)
Net sales and revenues $9,711 $9,101 $17,994 $18,098
----- ----- ------ ------
Pre-tax income 727 629 1,200 1,209
Income taxes 233 209 397 379
Minority interests 7 (3) 10 (6)
Earnings (loss) of nonconsolidated
affiliates (13) 7 (8) 32
---- ---- ----- ----
Net income
GM Europe 312 319 461 604
Other International 176 105 344 252
--- --- --- ---
Total net income $488 $424 $805 $856
=== === === ===
Net profit margin (1) 5.0% 4.7% 4.5% 4.7%
(1) Net profit margin represents net income as a percentage of net sales and
revenues.
Vehicle Unit Deliveries of Cars and Trucks - GMIO
Three Months Ended June 30,
1997 1996
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
(Units in Thousands)
International
Europe 4,769 492 10.3% 4,415 491 11.1%
Latin America, Africa and
the Middle East 1,195 203 17.0% 997 168 16.9%
Asia and Pacific 3,126 134 4.3% 3,273 152 4.6%
----- --- ----- ---
Total International 9,090 829 9.1% 8,685 811 9.3%
===== === ===== ===
Wholesale Sales - GMIO
Cars 634 602
Trucks 202 186
--- ---
Total 836 788
=== ===
- 15 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Vehicle Unit Deliveries of Cars and Trucks - GMIO (concluded)
Six Months Ended June 30,
1997 1996
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
(Units in Thousands)
International
Europe 9,265 958 10.3% 8,912 980 11.0%
Latin America, Africa and
the Middle East 2,208 365 16.5% 1,928 328 17.0%
Asia and Pacific 6,951 294 4.2% 6,873 310 4.5%
----- ---- ----- ----
Total International 18,424 1,617 8.8% 17,713 1,618 9.1%
====== ===== ====== =====
Wholesale Sales - GMIO
Cars 1,188 1,190
Trucks 431 390
------ ------
Total 1,619 1,580
===== =====
GMIO Financial Review
GMIO's 1997 second quarter net income was $488 million or 5.0% of net sales
and revenues compared with $424 million or 4.7% of net sales and revenues in the
prior year quarter. The increase in 1997 second quarter net income was primarily
due to a gain related to the sale of GM Europe's (GME) interest in Avis Europe
and higher sales volumes in Latin America, partially offset by higher sales
incentives and marketing expenses across Europe. Net income for the six months
ended June 30, 1997 totaled $805 million compared with $856 million for the
prior year period. The decrease in net income for the first six months of 1997
was primarily due to lower net income for GME.
Pre-tax income for the 1997 second quarter was $727 million compared with
$629 million in the prior year quarter with the increase primarily due to a gain
on the sale of GME's interest in Avis Europe and higher wholesale sales volumes
in Latin America.
Net sales and revenues for the 1997 second quarter increased by 6.7% to $9.7
billion compared with $9.1 billion in the prior year quarter. The increased net
sales and revenues in the 1997 second quarter mainly reflected higher wholesale
sales volumes in Latin America, partially offset by the impact of translating
foreign currencies against a stronger U.S. dollar. Net sales and revenues for
the six months ended June 30, 1997 totaled $18 billion, which represented a
decrease of approximately $100 million or 0.6% compared with the prior year six
month period.
Net income for GME totaled $312 million in the 1997 second quarter, which
included a $103 million after-tax gain related to the sale of GME's interest in
Avis Europe, compared with $319 million in the prior year quarter. Net income
for GME for the six months ended June 30, 1997 decreased $143 million compared
with the prior year period. The lower net income for the three and six months
ended June 30, 1997 was due primarily to higher sales incentives and marketing
expenses in a highly competitive European market. With the continued excess
industry capacity, most competitors have significantly reduced prices. In
response to this ongoing industry capacity overhang and the more aggressive
pricing environment, GME is currently studying the long-term competitiveness of
each of its operations. The findings of this study may result in changes to or
the realignment of those activities of GME that are not performing as
effectively as necessary to help meet GME's long-term goal of increased
profitability. The study is expected to be completed in late 1997 or early 1998.
Presently, GME cannot estimate the impact that the findings of this study may
have on its operations and on its and GM's results of operations.
Net income from the remainder of GMIO's operations, which include the Latin
American and Asia and Pacific Operations, totaled $176 million in the second
quarter of 1997 compared with $105 million in the prior year quarter. The
increased 1997 second quarter net income resulted from higher wholesale sales
volumes in Latin America, which was partially offset by lower earnings from
nonconsolidated affiliates due to lower sales volumes at Isuzu. Net income from
the remainder of GMIO's operations for the six months ended June 30, 1997,
totaled $344 million compared with $252 million in the prior year period,
primarily reflecting higher wholesale sales volumes in Latin America.
During the second quarter of 1997, two joint ventures in China, Shanghai GM
and Pan Asia Technical Automotive Center (PATAC), held their stone laying and
company formation ceremonies. Shanghai GM and PATAC are 50/50 joint venture
companies between Shanghai Automotive Industry Corporation and GM.
- 16 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
General Motors Acceptance Corporation (GMAC) Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions)
Financing revenue
Retail and lease financing $890 $956 $1,830 $1,913
Operating leases 1,817 1,785 3,619 3,523
Wholesale and term loans 470 384 903 868
------ ---- ------ ----
Total financing revenue 3,177 3,125 6,352 6,304
Interest and discount (1,312) (1,225) (2,578) (2,464)
Depreciation on operating leases (1,154) (1,123) (2,312) (2,274)
----- ----- ----- -----
Net financing revenue 711 777 1,462 1,566
Other income and insurance premiums
earned 915 829 1,847 1,573
------ ---- ----- -----
Net financing revenue and other 1,626 1,606 3,309 3,139
Expenses 1,043 1,045 2,096 2,071
----- ----- ----- -----
Pre-tax income 583 561 1,213 1,068
Income taxes 245 211 503 409
--- --- --- ---
Net income $338 $350 $710 $659
=== === === ===
Net income from financing operations(1) $296 $318 $589 $590
Net income from insurance operations 42 32 121 69
-- --- --- ---
Net income $338 $350 $710 $659
=== === === ===
Return on average equity (2) 16.1% 16.7% 17.0% 15.7%
(1) Includes GMAC Mortgage Group, Inc. (GMACMG).
(2) Return on average equity represents net income as a percentage of average
stockholder's equity outstanding for each month in the period.
- 17 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMAC Financial Review
GMAC's consolidated second quarter net income for 1997 totaled $338 million,
a 3% decrease from the second quarter of 1996. For the same period, a 7% decline
in net income from financing operations was attributed to reduced net financing
margins on automotive financing operations. Net income from insurance operations
during the second quarter of 1997 totaled $42 million, up 33% compared with the
second quarter of 1996. The increase was primarily attributable to improved
claim experience in mechanical service agreements (sometimes referred to as
`extended warranties') and commercial insurance.
During the three months ended June 30, 1997, GMAC financed 24% of new GM
vehicles delivered in the U.S., down from 25.7% during the same period last
year. Penetration for the first six months of 1997 was 25% compared with 25.9%
for the same 1996 period. The 1997 decreases in retail market share were
attributable to a reduction of GM sponsored leasing incentives, a continued
decline in fleet transaction participation and increased competitive market
conditions.
U.S. wholesale inventory financing was provided on 831,000 and 1,672,000 new
GM vehicles during the respective three and six month periods ended June 30,
1997, compared with 961,000 and 1,681,000 during the same 1996 periods. This
financing represented 67.8% and 69.9% of GM's U.S. vehicle sales to dealers
during the first six months of 1997 and 1996, respectively. Wholesale financing
revenue during the second quarter and first six months of 1997 was up from 1996
due to increased earning asset levels.
GMAC's worldwide cost of borrowing for the second quarter and first six
months of 1997 averaged 6.31% and 6.28%, respectively, 15 and 32 basis points
below the comparable prior year levels. Total borrowing costs for U.S.
operations averaged 6.38% and 6.35% for the three and six month periods ended
June 30, 1997, compared with 6.36% and 6.50% for the respective 1996 periods.
The lower average borrowing costs for the first six months of 1997 were
attributable to a greater proportion of floating rate short-term borrowings in
GMAC's funding mix.
The $20 million increase in consolidated net financing revenue and other
income during the second quarter of 1997 over the same period in 1996 was
primarily attributable to higher wholesale receivable balances and mortgage
income partially offset by lower retail receivable revenues and increased debt
expense incurred to fund the higher wholesale balances.
In June 1997, GMAC announced an agreement providing for Integon, a
non-standard automotive insurance provider, to merge with a wholly-owned
subsidiary of GMAC. Subject to obtaining all necessary regulatory approvals and
the approval of Integon shareholders, the transaction is expected to be
completed by year-end 1997 for a cash price of approximately $525 million and
the assumption of approximately $150 million and $100 million of Senior Notes
and Capital Securities, respectively. The merger will enable GMAC to continue
its growth strategy in the financial services industry.
- 18 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Hughes Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions Except Per Share Amounts)
Net sales
Outside customers $2,932 $2,531 $5,698 $4,970
GM and affiliates 1,334 1,502 2,696 2,676
----- ----- ----- -----
Total net sales 4,266 4,033 8,394 7,646
Other income-net 490 18 500 137
----- ------ ----- -----
Total revenues 4,756 4,051 8,894 7,783
Income before income taxes and
minority interests 775 436 1,075 904
Income taxes 275 172 385 364
Minority interests in net losses
of subsidiaries 11 12 26 17
--- --- --- ---
Net income $511 $276 $716 $557
=== === === ===
Earnings used for computation
of available separate
consolidated net income (1) $542 $306 $777 $618
=== === === ===
Net earnings per share attributable
to Class H common stock $1.35 $0.77 $1.94 $1.55
Cash dividends per share of Class H
common stock $0.25 $0.24 $0.50 $0.48
- ----------------
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
(1) Excludes amortization of GM purchase accounting adjustments of $30 million
for the second quarters of 1997 and 1996, and $61 million for the six-month
periods ended June 30, 1997 and 1996, related to GM's acquisition of Hughes
Aircraft Company.
Segment Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions)
Telecommunications and Space
Revenues $1,619 $941 $2,628 $1,874
Net sales $1,138 $950 $2,157 $1,771
Operating profit (1) $40 $57 $47 $131
Operating profit margin (2) 3.5% 6.0% 2.2% 7.4%
Automotive Electronics
Revenues $1,461 $1,554 $2,907 $2,825
Net sales $1,457 $1,540 $2,891 $2,800
Operating profit (1) $134 $236 $280 $396
Operating profit margin (2) 9.2% 15.3% 9.7% 14.1%
Aerospace and Defense Systems
Revenues $1,638 $1,510 $3,284 $3,022
Net sales $1,635 $1,512 $3,280 $3,014
Operating profit (1) $163 $161 $336 $319
Operating profit margin (2) 10.0% 10.7% 10.3% 10.6%
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
(1) Operating profit represents net sales less total costs and expenses
other than interest expense and amortization of purchase accounting
adjustments related to GM's acquisition of Hughes Aircraft Company.
(2) Operating profit margin represents operating profit as a percentage of
net sales.
- 19 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Hughes Financial Review
Hughes Electronics reported net income of $511 million for the second quarter
of 1997 compared with $276 million for the second quarter of 1996. Excluding
amortization of purchase accounting adjustments related to GM's acquisition of
Hughes Aircraft Company, Hughes' earnings used for computation of available
separate consolidated net income was $542 million for the second quarter of 1997
compared with $306 million for the same period in 1996. The 1997 second quarter
included the $318 million after-tax gain ($0.80 per share of Class H common
stock) recognized in connection with the PanAmSat Corporation (PAS) merger.
Excluding the one-time gain, earnings for the second quarter of 1997 decreased
26.8% from the $306 million reported in the same period in 1996, and earnings
per share of Class H common stock decreased $0.22 from $0.77 per share in the
second quarter of 1996. The declines were principally due to lower operating
margins at Delco Electronics as a result of reduced GM production volumes
related to work stoppages at two key GM assembly plants, and continued price
reductions.
Second quarter revenues (excluding the $490 million pre-tax gain recognized
in connection with the PAS merger) increased 17.4% between 1996 and 1997, due to
revenue increases in both the Telecommunications and Space and Aerospace and
Defense Systems segments which more than offset the decline in revenues in
Automotive Electronics due to the work stoppages. On the same basis, the
increase in revenues in the Telecommunications and Space segment was due to
continued expansion of the DIRECTV subscriber base in the United States and
Latin America, partially offset by lower sales of wireless telecommunications
equipment particularly related to the BellSouth Cellular Corp. contract. The
8.5% increase in revenues in the Aerospace and Defense Systems segment was
principally due to additional revenues resulting from the build-up of newer
programs, particularly information systems and services programs such as Desktop
V, Wide Area Augmentation System, and Hughes Air Warfare Center, and the
acquisition in March 1997 of the Marine Systems Group of Alliant Techsystems,
Inc. The 6.0% decrease in revenues for the Automotive Electronics segment was
principally due to a 6.9% decrease in GM vehicles produced in the United States
and Canada (excluding joint ventures) and a 2.2% decline in Delco-supplied
electronic content, partially offset by a 10.8% increase in international and
non GM-NAO sales.
Operating profit, excluding amortization of purchase accounting adjustments
related to GM's acquisition of Hughes Aircraft Company, declined 24.7% between
the second quarter of 1996 and the second quarter of 1997. The operating profit
margin on the same basis was 8.0% for the second quarter of 1997 compared with
11.2% for the same period in 1996. These reductions were primarily a result of
the lower margins in the Automotive Electronics segment driven by decreased
production volumes and price reductions resulting from competitive pricing in
connection with GM's global sourcing initiative. Also contributing to the
declines were lower wireless telecommunications equipment sales and margins, and
start-up operating losses from the Company's Latin American DIRECTV subsidiary,
Galaxy Latin America, within the Telecommunications and Space segment.
On January 16, 1997, GM and Hughes announced a series of planned transactions
designed to address strategic challenges and unlock stockholder value in the
three Hughes business segments. See the Hughes Transactions section on page 22
for additional information regarding the planned transactions.
- 20 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
To facilitate analysis, the following sections present the financial
statements for the Corporation's manufacturing, wholesale marketing, defense,
and electronics operations with the financing and insurance operations
(primarily GMAC) reflected on an equity basis. This is the same basis and format
used in years prior to the Corporation's adoption of SFAS No. 94, Consolidation
of All Majority-Owned Subsidiaries.
Consolidated Statements of Income With Financing and Insurance Operations on
an Equity Basis (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in Millions)
Net sales and revenues $39,741 $40,182 $77,198 $74,854
------ ------ ------ ------
Costs and expenses
Cost of sales and other operating charges,
exclusive of items listed below 32,998 33,127 64,022 63,251
Selling, general, and administrative
expenses 3,290 2,955 6,174 5,403
Depreciation and amortization expenses 1,918 1,849 3,797 3,637
Plant closing expense - - 80 -
------ ------ ------ -------
Total costs and expenses 38,206 37,931 74,073 72,291
------ ------ ------ ------
Operating income 1,535 2,251 3,125 2,563
Other income less income deductions 1,330 583 2,069 1,152
Interest expense (219) (229) (438) (425)
------ ------ ------ ------
Income from continuing operations
before income taxes, minority
interests, and earnings
of nonconsolidated affiliates 2,646 2,605 4,756 3,290
Income taxes 909 886 1,639 1,120
------ ------ ----- -----
Income from continuing operations before
minority interests and earnings of
nonconsolidated affiliates 1,737 1,719 3,117 2,170
Minority interests 18 (8) 37 (10)
Earnings of nonconsolidated affiliates 343 385 740 736
------ ------ ------ ------
Income from continuing operations 2,098 2,096 3,894 2,896
Income (loss) from discontinued
operations - (209) - 10
------ ----- ------ ------
Net income $2,098 $1,887 $3,894 $2,906
===== ===== ===== =====
Net profit margin (1) 5.3% 4.7% 5.0% 3.9%
(1) Net profit margin represents net income as a percentage of net sales and
revenues.
Results of Operations With Financing and Insurance Operations on an Equity
Basis
In the second quarter of 1997, GM's income from continuing operations totaled
$2.1 billion or $2.68 per share of $1-2/3 par value common stock. GM's 1997
second quarter income from continuing operations included a $490 million
after-tax unfavorable impact from the current year work stoppages previously
discussed. GM's income from continuing operations for the six months ended June
30, 1997 was $3.9 billion, or $4.98 per share of $1-2/3 par value common stock,
compared with $2.9 billion or $3.58 per share of $1-2/3 par value common stock,
for the first six months ended June 30, 1996.
Highlights of financial performance by GM's major business sectors for the
three months and six months ended June 30 were as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
GM-NAO $474 $705 $1,238 $426
Delphi 310 355 490 434
GMIO 488 424 805 856
GMAC 338 350 710 659
Hughes 542 306 777 618
Other (54) (44) (126) (97)
---- ----- ----- -----
Income from continuing
operations $2,098 $2,096 $3,894 $2,896
===== ===== ===== =====
- 21-
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Results of Operations With Financing and Insurance Operations on an Equity
Basis (concluded)
Reference should be made to the GM sectors' financial reviews that are
presented on pages 12 through 20 and incorporated by reference to supplement the
information presented herein.
Second quarter 1997 net sales and revenues were $39.7 billion, which
represented a decrease of $441 million compared with the prior year quarter. The
decrease in net sales and revenues was primarily due to lower wholesale sales
volumes in North America due to the current year work stoppages. Net sales and
revenues for the six months ended June 30, 1997 were $77.2 billion compared with
$74.9 billion for the first six months of 1996, reflecting higher wholesales
sales volumes. Wholesale sales volumes for the first six months of 1996 reflect
the unfavorable impact of the 17-day work stoppages at two component plants in
Dayton, Ohio.
The gross margin percentage for the 1997 second quarter was 17.0% compared
with 17.6% in the prior year quarter. The gross margin percentage for the six
months ended June 30, 1997 was 17.1%, compared with 15.5% for the first six
months of 1996. The decrease in the second quarter 1997 gross margin primarily
resulted from the decrease in wholesale sales volumes and higher sales
incentives in North America, partially offset by lower material and
manufacturing costs.
Selling, general, and administrative expenses increased to $3.3 billion in
the second quarter of 1997 compared with $3 billion in the prior year quarter
and to $6.2 billion for the six months ended June 30, 1997 compared with $5.4
billion in the prior year period. The increases for the 1997 three and six month
periods primarily reflected higher consumer influence spending associated with
the launches of new vehicles and increased expenses related to continued efforts
to grow the business in all of GM's business sectors. Depreciation and
amortization expenses increased in the second quarter of 1997 and for the six
months ended June 30, 1997 compared with the prior year periods, in connection
with expenditures for expansion initiatives and production and quality
improvements worldwide.
Other income less income deductions increased to $1.3 billion for the 1997
second quarter compared with $583 million in the prior year quarter primarily
due to a $490 million pre-tax gain ($318 million after-tax or $0.33 per share of
$1-2/3 par value common stock and $0.80 per share of Class H common stock)
related to the merger of the satellite service operations of Hughes and PAS and
a $128 million pre-tax gain ($103 million after-tax or $0.14 per share of $1-2/3
par value common stock) related to the sale of GME's equity interest in Avis
Europe. Other income less income deductions for the six months ended June 30,
1997 was $2.1 billion compared with $1.2 billion for the first six months of
1996 primarily due to the previously discussed gains related to the PAS merger
and the sale of GME's equity interest in Avis Europe, combined with favorable
settlements of legal claims and higher interest income.
GM completed the split-off of Electronic Data Systems Corporation (EDS) on
June 7, 1996, and accordingly, the financial results of EDS for the three and
six months ended June 30, 1996 have been reported as discontinued operations.
GM's 1996 second quarter net income, which included a loss from discontinued
operations of $209 million, totaled $1.9 billion or $2.63 per share of $1-2/3
par value common stock.
Hughes Transactions
On January 16, 1997, GM and Hughes announced a series of planned transactions
designed to address strategic challenges and unlock stockholder value in the
three Hughes business segments. The transactions would include the tax-free
spin-off of the Hughes defense business to holders of $1-2/3 par value and Class
H common stocks, followed immediately by the tax-free merger of that business
with Raytheon Company. The spin-off will not be proposed in a manner that would
result in the recapitalization of Class H common stock into $1-2/3 par value
common stock at a 120% exchange ratio, as currently provided for under certain
circumstances in the GM Restated Certificate of Incorporation, as amended. At
the same time, Delco Electronics, the automotive electronics subsidiary of
Hughes, would be transferred from Hughes to Delphi. Finally, Class H common
stock would be recapitalized into a GM tracking stock linked to the
telecommunications and space business of Hughes.
The distribution of the Hughes defense business to holders of $1-2/3 par value
common stock and Class H common stock would be recorded at fair value with a
gain of approximately $3.9 billion to $4.5 billion recognized and reported as
"other income" in GM's consolidated financial statements. On July 14, 1997, GM
received a ruling from the Internal Revenue Service that it's contemplated
spin-off of the Hughes defense business would be tax-free to GM and its
stockholders. The planned transactions must be approved by holders of $1-2/3 par
value and Class H common stocks, among a number of other conditions. In
addition, the merger of the Hughes defense business and Raytheon is subject to
antitrust clearance and approval by Raytheon stockholders. No assurance can be
given that the above transactions will be completed. GM expects to solicit
stockholders' approval of the planned transactions during the fourth quarter of
1997, after certain conditions are satisfied.
- 22 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets With Financing and Insurance Operations on an
Equity Basis
(Unaudited)
June 30, Dec. 31, June 30,
1997 1996 1996
(Dollars in Millions)
ASSETS
Cash and cash equivalents $10,855 $13,320 $11,501
Other marketable securities 4,062 3,642 1,538
------- ------- -------
Total cash and marketable securities 14,917 16,962 13,039
Accounts and notes receivable (less
allowances)
Trade 5,887 4,909 5,846
Nonconsolidated affiliates 1,478 927 2,413
Inventories (less allowances) 13,528 11,898 11,755
Contracts in process (less advances
and progress payments) 2,264 2,187 2,440
Equipment on operating leases (less
accumulated depreciation) 4,047 3,918 3,747
Deferred income taxes and other 3,161 3,140 5,412
------- ------- -------
Total current assets 45,282 43,941 44,652
Equity in net assets of nonconsolidated
affiliates 10,061 9,855 9,761
Deferred income taxes 19,692 20,075 17,981
Other investments and miscellaneous
assets 13,586 11,712 12,225
Property - net 37,211 37,156 35,200
Intangible assets -net 14,864 12,523 10,116
-------- -------- --------
Total assets $140,696 $135,262 $129,935
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $11,235 $11,527 $10,559
Loans payable 1,281 1,214 1,155
Accrued liabilities and customer deposits 31,431 29,822 29,011
------ ------ ------
Total current liabilities 43,947 42,563 40,725
Long-term debt 5,967 5,192 5,264
Capitalized leases 188 198 175
Postretirement benefits other than
pensions 41,393 40,578 39,791
Pensions 5,822 5,966 5,349
Other liabilities and deferred
income taxes 16,385 15,650 15,959
Deferred credits 1,845 1,605 1,649
-------- -------- --------
Total liabilities 115,547 111,752 108,912
------- ------- -------
Minority interests 716 92 163
Redeemable preferred stock of subsidiary 402 - -
Stockholders' equity 24,031 23,418 20,860
-------- -------- --------
Total liabilities and stockholders'
equity $140,696 $135,262 $129,935
======= ======= =======
Liquidity and Capital Resources With Financing and Insurance Operations on an
Equity Basis
GM's cash and marketable securities totaled $14.9 billion at June 30, 1997,
compared with $17 billion at December 31, 1996 and $13 billion at June 30, 1996.
The decrease in cash and marketable securities from December 31, 1996 to June
30, 1997 was primarily due to approximately $2 billion in cash used to acquire
35.5 million shares of $1-2/3 par value common stock under the stock repurchase
program announced in January 1997. Subsequently, on August 4, 1997, GM announced
that it had completed the $2.5 billion stock repurchase program that began in
the first half of 1997 and announced an additional $2.5 billion stock repurchase
program of $1-2/3 par value common stock to be completed over a 12 month period.
The stock repurchases to be made under the second repurchase program would
represent about 5% of the outstanding shares of $1-2/3 par value common stock
based on the New York Stock Exchange's closing price of $64.44 per share on
Friday, August 1, 1997. The increase in cash and marketable securities from June
30, 1996 to June 30, 1997 was due primarily to higher cash levels generated from
continuing operations for the period.
During the second quarter of 1997, loans payable and long-term debt increased
by over $800 million to $7.2 billion at June 30, 1997 from balances of $6.4
billion at December 31, 1996 and June 30, 1996, respectively. The increases were
primarily due to an increase of more than $600 million in long-term debt assumed
in the PAS merger previously discussed and other funding used for worldwide
growth initiatives. Net liquidity, calculated as cash and marketable securities
less the total of loans payable, long-term debt and capitalized leases was $7.5
billion at June 30, 1997, compared with $10.4 billion at December 31, 1996 and
$6.4 billion at June 30, 1996.
Book value per share of $1-2/3 par value common stock increased to $29.99 at
June 30, 1997, from $27.95 at December 31, 1996 and $24.79 at June 30, 1996.
Book value per share of Class H common stock increased to $14.99 at June 30,
1997, from $13.97 at December 31, 1996 and $12.40 at June 30, 1996.
- 23 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Liquidity and Capital Resources for GMAC
At June 30, 1997, GMAC owned assets and serviced automotive receivables
totaling $111.7 billion, $3.6 billion above year-end 1996, and $4.8 billion
above June 30, 1996. Earning assets totaled $100.9 billion at June 30, 1997,
compared with $95.7 billion and $93.3 billion at December 31 and June 30, 1996,
respectively. The increase over year-end 1996 was primarily attributable to
higher outstanding balances for wholesale receivables. Year-to-year increases in
asset levels were attributed to growth of operating leases and greater wholesale
and real estate mortgage balances.
As of June 30, 1997, GMAC's total borrowings were $82.5 billion, an increase
of $3.8 billion and $8.1 billion from December 31, 1996 and June 30, 1996,
respectively. The higher borrowings outstanding were used to fund increased
earning asset levels. GMAC's ratio of debt to total stockholder's equity at June
30, 1997 was 9.7:1, compared with 9.5:1 at December 31, 1996 and 8.9:1 at June
30, 1996. Continuing to utilize its asset securitization program, GMAC sold
additional retail finance receivables totaling $1.5 billion (net) during the
second quarter of 1997.
GMAC and its subsidiaries maintain substantial bank lines of credit which
totaled $40.2 billion at June 30, 1997, compared with $40.7 billion at year-end
1996 and $40.4 billion at June 30, 1996. The unused portion of these credit
lines totaled $31.5 billion at June 30, 1997, $900 million and $100 million
higher than December 31 and June 30, 1996, respectively.
Condensed Consolidated Statements of Cash Flows With Financing and Insurance
Operations on an Equity Basis (Unaudited)
Six Months Ended
June 30,
1997 1996
(Dollars in Millions)
Net cash provided by operating activities $7,582 $6,048
----- -----
Cash flows from investing activities
Expenditures for property (4,070) (4,176)
Investments in companies, net of cash acquired (1,652) (54)
Investments in other marketable securities
- acquisitions (7,963) (5,261)
Investments in other marketable securities
- liquidations 7,543 4,917
Operating leases - acquisitions (2,610) (2,065)
Operating leases - liquidations 1,667 2,826
Special inter-company payment from EDS - 500
Other (29) 202
------ ------
Net cash used in investing activities (7,114) (3,111)
----- -----
Cash flows from financing activities
Net increase (decrease) in loans payable 66 (1,034)
Increase in long-term debt 195 1,898
Decrease in long-term debt (37) (760)
Proceeds from issuing common stocks 281 191
Repurchases of common stocks (2,292) -
Cash dividends paid to stockholders (829) (837)
Proceeds from sale of minority interest in DIRECTV - 138
------ -----
Net cash used in financing activities (2,616) (404)
----- ----
Effect of exchange rate changes on cash and cash
equivalents (317) (182)
Net cash (used in) provided by continuing operations (2,465) 2,351
Net cash provided by discontinued operations - 103
Net (decrease) increase in cash and cash equivalents (2,465) 2,454
Cash and cash equivalents at beginning of the period 13,320 9,047
Cash and cash equivalents at end of the period $10,855 $11,501
Cash Flows With Financing and Insurance Operations on an Equity Basis
Net cash provided by operating activities was approximately $7.6 billion for
the six months ended June 30, 1997, compared with net cash provided by operating
activities of over $6 billion in the prior year period. The increase was
primarily the result of an increase in cash generated from higher income from
continuing operations.
- 24 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Cash Flows With Financing and Insurance Operations on an Equity Basis
(concluded)
Net cash used in investing activities amounted to $7.1 billion for the six
months ended June 30, 1997 compared with $3.1 billion in the prior year period.
The increase in net cash used in investing activities during the 1997 period was
primarily due to approximately $1.5 billion of cash consideration used to
consummate the merger of the satellite service operations of Hughes and PAS (see
Note 2 to the GM consolidated financial statements), combined with a $1.7
billion net increase in cash used for operating leases.
Net cash used in financing activities totaled $2.6 billion for the six months
ended June 30, 1997, compared with $404 million for the prior year period. The
increase was primarily due to the use of $2 billion during the first half of
1997 to acquire 35.5 million shares of $1-2/3 par value common stock, completing
80 percent of the Corporation's $2.5 billion stock repurchase program announced
in January 1997. GM also used approximately $300 million to repurchase shares of
$1-2/3 par value common stock for certain employee benefit plans.
A second quarter cash dividend on $1-2/3 par value common stock of $0.50 per
share was paid on June 10, 1997. This dividend declaration raises cash dividends
in the first six months of 1997 to $1.00 per share compared with $0.80 per share
in the same 1996 period. A second quarter cash dividend on Class H common stock
of $0.25 per share was paid on June 10, 1997. This continues the level
established in the first quarter of 1997 and raises cash dividends in the first
six months of 1997 to $0.50 per share compared with $0.48 per share in the same
1996 period. On August 4, 1997, the GM Board of Directors declared a cash
dividend for the third quarter of 1997 on $1-2/3 par value and Class H common
stocks of $0.50 and $0.25, respectively, payable September 10, 1997.
Cash Flows for GMAC
Cash provided by operating activities during the six months ended June 30,
1997 totaled $3.2 billion, a decrease from the $3.9 billion provided during the
comparable 1996 period. The decrease was attributed mainly to increased net
purchases of both mortgage loans and mortgage trading securities, offset
primarily by increases in payables to GM for vehicle shipments to dealers under
GMAC wholesale finance agreements.
Cash used for investing activities during the first six months of 1997
totaled $7.2 billion, compared with $3.6 billion during the same period in 1996.
The period-to-period increase was primarily attributable to lower sale of
receivable proceeds resulting from decreased asset securitization activity.
During the first six months of 1997, cash provided by financing activities
totaled $4 billion, compared with approximately $900 million of cash used by
financing activities during the first six months of 1996. The $4.9 billion
change was primarily attributable to increased proceeds from the issuance of
short term debt used to fund increases in wholesale receivable balances.
Security Ratings
On April 24, 1997, Standard and Poor's Ratings Services, a division of
McGraw-Hill Companies, Inc. (S&P), affirmed its security ratings of GM, GMAC,
and various overseas affiliates of GMAC. S&P also revised the ratings outlook
from stable to positive based on GM's generation of very strong overall earnings
and cash flows over the past three years, which S&P indicated reflects the
effectiveness of restructuring measures at GM's North American automotive
operations.
In addition, S&P affirmed its security ratings of Hughes and indicated that
the security ratings outlook for Hughes remains developing.
On June 18, 1997, Fitch Investors Services (Fitch) upgraded GM's senior debt
rating to A from A- and its preference shares rating to A- from BBB+. In
addition, GM's Capital Trust D and Capital Trust G Trust Originated Preferred
Securities (TOPrS) were rated A- (see Note 11 to the GM consolidated financial
statements) .
Fitch also upgraded GMAC's outstanding senior debt rating to A from A- and
all of its commercial paper ratings were affirmed at F-1. The senior debt
ratings of certain GMAC affiliates, which included GMAC Australia (Finance)
Limited, GMAC of Canada Limited, and GMAC International Finance B.V., were
upgraded to A from A-, while commercial paper and other short-term obligations
ratings of other GMAC affiliates, which included GMAC Nederland N.V. and GMAC
(U.K.) Finance plc., were affirmed at F-1.
Fitch's A and A- ratings are the sixth and seventh highest within the 10
investment grade ratings available from Fitch for long-term debt, with such debt
considered to be investment grade and of high credit quality based on the
obligor's strong ability to pay interest and repay principal. The debt may be
more vulnerable to adverse changes in economic conditions and circumstances than
debt with higher ratings.
Fitch's A- and BBB+ ratings are the seventh and eighth highest within the 10
investment grade ratings available from Fitch for preferred or preference
stocks. Preferred or preference stocks in the "A" category are of good quality
with asset protection and coverages of related dividends considered adequate and
expected to be maintained, while preferred or preference stocks in the "BBB"
category are considered to be reasonably safe but lack the protection of the "A"
to "AAA" categories.
Fitch's F-1 rating for commercial paper and other short-term obligations is
the second highest of four investment grade ratings available from Fitch and is
assigned to short-term issues that possess a very strong credit quality based
primarily on the existence of liquidity necessary to meet the obligation in a
timely manner.
The outlook, which indicates the likely direction of the rating, was revised
by Fitch to stable from improving for both GM and GMAC.
- 25-
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Employment and Payrolls
1997 1996
Worldwide Employment at June 30, (in thousands)
GM-NAO 243 256
Delphi 176 179
GMIO 114 109
GMAC 18 17
Hughes 88 84
Other 10 11
--- ----
Employees associated with continuing operations 649 656
=== ===
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Worldwide payrolls - continuing operations
(in billions) $7,631 $7,432 $15,364 $14,972
===== ===== ====== ======
New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income,
and SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. SFAS No. 130
requires that an entity classify items of other comprehensive income by their
nature in that financial statement. In addition, the accumulated balance of
other comprehensive income must be displayed separately from retained earnings
and additional paid-in capital in the equity section of the statement of
financial position. Reclassification of financial statements for earlier
periods, provided for comparative purposes, is required. SFAS No. 131
establishes standards for reporting information about operating segments in
annual financial statements and requires selected information about operating
segments in interim financial reports issued to stockholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. SFAS No. 131
requires reporting segment profit or loss, certain specific revenue and expense
items and segment assets. It also requires reconciliations of total segment
revenues, total segment profit or loss, total segment assets, and other amounts
disclosed for segments to corresponding amounts reported in the financial
statements. Restatement of comparative information for earlier periods presented
is required in the initial year of application. Interim information is not
required until the second year of application, at which time comparative
information is required. GM will adopt SFAS No. 130 and No. 131 on January 1,
1998, as required.
* * * * * *
- 26-
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS
(a) 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 June 30, 1997 or subsequent thereto, but before the
filing of this report are summarized below.
Environmental Matters
On May 16, 1997, GM reached a tentative settlement of a claim by the State of
North Dakota that GM had disposed of hazardous waste in a non-hazardous waste
landfill in North Dakota. The state alleged that 99 drums of an aluminum
grinding waste that were disposed of by GM's Powertrain Group Bay City facility
over several years exceeded the hazardous waste regulatory threshold for lead,
and, therefore, had been improperly disposed of in the non-hazardous landfill.
GM's internal assessment determined that the aluminum grinding waste had been
part of a much larger ferrous metal grinding waste stream which had been tested
and shown to be non-hazardous and that other aluminum grinding waste streams at
the facility had been tested and also been shown to be non-hazardous. When the
aluminum grinding waste was segregated from the ferrous metal grinding waste,
the facility, relying on a permissible method called "generator knowledge",
considered the waste to be non-hazardous and it was accepted as such by the
landfill. As part of the settlement, GM will undertake a good faith effort to
remove the drums of aluminum grinding waste and to make a voluntary contribution
of $120,000 to the state's Environmental Quality Restoration Fund.
* * *
As previously reported, several actions seeking compensatory and punitive
damages in unspecified amounts were filed against Hughes by plaintiffs alleging
that they suffered injuries as a result of the migration into the Tucson,
Arizona water supply of alleged toxic substances that were disposed of at a
facility owned by the United States Government which Hughes operates under a
contract with the U.S. Air Force. These actions included a putative class action
filed in Arizona State Court, Cordova v. Hughes Aircraft Company, an individual
action filed on behalf of approximately 800 plaintiffs in Federal District Court
in Arizona, Yslava v. Hughes Aircraft Company, and a class action filed in
Federal District Court in Arizona, Lanier v. Hughes Aircraft Company. Other
governmental and private entities are known to have also been sources of
substances which may have migrated into the Tucson water supply. Hughes believes
that it has strong defenses to the claims asserted against it and that it may
have claims for contribution against the other entities. In July, 1996, the
Cordova court denied plaintiff's motion for class certification and,
subsequently, an amended complaint in intervention on behalf of more than 400
plaintiffs asserting individual claims was filed.
The facts alleged in these cases are similar to the facts alleged in the
previously reported action entitled Valenzuela v. Hughes Aircraft Company. As
previously reported, the Valenzuela action was settled pursuant to an agreement
under which Hughes' principal insurers provided $70.7 million and Hughes
provided $13.8 million. At the time of such settlement, Hughes and its insurers
were litigating in the United States District Court in Arizona their respective
ultimate liability to one another for the amounts paid in connection with the
Valenzuela claims. This litigation, entitled Smith, et al. v. Hughes Aircraft
Company and related cases, was commenced in 1988 by various insurers seeking a
declaratory judgment that the Valenzuela claims are not covered under the terms
of the insurance policies issued to Hughes. These and other insurers have taken
a similar position with respect to the more recently filed actions and are also
litigating that position against Hughes regarding insurance coverage for the
Valenzuela claims in the Arizona and California federal and state courts. In
September, 1991, the Smith court entered summary judgment in favor of Hughes'
insurers who issued policies from 1971 to 1985, based upon "pollution
exclusions" contained in those policies. In November, 1993, the Ninth Circuit
affirmed in substantial part this particular ruling. Further proceedings
continue in the District Court.
The contract under which Hughes has operated the Air Force facility contains
provisions under which indemnification from the Air Force may be provided for
certain liabilities which Hughes may incur in connection with its operation of
the facility to the extent such liabilities are not covered by insurance. Hughes
intends to prosecute all appropriate claims it may have for insurance coverage
and, if necessary, to pursue all appropriate claims for indemnification or
contribution relating to the actions described above.
* * *
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GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Other Matters
With respect to the previously reported matter in which a jury in California
State Court awarded two former Hughes employees, Lane and Villalpando, a total
of $89.5 million in damages against Hughes based principally on allegations of
racial discrimination and retaliation, which award, as also previously reported,
had been reduced by the Court of Appeal to $17.33 million, the California
Supreme Court on March 19, 1997 granted Hughes' request for a review of the
$17.33 million judgment, and ordered the Court of Appeal to vacate its decision
and reconsider the case. On March 27, 1997 the Court of Appeal issued such an
order and requested supplemental briefs. On July 28, 1997 the Court of Appeal
reissued essentially the same opinion and award. Hughes' petition for
reconsideration is pending and, if necessary, it will request review by the
California Supreme Court.
* * *
Hughes has maintained a suit against the U.S. Government since September 1973
regarding the Government's infringement and use of a Hughes patent (the
"Williams Patent") covering "Velocity Control and Orientation of a Spin
Stabilized Body," principally satellites. On June 17, 1994, the U.S. Court of
Claims awarded Hughes damages of $114 million. Because Hughes believed that the
record supported a higher royalty rate, it appealed that decision. The U.S.
Government, contending that the award was too high, also appealed. On June 19,
1996, the Court of Appeals for the Federal Circuit (CAFC) affirmed the decision
of the Court of Claims which awarded Hughes $114 million in damages, together
with interest. The U.S. Government petitioned the CAFC for a rehearing. That
petition was denied in October 1996. The U.S. Government then filed a petition
with the U.S. Supreme Court seeking certiorari. On April 21, 1997 the U.S.
Supreme Court, citing a recent decision it had rendered in Warner-Jenkinson v.
Hilton Davis, remanded Hughes' suit over the Williams Patent back to the CAFC in
order to have the CAFC determine whether the ruling in the Williams case was
consistent with the U.S. Supreme Court's decision in the Warner-Jenkinson case.
The previous liability decision of the Court of Claims in the Williams Patent
matter, and its $114 million damage award to Hughes, currently remain in effect
pending reconsideration of the case by the CAFC. Hughes is unable to estimate
the duration of this reconsideration process. While no amount has been recorded
in the financial statements of Hughes to reflect the $114 million award or the
interest accumulating thereon, a resolution of this matter could result in a
gain that would be material to the earnings of GM attributable to Class H common
stock.
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 June 30, 1997. After discussion with counsel,
it is the opinion of management that such liability is not expected to have a
material adverse effect on the Corporation's consolidated operations or
financial position.
* * *
With respect to three previously reported class actions filed against General
Motors, as well as a number of other vehicle and parts manufacturers and
dealers, claiming that the front seat air bags installed in 1993 to 1997 model
vehicles are defective: Eloisa Rodriquez, et al. v. General Motors Corporation,
Ford Motor Company, Chrysler Corporation, Volvo of North America, Inc.,
Armadillo Motor Company, Inc. and Wickstrom Chevrolet Co., Inc., filed on April
11, 1997, in the District Court of Maverick County, Texas; Ellen Smith, et al.
v. General Motors Corporation, Ford Motor Corporation, Chrysler Corporation,
Sylacauga Auto Plex, et al., filed on April 25, 1997, in Circuit Court of Coosa
County, Alabama; and Frederick Lewis, et al. v. Volvo of North America, Inc.,
General Motors Corporation, Ford Motor Corporation, Chrysler Corporation, and
Spinato Chrysler Plymouth, Inc. dba Bergeron Volvo filed in Civil District Court
for the Parish of Orleans, Louisiana, the Alabama matter has been remanded to
state court. GM intends to vigorously defend these actions.
* * *
With respect to the previously reported matter In Re General Motors Anti-Lock
Brake Products Liability Litigation, plaintiffs filed a consolidated complaint
which GM successfully moved to dismiss. The court granted dismissal on June 11,
1997, without leave to amend. Plaintiffs are seeking reconsideration and are
expected to appeal if they are not successful.
* * *
(b) Previously reported legal proceedings which have been terminated, either
during the quarter ended June 30, 1997, or subsequent thereto, but before the
filing of this report are summarized below:
Environmental Matters
With regard to the previously reported Civil Administrative Complaint, In the
Matter of: General Motors Corporation, U.S. EPA Docket NO. RUST 002-93, issued
by EPA against the Corporation alleging that 65 petroleum and hazardous
substance underground storage tanks (USTs) operated at its Technical Center in
Warren, Michigan, have been in violation of certain EPA UST regulations, GM and
EPA entered into a Consent Agreement and Final Order on June 27, 1997, resolving
all EPA claims pertaining to the matter. The Consent Agreement and Final Order
requires GM to pay a civil penalty of $58,000.
* * *
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GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Environmental Matters (concluded)
With regard to the previously reported notice given by the Wayne County
Department of Health Air Pollution Division ("Wayne County") in November of
1996, to General Motors that Wayne County was seeking fines in excess of
$100,000 in connection with alleged intermittent emissions of offensive odors
since 1993 at GM's Oil Reclamation Facility at Clark Street in Detroit,
Michigan, GM and Wayne County have resolved the matter with GM's agreement to
pay $99,000 to Wayne County and donate $50,000 to three local schools. GM has
also decided to close the oil reclamation facility.
* * * * * *
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The annual meeting of stockholders of the Registrant was held on
May 23, 1997.
At that meeting, the following matters were submitted to a vote of the
stockholders of General Motors Corporation:
1997 General Motors Annual Meeting
Final Voting Results
(All classes of common stock)
Proposal Voting Results
Votes* Percent**
Item No. 1
Nomination and Election of Directors
The Judges subscribed and delivered a certificate reporting that the
following nominees for directors had received the number of votes* set opposite
their respective names.
Anne L. Armstrong For 579,268,355 98.6%
Withheld 8,070,167 1.4
Percy N. Barnevik For 579,581,429 98.7
Withheld 7,757,094 1.3
John H. Bryan For 579,585,425 98.7
Withheld 7,753,098 1.3
Thomas E. Everhart For 579,448,463 98.7
Withheld 7,890,059 1.3
Charles T. Fisher, III For 579,503,112 98.7
Withheld 7,835,410 1.3
George M. C. Fisher For 579,615,820 98.7
Withheld 7,722,703 1.3
J. Willard Marriott, Jr. For 579,492,184 98.7
Withheld 7,846,339 1.3
Ann D. McLaughlin For 577,145,659 98.3
Withheld 10,192,864 1.7
Harry J. Pearce For 579,596,955 98.7
Withheld 7,741,568 1.3
Eckhard Pfeiffer For 579,595,574 98.7
Withheld 7,742,948 1.3
John G. Smale For 579,413,865 98.7
Withheld 7,924,657 1.3
John F. Smith, Jr. For 579,493,833 98.7
Withheld 7,844,689 1.3
Louis W. Sullivan For 579,246,115 98.6
Withheld 8,092,407 1.4
Dennis Weatherstone For 579,547,572 98.7
Withheld 7,790,951 1.3
Thomas H. Wyman For 579,424,155 98.7
Withheld 7,914,367 1.3
Item No. 2
A proposal of the Board of For 582,169,751 99.1%
Directors that the stockholders Against 2,465,960 0.4
ratify the selection of Abstain 2,702,811 0.5
Deloitte & Touche LLP as
independent public accountants
for the year 1997.
Item No. 3
A proposal of the Board of For 466,747,447 92.4%
Directors that the stockholders Against 31,983,852 6.3
ratify the approval of the Abstain 6,352,263 1.3
Non-Employee Director Long-Term
Stock Incentive Plan.
- 29 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - Concluded
Proposal Voting Results
Votes* Percent**
Item No. 4
A proposal of the Board of For 449,163,964 89.0%
Directors that the stockholders Against 49,586,470 9.8
ratify to approve the incentive Abstain 6,191,111 1.2
program consisting of the
1997 Annual Incentive Plan, the 1997
Stock Incentive Plan, and the 1997
Performance Achievement Plan.
Item No. 5
A stockholder proposal to limit For 21,790,160 4.3%
the number of years future Against 473,736,648 93.8
outside Directors serve. Abstain 9,421,320 1.9
Item No. 6
A proposal by stockholders that For 138,371,961 27.4%
the Board of Directors provide Against 358,946,216 71.1
for cumulative voting in the Abstain 7,621,860 1.5
election of directors.
Item No. 7
A stockholder proposal to For 34,724,542 6.9%
re-start separate chief executive Against 459,112,730 91.1
and independent board chairman Abstain 9,911,924 2.0
positions.
Item No. 8
A stockholder proposal to For 32,751,863 6.5%
require 90% of directors be Against 463,332,897 91.8
independent. Abstain 8,854,727 1.7
Item No. 9
A stockholder proposal regarding For 27,460,081 5.4%
stock options for directors. Against 466,997,267 92.5
Abstain 10,479,741 2.1
* Numbers represent the aggregate voting power of all votes cast with holders
of $1-2/3 par value common stock casting one vote per share and holders of
Class H common stock casting one-half of a vote per share.
** Percentages represent the aggregate voting power of both classes of GM common
stock cast for each item.
* * * * * *
- 30 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS (Including Those Incorporated by Reference).
Exhibit
Number Exhibit Name Page No.
2(a) Agreement and Plan of Merger by and between
HE Holdings, Inc. and Raytheon Company dated
as of January 16, 1997, filed as Exhibit 2(a) to
the Current Report on Form 8-K of General Motors
Corporation dated January 16, 1997 N/A
2(b) Implementation Agreement by and between General
Motors Corporation and Raytheon Company dated as
of January 16, 1997, filed as Exhibit 2(b) to
the Current Report on Form 8-K of General Motors
Corporation dated January 16, 1997 N/A
2(c) Form of Agreement and Plan of Merger by and between
General Motors Corporation and _____________ Corporation
(included as Exhibit A to the Implementation
Agreement attached as Exhibit 2(b) to the Current
Report on Form 8-K dated January 16, 1997), filed as
Exhibit 2(c) to the Current Report on
Form 8-K of General Motors Corporation dated
January 16, 1997 N/A
2(d)* List of Omitted Schedules and Other Attachments,
filed as Exhibit 2(d) to the Current Report on Form 8-K
of General Motors Corporation dated January 16, 1997 N/A
3(ii)** By-Laws of General Motors Corporation as amended to
August 4, 1997 33
4(e)(i) Amended and Restated Declaration of Trust of General
Motors Capital Trust D, incorporated by reference to
Exhibit 4(c)(i) to the Current Report on Form 8-K
of General Motors Corporation dated July 1, 1997 N/A
4(e)(ii) Amended and Restated Declaration of Trust of General
Motors Capital Trust G, incorporated by reference to
Exhibit 4(c)(ii) to the Current Report on Form 8-K
of General Motors Corporation dated July 1, 1997 N/A
4(f)(i) Indenture between General Motors Corporation and
Wilmington Trust Company, incorporated by reference
to Exhibit 4(d)(i) to the Current Report on Form 8-K
of General Motors Corporation dated July 1, 1997 N/A
4(f)(ii) First Supplemental Indenture between General Motors
Corporation and Wilmington Trust Company With Respect
To The Series D Junior Subordinated Debentures,
incorporated by reference to Exhibit 4(d)(ii) to the
Current Report on Form 8-K of General Motors Corporation
dated July 1, 1997 N/A
4(f)(iii) Second Supplemental Indenture between General Motors
Corporation and Wilmington Trust Company With Respect
To The Series G Junior Subordinated Debentures,
incorporated by reference to Exhibit 4(d)(iii) to
the Current Report on Form 8-K of General Motors
Corporation dated July 1, 1997 N/A
4(g)(i) Series D Preferred Securities Guarantee Agreement,
General Motors Capital Trust D, incorporated by
reference to Exhibit 4(g)(i) to the Current Report on
Form 8-K of General Motors Corporation dated July 1, 1997 N/A
4(g)(ii) Series G Preferred Securities Guarantee Agreement,
General Motors Capital Trust G, incorporated by reference
to Exhibit 4(g)(ii) to the Current Report on
Form 8-K of General Motors Corporation dated July 1, 1997 N/A
11 Computation of Earnings Per Share Attributable to
Common Stocks for the Three and Six Month Periods
Ended June 30, 1997 and 1996 62
- 31 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (concluded)
12 Computation of Ratios of Earnings to Fixed Charges
for the Six Month Periods Ended June 30, 1997 and 1996 66
99 Hughes Electronics Corporation and Subsidiaries
Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and
Results of Operations 67
27 Financial Data Schedule (for SEC information only)
* The registrant hereby undertakes to furnish supplementally a copy of any
omitted schedule or other attachment to the Securities and Exchange
Commission upon request.
** Amendment to Section 1.1 of Article I to revise the date of the annual
meeting of stockholders.
(b) REPORTS ON FORM 8-K.
Three reports on Form 8-K, dated April 14, 1997, May 23, 1997, and May 27,
1997, were filed during the quarter ended June 30, 1997 reporting matters under
Item 5, Other Events, and Item 7, Financial Statements, Pro Forma Financial
Information, and Exhibits.
* * * * * *
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)
Date August 14, 1997 /s/Peter R. Bible
- -------------------- --------------------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 32-