1
EXHIBIT 99
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME
(UNAUDITED)
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE
AMOUNTS)
Revenues
Net sales
Outside customers................................ $2,531.2 $2,346.1 $4,970.1 $4,508.7
General Motors and affiliates.................... 1,501.4 1,362.4 2,676.1 2,766.6
Other income -- net (Note 2)........................ 29.9 15.1 153.0 27.1
-------- -------- -------- --------
Total Revenues................................. 4,062.5 3,723.6 7,799.2 7,302.4
-------- -------- -------- --------
Costs and Expenses
Cost of sales and other operating charges, exclusive
of items listed below............................ 3,094.6 2,829.8 5,891.1 5,606.8
Selling, general, and administrative expenses....... 358.0 300.2 658.3 548.7
Depreciation and amortization....................... 129.6 125.3 261.2 241.0
Amortization of GM purchase accounting adjustments
related to Hughes Aircraft Company (Note 3)...... 30.6 30.9 61.2 61.9
Interest expense -- net............................. 1.4 1.1 6.6 4.4
-------- -------- -------- --------
Total Costs and Expenses......................... 3,614.2 3,287.3 6,878.4 6,462.8
-------- -------- -------- --------
Income before Income Taxes............................ 448.3 436.3 920.8 839.6
Income taxes.......................................... 172.3 178.8 363.7 344.2
-------- -------- -------- --------
Net Income............................................ 276.0 257.5 557.1 495.4
Adjustments to exclude the effect of GM purchase
accounting adjustments related to Hughes Aircraft
Company
(Note 3)............................................ 30.6 30.9 61.2 61.9
-------- -------- -------- --------
Earnings Used for Computation of Available Separate
Consolidated Net Income............................. $ 306.6 $ 288.4 $ 618.3 $ 557.3
======== ======== ======== ========
Available Separate Consolidated Net Income (Note 3)
Average number of shares of GM Class H Common Stock
outstanding (in millions) (Numerator)............ 98.2 95.4 97.8 94.8
Class H dividend base (in millions) (Denominator)... 399.9 399.9 399.9 399.9
Available Separate Consolidated Net Income.......... $ 75.2 $ 68.8 $ 151.2 $ 132.1
======== ======== ======== ========
Net earnings attributable to General Motors Class
H Common Stock on a per share basis (Note 3)... $0.77 $0.72 $1.55 $1.39
======== ======== ======== ========
Reference should be made to the Notes to Consolidated Financial Statements.
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNT)
ASSETS
Current Assets
Cash and cash equivalents....................................... $ 1,000.1 $ 1,139.5
Accounts and notes receivable
Trade receivables (less allowances).......................... 1,259.7 1,235.6
General Motors and affiliates................................ 129.5 146.7
Contracts in process, less advances and progress payments....... 2,754.0 2,469.2
Inventories (less allowances)
Productive material, work in process, and supplies........... 1,327.6 1,060.4
Finished product............................................. 155.6 165.1
Prepaid expenses, including deferred income taxes............... 592.7 594.3
--------- ----------
Total Current Assets....................................... 7,219.2 6,810.8
Property-Net...................................................... 2,813.6 2,739.2
Telecommunications and Other Equipment-Net........................ 1,078.1 1,175.1
Intangible Assets, net of amortization............................ 3,532.3 3,573.7
Investments and Other Assets, including deferred income taxes --
principally at cost (less allowances)........................... 1,638.8 1,675.6
--------- ----------
Total Assets...................................................... $16,282.0 $ 15,974.4
========= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable
Outside...................................................... $ 872.0 $ 748.7
General Motors and affiliates................................ 39.3 52.2
Advances on contracts........................................... 925.9 893.7
Notes and loans payable......................................... 270.9 432.5
Income taxes payable............................................ 128.0 190.8
Accrued liabilities............................................. 1,987.4 1,990.9
--------- ----------
Total Current Liabilities.................................. 4,223.5 4,308.8
--------- ----------
Long-Term Debt and Capitalized Leases............................. 107.6 258.8
--------- ----------
Postretirement Benefits Other Than Pensions (Note 4).............. 1,638.3 1,610.6
--------- ----------
Other Liabilities, Deferred Income Taxes, and Deferred Credits.... 1,417.9 1,270.5
--------- ----------
Stockholder's Equity
Capital stock (outstanding, 1,000 shares, $0.10 par value) and
additional paid-in capital................................... 6,344.8 6,338.1
Net income retained for use in the business..................... 2,689.0 2,323.9
--------- ----------
Subtotal................................................... 9,033.8 8,662.0
Minimum pension liability adjustment............................ (108.6) (108.6)
Accumulated foreign currency translation adjustments............ (30.5) (27.7)
--------- ----------
Total Stockholder's Equity................................. 8,894.7 8,525.7
--------- ----------
Total Liabilities and Stockholder's Equity........................ $16,282.0 $ 15,974.4
========= ==========
Reference should be made to the Notes to Consolidated Financial Statements.
45
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------
1996 1995
-------- --------
(DOLLARS IN
MILLIONS)
Net Cash Provided by Operating Activities................................ $ 357.6 $ 461.3
-------- --------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired.......................... (28.7) (154.6)
Expenditures for property and special tools............................ (293.9) (225.6)
Increase in telecommunications and other equipment..................... (91.2) (43.4)
Proceeds from sale and leaseback of satellite transponders with General
Motors Acceptance Corporation....................................... 252.0 --
Proceeds from disposal of property..................................... 31.4 37.6
Proceeds from sale of investments and businesses....................... -- 17.5
Decrease (increase) in notes receivable................................ 0.7 (24.7)
-------- --------
Net Cash Used in Investing Activities.................................. (129.7) (393.2)
-------- --------
Cash Flows from Financing Activities
Net decrease in notes and loans payable................................ (311.6) (65.7)
Increase in long-term debt............................................. 15.3 11.1
Decrease in long-term debt............................................. (16.5) (10.2)
Proceeds from sale of minority interest in subsidiary.................. 137.5 --
Cash dividends paid to General Motors.................................. (192.0) (184.0)
-------- --------
Net Cash Used in Financing Activities.................................. (367.3) (248.8)
-------- --------
Net decrease in cash and cash equivalents................................ (139.4) (180.7)
Cash and cash equivalents at beginning of the period..................... 1,139.5 1,501.8
-------- --------
Cash and cash equivalents at end of the period........................... $1,000.1 $1,321.1
======== ========
Reference should be made to the Notes to Consolidated Financial Statements.
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. 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 General Motors' 1995 Annual
Report on Form 10-K, as amended.
NOTE 2.
Other income -- net for the six months ended June 30, 1996 includes a
$120.3 million pre-tax gain from the sale of a 2.5% equity interest in
DIRECTV(R) to AT&T.
NOTE 3.
Earnings attributable to General Motors Class H common stock on a per share
basis have been determined based on the relative amounts available for the
payment of dividends to holders of the GM Class H common stock. Holders of GM
Class H common stock have no direct rights in the equity or assets of Hughes,
but rather have rights in the equity and assets of GM (which includes 100% of
the stock of Hughes). Dividends on the GM Class H common stock are declared by
GM's Board of Directors out of the Available Separate Consolidated Net Income of
Hughes earned since the acquisition of Hughes Aircraft Company by GM. The
Available Separate Consolidated Net Income of Hughes is determined quarterly and
is equal to the separate consolidated net income of Hughes, excluding the
effects of GM purchase accounting adjustments arising from the acquisition of
Hughes Aircraft Company (Earnings Used for Computation of Available Separate
Consolidated Net Income), multiplied by a fraction, the numerator of which is a
number equal to the weighted average number of shares of GM Class H common stock
outstanding during the period and the denominator of which was 399.9 million
during the second quarters of 1996 and 1995.
The denominator used to determine the Available Separate Consolidated Net
Income of Hughes is adjusted as deemed appropriate by the GM Board of Directors
to reflect subdivisions or combinations of the GM Class H common stock and to
reflect certain transfers of capital to or from Hughes. The GM Board's
discretion to make such adjustments is limited by criteria set forth in GM's
Restated Certificate of Incorporation. In this regard, the GM Board has
generally caused the denominator to decrease as shares are purchased by Hughes,
and to increase as such shares are used, at Hughes expense, for Hughes employee
benefit plans or acquisitions.
Dividends may be paid on GM Class H common stock only when, as, and if
declared by the GM Board of Directors in its sole discretion. The current policy
of the GM Board with respect to GM Class H common stock is to pay quarterly cash
dividends at an annual rate approximately equal to 35% of the Available Separate
Consolidated Net Income of Hughes for the prior year.
NOTE 4.
Hughes has disclosed in the financial statements certain amounts associated
with estimated future postretirement benefits other than pensions and
characterized such amounts as "accumulated postretirement benefit obligations",
"liabilities", or "obligations". Notwithstanding the recording of such amounts
and the use of these terms, Hughes does not admit or otherwise acknowledge that
such amounts or existing postretirement benefit plans of Hughes (other than
pensions) represent legally enforceable liabilities of Hughes.
47
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED
(UNAUDITED)
NOTE 5.
As previously reported, 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
affirmed the decision of the Court of Claims which awarded Hughes $114 million
in damages, together with interest. The time period to appeal has not yet
expired and accordingly the decision is not yet final. Hughes is unable to
estimate the duration of any such possible appeals. In the opinion of management
of Hughes, there is a reasonable possibility that this matter could be resolved
in the near term. While no amount has been recorded in the financial statements
of Hughes to reflect the $114 million award, a resolution of this matter could
result in a gain that would be material to the earnings of General Motors
attributable to Class H common stock.
* * * * * *
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion excludes the purchase accounting adjustments
related to General Motors' acquisition of Hughes Aircraft Company (see
Supplemental Data beginning on page 51).
RESULTS OF OPERATIONS
Hughes reported 1996 second quarter earnings, before the effects of
purchase accounting adjustments related to General Motors' acquisition of Hughes
Aircraft Company, of $306.6 million, a 6.3% increase from the $288.4 million
reported in the second quarter of 1995. Earnings per share of GM Class H common
stock increased 6.9% to $0.77 per share from $0.72 per share in the second
quarter of 1995.
For the first six months of 1996, net income increased 10.9% to $618.3
million compared with $557.3 million reported in the same period in 1995.
Earnings per share increased 11.5% to $1.55 from $1.39 per share in the first
six months of 1995.
Revenues for the second quarter of 1996 were $4,062.5 million, a 9.1%
increase from the $3,723.6 million reported in the second quarter of 1995.
Revenues for the first six months of 1996 increased to $7,799.2 million, a 6.8%
increase from the $7,302.4 million reported in the first half of 1995. Costs and
expenses as a percentage of revenues increased slightly to 88.2% from 87.5% in
the second quarter of 1995. For the six months ended June 30, 1996, costs and
expenses as a percentage of revenues decreased slightly to 87.4% from 87.7% in
the comparable 1995 period. Income taxes were $172.3 million, or 36.0% of income
before income taxes, for the quarter compared with $178.8 million, or 38.3% of
income before income taxes, in the comparable quarter of 1995. For the first six
months of 1996, income taxes were $363.7 million, or 37.0% of income before
income taxes, compared with $344.2 million, or 38.2% of income before income
taxes, in the comparable 1995 period.
Operating profit was $450.4 million for the second quarter, essentially
unchanged from the operating profit of $453.2 million reported during the
comparable period in 1995. The operating profit margin on the same basis was
11.2% for the quarter compared with 12.2% in the second quarter of 1995.
Operating profit for the first six months of 1996 was $835.6 million, a 4.9%
decrease from the $878.8 million in the same period last year. The operating
profit margin on the same basis for the first six months of 1996 was 10.9%
compared with 12.1% in the prior year's period.
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Second quarter revenue growth was attributable to increases at each of
Hughes' three business segments, particularly Telecommunications and Space where
revenues were propelled by higher commercial satellite manufacturing sales,
continued DIRECTV(R) subscriber growth and increased sales of cellular
communications equipment. Additionally, the 1995 acquisition of Magnavox
Electronic Systems Company (Magnavox) in the Aerospace and Defense Systems
segment and international and domestic sales growth in the Automotive
Electronics segment contributed to the increase in revenues. The improved
earnings were primarily a result of the higher satellite manufacturing and
cellular communications equipment sales and a decrease in the effective tax rate
resulting from the favorable resolution of certain tax contingencies. These
earnings increases more than offset the impact of lower operating profit margins
in the Automotive Electronics and Aerospace and Defense Systems segments. The
lower operating profit margin in the Automotive Electronics segment was
primarily due to price reductions resulting from competitive pricing in
connection with GM's global sourcing initiative and continued investment in
international expansion. The lower operating profit margin in the Aerospace and
Defense Systems segment was attributable to a continued shift from production
programs to engineering and development programs, and growth in information
systems and services revenues.
The increase in revenues for the six months ended June 30, 1996, when
compared with the comparable period in 1995, was primarily the result of
increased Telecommunications and Space segment revenues driven by DIRECTV
subscriber growth, a gain recognized in the first quarter of 1996 from the sale
of a 2.5% equity interest in DIRECTV to AT&T, and higher sales of commercial
satellites and Galaxy satellite transponders. Aerospace and Defense Systems
segment revenues were also higher in the first six months of 1996 principally
due to the 1995 acquisitions of CAE-Link and Magnavox. These increases more than
offset the reduced revenues in the Automotive Electronics segment resulting from
lower first quarter GM production volumes related to a 17-day strike at two GM
component plants. The Automotive Electronics segment accounted for the majority
of the decline in operating profit and operating profit margin primarily due to
the aforementioned GM strike and continued price reductions. The earnings
improvement was primarily due to the gain recognized from the sale of 2.5% of
DIRECTV to AT&T and a decrease in the effective tax rate which more than offset
the reduced operating profit.
The Automotive Electronics segment reported revenues for the quarter of
$1,554.0 million, an increase of 4.7% from revenues of $1,484.8 million for the
same period in 1995. The increase reflects a 1.8% increase in GM vehicles
produced in the United States and Canada (excluding joint ventures) and a 3.0%
increase in Hughes-supplied electronic content in these vehicles(from $870 per
vehicle to $896 per vehicle). In addition, international and non-GM sales were
$259 million, a 19.9% increase from the $216 million reported in last year's
second quarter. Operating profit decreased 5.0% in the second quarter to $236.4
million from $248.8 million for the comparable period in 1995. The decline was
primarily due to price reductions resulting from competitive pricing in
connection with GM's global sourcing initiative and the impact from continued
investment in international expansion. These factors were partially offset by
increased production volumes and electronic content, and continued cost
reduction efforts. As a result, second quarter operating profit margin declined
to 15.3% from 17.0% in 1995.
As the principal supplier of automotive electronics to General Motors'
North American Operations unit, Hughes' sales of automotive electronics will
continue to be heavily dependent on General Motors production of vehicles in
North America, the level of Hughes-supplied electronic content per vehicle, and
the price of such electronics. In addition, the global market for such products
is highly competitive. In response to this competitive environment, the
segment's strategy is to continue efforts to increase non-GM NAO sales, make
strategic acquisitions and forge international alliances, reduce costs
aggressively each year, and increase electronic functionality through a focus on
safety, security, communications, and convenience. In order to achieve certain
of these strategic objectives, the segment will seek to improve its systems
capability both internally and by developing key design, manufacturing and
marketing alliances and other relationships with mechanical and electrical
automotive component suppliers.
The Telecommunications and Space segment revenues for the quarter were
$951.9 million, an increase of 27.4% over revenues of $747.4 million reported in
the prior year's second quarter. The growth was principally
49
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
due to increased commercial satellite manufacturing and cellular communications
equipment sales as well as continued DIRECTV subscriber growth, which were
partially offset by reduced Galaxy(R) satellite transponder sales. Operating
profit in the second quarter increased 24.2% to $57.0 million compared with
$45.9 million reported in the same period in 1995. This increase was primarily
the result of the higher satellite manufacturing and cellular communications
equipment sales, in part offset by reduced Galaxy satellite transponder sales
and increased DIRECTV marketing expenses. Second quarter operating profit margin
of 6.0% was comparable to the 6.1% reported in 1995.
The global telecommunications industry is experiencing a period of rapid
growth and change providing industry participants with many opportunities for
strategic growth as well as vigorous competition. The Telecommunications and
Space segment intends to continue to expand its offerings from being primarily a
supplier of hardware to becoming a provider of hardware and video, voice, and
data services worldwide. This strategy requires significant current and future
investment in order to maintain and enhance the segment's competitive position
with respect to existing products and to take advantage of the growth
opportunities presented, as well as the formation of strategic alliances to
compete in the very competitive global marketplace.
The Aerospace and Defense Systems segment second quarter 1996 revenues were
$1,510.4 million, a 5.4% increase over revenues of $1,432.5 million reported in
the same period in 1995. The growth was principally due to additional revenues
resulting from the December 1995 acquisition of Magnavox. Operating profit for
the period declined 1.3% to $161.4 million compared with $163.6 million for the
second quarter of 1995. The operating profit margin in the period declined to
10.7% from 11.5% in the second quarter of 1995 primarily due to a continued
shift from production programs to engineering and development programs, and
growth in information systems and services revenues.
The continuing consolidation of businesses in the defense industry is
resulting in increased competitive pressures for the Aerospace and Defense
Systems segment that could impact future operating results. In response to this
environment, the Hughes strategy is to strengthen its leadership positions
through acquisitions, consolidations, realignments, and divestitures, strive to
be the low-cost provider, use technology to capture market share, expand
international sales, and broaden its customer base.
Statements made concerning the ongoing financial performance, strategies
and possible future actions which Hughes intends to pursue to achieve the
strategic objectives for each of its three principal business segments
constitute forward-looking information. The implementation of these strategies
and of such future actions and the achievement of such financial performance are
each subject to numerous conditions, uncertainties and risk factors, and,
accordingly, no assurance can be given that Hughes will be able to successfully
accomplish its strategic objectives or achieve such financial performance. The
principal important risk factors which could cause actual performance and future
actions to differ materially from the forward-looking statements made herein
include economic conditions, product demand and market acceptance, government
action, competition, technological risk and interruptions to production
attributable to causes outside Hughes' control.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 1996 were $1,000.1 million, a
decrease of $139.4 million from the $1,139.5 million reported at December 31,
1995. Net cash provided by operating activities for the six months ended June
30, 1996 of $357.6 million was more than offset by cash used in investing and
financing activities. Net cash used in investing activities was primarily
attributable to capital expenditures of $293.9 million and an increase in
telecommunications and other equipment of $91.2 million, offset by proceeds from
the sale and leaseback of satellite transponders with General Motors Acceptance
Corporation of $252.0 million. Net cash used in financing activities included
the repayment of a $302.7 million note payable related to the 1995
50
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
acquisition of Magnavox and cash dividends paid to General Motors of $192.0
million, partially offset by cash proceeds from the sale of a minority interest
in DIRECTV of $137.5 million.
As a measure of liquidity, Hughes' current ratio (ratio of current assets
to current liabilities) increased to 1.71 at June 30, 1996 from 1.58 at December
31, 1995. Working capital increased to $2,995.7 million at June 30, 1996 from
$2,502.0 million at December 31, 1995.
Capital expenditures, including expenditures for telecommunications and
other equipment, were $397.8 million through June 30, 1996, compared with $308.4
million for the comparable period in 1995.
Notes and loans payable decreased from $432.5 million at December 31, 1995
to $270.9 million at June 30, 1996. The decrease is primarily due to the
repayment of the $302.7 million note payable related to the 1995 acquisition of
Magnavox, offset in part by the reclassification of $150.0 million of debt from
non-current to current. This reclassification of debt also caused long-term debt
and capitalized leases to decrease from $258.8 million at December 31, 1995 to
$107.6 million at June 30, 1996. The ratio of long-term debt to the total of
such debt and proforma stockholder's equity improved to 1.7% at June 30, 1996
from 4.4% at December 31, 1995.
SUPPLEMENTAL DATA
The Consolidated Financial Statements reflect the application of purchase
accounting adjustments as described in Note 3 to the Consolidated Financial
Statements. However, as provided in GM's Certificate of Incorporation, the
earnings attributable to GM Class H common stock for purposes of determining the
amount available for the payment of dividends on GM Class H common stock
specifically excludes such adjustments. More specifically, amortization of these
intangible assets associated with GM's purchase of Hughes Aircraft Company
amounted to $30.6 million and $30.9 million for the second quarters of 1996 and
1995, respectively. Such amounts were excluded from the earnings available for
the payment of dividends on GM Class H common stock and were charged against the
earnings available for the payment of dividends on GM's $1 2/3 par value stock.
Unamortized purchase accounting adjustments associated with GM's purchase of
Hughes Aircraft Company were $2,784.6 million at June 30, 1996 and $2,845.8
million at December 31, 1995.
In order to provide additional analytical data to the users of Hughes'
financial information, supplemental data in the form of unaudited summary pro
forma financial data are provided. Consistent with the basis on which earnings
of Hughes available for the payment of dividends on the GM Class H common stock
is determined, the pro forma data exclude purchase accounting adjustments
related to General Motors' acquisition of Hughes Aircraft Company. Included in
the supplemental data are certain financial ratios which provide measures of
financial returns excluding the impact of purchase accounting adjustments. The
pro forma data are not presented as a measure of GM's total return on its
investment in Hughes.
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUMMARY PRO FORMA FINANCIAL DATA*
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
Total Revenues........................................ $4,062.5 $3,723.6 $7,799.2 $7,302.4
Total Costs and Expenses.............................. 3,583.6 3,256.4 6,817.2 6,400.9
-------- -------- -------- --------
Income before Income Taxes............................ 478.9 467.2 982.0 901.5
Income taxes.......................................... 172.3 178.8 363.7 344.2
-------- -------- -------- --------
Earnings Used for Computation of Available Separate
Consolidated Net Income............................. $ 306.6 $ 288.4 $ 618.3 $ 557.3
======== ======== ======== ========
Earnings Attributable to General Motors Class H Common
Stock on a Per Share Basis.......................... $0.77 $0.72 $1.55 $1.39
======== ======== ======== ========
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
--------- ------------
(DOLLARS IN MILLIONS)
ASSETS
Total Current Assets................................................ $ 7,219.2 $ 6,810.8
Property -- Net..................................................... 2,813.6 2,739.2
Telecommunications and Other Equipment -- Net....................... 1,078.1 1,175.1
Intangible Assets, Investments, and Other Assets -- Net............. 2,386.5 2,403.5
--------- ----------
Total Assets........................................................ $13,497.4 $ 13,128.6
========= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Total Current Liabilities........................................... $ 4,223.5 $ 4,308.8
Long-Term Debt and Capitalized Leases............................... 107.6 258.8
Postretirement Benefits Other Than Pensions, Other Liabilities, and
Deferred Credits.................................................. 3,056.2 2,881.1
Total Stockholder's Equity**........................................ 6,110.1 5,679.9
--------- ----------
Total Liabilities and Stockholder's Equity**........................ $13,497.4 $ 13,128.6
========= ==========
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
** General Motors' equity in its wholly-owned subsidiary, Hughes. Holders of GM
Class H common stock have no direct rights in the equity or assets of Hughes,
but rather have rights in the equity and assets of GM (which includes 100% of
the stock of Hughes).
52
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUMMARY PRO FORMA FINANCIAL DATA* -- CONTINUED
PRO FORMA SELECTED SEGMENT DATA
(UNAUDITED)
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS)
AUTOMOTIVE ELECTRONICS
Revenues
Amount.......................................... $1,554.0 $1,484.8 $2,825.8 $2,981.0
As a percentage of Hughes Revenues.............. 38.3% 39.9% 36.2% 40.8%
Net Sales......................................... $1,540.2 $1,462.7 $2,800.4 $2,935.4
Operating Profit(1)............................... $ 236.4 $ 248.8 $ 395.7 $ 504.2
Operating Profit Margin(2)........................ 15.3% 17.0% 14.1% 17.2%
Depreciation and Amortization..................... $ 50.5 $ 43.5 $ 99.3 $ 86.3
Capital Expenditures.............................. $ 52.1 $ 57.9 $ 102.4 $ 110.8
TELECOMMUNICATIONS AND SPACE
Revenues
Amount.......................................... $ 951.9 $ 747.4 $1,888.3 $1,394.1
As a percentage of Hughes Revenues.............. 23.4% 20.1% 24.2% 19.1%
Net Sales......................................... $ 950.3 $ 751.4 $1,771.3 $1,408.0
Operating Profit(1)............................... $ 57.0 $ 45.9 $ 131.5 $ 77.4
Operating Profit Margin(2)........................ 6.0% 6.1% 7.4% 5.5%
Depreciation and Amortization(3).................. $ 41.7 $ 40.9 $ 87.9 $ 78.1
Capital Expenditures(4)........................... $ 165.3 $ 104.1 $ 235.6 $ 143.4
AEROSPACE AND DEFENSE SYSTEMS
Revenues
Amount.......................................... $1,510.4 $1,432.5 $3,022.8 $2,817.5
As a percentage of Hughes Revenues.............. 37.2% 38.5% 38.8% 38.6%
Net Sales......................................... $1,512.0 $1,426.9 $3,014.2 $2,810.0
Operating Profit(1)............................... $ 161.4 $ 163.6 $ 319.3 $ 317.1
Operating Profit Margin(2)........................ 10.7% 11.5% 10.6% 11.3%
Depreciation and Amortization(3).................. $ 33.3 $ 35.0 $ 66.0 $ 64.5
Capital Expenditures.............................. $ 26.6 $ 30.1 $ 55.1 $ 50.8
CORPORATE AND OTHER
Operating Loss(1)................................. $ (4.4) $ (5.1) $ (10.9) $ (19.9)
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
(1) Net Sales less Total Costs and Expenses other than Interest Expense.
(2) Operating Profit as a percentage of Net Sales.
(3) Excludes amortization arising from purchase accounting adjustments related
to GM's acquisition of Hughes Aircraft Company amounting to $5.3 million in
each of the second quarters and $10.6 million in each of the six-month
periods for the Telecommunications and Space segment; and $25.2 million in
each of the second quarters and $50.4 million in each of the six-month
periods for the Aerospace and Defense Systems segment.
(4) Includes expenditures related to telecommunications and other equipment
amounting to $87.9 million, $73.3 million, $103.9 million, and $82.8
million, respectively.
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HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUMMARY PRO FORMA FINANCIAL DATA* -- CONCLUDED
PRO FORMA SELECTED FINANCIAL DATA
(UNAUDITED)
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Operating profit.................................. $ 450.4 $ 453.2 $ 835.6 $ 878.8
Income before income taxes........................ $ 478.9 $ 467.2 $ 982.0 $ 901.5
Earnings used for computation of available
separate consolidated net income................ $ 306.6 $ 288.4 $ 618.3 $ 557.3
Average number of GM Class H dividend
base shares(1).................................. 399.9 399.9 399.9 399.9
Stockholder's Equity.............................. $6,110.1 $5,348.1 $6,110.1 $5,348.1
Dividends per share of GM Class H common stock.... $ 0.24 $ 0.23 $ 0.48 $ 0.46
Working capital................................... $2,995.7 $2,921.8 $2,995.7 $2,921.8
Operating profit as a percent of net sales........ 11.2% 12.2% 10.9% 12.1%
Pre-tax income as a percent of net sales.......... 11.9% 12.6% 12.8% 12.4%
Net income as a percent of net sales.............. 7.6% 7.8% 8.1% 7.7%
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
(1) Class H dividend base shares is used in calculating earnings attributable to
GM Class H common stock on a per share basis. This is not the same as the
average number of GM Class H shares outstanding, which was 98.2 million for
the second quarter of 1996 and 95.4 million for the second quarter of 1995.
* * * * * * *
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