SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) January 15, 2003
----------------
GENERAL MOTORS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-143 38-0572515
---------------------------- ----------------------- -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
300 Renaissance Center, Detroit, Michigan 48265-3000
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
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- 1 -
ITEM 5. OTHER EVENTS
On January 16, 2003, a news release was issued on the subject of fourth
quarter consolidated earnings for General Motors Corporation (GM). The news
release did not include certain financial statements, related footnotes and
certain other financial information that will be filed with the Securities and
Exchange Commission as part of GM's Annual Report on Form 10-K. The following is
the fourth quarter earnings release for GM, and their subsidiary Hughes
Electronics Corporation's (Hughes) earnings release dated January 15, 2003.
- For 2002, GM earned $1.7 billion, or $3.35 per share
Excluding Hughes and special items, $3.9 billion, or $6.98 per share
- In the fourth quarter, GM earned $1.0 billion, or $1.71 per share
Excluding Hughes, $934 million, or $1.67 per share
- Record revenue, market share gains in three automotive regions, strong
cash generation, and improved cost performance were key highlights in 2002
- GMAC posts eighth straight year of earnings growth
Detroit - General Motors Corp. (NYSE: GM, GMH) today reported record revenues
and significantly improved earnings in both the calendar year and fourth
quarter of 2002.
CALENDAR YEAR 2002
GM earned $1.7 billion on record revenue of $186.8 billion, or $3.35 diluted
earnings per share of GM $1-2/3 par value common stock, compared with $601
million, or $1.77 per share, in 2001.
Excluding special items (see "Highlights") and Hughes, 2002 earnings totaled
$3.9 billion, or $6.98 per share, nearly double the results in 2001 when GM
earned $2.0 billion, or $3.60 per share.
FOURTH QUARTER 2002
Earnings totaled $1.0 billion on record quarterly revenue of $48.7 billion, or
$1.71 per share. That compares with $255 million, or $0.60 per share, in the
prior-year period. There were no special items other than those at Hughes in the
fourth quarter of 2002.
Excluding Hughes and its special items, earnings in the fourth quarter of 2002
totaled $934 million, or $1.67 per share, more than double the $386 million, or
$0.69 per share, earned in the prior-year period.
YEAR IN REVIEW
"Our strategy to leverage GM's size, and fundamentally improve its operating
efficiency continues to pay off," said GM Chairman Jack Smith. "We're a far
leaner, more flexible company, offering cars and trucks that are winners in the
marketplace, which continues to drive our improved earnings."
"GM delivered strong results despite challenging global economic and market
conditions," said GM President and Chief Executive Officer Rick Wagoner. "Strong
launches of well-received products, aggressive marketing, improved quality and
productivity, and continued cost reductions were the primary drivers of our
improved performance. Our performance in 2002 gives us confidence in the
strength of our fundamental operating systems, and is an excellent foundation on
which we can build.
"General Motors Acceptance Corp. (GMAC) achieved its eighth consecutive year of
earnings growth and fourth straight year of record earnings -- truly an
outstanding performance, which was achieved despite considerable challenges in
the capital markets," Wagoner said.
- 2 -
GM's automotive operations generated approximately $8 billion in cash flow, as
total cash generation was about $12 billion in 2002, exceeding the target of $10
billion. "We generated significantly more cash than expected," Wagoner said.
"This was achieved despite the fact that the Hughes transaction, which had been
a major element of our cash-generation plan, could not be completed. And, we
still have a significant store of value in Hughes that we can capitalize on
going forward."
The strong cash performance allowed GM to contribute a total of $4.8 billion to
its U.S. pension plans during the year, including a $2.6 billion cash
contribution in the fourth quarter. In addition, GM made a $1 billion cash
contribution to the long-term Voluntary Employees' Beneficiary Association
(VEBA) Trust in June of 2002. Even with these contributions, net liquidity of
$2.3 billion at year-end 2002 was up $1.3 billion from year-end 2001.
Cash, marketable securities, and assets of the VEBA trust invested in short-term
fixed-income securities totaled $17.3 billion at Dec. 31, 2002, excluding GMAC
and Hughes, up almost $6 billion from the end of 2001.
GM financial results described throughout the remainder of this release exclude
special items unless otherwise noted (see "Highlights").
GM AUTOMOTIVE OPERATIONS
GM's global automotive operations earned $563 million in the fourth quarter of
2002, compared with $66 million in the prior-year period. The increase was
fueled by income growth at GM North America (GMNA) and Asia Pacific, and
moderating losses in Europe and Latin America. For 2002, GMNA earned $3.0
billion, double its 2001 performance.
"For the second year in a row, we increased our market share in three of the
four automotive regions, and we improved the quality of our share with stronger
sales of higher-profit models," Wagoner said.
GM's U.S. market share increased to 28.3 percent for the year, up 0.2 percentage
points from 2001. "We've grown market share in the United States for the second
consecutive year, thanks to strong core products like our full-size pickups, and
mid-size and large SUVs," Wagoner said. "GM set all-time industry records for
truck and SUV sales in 2002, becoming the first manufacturer ever to top 1.2
million SUV sales in a calendar year. We're making these gains because we're
offering cars and trucks that customers really want to buy, and we're targeting
market share gains again in 2003 as we introduce 12 new vehicles in the United
States alone this year."
The pricing environment continued to be challenging, with vehicle prices
continuing to decline in North America. Net price retention was negative 3.2
percent in the fourth quarter of 2002, and negative 2.1 percent for the year.
Higher production volume and significant improvements in structural and material
costs more than offset the continued pricing pressures, leading to more than a
50 percent improvement in GMNA's fourth-quarter net income compared with the
same period in 2001. Year-end dealer inventories were well positioned at
slightly more than a million units.
GM Europe (GME) reported a loss of $129 million in the fourth quarter of 2002,
an improvement from the $240 million loss in the year-ago period. Significant
progress in reducing material and structural costs and increased volume were
partially offset by higher losses at Saab. For 2002, GME had a loss of $549
million, compared with a loss of $767 million in 2001.
"We've made very good progress on the cost side in Europe, and we continue to
focus on revenue growth," Wagoner said. "We've mounted a major product offensive
and expect the new Opel/Vauxhall and Saab models, along with expanded diesel
engine availability, to drive increased sales. We're pleased with the progress
we're making in turning around our Opel/Vauxhall operations, and we are
intensifying our efforts to cut costs and improve sales at Saab."
- 3 -
GM Asia-Pacific (GMAP) reported a profit of $66 million in the fourth quarter of
2002 compared with earnings of $25 million a year ago, led by continued strong
performance at GM's Australia-based Holden and Shanghai GM in China. The
earnings also reflect better-than-expected results from GM's equity alliances.
The fourth-quarter-2002 results included GM's share of start-up related losses
at GM Daewoo Auto & Technology Co., which totaled approximately $50 million. For
2002, GMAP earned $188 million, compared with $77 million in 2001.
"We are very pleased with our steady sales and earnings progress in Asia,"
Wagoner said. "Holden continues to perform very well, and Shanghai GM is
aggressively and profitably expanding its capacity and model lineup in China."
GM Latin America/Africa/Mid-East (GMLAAM) reported a loss of $7 million in the
fourth quarter of 2002, a significant improvement versus its loss of $111
million in the year-ago quarter. Results there were negatively affected by the
general economic downturn in the region and turmoil in Venezuela and Argentina.
For 2002, GMLAAM had a loss of $181 million, compared with a loss of $80 million
in 2001.
"Responding to the challenging economic conditions, we continued to reduce our
costs and grew market share by nearly one percentage point on the strength of
new products, such as the new Corsa and the Chevrolet Meriva. We strengthened
our lead as the number-one manufacturer in the region, and we're well positioned
to generate solid earnings when the economy recovers," Wagoner said.
GMAC
GMAC earned $524 million in the fourth quarter of 2002 -- an all-time
fourth-quarter record. These results represent an increase of more than 20
percent from fourth-quarter earnings of $435 million a year ago, with the
improvement driven by strong results from automotive finance and mortgage
operations. For 2002, GMAC earned an all-time record $1.9 billion, compared with
$1.8 billion in 2001.
"GMAC continues to be a key contributor to GM's profitability," Wagoner said.
"Eight consecutive years of annual income growth demonstrates we have a solid
operating strategy and an effective approach to meet the challenges of the
difficult capital-funding environment."
HUGHES
Hughes had a loss of $84 million in the fourth quarter of 2002, compared with a
loss of $131 million in the prior-year period. The results primarily reflect
continued improvement in the operating performance of DIRECTV U.S. Revenue, led
by the growing subscriber base of DIRECTV, totaled $2.5 billion in the fourth
quarter of 2002, up from $2.3 billion in the same quarter last year. Total
DIRECTV subscriptions in the United States increased approximately 256,000 from
the third quarter of 2002 to 11.2 million. For 2002, Hughes had a loss of $467
million, compared with a loss of $525 million in 2001.
Including special items disclosed by Hughes yesterday, earnings totaled $86
million in the fourth quarter of 2002. The net effect of the fourth-quarter
special items totaled a favorable $170 million after taxes (see "Highlights").
PROFIT SHARING
General Motors also announced that approximately 130,000 hourly employees in the
United States will qualify for profit-sharing payments in 2003. A typical U.S.
hourly employee, eligible under the profit-sharing program, will qualify for a
payment of approximately $940.
- 4-
LOOKING AHEAD
GM expects moderate economic growth in 2003 in the United States, resulting in
total U.S. industry vehicle sales of approximately 16.5 million units. In
Europe, total industry vehicle sales are expected to be about 19 million units.
GM's 2003 first-quarter production forecast for North America is now estimated
at 1.43 million units, up nearly 6 percent from the first quarter of 2002. GM
estimates that earnings in the first quarter of 2003 will be approximately $1.50
per share, and the calendar-year earnings target is approximately $5.00 per
share, excluding Hughes and any special items. In the fourth quarter of 2002,
GM's effective income-tax rate, excluding financing and insurance operations,
was 26 percent, the level expected for GM in each of the next several years.
General Motors, the world's largest vehicle manufacturer, designs, builds and
markets cars and trucks worldwide, and has been the global automotive sales
leader since 1931. More information on GM can be found at www.gm.com.
# # #
In this press release and related comments by General Motors management, our use
of the words "expect," "anticipate," "estimate," "forecast," "objective,"
"plan," "goal" and similar expressions is intended to identify forward looking
statements. While these statements represent our current judgment on what the
future may hold, and we believe these judgments are reasonable, actual results
may differ materially due to numerous important factors that are described in
GM's most recent report on SEC Form 10-K (at page II-15, 16) which may be
revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such
factors include, among others, the following: changes in economic conditions,
currency exchange rates or political stability; shortages of fuel, labor strikes
or work stoppages; market acceptance of the corporation's new products;
significant changes in the competitive environment; changes in laws, regulations
and tax rates; and, the ability of the corporation to achieve reductions in cost
and employment levels to realize production efficiencies and implement capital
expenditures at levels and times planned by management.
- 5 -
General Motors Corporation
List of Special Items - After Tax
(dollars in millions)
Fourth Quarter 2002
---------------------------------
GM $1-2/3
Par Value
Common Stock
Total Diluted
Hughes GM EPS
------ ------ ------------
Reported Net Income $86 $1,020 $1.71
Hughes EchoStar Termination
Payment (A) (372) (372) (0.20)
Hughes Write-down of Crown
Media Investment (B) 27 27 0.02
Hughes Write-down of XM Radio
Investment (C) 63 63 0.03
Hughes Costs Related to
Shut-down of DIRECTV DSL(TM)
Service (D) 97 97 0.05
Hughes Loss on HTIL
Transaction (E) 15 15 0.01
-- --- ----
Adjusted Income (Loss) $(84) $850 $1.62
== === ====
(A) The Hughes EchoStar Termination Payment reflects the $600 million
EchoStar paid to Hughes in connection with the termination of the
October 28, 2001 merger agreement between Hughes and EchoStar.
(B) The Hughes Write-down of Crown Media Investment relates to the
recognition of an other than temporary decline in the market value of
Hughes' investment in Crown Media.
(C) The Hughes Write-down of XM Radio Investment relates to the
recognition of an other than temporary decline in the market value of
Hughes' investment in XM Radio.
(D) The Hughes Costs Related to Shut-down of DIRECTV DSL(TM) Service
relates to the costs to close the business including contract
termination payments, write-offs of equipment, and severance payments.
(E) The Hughes Loss on HTIL Transaction relates to the exchange of Hughes'
ownership in Hughes Tele.com (India) Limited for an equity interest in
and long term receivables from Tata Teleservices Limited.
NOTE: There were no special items presented in the fourth
quarter of 2001.
- 6 -
General Motors Corporation
List of Special Items - After Tax
(dollars in millions)
Year to Date 2002
-------------------------------------------------
GM $1-2/3
Par Value
Common Stock
Other Total Diluted
GMNA GME Hughes ACO GM EPS
---- --- ------ ----- ----- ----------
Reported Net Income
(Loss) $2,900 $(1,011) $(239) $(1,803) $1,736 $3.35
Hughes EchoStar
Termination Payment (A) - - (372) - (372) (0.21)
Hughes Write-down of
Crown Media Investment (B) - - 27 - 27 0.02
Hughes Write-down of XM
Radio Investment (C) - - 63 - 63 0.04
Hughes Costs Related to
Shut-down of DIRECTV DSL(TM)
Service (D) - - 97 - 97 0.05
Hughes Loss on HTIL
Transaction (E) - - 15 - 15 0.01
Write-down of
Fiat Auto Investment (F) - - - 1,371 1,371 2.44
GMNA Production
Footprint (G) 116 - - - 116 0.21
Hughes Sale of Equity
Interests (H) - - (68) - (68) (0.04)
GME End of Life Vehicle
Charge (I) - 55 - - 55 0.10
GME Restructuring
Charge (J) - 407 - - 407 0.72
Hughes Space Shuttle
Settlement (K) - - (59) - (59) (0.04)
Hughes GECC Contractual
Dispute (L) - - 51 - 51 0.03
Hughes Loan Guarantee
Charge (M) - - 18 - 18 0.01
----- --- --- --- ----- ----
Adjusted Income
(Loss) $3,016 $(549) $(467) $(432) $3,457 $6.69
===== === === === ===== ====
See notes on following page.
- 7 -
General Motors Corporation
List of Special Items - After Tax
See page 6 for footnotes (A) - (E)
(A) The Write-down of Fiat Auto Investment relates to GM's investment in
Fiat Auto Holdings, B.V. ("Fiat Auto") and reflects completion of an
impairment study relating to the carrying value of that investment,
which was reduced from $2.4 billion to $220 million.
(B) The GMNA Production Footprint charge primarily relates to costs
associated with the transfer of commercial truck production from
Janesville, Wisconsin, to Flint, Michigan.
(C) The Hughes Sale of Equity Interests relates primarily to the
investment in the multimedia company Thomson.
(D) The GME End of Life Vehicle Charge relates to the European Union's
directive requiring member states to enact legislation regarding
end-of-life vehicles to be the responsibility of manufacturers for
dismantling and recycling vehicles they have sold.
(E) The GME Restructuring Charge relates to the initiative implemented in
the first quarter of 2002 to improve the competitiveness of GM's
automotive operations in Europe.
(F) The Hughes Space Shuttle Settlement relates to the favorable
resolution of a lawsuit that was filed against the U.S. government
on March 22, 1991, based upon the National Aeronautics and Space
Administration's (NASA) breach of contract to launch ten satellites
on the Space Shuttle.
(G) The Hughes GECC Contractual Dispute relates to an expected loss
associated with a contractual dispute with General Electric Capital
Corporation.
(H) The Hughes Loan Guarantee Charge relates to a loan guarantee for a
Hughes Network Systems' affiliate in India.
- 8 -
General Motors Corporation
List of Special Items - After Tax
(dollars in millions)
Year to Date 2001
----------------------------------------
Other
GMNA GME GMLAAM GMAP Hughes ACO
---- --- ------ ---- ------ -----
Reported Net Income (Loss) $1,270 $(765) $(81) $(57) $(618) $(916)
Ste. Therese Charge (A) 194 - - - - -
Raytheon Settlement (B) - - - - - 474
Gain on Sale of Thomson (C) - - - - (67) -
SkyPerfecTV! Writedown (D) - - - - 133 -
Severance Charge (E) - - - - 40 -
DirecTV Japan Adjustment (F) - - - - (21) -
Isuzu Restructuring (G) - - - 133 - -
SFAS 133 (H) 14 (2) 1 1 8 -
----- --- -- -- --- ---
Adjusted Income (Loss) $1,478 $(767) $(80) $77 $(525) $(442)
===== === == == === ===
GM $1-2/3
Par Value
Common Stock
Total Other Total Diluted
ACO GMAC FIO GM EPS
----- ------ ----- ----- ------------
Reported Net Income (Loss)$(1,167) $1,786 $(18) $601 $1.77
Ste. Therese Charge (A) 194 - - 194 0.35
Raytheon Settlement (B) 474 - - 474 0.85
Gain on Sale of Thomson (C) (67) - - (67) (0.04)
SkyPerfecTV! Writedown (D) 133 - - 133 0.08
Severance Charge (E) 40 - - 40 0.02
DirecTV Japan Adjustment (F) (21) - - (21) (0.01)
Isuzu Restructuring (G) 133 - - 133 0.24
SFAS 133 (H) 22 (34) - (12) (0.03)
--- ----- -- ----- ----
Adjusted Income (Loss) $(259) $1,752 $(18) $1,475 $3.23
=== ===== == ===== ====
See notes on next page.
- 9 -
General Motors Corporation
List of Special Items - After Tax
A) The Ste. Therese Charge relates to the closing of the Ste. Therese,
Quebec assembly plant.
B) The Raytheon Settlement relates to Hughes' settlement with the Raytheon
Company on a purchase price adjustment related to Raytheon's 1997
merger with Hughes Defense.
C) The Gain on Sale of Thomson relates to Hughes' sale of 4.1 million
shares of Thomson Multimedia common stock.
D) The SkyPerfecTV! Writedown relates to Hughes' non-cash charge from the
revaluation of its investment.
E) The Severance Charge relates to Hughes' 10% company-wide workforce
reduction in the U.S.
F) The DirecTV Japan Adjustment relates to a favorable adjustment to the
expected costs associated with the shutdown of Hughes' DirecTV Japan
business.
G) The Isuzu Restructuring charges include General Motors' portion of
severance payments and asset impairments that were part of the second
quarter restructuring of its affiliate Isuzu Motors Ltd.
H) The SFAS 133 Adjustment represents the net impact during the first
quarter 2001 from initially adopting SFAS No. 133, Accounting for
Derivatives and Hedging Activities.
- 10 -
General Motors Corporation
Adjusted Corporate Financial Results
Fourth Quarter Year to Date
-------------- --------------
2002(1) 2001(1) 2002(1) 2001(1)
---- ---- ---- ----
Total net sales and
revenues ($Mil's) $48,108 $45,950 $186,244 $177,268
Excluding Hughes $45,600 $43,665 $177,276 $168,950
Memo: Reported $48,656 $45,950 $186,763 $177,260
Consolidated adjusted
income ($Mil's) $850 $255 $3,457 $1,475
Excluding Hughes $934 $386 $3,924 $2,000
Net margin from
adjusted income 1.8% 0.6% 1.9% 0.8%
Excluding Hughes 2.0% 0.9% 2.2% 1.2%
GM $1-2/3 par value
earnings per share
Basic EPS $1.62 $0.61 $6.72 $3.26
Diluted EPS $1.62 $0.60 $6.69 $3.23
Diluted EPS excluding
Hughes $1.67 $0.69 $6.98 $3.60
GM Class H
earnings per share
Basic EPS $(0.06) $(0.12) $(0.38) $(0.48)
Diluted EPS $(0.06) $(0.12) $(0.38) $(0.48)
Earnings attributable to
GM $1-2/3 par value ($Mil's)
Adjusted income $850 $255 $3,457 $1,475
Preferred dividends - (23) (47) (99)
Losses attributable
to GM Class H 59 105 352 419
--- --- ----- -----
Total earnings attributable
to GM $1-2/3 par value $909 $337 $3,762 $1,795
=== === ===== =====
GM $1-2/3 par value average
shares outstanding (Mil's)
Basic shares 560 556 560 551
Diluted shares 561 559 562 556
Cash dividends per share
of common stocks
GM $1-2/3 par value $0.50 $0.50 $2.00 $2.00
GM Class H - - - -
Book value per share of
common stocks at Dec. 31
GM $1-2/3 par value $9.06 $24.79
GM Class H $1.81 $4.96
Total cash at Dec. 31,
Excluding Hughes($Bil's) (2) $17.3 $11.5
Automotive, Communications
Services, and
Other Operations ($Mil's)
Depreciation $1,282 $1,095 $4,723 $4,354
Amortization of special
tools 751 613 2,647 2,360
Amortization of intangible
assets 21 67 27 285
----- ----- ----- -----
Total $2,054 $1,775 $7,397 $6,999
===== ===== ===== =====
See footnotes on page 15.
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General Motors Corporation
Adjusted Segment Financial Results
Fourth Quarter Year to Date
-------------- --------------
2002(1) 2001(1) 2002(1) 2001(1)
---- ---- ---- ----
(dollars in millions)
Total net sales and revenues
GMNA $28,864 $27,446 $114,444 $106,938
GME 6,763 6,084 23,912 23,700
GMLAAM 1,342 1,392 5,110 5,864
GMAP 1,180 1,063 4,524 4,201
------ ------ ------- -------
Total GMA 38,149 35,985 147,990 140,703
Hughes 2,508 2,285 8,968 8,318
Other 384 1,029 2,260 2,470
------ ------ ------- -------
Total ACO 41,041 39,299 159,218 151,491
GMAC 7,066 6,565 26,793 25,480
Other Financing 1 86 233 297
------ ------ ------- -------
Total FIO 7,067 6,651 27,026 25,777
------ ------ ------- -------
Consolidated net sales
and revenues $48,108 $45,950 $186,244 $177,268
====== ====== ======= =======
Pre-tax income (loss)
GMNA $838 $528 $4,198 $2,051
GME (233) (345) (797) (1,092)
GMLAAM (6) (150) (240) (79)
GMAP 45 (17) 10 27
--- --- ----- -----
Total GMA 644 16 3,171 907
Hughes (3) (92) (213) (640) (786)
Other (274) (135) (681) (537)
--- --- ----- -----
Total ACO 278 (332) 1,850 (416)
GMAC 778 730 3,001 2,872
Other Financing 4 (24) (30) (58)
--- --- ----- -----
Total FIO 782 706 2,971 2,814
----- --- ----- -----
Consolidated pre-tax
income $1,060 $374 $4,821 $2,398
===== === ===== =====
Net income (loss)
GMNA $633 $392 $3,016 $1,478
GME (129) (240) (549) (767)
GMLAAM (7) (111) (181) (80)
GMAP 66 25 188 77
--- --- ----- -----
Total GMA 563 66 2,474 708
Hughes (3)(4) (84) (131) (467) (525)
Other (199) (120) (432) (442)
--- --- ----- -----
Total ACO 280 (185) 1,575 (259)
GMAC 524 435 1,870 1,752
Other Financing 46 5 12 (18)
--- --- ----- -----
Total FIO 570 440 1,882 1,734
--- --- ----- -----
Consolidated adjusted
income $850 $255 $3,457 $1,475
=== === ===== =====
See footnotes on page 15.
- 12 -
General Motors Corporation
Supplementary Adjusted Segment Financial Results
Fourth Quarter Year to Date
-------------- --------------
2002(1) 2001(1) 2002(1) 2001(1)
---- ---- ---- ----
(dollars in millions)
Income tax expense (benefit)
GMNA $240 $150 $1,227 $537
GME (62) (72) (172) (284)
GMLAAM 3 (38) (76) (17)
GMAP 43 17 55 24
--- --- ----- ---
Total GMA $224 $57 $1,034 $260
=== === ===== ===
Equity income (loss) and
minority interests
GMNA $35 $14 $45 $(36)
GME 42 33 76 41
GMLAAM 2 1 (17) (18)
GMAP 64 59 233 74
--- --- --- --
Total GMA $143 $107 $337 $61
=== === === ==
Effective income tax rate
GMNA 28.6% 28.4% 29.2% 26.2%
GME 26.6% 20.9% 21.6% 26.0%
GMLAAM (50.0%) 25.3% 31.7% 21.5%
GMAP 95.6% (100.0%) - 88.9%
Total ACO 26.0% 31.0% 28.7% 31.0%
Net margins
GMNA 2.2% 1.4% 2.6% 1.4%
GME (1.9%) (3.9%) (2.3%) (3.2%)
GMLAAM (0.5%) (8.0%) (3.5%) (1.4%)
GMAP 5.6% 2.4% 4.2% 1.8%
Total GMA 1.5% 0.2% 1.7% 0.5%
Hughes (3)(4) (3.3%) (5.7%) (5.2%) (6.3%)
Total ACO 0.7% (0.5%) 1.0% (0.2%)
GMAC 7.4% 6.6% 7.0% 6.9%
Consolidated net income 1.8% 0.6% 1.9% 0.8%
See footnotes on page 15.
- 13 -
General Motors Corporation
Operating Statistics
Fourth Quarter Year to Date
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
(units in thousands)
Worldwide Wholesale Sales
United States - Cars 535 503 2,090 2,075
United States - Trucks 754 648 2,810 2,463
----- ----- ----- -----
Total United States 1,289 1,151 4,900 4,538
Canada, Mexico, and Other 205 166 786 649
----- ----- ----- -----
Total GMNA 1,494 1,317 5,686 5,187
GME 420 401 1,645 1,760
GMLAAM 164 166 640 666
GMAP 92 100 405 460
----- ----- ----- -----
Total Worldwide 2,170 1,984 8,376 8,073
===== ===== ===== =====
Vehicle Unit Deliveries
Chevrolet - Cars 161 193 747 830
Chevrolet - Trucks 466 539 1,896 1,860
Pontiac 115 115 517 533
GMC 146 163 561 555
Buick 108 105 432 406
Oldsmobile 32 44 155 234
Saturn 69 61 280 261
Cadillac 54 47 200 172
Other 23 14 71 54
----- ----- ----- -----
Total United States 1,174 1,281 4,859 4,905
Canada, Mexico, and Other 192 172 764 686
----- ----- ----- -----
Total GMNA 1,366 1,453 5,623 5,591
GME 392 382 1,662 1,800
GMLAAM 164 167 647 665
GMAP 156 136 605 524
----- ----- ----- -----
Total Worldwide 2,078 2,138 8,537 8,580
===== ===== ===== =====
Market Share
United States - Cars 25.5% 25.8% 25.4% 26.9%
United States - Trucks 32.1% 31.4% 31.0% 29.2%
Total United States 29.2% 28.9% 28.3% 28.1%
Total North America 28.6% 28.1% 28.0% 27.6%
Total Europe 8.8% 8.5% 8.7% 9.1%
Latin America (5) 23.9% 23.4% 23.8% 22.4%
Asia and Pacific 4.4% 4.3% 4.2% 4.0%
Total Worldwide 15.2% 15.5% 14.9% 15.0%
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 29.7% 14.8% 28.9% 25.7%
% Fleet Sales - Trucks 10.3% 7.4% 11.3% 12.1%
Total Vehicles 17.9% 10.4% 18.8% 18.4%
Retail Lease as % of Retail Sales
Total Smartlease
and Smartbuy 7.2% 4.3% 10.3% 11.9%
Days Supply of Inventory
at December 31
United States - Cars 77 93
United States - Trucks 62 75
GMNA Capacity Utilization
(2 shift rated) 94.3% 83.7% 88.4% 79.7%
GMNA Net Price (3.2%) (1.5%) (2.1%) (1.3%)
See footnotes on page 15.
- 14 -
General Motors Corporation
Operating Statistics
Fourth Quarter Year to Date
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
GMAC's U.S. Cost of Borrowing 4.28% 4.76% 4.33% 5.51%
Current Debt Spreads Over
U.S. Treasuries
2 Year 330 bp 195 bp
5 Year 335 bp 215 bp
10 Year 335 bp 225 bp
Worldwide Employment
at Dec. 31 (in 000's)
United States Hourly 121 126
United States Salary 40 42
--- ---
Total United States 161 168
Canada, Mexico, and Other 32 34
--- ---
GMNA 193 202
GME 66 73
GMLAAM 24 23
GMAP 11 11
Hughes 12 12
GMAC 31 28
Other 12 13
--- ---
Total 349 362
=== ===
Worldwide Payrolls ($Bil's) $5.4 $4.8 $21.0 $19.8
Footnotes:
---------
(1) Adjusted amounts for all periods represent the reported amounts
excluding the effects of special items as detailed on pages 8 and 9.
(2) Represents total cash for Automotive, Communications Services, and
Other Operations, excluding Hughes, which includes cash and marketable
securities, as well as $3.0 billion invested in short-term fixed
income securities of the Corporation's Voluntary Employees'
Beneficiary Association Trust.
(3) The Q4 2001 and Year-to-Date 2001 amounts exclude the effects of
purchase accounting adjustments related to General
Motors' acquisition of Hughes in 1985. This purchase
accounting adjustment is not recorded in 2002 because
the related goodwill is no longer being amortized
effective January 1, 2002 in accordance with SFAS No.
142, Goodwill and Other Intangible Assets.
(4) Excludes Hughes Series A Preferred Stock dividends paid to General
Motors.
(5) Latin America excludes the Middle East and Africa.
- 15 -
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended December 31,
-------------------------------
2002 2001
---- ----
(dollars in millions except per share amounts)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Total net sales and revenues $48,656 $45,950
------ ------
Cost of sales and other expenses 39,827 37,336
Selling, general, and administrative
expenses 5,680 6,131
Interest expense 1,799 2,109
------ ------
Total costs and expenses 47,306 45,576
------ ------
Income before income taxes and
minority interests 1,350 374
Income tax expense 396 180
Equity income and minority interests 66 61
----- ---
Net income 1,020 255
Dividends on preference stocks - (23)
----- ---
Earnings attributable to common stocks $1,020 $232
===== ===
Basic earnings (losses) per
share attributable to
common stocks
Earnings per share attributable
to $1-2/3 par value $1.71 $0.61
==== ====
Earnings per share attributable
to Class H $0.06 $(0.12)
==== ====
Earnings (losses) per share
attributable to common
stocks assuming dilution
Earnings per share attributable
to $1-2/3 par value $1.71 $0.60
==== ====
Earnings per share attributable
to Class H $0.06 $(0.12)
==== ====
- 16 -
CONSOLIDATED STATEMENTS OF INCOME - continued
Three Months Ended
December 31,
------------
2002 2001
---- ----
(dollars in millions)
AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS
Total net sales and revenues $41,589 $39,299
------ ------
Cost of sales and other expenses 37,010 35,083
Selling, general, and administrative
expenses 3,840 4,206
------ ------
Total costs and expenses 40,850 39,289
------ ------
Interest expense 83 222
Net expense from transactions with
Financing and Insurance Operations 88 120
---- ---
Income (loss) before income taxes
and minority interests 568 (332)
Income tax expense (benefit) 195 (76)
Equity income and minority interests 77 71
--- ---
Net income (loss) - Automotive,
Communications Services
and Other Operations $450 $(185)
=== ===
FINANCING AND INSURANCE OPERATIONS
Total revenues $7,067 $6,651
----- -----
Interest expense 1,716 1,887
Depreciation and amortization expense 1,432 1,428
Operating and other expenses 2,125 1,928
Provisions for financing and insurance
losses 1,100 822
----- -----
Total costs and expenses 6,373 6,065
----- -----
Net income from transactions with
Automotive, Communications Services,
and Other Operations (88) (120)
--- ---
Income before income taxes and
minority interests 782 706
Income tax expense 201 256
Equity loss and minority interests (11) (10)
--- ---
Net income - Financing and
Insurance Operations $570 $440
=== ===
- 17 -
CONSOLIDATED STATEMENTS OF INCOME - continued
Years Ended December 31,
--------------------------------
2002 2001 2000
---- ---- ----
(dollars in millions except per share amounts)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Total net sales and revenues $186,763 $177,260 $184,632
------- ------- -------
Cost of sales and other expenses 153,344 144,093 145,664
Selling, general, and administrative
expenses 23,624 23,302 22,252
Interest expense 7,715 8,347 9,552
------- ------- -------
Total costs and expenses 184,683 175,742 177,468
------- ------- -------
Income before income taxes and
minority interests 2,080 1,518 7,164
Income tax expense 533 768 2,393
Equity income (loss) and minority
interests 189 (149) (319)
----- --- -----
Net income 1,736 601 4,452
Dividends on preference stocks (47) ( 99) (110)
----- --- -----
Earnings attributable to common stocks $1,689 $502 $4,342
===== === =====
Basic earnings (losses) per
share attributable to
common stocks
Earnings per share attributable
to $1-2/3 par value $3.37 $1.78 $6.80
==== ==== ====
Earnings per share attributable
to Class H $(0.21) $(0.55) $0.56
==== ==== ====
Earnings (losses) per share
attributable to common
stocks assuming dilution
Earnings per share attributable
to $1-2/3 par value $3.35 $1.77 $6.68
==== ==== ====
Earnings per share attributable
to Class H $(0.21) $(0.55) $0.55
==== ==== ====
- 18 -
CONSOLIDATED STATEMENTS OF INCOME - concluded
Years Ended December 31,
------------------------
2002 2001 2000
---- ---- ----
(dollars in millions)
AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS
Total net sales and revenues $159,737 $151,491 $160,627
------- ------- -------
Cost of sales and other expenses 144,550 135,620 138,303
Selling, general, and administrative
expenses 14,993 16,043 16,246
------- ------- -------
Total costs and expenses 159,543 151,663 154,549
------- ------- -------
Interest expense 789 751 815
Net expense from transactions with
Financing and Insurance Operations 296 435 682
--- ----- -----
Income (loss) from continuing
operations before income
taxes and minority interests (891) (1,358) 4,581
Income tax (benefit) expense (489) (270) 1,443
Equity income (loss) and minority interests 256 (79) (299)
--- ----- -----
Net income (loss) - Automotive,
Communications Services,
and Other Operations $(146) $(1,167) $2,839
=== ===== =====
FINANCING AND INSURANCE OPERATIONS
Total revenues $27,026 $25,769 $24,005
------ ------ ------
Interest expense 6,926 7,596 8,737
Depreciation and amortization expense 5,541 5,857 5,982
Operating and other expenses 8,356 7,348 5,805
Provisions for financing and
insurance losses 3,528 2,527 1,580
------ ------ ------
Total costs and expenses 24,351 23,328 22,104
------ ------ ------
Net income from transactions with
Automotive, Communications Services,
and Other Operations (296) (435) (682)
----- ----- -----
Income before income taxes and
minority interests 2,971 2,876 2,583
Income tax expense 1,022 1,038 950
Equity loss and minority interests (67) (70) (20)
----- ----- -----
Net income - Financing and
Insurance Operations $1,882 $1,768 $1,613
===== ===== =====
- 19 -
CONSOLIDATED BALANCE SHEETS
December 31,
GENERAL MOTORS CORPORATION AND SUBSIDIARIES 2002 2001
---- ----
ASSETS (dollars in millions)
Automotive, Communications Services, and Other Operations
Cash and cash equivalents $13,291 $8,432
Marketable securities 2,174 790
------ -----
Total cash and marketable securities 15,465 9,222
Accounts and notes receivable (less allowances) 5,861 5,406
Inventories (less allowances) 10,302 10,034
Equipment on operating leases (less
accumulated depreciation) 5,305 4,524
Deferred income taxes and other current assets 10,938 7,877
------ ------
Total current assets 47,871 37,063
Equity in net assets of nonconsolidated associates 5,044 4,950
Property - net 36,152 34,908
Intangible assets - net 14,611 13,721
Deferred income taxes 32,759 22,294
Other assets 7,323 17,274
------- -------
Total Automotive, Communications Services, and
Other Operations assets 143,760 130,210
Financing and Insurance Operations
Cash and cash equivalents 8,158 10,123
Investments in securities 14,651 11,279
Finance receivables - net 134,647 109,211
Investment in leases and other receivables 35,466 34,618
Other assets 33,798 26,971
Net receivable from Automotive, Communications
Services, and Other Operations 1,089 1,557
------- -------
Total Financing and Insurance Operations assets 227,809 193,759
------- -------
Total assets $371,569 $323,969
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive, Communications Services, and Other Operations
Accounts payable (principally trade) $20,169 $18,297
Loans payable 1,516 2,402
Accrued expenses 42,304 34,090
Net payable to Financing and Insurance Operations 1,089 1,557
------ ------
Total current liabilities 65,078 56,346
Long-term debt 16,651 10,726
Postretirement benefits other than pensions 34,275 34,515
Pensions 22,709
10,790
Other liabilities and deferred income taxes 15,461 13,794
------- -------
Total Automotive, Communications Services,
and Other Operations liabilities 154,174 126,171
Financing and Insurance Operations
Accounts payable 6,982 7,900
Debt 183,773 153,186
Other liabilities and deferred income taxes 18,992 16,259
------- -------
Total Financing and Insurance Operations liabilities 209,747 177,345
------- -------
Total liabilities 363,921 303,516
Minority interests 834 746
Stockholders' equity
$1-2/3 par value common stock (outstanding,
560,447,797. and 559,044,427 shares) 936 932
Class H common stock (outstanding,
958,284,272 and 877,505,382 shares) 96 88
Capital surplus (principally additional
paid-in capital) 21,583 21,519
Retained earnings 10,031 9,463
------ ------
Subtotal 32,646 32,002
Accumulated foreign currency translation adjustments (2,784) (2,919)
Net unrealized loss on derivatives (205) (307)
Net unrealized gains on securities 372 512
Minimum pension liability adjustment (23,215) (9,581)
------- -------
Accumulated other comprehensive loss (25,832) (12,295)
------- -------
Total stockholders' equity 6,814 19,707
------- -------
Total liabilities and stockholders' equity $371,569 $323,969
======= =======
- 20 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31,
--------------------------------
2002 2001 2000
---- ---- ----
Automotive, Financing Automotive, Financing Automotive, Financing
Comm.Serv., and Comm.Serv., and Comm.Serv., and
and Other Insurance and Other Insurance and Other Insurance
--------- --------- --------- --------- --------- ---------
Cash flows from operating activities (dollars in millions)
Income (loss) from continuing
operations (146) 1,882 (1,167) 1,768 $2,839 $1,613
Adjustments to reconcile income
(loss)from continuing operations
to net cash provided by operating
activities
Depreciation and amortization
expenses 7,397 5,541 7,051 5,857 7,429 5,982
Postretirement benefits other than
pensions, net of payments and VEBA
contributions (223) 15 1,861 20 772 27
Pension expense, net of
contributions (3,380) - 148 - 128 -
Net change in mortgage loans - (4,377) - (4,241) - 242
Net change in mortgage securities - (656) - (777) - (577)
Operating leases - acquisitions (5,595) - (4,997) - (6,000) -
Operating leases - liquidations 4,774 - 6,116 - 6,008 -
Change in other investments and
miscellaneous assets 3,024 3,757 959 (958) 1,154 (1,692)
Change in other operating assets
and liabilities 4,314 (300) (2,056) 719 724 2,505
Other (1,695) 2,776 (357) 3,039 (1,966) 2,257
----- ----- ---- ----- ----- -----
Net cash provided by operating
activities $8,470 $8,638 $7,558 $5,427 $11,088 $10,357
----- ----- ----- ----- ------ ------
Cash flows from investing activities
Expenditures for property (6,986) (457) (8,611) (20) (9,200) (522)
Investments in marketable securities
- acquisitions (2,228) (37,158) (857) (34,273) (2,520) (24,599)
Investments in marketable securities
- liquidations 873 34,815 1,228 33,124 3,057 24,114
Net change in mortgage servicing rights - (1,711) - (2,075) - (1,084)
Increase in finance receivables - (141,567) - (107,440) - (73,754)
Proceeds from sales of finance
receivables - 115,678 - 95,949 - 59,221
Operating leases - acquisitions - (16,624) - (12,938) - (15,415)
Operating leases - liquidations - 13,994 - 11,892 - 10,085
Investments in companies, net of
cash acquired (690) (182) (743) (542) (4,302) (2,077)
Net investing activity with
Financing and
Insurance Operations 400 - (500) - (1,069) -
Other 1,700 (834) (768) (416) 2,504 93
----- --- --- --- ----- --
Net cash used in investing
activities (6,931) (34,046) (10,251) (16,739) (11,530) (23,938)
----- ------ ------ ------ ------ ------
Cash flows from financing activities
Net increase (decrease) in
loans payable (1,482) 523 194 (20,238) 142 7,723
Long-term debt - borrowings 6,295 47,404 5,849 58,522 5,279 22,481
Long-term debt - repayments (328) (24,561) (2,602) (18,906) (6,196) (16,263)
Net financing activity with
Automotive, Communications Services,
and Other Operations - (400) - 500 - 1,069
Repurchases of common and
preference stocks (97) - (264) - (1,613) -
Proceeds from issuing common stocks 62 - 100 - 2,792 -
Proceeds from sales of treasury stocks 19 - 418 - - -
Cash dividends paid to stockholders (1,167) - (1,201) - (1,294) -
----- ------ ----- ------ ----- ------
Net cash provided by (used in)
financing activities 3,302 22,966 2,494 19,878 (890) 15,010
----- ------ ----- ------ --- ------
Effect of exchange rate changes
on cash and cash equivalents 485 10 (74) (22) (249) (6)
Net transactions with Automotive/
Financing Operations (467) 467 (414) 414 970 (970)
--- ----- --- ----- --- ---
Net (decrease) increase in cash
and cash equivalents 4,859 (1,965) (687) 8,958 (611) 453
Cash and cash equivalents at
beginning of the year 8,432 10,123 9,119 1,165 9,730 712
------ ------ ----- ------ ----- -----
Cash and cash equivalents at end
of the year $13,291 $8,158 $8,432 $10,123 $9,119 $1,165
====== ===== ===== ====== ===== =====
- 21 -
HUGHES FOURTH QUARTER 2002 RESULTS DRIVEN BY CONTINUED STRONG
DIRECTV U.S. FINANCIAL PERFORMANCE
DIRECTV U.S. Revenues Increase Over 19% to $1.8 Billion;
DIRECTV U.S. EBITDA1 More Than Triples to $191 Million
El Segundo, Calif., January 15, 2003 -- Hughes Electronics Corporation, a
world-leading provider of digital television entertainment, satellite-based
private business networks, and global video and data broadcasting, today
reported fourth quarter 2002 revenues increased 8.3% to $2,471.7 million,
compared with $2,281.6 million in the fourth quarter of 2001. EBITDA(1) for the
quarter increased to $171.6 million compared with $118.2 million in the fourth
quarter of last year. EBITDA margin(1) was 6.9% in the quarter compared with an
EBITDA margin of 5.2% last year. Included in the 2002 fourth quarter results was
a one-time charge of $111.4 million related to the previously announced shutdown
of the DIRECTV Broadband business. Excluding this charge, EBITDA was $283.0
million and EBITDA margin was 11.4%. The operating loss for the fourth quarter
of 2002 was $105.4 million compared with an operating loss of $178.6 million in
the fourth quarter of 2001.
"The continued improvement in the operating performance of DIRECTV U.S.
drove the strong revenue and EBITDA performance of HUGHES in the quarter," said
Jack A. Shaw, HUGHES' president and chief executive officer. "The actions we've
taken over the last 18 months to lower churn, reduce subscriber acquisition
costs and increase monthly revenue per subscriber have resulted in a higher
quality subscriber base and have increased the financial returns on our
subscriber investment. As a result, DIRECTV U.S. fourth quarter revenues
increased by over 19% to about $1.8 billion and EBITDA more than tripled to $191
million as compared to the same period in 2001."
Shaw continued, "We also moved quickly to address the issues facing our
DIRECTV Broadband and DIRECTV Latin America businesses as soon as the proposed
merger with EchoStar was terminated. As a result of our recent announcements to
shutdown DIRECTV Broadband and restructure DIRECTV Latin America, we expect to
reduce our cash requirements by several hundred million dollars over the next
few years."
In the fourth quarter of 2002, HUGHES reported an operating loss of $105.4
million compared with an operating loss of $178.6 million in 2001. This lower
operating loss was due primarily to the higher EBITDA and the elimination of
approximately $45 million of amortization expense for goodwill and intangible
assets in 2002 that resulted from the adoption of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
142") on January 1, 2002. These changes were partially offset by higher
depreciation expense, mostly at DIRECTV U.S. due to the launch of two new
satellites and additional infrastructure expenditures made during the last year.
- 22 -
HUGHES had fourth quarter 2002 net income of $115.3 million compared to a
net loss of $132.6 million in the same period of 2001. The primary reasons for
the improved net income were the lower operating loss and a pre-tax gain of $600
million related to the settlement with EchoStar Communications Corporation
("EchoStar") in connection with the termination of the proposed merger agreement
with HUGHES. These improvements were partially offset by pre-tax charges related
to the write-down to market value of equity investments in XM Satellite Radio
and Crown Media Holdings of $103 million and $44 million, respectively, and a
$52 million pre-tax loss related to the exchange of HUGHES' ownership in HUGHES
Tele.com (India) Limited for an equity interest in and long term receivables
from Tata Teleservices Limited.
In January of 2002, HUGHES adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." In the fourth quarter, step two of the transitional
impairment test was completed for DIRECTV Latin America, DIRECTV Broadband and a
Hughes Network Systems ("HNS") equity investment. As a result of this analysis,
HUGHES wrote-down $557 million of goodwill related to DIRECTV Latin America,
$108 million of goodwill related to DIRECTV Broadband and $16 million of
goodwill associated with the HNS equity investment. In accordance with SFAS No.
142, these charges are reflected in the first quarter of 2002 results and are
recorded in "Cumulative effect of accounting changes, net of taxes."
FULL-YEAR FINANCIAL REVIEW
For the full-year 2002, revenues increased 8.1% to $8,934.9 million
compared to $8,264.0 million in 2001. This increase was primarily due to
continued subscriber growth at DIRECTV U.S. partially offset by lower sales in
the Carrier businesses of HNS, the devaluation of several foreign currencies in
the DIRECTV Latin America businesses and the absence of new sales-type lease
contracts at PanAmSat.
EBITDA in 2002 was $672.4 million and EBITDA margin was 7.5%, compared to
EBITDA of $389.9 million and EBITDA margin of 4.7% in 2001. The 72.5% increase
in EBITDA and the increase in EBITDA margin were primarily attributable to
additional profit gained from the DIRECTV U.S. revenue growth and lower
subscriber acquisition costs, a $95 million one-time gain from the favorable
resolution of litigation with the National Aeronautics and Space Administration
("NASA"), and an $88 million charge primarily related to severance recorded in
2001. These improvements were partially offset by the devaluation of several
foreign currencies and the costs associated with the 2002 World Cup in the
DIRECTV Latin America businesses, the $111 million charge for the shutdown of
the DIRECTV Broadband business and a charge of $48 million related to losses
associated with the final settlement of a contractual dispute with General
Electric Capital Corporation ("GECC").
HUGHES' operating loss for 2002 was $394.7 million compared with an
operating loss of $757.8 million in 2001. The improved operating loss was
primarily due to the higher EBITDA and the elimination of approximately $249
million of amortization expense for goodwill and intangible assets in 2002 that
resulted from the adoption of SFAS No. 142. These changes were partially offset
by higher depreciation expense, particularly at DIRECTV U.S. due to the recent
launch of two new satellites and additional infrastructure expenditures made
during the last year.
In 2002, net losses totaled $891.1 million compared to net losses of
$621.6 million in 2001. The higher net loss was primarily due to the goodwill
charges, increased net interest expense including a charge of $74 million
related to the GECC settlement in 2002, the write-downs of equity investments to
market value and the discontinuation of the minority interest adjustment related
to DIRECTV Latin America. Partially offsetting these results were the gain
recorded on the EchoStar settlement, the lower operating loss, the write-down of
HUGHES' Sky Perfect Communications, Inc. ("Sky Perfect") investment in 2001, and
the larger pre-tax gain on the sale of HUGHES' Thomson Multimedia common stock
in 2002 compared to 2001.
- 23 -
SEGMENT FINANCIAL REVIEW: FOURTH QUARTER 2002
Direct-To-Home Broadcast
Fourth quarter 2002 revenues for the segment increased 15.1% to $1,973.7
million from $1,715.2 million in the fourth quarter of 2001. The segment had
EBITDA of $44.8 million compared with negative EBITDA of $5.3 million in the
fourth quarter of 2001. Operating loss was $142.3 million in the fourth quarter
of 2002 compared with an operating loss of $176.1 million in the same period
last year.
United States: Excluding subscribers in the National Rural
Telecommunications Cooperative ("NRTC") territories, DIRECTV's owned and
operated gross subscriber additions in the quarter were 711,000 and after
accounting for churn, DIRECTV added 292,000 net subscribers. DIRECTV owned and
operated subscribers totaled 9.49 million as of December 31, 2002, 12% more than
the 8.44 million cumulative subscribers attained as of December 31, 2001. For
the fourth quarter of 2002, the total number of subscribers in NRTC territories
fell by 36,000, reducing the total number of NRTC subscribers as of December 31,
2002, to 1.69 million. As a result, the DIRECTV platform ended the year with
11.18 million total subscribers.
DIRECTV reported quarterly revenues of $1,814 million, an increase of over
19% from last year's fourth quarter revenues of $1,519 million. The increase was
due to continued subscriber growth and higher monthly revenue per subscriber.
EBITDA for the fourth quarter of 2002 was $191 million compared with
EBITDA in the same period of 2001 of $63 million. The increased EBITDA was
primarily due to the additional profit gained from DIRECTV's increased revenue
and lower marketing costs related to lower gross subscriber additions. Operating
profit in the current quarter increased to $68 million compared with an
operating loss of $46 million in 2001 principally due to the improved EBITDA and
reduced amortization expense in accordance with SFAS No. 142. These were
partially offset by higher depreciation expense, mostly related to the launch of
the DIRECTV 4S satellite in December 2001 and DIRECTV 5 in May 2002, as well as
additional infrastructure expenditures made during the last year.
Please refer to the "Selected DIRECTV U.S. Performance Highlights"
attachment for additional information on DIRECTV's subscribers and other
important financial metrics.
DIRECTV DSL: On December 13, 2002, HUGHES announced that it was shutting
down the DIRECTV DSLTM service. DIRECTV Broadband will be transitioning
subscribers to alternative service providers during the first quarter of 2003.
In the fourth quarter of 2002, the DIRECTV DSL service added approximately
600 net customers. As of December 31, 2002, DIRECTV DSL had about 151,600
residential broadband customers in the United States compared with about 91,000
customers as of December 31, 2001.
- 24 -
The DIRECTV DSL service had fourth quarter 2002 revenues of $21 million
compared with $11 million reported in the fourth quarter of 2001. The increase
was driven by the larger subscriber base and an increase in monthly revenue per
subscriber.
Including a $111 million charge recorded for the expected costs associated
with the planned shutdown of the service, DIRECTV DSL had negative EBITDA of
$134 million in the quarter compared with negative EBITDA of $32 million in the
same period last year. The charge will cover the expected costs to close the
business including contract termination payments, write-off of customer premise
equipment and severance payments. DIRECTV DSL's operating loss in the fourth
quarter of 2002 increased to $147 million compared with an operating loss of $41
million in 2001 primarily due to the shutdown charge.
Latin America: On January 8, 2003, DIRECTV Latin America announced that it
had initiated discussions with certain programmers, suppliers, lenders and
business associates to resolve issues that have affected its financial
performance, including excessive fixed costs and a substantial debt burden.
DIRECTV Latin America's goal is to implement a plan that is consistent with its
overall objectives of enhanced competitiveness and profitable growth.
The DIRECTV service in Latin America lost 22,000 net subscribers in the
fourth quarter of 2002. As a result, the total number of subscribers in Latin
America as of the end of the quarter was approximately 1,582,000 compared with
about 1,610,000 as of December 31, 2001.
Revenues for DIRECTV Latin America were $141 million for the quarter
compared with $186 million in the fourth quarter of 2001. This decline was
primarily due to the devaluation of several foreign currencies, the most
significant of which was in Argentina, as well as the lower number of
subscribers.
DIRECTV Latin America had negative EBITDA of $13 million in the quarter
compared with negative EBITDA of $36 million in the fourth quarter of 2001. The
improvement in EBITDA was primarily due to a $29 million charge in 2001 related
to the Argentinean devaluation as well as reduced operating costs in 2002 due to
aggressive cost cutting. These improvements were partially offset by the decline
in revenues. DIRECTV Latin America's operating loss decreased to $64 million in
the quarter from an operating loss of $89 million last year primarily due to the
improved EBITDA and reduced amortization expense in accordance with SFAS No.
142, partially offset by higher depreciation expense associated with additional
infrastructure expenditures.
Satellite Services
PanAmSat Corporation ("PanAmSat"), which is 81%-owned by HUGHES, generated
fourth quarter 2002 revenues of $196.8 million compared with $203.7 million in
the same period of the prior year. The decrease in revenues was primarily due to
reduced occasional video services revenues as compared to fourth quarter 2001,
which reflected increased activity due to the events of September 11, 2001.
EBITDA for the quarter was $144.4 million and EBITDA margin was 73.4%.
EBITDA in the fourth quarter of 2001 was $139.3 million and EBITDA margin was
68.4%. The increase in EBITDA and EBITDA margin was primarily due to the
company's continued focus on reducing its operating costs. Operating profit for
the quarter was $71.4 million compared with operating profit of $29.3 million in
the fourth quarter of 2001. The increase was primarily due to the improved
EBITDA as well as lower amortization expense in accordance with SFAS No. 142 and
lower satellite depreciation expense.
As of December 31, 2002, PanAmSat had contracts for satellite services
representing future payments (backlog) of approximately $5.55 billion compared
to approximately $5.50 billion at the end of the third quarter of 2002.
- 25 -
Network Systems
HNS generated fourth quarter 2002 revenues of $372.5 million compared with
$435.7 million in the fourth quarter of 2001. The decline was principally due to
lower sales in the Carrier businesses primarily related to the substantial
completion of the XM Satellite Radio and Thuraya Satellite Telecommunications
Company contracts.
HNS shipped 939,000 DIRECTV(R) receiver systems in the fourth quarter of
2002 compared to 814,000 units in the same period last year. Additionally, HNS
added approximately 20,000 net DIRECWAY residential and small office/home office
(SOHO) broadband customers in the quarter. As of December 31, 2002, DIRECWAY had
approximately 158,000 residential and SOHO subscribers in North America compared
to 101,000 as of December 31, 2001, a 56% increase.
HNS reported EBITDA of $1.1 million in the quarter compared to negative
EBITDA of $14.1 million in the fourth quarter of 2001. Improved margins in the
Satellite Broadband and Set-Top Box businesses were partially offset by the
lower EBITDA associated with the decline in sales in the Carrier businesses.
Operating loss was $18.0 million compared with the prior year's operating loss
of $27.6 million. The decrease in operating loss was attributable to the
improved EBITDA partially offset by increased depreciation and amortization
expense associated with additional infrastructure expenditures.
BALANCE SHEET
From December 31, 2001 to December 31, 2002, HUGHES' consolidated cash
balance increased $428.5 million to $1,128.6 million and total debt increased
$470.5 million to $3,117.8 million. The major uses of cash were $1,298.1 million
for satellite and capital expenditures, the payment of $180 million to GECC and
the final purchase price adjustment payment of $134 million to the Raytheon
Company. Also included in 2002 were cash receipts of $600 million for the
settlement on the terminated merger with EchoStar, $215 million from an
insurance claim on the PAS-7 satellite, $211 million for the sale of Thomson
Multimedia common stock, $105 million for the sale of Sky Perfect common stock
and $95 million from the resolution of the breach of contract lawsuit with NASA.
Additionally, on December 4, 2002, HUGHES announced that it had refinanced
and extended $1.9 billion of senior credit facilities. The amended facilities
mature on August 31, 2003, and include a $1.28 billion revolving credit facility
and a $650 million term loan.
Hughes Electronics Corporation is a unit of General Motors Corporation.
The earnings of Hughes Electronics are used to calculate the earnings
attributable to the General Motors Class H common stock (NYSE:GMH).
A live webcast of HUGHES' fourth quarter 2002 earnings call will be
available on the company's website at www.hughes.com. The call will begin at
2:00 p.m. ET, today. The dial in number for the call is (913) 981-5517. The
webcast will be archived on the Investor Relations portion of the HUGHES website
and a replay will be available (dial in number: 719-457-0820, code: 797276)
beginning today at 7:00 p.m. ET.
(1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
defined as operating profit (loss) plus depreciation and amortization. EBITDA
margin is calculated by dividing EBITDA by total revenues. EBITDA is not
presented as an alternative measure of operating results or cash flow from
operations, as determined in accordance with accounting principles generally
accepted in the United States of America. HUGHES management uses EBITDA to
evaluate the operating performance of HUGHES and its business segments, to
allocate resources and capital to its business segments, and as a measure of
performance for incentive compensation purposes. HUGHES believes EBITDA is a
measure of performance used by some investors, equity analysts and others to
make informed investment decisions. EBITDA is used as an analytical indicator of
income generated to service debt and fund capital expenditures. In addition,
multiples of current or projected EBITDA are used to estimate current or
prospective enterprise value. HUGHES management believes that EBITDA is a common
measure used to compare HUGHES' operating performance and enterprise value to
other communications, entertainment and media service providers. EBITDA does not
reflect funds available for investment in the business of HUGHES, dividends or
other discretionary uses. EBITDA and EBITDA margin as presented herein may not
be comparable to similarly titled measures reported by other companies.
- 26 -
Hughes Financial Guidance
-------------------------------------------------------------------------------
2002 Full Year First Quarter Full Year
Actuals 2003 2003
-------------------------------------------------------------------------------
HUGHES
-------------------------------------------------------------------------------
Revenues $8,935M ~$2.1B $9.3 - 9.5B
-------------------------------------------------------------------------------
EBITDA $672M $175 - 225M ~$1.1B
-------------------------------------------------------------------------------
Cash Supplied/(Required) $138M(1) N/A $(200) - (300)M(2)
-------------------------------------------------------------------------------
DIRECTV U.S.
-------------------------------------------------------------------------------
Revenues $6,445M ~$1.625B ~$7.1B
-------------------------------------------------------------------------------
EBITDA $620M(3) ~$160M $800 - 850M
-------------------------------------------------------------------------------
Net Subscriber Adds 1,050K N/A 750 - 800K
-------------------------------------------------------------------------------
DIRECTV DSL
-------------------------------------------------------------------------------
Revenues $72M
------------------------------------------
EBITDA $(220)M DIRECTV DSL Discontinued
------------------------------------------
Net Subscriber Adds 61K
-------------------------------------------------------------------------------
DIRECTV Latin America
-------------------------------------------------------------------------------
Revenues $680M $125 - 150M $550 - 600M
-------------------------------------------------------------------------------
EBITDA $(202)M $(30) - (50)M $(50) - (75)M
-------------------------------------------------------------------------------
Hughes Network Systems
-------------------------------------------------------------------------------
Revenues $1,170M $215 - 230M $1.1 - 1.2B
-------------------------------------------------------------------------------
EBITDA $(87)M(4) $(20) - (30)M Breakeven
-------------------------------------------------------------------------------
PanAmSat
-------------------------------------------------------------------------------
Revenues $812M $190 - 200M $790 - 820M
-------------------------------------------------------------------------------
New Outright Sales None None None
and Sales-Type
Leases
-------------------------------------------------------------------------------
EBITDA $592M $140 - 150M $580 - 600M
-------------------------------------------------------------------------------
(1) Excludes financing fees of and purchases of short term investments.
(2) Excludes one-time non-operating cash requirements.
(3) Excludes $56M EBITDA charge for GECC settlement and includes $45M of
allocated HUGHES corporate G&A which will not be allocated in 2003.
(4) Includes $10M of allocated HUGHES corporate G&A which will not be allocated
in 2003.
NOTE: Hughes Electronics Corporation believes that some of the foregoing
statements may constitute forward-looking statements. When used in this report,
the words "estimate," "plan," "project," "anticipate," "expect," "intend,"
"outlook," "believe," and other similar expressions are intended to identify
such forward-looking statements and information. Important factors that may
cause actual results of HUGHES to differ materially from the forward-looking
statements in this report are set forth in the Form 10-Ks filed with the SEC by
General Motors and HUGHES.
###
- 27 -
Selected DIRECTV U.S. Performance Highlights
--------------------------------------------------------------------------------
Quarters Ended
-------------------------------------------------
12/31/01 3/31/02 6/30/02 9/30/02 12/31/02
DIRECTV U.S. Key Performance
Metrics
--------------------------------------------------------------------------------
Average Revenue per User
(ARPU),$ (1) $61.35 $56.70 $58.10 $59.20 $64.70
--------------------------------------------------------------------------------
Subscriber Acquisition
Cost (SAC),$ (2) $565 $525 $530 $535 $570
--------------------------------------------------------------------------------
Churn, % (3) 1.7% 1.6% 1.7% 1.7% 1.5%
--------------------------------------------------------------------------------
Pre-Marketing Cash Flow
(PMCF), % 38% 39% 40% 41% 38%
--------------------------------------------------------------------------------
Subscriber Summary (in millions)
--------------------------------
DIRECTV - Owned & Operated
--------------------------------------------------------------------------------
Residential 7.88 8.27 8.46 8.68 8.93
--------------------------------------------------------------------------------
Commercial 0.33 0.34 0.37 0.38 0.40
--------------------------------------------------------------------------------
Suspended 0.23 0.18 0.16 0.14 0.16
--------------------------------------------------------------------------------
Total DIRECTV - Owned
& Operated (4) 8.44 8.79 8.99 9.20 9.49
--------------------------------------------------------------------------------
NRTC, Total (5) 1.89 1.75 1.75 1.72 1.69
--------------------------------------------------------------------------------
Grand Total 10.33 10.54 10.74 10.92 11.18
---------------------------------===============================================
(1) Total revenue divided by average period-end total DIRECTV owned &
operated customers
(2) Sales and marketing acquisition costs divided by DIRECTV owned &
operated customer gross adds in the period; includes advanced and leased
set-top boxes
(3) Net customer disconnects divided by average period-end DIRECTV owned and
operated customers
(4) Excludes pending customers to reflect policy change effective 1/1/02
(5) Reflects DIRECTV billing system data except Q1 and Q2 2002 which also
reflect Pegasus Communicatons Corp. policy change and adjustments
reported in Pegasus' Form 10Q filings
--------------------------------------------------------------------------------
- 28 -
CONSOLIDATED STATEMENTS OF OPERATIONS AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS)
(Dollars in Millions)
(Unaudited) Twelve Months
Fourth Quarter Ended December 31,
--------------------------------------
2002 2001 2002 2001
--------------------------------------------------------------------------------
Revenues
Direct broadcast, leasing and
other services $2,195.6 $1,935.6 $8,031.0 $7,204.3
Product sales 276.1 346.0 903.9 1,059.7
--------------------------------------------------------------------------------
Total Revenues 2,471.7 2,281.6 8,934.9 8,264.0
--------------------------------------------------------------------------------
Operating Costs and Expenses,
Exclusive of Depreciation and
Amortization Expense Shown Below
Broadcast programming and other costs 1,162.3 944.3 4,187.1 3,335.3
Cost of products sold 251.4 309.8 818.6 900.2
Selling, general and administrative
expenses 886.4 909.3 3,256.8 3,638.6
Depreciation and amortization 277.0 296.8 1,067.1 1,147.7
--------------------------------------------------------------------------------
Total Operating Costs and Expenses 2,577.1 2,460.2 9,329.6 9,021.8
--------------------------------------------------------------------------------
Operating Loss (105.4) (178.6) (394.7) (757.8)
Interest income 7.4 4.5 24.5 56.7
Interest expense (61.1) (61.9) (336.2) (195.9)
Other, net 379.5 (2.7) 425.5 (92.7)
--------------------------------------------------------------------------------
Income (Loss) Before Income Taxes,
Minority Interests and Cumulative
Effect of Accounting Change 220.4 (238.7) (280.9) (989.7)
Income tax (expense) benefit (97.8) 107.8 92.7 325.6
Minority interests in net (earnings)
losses of subsidiaries (7.3) (1.7) (21.6) 49.9
--------------------------------------------------------------------------------
Income (Loss) before cumulative
effect of accounting changes 115.3 (132.6) (209.8) (614.2)
Cumulative effect of accounting
changes, net of taxes - - (681.3) (7.4)
--------------------------------------------------------------------------------
Net Income (Loss) 115.3 (132.6) (891.1) (621.6)
Adjustment to exclude the effect
of GM purchase accounting - 0.8 - 3.3
--------------------------------------------------------------------------------
Income (Loss) excluding the effect
of GM purchase accounting 115.3 (131.8) (891.1) (618.3)
Preferred stock dividends - (24.1) (46.9) (96.4)
--------------------------------------------------------------------------------
Income (Loss) Used for Computation of
Available Separate Consolidated
Net Income (Loss) $115.3 $(155.9) $(938.0) $(714.7)
================================================================================
Available Separate Consolidated
Net Income (Loss)
Average number of shares of General Motors
Class H Common Stock outstanding
(in millions) (Numerator) 958.2 877.3 919.5 876.3
Average Class H dividend base
(in millions) (Denominator) 1,381.8 1,300.9 1,343.1 1,300.0
Available Separate Consolidated
Net Income (Loss) $80.0 $(105.1) $(642.2) $(481.8)
================================================================================
- 29 -
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions) December 31,
2002 December 31,
ASSETS (Unaudited) 2001
--------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $1,128.6 $700.1
Accounts and notes receivable 1,133.9 1,090.5
Contracts in process 165.9 153.1
Inventories 230.3 360.1
Deferred income taxes 97.7 118.9
Prepaid expenses and other 921.3 918.4
--------------------------------------------------------------------------------
Total Current Assets 3,677.7 3,341.1
Satellites, net 4,922.6 4,806.6
Property, net 2,017.4 2,197.8
Goodwill, net 5,775.2 6,496.6
Intangible Assets, net 644.7 660.2
Net Investment in Sales-type Leases 161.9 227.0
Investments and Other Assets 706.9 1,480.8
--------------------------------------------------------------------------------
Total Assets $17,906.4 $19,210.1
================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
--------------------------------------------------------------------------------
Current Liabilities
Accounts payable $1,039.0 $1,227.5
Deferred revenues 166.4 178.5
Short-term borrowings and current portion of
long-term debt 727.8 1,658.5
Accrued liabilities and other 1,288.5 1,342.0
--------------------------------------------------------------------------------
Total Current Liabilities 3,221.7 4,406.5
Long-Term Debt 2,390.0 988.8
Other Liabilities and Deferred Credits 1,178.4 1,465.1
Deferred Income Taxes 581.2 746.5
Commitments and Contingencies
Minority Interests 555.3 531.3
Stockholder's Equity 9,979.8 11,071.9
--------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $17,906.4 $19,210.1
================================================================================
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 General
Motors (which includes 100% of the stock of Hughes).
- 30 -
SELECTED SEGMENT DATA
(Dollars in Millions)
(Unaudited) Twelve Months
Fourth Quarter Ended December 31,
-------------------- ------------------
2002 2001 2002 2001
------------------------------------------------------------------------------
DIRECT-TO-HOME BROADCAST
Total Revenues $ 1,973.7 $ 1,715.2 $7,193.3 $6,306.4
EBITDA (1) $ 44.8 $ (5.3) $ 142.2 $ (74.8)
EBITDA Margin (1) 2.3% N/A 2.0% N/A
Operating Loss $ (142.3) $ (176.1) $ (523.8) $ (749.9)
Depreciation and Amortization $ 187.1 $ 170.8 $ 666.0 $ 675.1
Capital Expenditures $ 123.5 $ 211.8 $ 524.1 $ 734.3
------------------------------------------------------------------------------
SATELLITE SERVICES
Total Revenues $ 196.8 $ 203.7 $ 812.3 $ 870.1
EBITDA (1) $ 144.4 $ 139.3 $ 591.6 $ 580.0
EBITDA Margin (1) 73.4% 68.4% 72.8% 66.7%
Operating Profit $ 71.4 $ 29.3 $ 255.9 $ 165.3
Operating Profit Margin 36.3% 14.4% 31.5% 19.0%
Depreciation and Amortization $ 73.0 $ 110.0 $ 335.7 $ 414.7
Capital Expenditures $ 34.3 $ 96.5 $ 294.3 $ 338.2
------------------------------------------------------------------------------
NETWORK SYSTEMS
Total Revenues $ 372.5 $ 435.7 $1,169.9 $1,325.8
EBITDA (1) $ 1.1 $ (14.1) $ (87.0) $ (111.8)
Operating Loss $ (18.0) $ (27.6) $ (160.7) $ (171.8)
Depreciation and Amortization $ 19.1 $ 13.5 $ 73.7 $ 60.0
Capital Expenditures $ 85.0 $ 197.4 $ 400.4 $ 664.6
------------------------------------------------------------------------------
ELIMINATIONS and OTHER
Total Revenues $ (71.3) $ (73.0) $ (240.6) $ (238.3)
EBITDA (1) $ (18.7) $ (1.7) $ 25.6 $ (3.5)
Operating Profit (Loss) $ (16.5) $ (4.2) $ 33.9 $ (1.4)
Depreciation and Amortization $ (2.2) $ 2.5 $ (8.3) $ (2.1)
Capital Expenditures $ 24.6 $ 10.4 $ 79.3 $ 6.4
------------------------------------------------------------------------------
TOTAL
Total Revenues $ 2,471.7 $ 2,281.6 $8,934.9 $8,264.0
EBITDA (1) $ 171.6 $ 118.2 $ 672.4 $ 389.9
EBITDA Margin (1) 6.9% 5.2% 7.5% 4.7%
Operating Loss $ (105.4) $ (178.6) $ (394.7) $ (757.8)
Depreciation and Amortization $ 277.0 $ 296.8 $1,067.1 $1,147.7
Capital Expenditures $ 267.4 $ 516.1 $1,298.1 $1,743.5
==============================================================================
(1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
is the sum of operating profit (loss) and depreciation and amortization.
EBITDA margin is calculated by dividing EBITDA by total revenues. EBITDA
is not presented as an alternative measure of operating results or cash
flow from operations, as determined in accordance with accounting
principles generally accepted in the United States of America. EBITDA
does not reflect the funds available for investment in the business of
HUGHES, dividends or other discretionary uses. EBITDA as presented
herein may not be comparable to similarly titled measures reported by
other companies.
- 31 -
SIGNATURE
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 January 16, 2003
----------------
By
/s/Peter R. Bible
-------------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 32 -