UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
-- 1934
For the quarterly period ended March 31, 2001
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
--- 1934
For the transition period from to
--------------- -------------
Commission file number 1-143
GENERAL MOTORS CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-0572515
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Renaissance Center, Detroit, Michigan 48265-3000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 556-5000
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
--- ---
As of March 31, 2001, there were outstanding 548,590,037 shares of the
issuer's $1-2/3 par value common stock and 875,620,885 shares of GM Class H
$0.10 par value common stock.
- 1 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
INDEX
Page No.
-------
Part I - Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Statements of Income for the Three Months
Ended March 31, 2001 and 2000 3
Consolidated Balance Sheets as of March 31, 2001,
December 31, 2000, and March 31, 2000 5
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and 2000 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Part II - Other Information (Unaudited)
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 18
Exhibit 99 Hughes Electronics Corporation Financial Statements and
Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited) 19
- 2 -
PART I
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
------------------
2001 2000
---- ----
(dollars in millions
except per share amounts)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Total net sales and revenues $42,615 $46,858
------ ------
Cost of sales and other expenses (Note 9) 34,510 37,141
Selling, general, and administrative expenses 5,390 4,857
Interest expense 2,211 2,228
------- -------
Total costs and expenses 42,111 44,226
------ ------
Income before income taxes and minority interests 504 2,632
Income tax expense 208 783
Equity income/(loss) and minority interests (59) (66)
---- --------
Net income 237 1,783
Dividends on preference stocks (28) (29)
---- -------
Earnings attributable to common stocks $209 $1,754
=== =====
Basic earnings (losses) per share attributable
to common stocks (Note 8)
Earnings per share attributable to $1-2/3 par value $0.54 $2.88
==== ====
Earnings per share attributable to Class H $(0.10) $(0.08)
==== ====
Earnings (losses) per share attributable to common stocks
assuming dilution (Note 8)
Earnings per share attributable to $1-2/3 par value $0.53 $2.80
==== ====
Earnings per share attributable to Class H $(0.10) $(0.08)
==== ====
Reference should be made to the notes to consolidated financial statements.
- 3 -
CONSOLIDATED STATEMENTS OF INCOME - concluded
(Unaudited)
Three Months Ended
March 31,
------------------
2001 2000
---- ----
(dollars in millions)
AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS
Total net sales and revenues $36,164 $41,195
------ ------
Cost of sales and other expenses (Note 9) 32,494 35,321
Selling, general, and administrative expenses 3,639 3,507
------- ------
Total costs and expenses 36,133 38,828
------ ------
Interest expense 162 216
Net expense from transactions with
Financing and Insurance Operations 131 139
--- ------
Income (loss) before income taxes and
minority interests (262) 2,012
Income tax (benefit) expense (81) 542
Equity income/(loss) and minority interests (36) (65)
---- ------
Net income (loss) - Automotive, Communications
Services, and Other Operations $(217) $1,405
=== =====
FINANCING AND INSURANCE OPERATIONS
Total revenues $6,451 $5,663
----- -----
Interest expense 2,049 2,012
Depreciation and amortization expense 1,509 1,523
Operating and other expenses 1,717 1,306
Provisions for financing and insurance losses 541 341
----- -----
Total costs and expenses 5,816 5,182
----- -----
Net income from transactions with Automotive,
Communications Services, and Other Operations (131) (139)
--- ---
Income before income taxes and minority interests 766 620
Income tax expense 289 241
Equity income/(loss) and minority interests (23) (1)
--- ---
Net income - Financing and Insurance Operations $454 $378
=== ===
The above supplemental consolidating information is explained in Note 1,
"Financial Statement Presentation."
Reference should be made to the notes to consolidated financial statements.
- 4 -
CONSOLIDATED BALANCE SHEETS
Mar. 31, Mar. 31,
2001 Dec. 31, 2000
GENERAL MOTORS CORPORATION AND SUBSIDIARIES (Unaudited) 2000 (Unaudited)
--------- ---- ---------
ASSETS (dollars in millions)
Automotive, Communications Services, and
Other Operations
Cash and cash equivalents $7,445 $9,119 $8,497
Marketable securities 455 1,161 1,948
------ ------- -------
Total cash and marketable securities 7,900 10,280 10,445
Accounts and notes receivable
(less allowances) 6,264 5,835 5,552
Inventories (less allowances) (Note 2) 11,885 10,945 12,028
Equipment on operating leases (less
accumulated depreciation) 5,365 5,699 5,963
Deferred income taxes and other
current assets 8,421 8,388 9,491
------ ------ ------
Total current assets 39,835 41,147 43,479
Equity in net assets of nonconsolidated
associates 4,271 3,497 2,158
Property - net 34,081 33,977 33,177
Intangible assets - net 7,563 7,622 8,808
Deferred income taxes 14,806 14,870 15,100
Other assets 31,290 32,243 25,372
------ ------ ------
Total Automotive, Communications Services,
and Other Operations assets 131,846 133,356 128,094
Financing and Insurance Operations
Cash and cash equivalents 6,209 1,165 910
Investments in securities 10,107 9,595 9,016
Finance receivables - net 87,845 92,415 84,581
Investment in leases and other receivables 36,386 36,752 37,350
Other assets 29,041 27,846 21,243
Net receivable from Automotive, Communications
Services, and Other Operations 1,380 1,971 1,407
------- ------- -------
Total Financing and Insurance
Operations assets 170,968 169,744 154,507
------- ------- -------
Total assets $302,814 $303,100 $282,601
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive, Communications Services, and
Other Operations
Accounts payable (principally trade) $18,587 $18,309 $17,649
Loans payable 2,052 2,208 2,041
Accrued expenses 33,861 33,252 33,214
Net payable to Financing and Insurance
Operations 1,380 1,971 1,407
------ ------ ------
Total current liabilities 55,880 55,740 54,311
Long-term debt 8,510 7,410 8,587
Postretirement benefits other than pensions 33,416 34,306 34,532
Pensions 3,386 3,480 3,395
Other liabilities and deferred income taxes 15,109 15,768 17,214
------- ------- -------
Total Automotive, Communications Services,
and Other Operations liabilities 116,301 116,704 118,039
Financing and Insurance Operations
Accounts payable 6,669 7,416 4,616
Debt 135,334 135,037 124,492
Other liabilities and deferred income taxes 14,366 12,922 12,202
------- ------- --------
Total Financing and Insurance Operations
liabilities 156,369 155,375 141,310
Minority interests 702 707 621
General Motors - obligated mandatorily
redeemable preferred securities of
subsidiary trusts holding solely
junior subordinated debentures of
General Motors (Note 4)
Series D - - 79
Series G 139 139 139
Stockholders' equity
$1-2/3 par value common stock (issued,
548,924,480; 548,181,757;
and 621,602,927 shares) (Note 8) 915 914 1,036
Class H common stock (issued,
875,728,294; 875,286,559;
and 415,537,836 shares) (Note 5 and 8) 88 88 14
Capital surplus (principally additional
paid-in capital) 21,105 21,020 14,031
Retained earnings 10,053 10,119 8,404
------ ------ ------
Subtotal 32,161 32,141 23,485
Accumulated foreign currency translation
adjustments (2,992) (2,502) (2,115)
Net unrealized loss on derivatives (Note 7) (121) - -
Net unrealized gains on securities 300 581 1,164
Minimum pension liability adjustment (45) (45) (121)
-------- -------- --------
Accumulated other comprehensive loss (2,858) (1,966) (1,072)
-------- -------- --------
Total stockholders' equity 29,303 30,175 22,413
-------- -------- --------
Total liabilities and stockholders' equity $302,814 $303,100 $282,601
======== ======== ========
Reference should be made to the notes to consolidated financial statements.
- 5 -
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
-------------------------------------------------------
2001 2000
------------------------- -------------------------
Automotive, Financing Automotive, Financing
Comm.Serv. and Comm.Serv. and
and Other Insurance and Other Insurance
--------- --------- --------- ---------
(dollars in millions)
Net cash provided by (used in)
operating activities $873 $(153) $2,449 $3,655
Cash flows from investing activities
Expenditures for property (2,078) (19) (1,702) (103)
Investments in marketable securities
- acquisitions (279) (7,225) (970) (5,858)
Investments in marketable securities
- liquidations 985 6,713 720 6,261
Mortgage servicing rights - acquisitions - (447) - (178)
Mortgage servicing rights - liquidations - - - -
Finance receivables - acquisitions - (50,804) - (51,978)
Finance receivables - liquidations - 34,521 - 35,252
Proceeds from sales of finance receivables - 19,968 - 12,248
Operating leases - acquisitions (1,748) (2,850) (2,174) (4,481)
Operating leases - liquidations 1,925 2,481 1,763 1,739
Investments in companies, net of
cash acquired (548) (116) (154) -
Net investing activity with Financing and
Insurance Operations - - (998) -
Other (824) 503 (291) 437
----- ----- ----- -----
Net cash (used in) provided by
investing activities (2,567) 2,725 (3,806) (6,661)
----- ----- ----- -----
Cash flows from financing activities
Net decrease in loans payable (156) (16,857) (25) (564)
Long-term debt - borrowings 2,041 22,518 1,186 7,754
Long-term debt - repayments (947) (3,770) (1,033) (4,577)
Net financing activity with Automotive,
Communications Services,
and Other Operations - - - 998
Repurchases of common stocks - - (132) -
Proceeds from issuing common stocks 33 - 156 -
Cash dividends paid to stockholders (301) - (339) -
--- ----- --- -----
Net cash provided by (used in)
financing activities 670 1,891 (187) 3,611
--- ----- --- -----
Effect of exchange rate changes on cash and
cash equivalents (59) (10) (95) (1)
Net transactions with Automotive/
Financing Operations (591) 591 406 (406)
--- ----- ----- ---
Net (decrease) increase in cash and
cash equivalents (1,674) 5,044 (1,233) 198
Cash and cash equivalents at beginning
of the period 9,119 1,165 9,730 712
----- ----- ----- ---
Cash and cash equivalents at end
of the period $7,445 $6,209 $8,497 $910
===== ===== ===== ===
Reference should be made to the notes to consolidated financial statements.
- 6 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Financial Statement Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the U.S.
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 December 31,
2000 consolidated financial statements and notes thereto included in General
Motors Corporation's (the "Corporation" or "GM") 2000 Annual Report on Form
10-K, and all other GM, Hughes Electronics Corporation (Hughes), and General
Motors Acceptance Corporation (GMAC) filings with the Securities and Exchange
Commission.
GM presents separate supplemental consolidating statements of income and
other financial information for the following businesses: (1) Automotive,
Communications Services, and Other Operations which consists of the design,
manufacturing, and marketing of cars, trucks, locomotives, and heavy-duty
transmissions and related parts and accessories, as well as the operations of
Hughes; and (2) Financing and Insurance Operations which consists primarily of
GMAC, which provides a broad range of financial services, including consumer
vehicle financing, full-service leasing and fleet leasing, dealer financing, car
and truck extended service contracts, residential and commercial mortgage
services, vehicle and homeowners' insurance, and asset-based lending.
Transactions between businesses have been eliminated in the Corporation's
consolidated statements of income.
Certain amounts for 2000 were reclassified to conform with the 2001
classifications.
Note 2. Inventories
Inventories included the following for Automotive, Communications Services,
and Other Operations (dollars in millions):
March 31, Dec. 31, March 31,
2001 2000 2000
-------- --------- ---------
Productive material, work in process,
and supplies $5,840 $5,555 $5,963
Finished product, service parts, etc. 7,950 7,319 7,955
------- ------- -------
Total inventories at FIFO 13,790 12,874 13,918
Less LIFO allowance 1,905 1,929 1,890
------- ------- -------
Total inventories (less allowances) $11,885 $10,945 $12,028
====== ====== ======
Note 3. Contingent Matters
Litigation is subject to uncertainties and the outcome of individual
litigated matters is not predictable with assurance. Various legal actions,
governmental investigations, claims, and proceedings are pending against the
Corporation, including those arising out of alleged product defects;
employment-related matters; governmental regulations relating to safety,
emissions, and fuel economy; product warranties; financial services; dealer,
supplier, and other contractual relationships; and environmental matters. In
connection with the disposition by Hughes of its defense electronics business to
Raytheon Company in 1997 and its satellite systems manufacturing businesses to
The Boeing Company in 2000, there are disputes regarding the purchase price and
other matters that may result in payments by Hughes to the acquiring companies
that could be material to Hughes. GM has established reserves for matters in
which losses are probable and can be reasonably estimated. Some of the matters
may involve compensatory, punitive, or other treble damage claims, or demands
for recall campaigns, environmental remediation programs, or sanctions, that if
granted, could require the Corporation to pay damages or make other expenditures
in amounts that could not be estimated at March 31, 2001. After discussion with
counsel, it is the opinion of management that such liability is not expected to
have a material adverse effect on the Corporation's consolidated financial
condition or results of operations.
- 7 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(Unaudited)
Note 4. Preferred Securities of Subsidiary Trusts
On April 2, 2001, GM redeemed the Series G Trust's sole assets causing the
Series G Trust to redeem the approximately 5 million outstanding Series G 9.87%
Trust Originated Preferred Securitiessm (TOPrSsm). The Series G TOPrS were
redeemed at a price of $25 per share plus accrued and unpaid dividends of $0.42
per share. Also on April 2, 2001, GM redeemed the approximately 5 million
outstanding Series G depositary shares, each of which represents a one-fourth
interest in a GM Series G 9.12% Preference Share, at a price of $25 per share
plus accrued and unpaid dividends of $0.59 per share. The securities together
had a total face value of approximately $252 million.
-------------
sm "Trust Originated Preferred Securities" and "TOPrS" are service trademarks of
Merrill Lynch & Co.
Note 5. Capital Stock Transactions
During the second quarter of 2000, GM completed an exchange offer in which GM
repurchased 86 million shares of GM $1-2/3 par value common stock and issued 92
million shares of GM Class H common stock. In addition, on June 12, 2000, GM
contributed approximately 54 million shares and approximately 7 million shares
of GM Class H common stock to the U.S. Hourly-Rate Employees Pension Plan and
VEBA trust, respectively. The total value of the contributions was approximately
$5.6 billion. As a result of the exchange offer and employee benefit plan
contributions, the economic interest in Hughes attributable to GM $1-2/3 par
value common stock decreased from approximately 62% to approximately 30% and the
economic interest in Hughes attributable to GM Class H common stock increased
from approximately 38% to 70% on a fully diluted basis.
On June 6, 2000, the GM Board of Directors declared a three-for-one stock
split of the GM Class H common stock. The stock split was in the form of a 200%
stock dividend, paid on June 30, 2000 to GM Class H common stockholders of
record on June 13, 2000. All GM Class H common stock per share amounts and
numbers of shares for all periods presented have been adjusted to reflect the
stock split. Furthermore, as a result of this stock split, the voting and
liquidation rights of the GM Class H common stock were reduced from 0.6 votes
per share and 0.6 liquidation units per share, to 0.2 votes per share and 0.2
liquidation units per share in order to avoid dilution in the aggregate voting
or liquidation rights of any class. The voting and liquidation rights of the GM
$1-2/3 par value common stock were not changed. The voting and liquidation
rights of GM $1-2/3 par value common stock are one vote per share and one
liquidation unit per share.
Note 6. Comprehensive Income
GM's total comprehensive (loss) income was as follows (dollars in millions):
Three Months Ended
March 31,
------------------
2001 2000
---- ----
Net income $237 $1,783
Other comprehensive (loss) income (892) 86
--- ------
Total $(655) $1,869
=== =====
Note 7. Derivative Financial Instruments
Effective January 1, 2001, GM adopted Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, which requires that all derivatives be recorded at fair
value on the balance sheet and establishes criteria for designation and
effectiveness of derivative transactions for which hedge accounting is applied.
GM assesses the initial and ongoing effectiveness of its hedging relationships
in accordance with its documented policies. As a result of the adoption of this
standard as of January 1, 2001, GM recorded a transition adjustment representing
a one-time after-tax charge to income totaling $23 million, as well as an
after-tax unrealized gain of $4 million to other comprehensive income.
GM is exposed to market risk from changes in foreign currency exchange rates,
interest rates, and certain commodity and equity security prices. In the normal
course of business, GM enters into a variety of foreign exchange, interest rate,
and commodity forward contracts, swaps, and options, with the objective of
minimizing exposure arising from these risks. A risk management control system
is utilized to monitor foreign exchange, interest rate, commodity and equity
price risks, and related hedge positions.
- 8 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(Unaudited)
Note 7. Derivative Financial Instruments (concluded)
Cash Flow Hedges
GM uses financial instruments designated as cash flow hedges to hedge the
Corporation's exposure to foreign currency exchange risk associated with buying,
selling, and financing in currencies other than the local currencies in which it
operates, and its exposure to commodity price risk associated with changes in
prices of commodities used in its automotive business, primarily non-ferrous
metals used in the manufacture of automotive components. For transactions
denominated in foreign currencies GM hedges forecasted and firm commitment
exposures up to one year in the future. For commodities, GM hedges exposures up
to seven years in the future. For the three months ended March 31, 2001, hedge
ineffectiveness associated with instruments designated as cash flow hedges, and
changes in the time value of the instruments, which are excluded from the
assessment of hedge ineffectiveness, increased cost of sales and other expenses
by $2 million and $73 million, respectively. For the three months ended March
31, 2001, net gains of $1 million were reclassified into earnings as a result of
the discontinuance of cash flow hedges.
Derivative gains and losses included in other comprehensive income are
reclassified into earnings at the time that the associated hedged transactions
impact the income statement. For the three months ended March 31, 2001, $59
million of net derivative gains were reclassified to cost of sales and other
expenses. These net gains were offset by gains and losses on the transactions
being hedged. Approximately $9 million of net derivative losses included in
other comprehensive income at March 31, 2001 will be reclassified into earnings
within twelve months from that date.
Fair Value Hedges
GM uses financial instruments designated as fair value hedges to manage
certain of the Corporation's exposure to interest rate risk. GM is subject to
market risk from exposures to changes in interest rates due to its financing,
investing, and cash management activities. Interest rate swap agreements are
used to hedge GM's exposure associated with its fixed rate debt. For the three
months ended March 31, 2001, hedge ineffectiveness associated with instruments
designated as fair value hedges increased selling, general, and administrative
expenses by $62 million. During the same period, no fair value hedges were
derecognized.
Undesignated Derivative Instruments
Forward contracts and options not designated as hedging instruments under
SFAS No. 133 are also used to hedge certain foreign currency exposures.
Unrealized gains and losses on such instruments are recognized currently in
earnings.
Note 8. Earnings Per Share Attributable to Common Stocks
Earnings per share (EPS) attributable to each class of GM common stock was
determined based on the attribution of earnings to each such class of common
stock for the period divided by the weighted-average number of common shares for
each such class outstanding during the period. Diluted EPS attributable to each
class of GM common stock considers the impact of potential common shares, unless
the inclusion of the potential common shares would have an antidilutive effect.
The attribution of earnings to each class of GM common stock was as follows
(dollars in millions):
Three Months Ended
March 31,
------------------
2001 2000
---- ----
Earnings (losses) attributable to common stocks
Earnings attributable to $1-2/3 par value $296 $1,786
(Losses) attributable to Class H $(87) $(32)
Earnings attributable to GM $1-2/3 par value common stock for the period
represent the earnings attributable to all GM common stocks for the period,
reduced by the Available Separate Consolidated Net Income (ASCNI) of Hughes for
the respective period.
- 9 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(Unaudited)
Note 8. Earnings Per Share Attributable to Common Stocks (concluded)
Losses attributable to GM Class H common stock represent the ASCNI of Hughes,
excluding the effects of GM purchase accounting adjustments arising from GM's
acquisition of Hughes Aircraft Company, reduced by the amount of dividends
accrued on the Series A Preferred Stock of Hughes (as an equivalent measure of
the effect that GM's payment of dividends on the GM Series H 6.25% Automatically
Convertible Preference Stock would have if paid by Hughes). The calculated
losses used for computation of the ASCNI of Hughes is then multiplied by a
fraction, the numerator of which is equal to the weighted-average number of
shares of GM Class H common stock outstanding (875 million and 413 million
during the three months ended March 31, 2001 and 2000, respectively), and the
denominator of which is a number equal to the weighted-average number of shares
of GM Class H common stock which if issued and outstanding would represent a
100% interest in the earnings of Hughes (the "Average Class H dividend base").
The Average Class H dividend base was 1.3 billion for the first quarter of 2001
and 2000.
The reconciliation of the amounts used in the basic and diluted earnings per
share computations was as follows (dollars in millions except per share
amounts):
$1-2/3 Par Value Common Stock Class H Common Stock
------------------------------- ------------------------------
Per Share Per Share
Income Shares Amount ASCNI Shares Amount
------ ------ ------ ----- ------ ------
Three Months Ended March 31, 2001
Net income (loss) $307 $(70)
Less:Dividends on preference stocks 11 17
--- ---
Basic EPS
Income (loss) attributable to
common stocks 296 548 $0.54 (87) 875 $(0.10)
==== ====
Effect of Dilutive Securities
Assumed exercise of dilutive
stock options - 6 - -
--- --- --- ---
Diluted EPS
Adjusted income (loss) attributable
to common stocks $296 554 $0.53 $(87) 875 $(0.10)
=== === ==== == === ====
Three Months Ended March 31, 2000
Net income (loss) $1,807 $(24)
Less:Dividends on preference stocks 21 8
----- ---
Basic EPS
Income (loss) attributable to
common stocks 1,786 620 $2.88 (32) 413 $(0.08)
==== ====
Effect of Dilutive Securities
Assumed exercise of dilutive
stock options - 17 - -
----- --- --- ---
Diluted EPS
Adjusted income (loss)
attributable to
common stocks $1,786 637 $2.80 $(32) 413 $(0.08)
===== === ==== == === ====
Note 9. Depreciation and Amortization
Depreciation and amortization included in cost of sales and other expenses
for Automotive, Communications Services, and Other Operations was as follows (in
millions):
Three Months Ended
March 31,
------------------
2001 2000
---- ----
Depreciation $1,031 $990
Amortization of special tools 565 654
Amortization of intangible assets 73 71
----- -----
Total $1,669 $1,715
===== =====
- 10 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - concluded
(Unaudited)
Note 10. Segment Reporting
GM's reportable operating segments within its Automotive, Communications
Services, and Other Operations business consist of General Motors Automotive
(GMA) (which is comprised of four regions: GM North America (GMNA), GM Europe
(GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM Asia Pacific (GMAP)),
Hughes, and Other. GM's reportable operating segments within its Financing and
Insurance Operations business consist of GMAC and Other. Selected information
regarding GM's reportable operating segments were as follows:
Total
Auto- Other Total
GMNA GME GMLAAM GMAP GMA Hughes Other motive GMAC Financing Financing
---- --- ------ ---- --- ------ ----- ------ ---- --------- ---------
(dollars in millions)
For the Three Months Ended March 31, 2001
Net sales and revenues:
External customers $25,580 $6,000 $1,361 $838 $33,779 $1,911 $474 $36,164 $6,369 $82 $6,451
Intersegment (474) 268 34 172 - 6 (6) - - - -
------ ----- ----- ----- ------ ----- --- ------ ----- -- -----
Total net sales and revenues $25,106 $6,268 $1,395 $1,010 $33,779 $1,917 $468 $36,164 $6,369 $82 $6,451
====== ===== ===== ===== ====== ===== === ====== ===== == =====
Interest income (a) $269 $83 $1 $4 $357 $24 $(225) $156 $638 $(118) $520
Interest expense $355 $60 $24 $1 $440 $51 $(329) $162 $1,989 $60 $2,049
Net income (loss) $106 $(84) $5 $(21) $6 $(104)(b) $(119) $(217) $465 $(11) $454
Segment Assets $88,963 $18,423 $4,499 $964 $112,849 $18,854 $143 $131,846 $170,110 $858 $170,968
For the Three Months Ended March 31, 2000
Net sales and revenues:
External customers $29,729 $6,570 $1,249 $783 $38,331 $2,107 $757 $41,195 $5,621 $42 $5,663
Intersegment (485) 264 141 80 - 11 (11) - - - -
------ ----- ------ --- ------ ----- --- ------ ----- -- -----
Total net sales and revenues $29,244 $6,834 $1,390 $863 $38,331 $2,118 $746 $41,195 $5,621 $42 $5,663
====== ===== ===== === ====== ===== === ====== ===== == =====
Interest income (a) $123 $100 $6 $2 $231 $18 $(88) $161 $483 $(109) $374
Interest expense $266 $86 $21 $- $373 $45 $(202) $216 $1,910 $102 $2,012
Net income (loss) $1,289 $221 $1 $7 $1,518 $(77)(b) $(36) $1,405 $397 $(19) $378
Segment Assets $82,618 $21,139 $4,597 $1,268 $109,622 $20,196 $(1,724) $128,094 $153,913 $594 $154,507
(a) Interest income is included in net sales and revenues from external
customers.
(b) The amount reported for Hughes excludes amortization of GM purchase
accounting adjustments related to GM's acquisition of Hughes Aircraft
Company of $1 million and $5 million for 2001 and 2000, respectively.
* * * * * *
- 11-
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial condition and
results of operations (MD&A) should be read in conjunction with the December 31,
2000 consolidated financial statements and notes thereto along with the MD&A
included in General Motors Corporation's (the "Corporation" or "GM") 2000 Annual
Report on Form 10-K, and all other GM, Hughes Electronics Corporation (Hughes),
and General Motors Acceptance Corporation (GMAC) filings with the Securities and
Exchange Commission. All earnings per share amounts included in the MD&A are
reported as diluted.
GM presents separate financial information for the following businesses:
Automotive, Communications Services, and Other Operations and Financing and
Insurance Operations.
GM's reportable operating segments within its Automotive, Communications
Services, and Other Operations business consist of:
. GM Automotive (GMA), which is comprised of four regions: GM North America
(GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM
Asia Pacific (GMAP);
. Hughes, which includes activities relating to digital entertainment,
information and communications services, and satellite-based private
business networks; and
. Other, which includes the design, manufacturing, and marketing of
locomotives and heavy-duty transmissions, the elimination of intersegment
transactions, certain non-segment specific revenues and expenditures, and
certain corporate activities.
GM's reportable operating segments within its Financing and Insurance
Operations business consist of GMAC and Other Financing, which includes
financing entities operating in the U.S., Canada, Brazil, Germany, Sweden, and
Mexico that are not associated with GMAC.
The disaggregated financial results for GMA have been prepared using a
management approach, which is consistent with the basis and manner in which GM
management internally disaggregates financial information for the purpose of
assisting in making internal operating decisions. In this regard, certain common
expenses were allocated among regions less precisely than would be required for
stand-alone financial information prepared in accordance with accounting
principles generally accepted in the U.S. (GAAP) and certain expenses (primarily
certain U.S. taxes related to non-U.S. operations) were included in the
Automotive, Communications Services, and Other Operations' Other segment. The
financial results represent the historical information used by management for
internal decision making purposes; therefore, other data prepared to represent
the way in which the business will operate in the future, or data prepared on a
GAAP basis, may be materially different.
RESULTS OF OPERATIONS
For the first quarter of 2001, consolidated net income for the Corporation
was $237 million, or $0.53 per share of GM $1-2/3 par value common stock,
compared with $1.8 billion, or $2.80 per share of GM $1-2/3 par value common
stock for the first quarter of 2000.
Effective January 1, 2001, GM adopted Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, which requires that all derivatives be recorded at fair
value on the balance sheet and establishes criteria for designation and
effectiveness of derivative transactions for which hedge accounting is applied.
As a result of the adoption of this standard as of January 1, 2001, GM recorded
a transition adjustment representing a one-time after-tax charge to income
totaling $23 million, as well as an after-tax unrealized gain of $4 million to
other comprehensive income. For the first quarter of 2001, the net effect of the
initial adoption of SFAS No. 133 resulted in an increase to income for the
Corporation of $12 million after-tax (GMNA $(14) million, GME $2 million, GMLAAM
$(1) million, GMAP $(1) million, Hughes $(8) million, and GMAC $34 million).
This amount represents the initial transition adjustment recorded as a charge to
income of $23 million and the amount of the initial transition adjustment
originally recorded in other comprehensive income which was reclassified into
earnings during the first quarter. These amounts were primarily recorded in cost
of sales for Automotive, Communications Services, and Other Operations and in
operating and other expenses and interest expense for Financing and Insurance
Operations.
- 12 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Vehicle Unit Deliveries of Cars and Trucks
Three Months Ended March 31,
------------------------------------------------------
2001 2000
------------------------- ------------------------
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
-------- ---- -------- -------- ---- --------
(units in thousands)
GMNA
United States
Cars 2,089 604 28.9% 2,227 644 28.9%
Trucks 2,118 592 28.0% 2,265 639 28.2%
----- ----- ----- -----
Total United States 4,207 1,196 28.4% 4,492 1,283 28.6%
Canada, Mexico, and
Other 646 164 25.4% 631 157 24.8%
----- ----- ----- -----
Total GMNA 4,853 1,360 28.0% 5,123 1,440 28.1%
GME 5,183 496 9.6% 5,551 522 9.4%
GMLAAM 978 163 16.6% 879 138 15.8%
GMAP 3,345 125 3.8% 3,357 111 3.3%
------ ----- ------ -----
Total Worldwide 14,359 2,144 14.9% 14,910 2,211 14.8%
====== ===== ====== =====
Wholesale Sales
Three Months Ended
March 31,
-------------------------
2001 2000
-------- --------
(units in thousands)
GMNA
Cars 594 731
Trucks 631 758
----- -----
Total GMNA 1,225 1,489
----- -----
GME
Cars 441 460
Trucks 27 39
--- ---
Total GME 468 499
--- ---
GMLAAM
Cars 111 92
Trucks 48 43
--- ---
Total GMLAAM 159 135
--- ---
GMAP
Cars 47 39
Trucks 92 77
--- ---
Total GMAP 139 116
--- ---
Total Worldwide 1,991 2,239
===== =====
GMA Financial Review
GMA's income and net margin adjusted to exclude the net effect of the initial
adoption of SFAS No. 133 (adjusted income and margin) was $20 million and 0.1%
on net sales and revenues of $33.8 billion for the first quarter of 2001,
compared with income of $1.5 billion and a net margin of 4.0% on net sales and
revenues of $38.3 billion for the prior year quarter. The decrease in adjusted
income and net sales and revenues from the prior year quarter was primarily due
to a decrease in wholesale sales volumes and pricing pressures in North America
and Europe. These unfavorable conditions were partially offset by cost structure
improvements, primarily in North America.
GMNA's adjusted income was $120 million for the first quarter of 2001,
compared with $1.3 billion for the prior year quarter. The decrease in GMNA's
first quarter 2001 adjusted income was primarily the result of lower wholesale
sales volumes due to significant production reductions during the quarter (as
efforts were made to decrease dealer stock levels in the U.S.) and unfavorable
net price, partially offset by improvements in manufacturing costs due to
performance efficiencies and material cost savings. Net price, which comprehends
the percent increase/(decrease) a customer pays in the current period for the
same comparably equipped vehicle produced in the previous year's period, was
unfavorable for the quarter at (1.0)% year-over-year.
- 13 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMA Financial Review (concluded)
GME's adjusted loss was $86 million for the first quarter of 2001, compared
with income of $221 million for the prior year quarter. The decrease in adjusted
earnings for the first quarter of 2001 was primarily due to a decrease in
wholesale sales volume from the continued weakening of the European industry, as
well as reduced availability of the new Corsa during the launch period. The
volume decreases were exacerbated by a continued shift in sales mix from larger,
more profitable vehicles to the smaller, less profitable entries, and a
continued increase in competitive pricing pressure.
GMLAAM's adjusted income was $6 million for the first quarter of 2001,
compared with income of $1 million for the prior year quarter. The increase in
adjusted income for the first quarter of 2001 was primarily due to an increase
in wholesale sales volumes and nominal price increases, partially offset by
increases in material, manufacturing, and commercial costs.
GMAP's adjusted loss was $20 million for the first quarter of 2001, compared
with income of $7 million for the prior year quarter. The decrease in adjusted
earnings for the first quarter of 2001 was primarily due to increased equity
losses at Isuzu, unfavorable product mix, and start-up costs in the region,
partially offset by increased wholesale sales volumes.
Hughes Financial Review
Total net sales and revenues decreased to $1.9 billion for the first quarter
of 2001, compared with $2.1 billion for the prior year quarter. The decrease in
net sales and revenues for the first quarter of 2001 resulted from decreased
revenues at Hughes Network Systems (HNS) and PanAmSat Corporation
(PanAmSat), as well as the sale of the satellite systems manufacturing
businesses to The Boeing Company on October 6, 2000. The decrease in net sales
and revenues at HNS was primarily due to decreased shipments of DIRECTV receiver
equipment and a decrease in manufacturing subsidies due primarily to DIRECTV's
completion of the conversion of PRIMESTAR By DIRECTV customers to the high-power
DIRECTV service in 2000. The decrease in net sales and revenues at PanAmSat was
primarily due to new outright sales and sales-type lease transactions executed
during the first quarter of 2000, for which there were no comparable results for
the first quarter of 2001. These decreases were partially offset by an increase
in net sales and revenues at the Direct-To-Home businesses that resulted from
the addition of about 2.0 million net new subscribers in the United States and
Latin America since March 31, 2000.
Hughes' adjusted loss was $96 million for the first quarter of 2001, compared
with a loss of $77 million for the prior year quarter. The increase in the
adjusted loss for the first quarter of 2001 was primarily due to higher
marketing costs at the Direct-To-Home businesses resulting from increased
subscriber growth in both the United States and Latin America, increased
depreciation and amortization expense due to capital expenditures for property
and satellites since the first quarter of 2000 and a change in the useful life
of Galaxy VIII-i satellite that resulted from the failure of its primary
propulsion system during the third quarter of 2000, and the sale of the
satellite systems manufacturing businesses to The Boeing Company in October
2000. These increases were partially offset by the write-off of the discontinued
DIRECTV Japan business in 2000.
Due to rapid consolidation in the media and telecommunications industries, GM
is now considering alternative strategic transactions involving Hughes and other
participants in those industries. Any such transaction might involve the
separation of Hughes from GM. GM's objective in this effort is to maximize the
enterprise value of Hughes for the long-term benefit of the holders of GM's
Class H common stock and GM $1-2/3 par value common stock through a structure
that maintains the financial strength of GM. No assurance can be given that any
transaction will be agreed upon with any party or that other conditions,
including any stockholder or regulatory approvals, will be satisfied.
GMAC Financial Review
GMAC's adjusted income was $431 million for the first quarter of 2001,
compared with $397 million for the prior year quarter. Adjusted income from
automotive and other financing operations totaled $290 million for the first
quarter of 2001, compared with $262 million for the prior year quarter. The
strong results can be attributed to higher asset levels in North America in the
first quarter of 2001. Adjusted income from insurance operations totaled $43
million for the first quarter of 2001, compared with $62 million for the prior
year quarter. The decrease was due to industry-wide deterioration of loss trends
in the personal lines business, partially offset by favorable loss experiences
in certain commercial and mechanical programs. Adjusted income from mortgage
operations totaled $98 million for the first quarter of 2001, compared with $73
million for the prior year quarter. The increased earnings from mortgage
operations reflect higher originations and increased securitization activity, as
well as increased contributions from international operations.
- 14 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMAC Financial Review (concluded)
Financing revenue totaled $3.9 billion for the first quarter of 2001,
compared with $3.8 billion for the prior year quarter. The growth was mainly due
to higher average retail and commercial and other loan receivable balances,
partially offset by a decrease in wholesale receivable balances.
During the first quarter of 2001, interest rates, including those on
originated loans for fifteen and thirty-year residential mortgages, declined
substantially. This activity increased mortgage refinancing activity resulting
in a reduction in the expected future cash flows that support the carrying value
of the mortgage servicing rights. To protect against declines in fair value of
its mortgage servicing rights, GMAC administers a hedge program. Subsequent to
March 31, 2001, spreads between mortgage rates, which drive changes in the value
of GMAC's mortgage related assets, and the interest rates which drive changes in
the value of GMAC's hedge instruments that are used in risk management
activities have significantly tightened while prepayments have continued to
accelerate. As a result, estimated fair values of mortgage servicing rights for
risks not being hedged have declined.
Using the respective interest rates in effect as of April 30, 2001 to value
the mortgage serving rights and corresponding derivatives that hedge mortgage
servicing rights, the net potential negative effect of the risks not being
hedged (spread risk), hedge ineffectiveness, and loan prepayments is a reduction
in income of $80 million after-tax. This impact may change, as most of this is
unrealized at this date. Should this interest rate environment continue,
additional potential impairments could occur or be realized or should it
improve, the potential impairments could decline or be eliminated.
Furthermore, significantly offsetting the impact of these potential
impairments are several positive factors, including improvement in GMAC's
mortgage securitization residual cash flows; an increase in mortgage processing
fees and interest income from mortgage loans held for sale; and lower funding
costs due to the interest rate reduction by the Federal Reserve on April 18,
2001.
LIQUIDITY AND CAPITAL RESOURCES
Automotive, Communications Services, and Other Operations
---------------------------------------------------------
At March 31, 2001, cash, marketable securities, and $3.0 billion of assets of
the Voluntary Employees' Beneficiary Association (VEBA) trust invested in
fixed-income securities totaled $10.9 billion, compared with $13.3 billion at
December 31, 2000 and $13.4 billion at March 31, 2000. The decrease from
December 31, 2000 was primarily due to an increase in accounts receivable and
inventory levels, partially offset by an increase in accounts payable. In
addition, GM's purchase of an additional 10% equity stake in Suzuki, an increase
in net capital expenditures, and decreased wholesale sales volumes contributed
to the decrease in cash. Total assets in the VEBA trust used to pre-fund part of
GM's other postretirement benefits liability approximated $5.7 billion at March
31, 2001, compared with $6.7 billion at December 31, 2000 and $6.3 billion at
March 31, 2000. GM previously indicated that it had a goal of maintaining $13.0
billion of cash and marketable securities in order to continue funding product
development programs throughout the next downturn in the business cycle. This
$13.0 billion target includes cash to pay certain costs that were pre-funded in
part by VEBA contributions.
Long-term debt was $8.5 billion at March 31, 2001, compared with $7.4 billion
at December 31, 2000 and $8.6 billion at March 31, 2000. The ratio of long-term
debt to long-term debt and GM's net assets of Automotive, Communications
Services, and Other Operations was 35.4% at March 31, 2001, compared with 30.8%
at December 31, 2000 and 46.1% at March 31, 2000. The ratio of long-term debt
and short-term loans payable to the total of this debt and GM's net assets of
Automotive, Communications Services, and Other Operations was 40.5% at March 31,
2001, compared with 36.6% at December 31, 2000 and 51.4% at March 31, 2000.
Net liquidity, calculated as cash and marketable securities less the total of
loans payable and long-term debt, was $(2.7) billion at March 31, 2001, compared
with $662 million at December 31, 2000 and $(183) million at March 31, 2000.
Financing and Insurance Operations
----------------------------------
At March 31, 2001, GMAC owned assets and serviced automotive receivables
totaling $193.1 billion, compared with $185.6 billion at December 31, 2000 and
$166.9 billion at March 31, 2000. The increase from December 31, 2000 was
primarily the result of increases in cash and cash equivalents, serviced retail
receivables, other assets, investments in securities, commercial and other loan
receivables, due and deferred from receivable sales, real estate mortgages held
for sale, and mortgage servicing rights. These increases were partially offset
by a decline in net operating lease assets, serviced wholesale receivables, and
receivables due from Automotive, Communications Services, and Other Operations.
- 15 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Financing and Insurance Operations (concluded)
Consolidated automotive and commercial finance receivables serviced by GMAC,
including sold receivables, totaled $114.2 billion at March 31, 2001, compared
with $112.5 billion at December 31, 2000 and $100.1 billion at March 31, 2000.
The increase from December 31, 2000 was primarily the result of a $1.8 billion
increase in serviced retail receivables, an increase in commercial and other
loan receivables, partially offset by a decrease in serviced wholesale
receivables. Continued GM-sponsored retail financing incentives contributed to
the rise in serviced retail receivables. The increase in commercial and other
loan receivables was primarily attributable to increases in secured notes as
well as continued growth at Commercial Credit LLC and GMAC Business Credit LLC.
At March 31, 2001, GMAC's total borrowings were $133.8 billion, compared with
$133.4 billion at December 31, 2000 and $123.2 billion at March 31, 2000. The
increased borrowings since December 31, 2000 were used to fund increased asset
levels. GMAC's ratio of total debt to total stockholder's equity at March 31,
2001 was 9.4:1, compared with 9.5:1 at December 31, 2000 and March 31, 2000.
Book Value Per Share
Book value per share is determined based on the liquidation rights of the
various classes of common stock. Book value per share of GM $1-2/3 par value
common stock was $38.23 at March 31, 2001, compared with $39.36 at December 31,
2000 and $29.42 at March 31, 2000. Book value per share of GM Class H common
stock, adjusted to reflect the GM Class H common stock split, was $7.65 at March
31, 2001, compared with $7.87 at December 31, 2000 and $5.88 at March 31, 2000.
Return on Net Assets (RONA)
As part of its shareholder value initiatives, GM has adopted RONA as a
performance measure to heighten management's focus on balance sheet investments
and the return on those investments. GM's RONA calculation is based on
principles established by management and approved by the GM Board of Directors.
GM's 2001 first quarter RONA on an annualized basis adjusted to exclude the net
effect of the initial adoption of SFAS No. 133 and excluding Hughes, was 5.1%.
Dividends
Dividends may be paid on common stocks only when, as, and if declared by the
GM Board in its sole discretion. The amount available for the payment of
dividends on each class of common stock will be reduced on occasion by dividends
paid on that class and will be adjusted on occasion for changes to the amount of
surplus attributed to the class resulting from the repurchase or issuance of
shares of that class.
GM's policy is to distribute dividends on its $1-2/3 par value common stock
based on the outlook and indicated capital needs of the business. On February 6,
2001, the GM Board declared a quarterly cash dividend of $0.50 per share on GM
$1-2/3 par value common stock, paid March 10, 2001, to holders of record on
February 16, 2001. With respect to GM Class H common stock, the GM Board
determined that it will not pay any cash dividends at this time in order to
allow the earnings of Hughes to be retained for investment in its
telecommunications and space businesses.
A quarterly dividend of $8.7793 per share for the GM Series H 6.25%
Automatically Convertible Preference Stock was paid on May 1, 2001, to the sole
holder of record on April 2, 2001.
Employment and Payrolls
Worldwide employment at March 31, (in thousands) 2001 2000
---- ----
GMNA 208 214
GME 79 90
GMLAAM 23 23
GMAP 11 11
Hughes 10 18
GMAC 28 26
Other 13 13
---- ----
Total employees 372 395
=== ===
Three Months Ended
March 31,
-------------------
2001 2000
---- ----
Worldwide payrolls - (in billions) $5.0 $5.5
=== ===
* * * * * * *
- 16 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS
(a) Material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Corporation became, or was, a party
during the quarter ended March 31, 2001, or subsequent thereto, but before the
filing of this report are summarized below:
Other Matters
With respect to the previously reported action against DIRECTV filed by
Pegasus Satellite Television, Inc. ("Pegasus Satellite") and Golden Sky Systems,
Inc. ("Golden Sky"), the two largest National Rural Telecommunications
Cooperative ("NRTC") affiliates, on January 11, 2000, DIRECTV filed
counterclaims against Pegasus Satellite and Golden Sky on March 9, 2001 seeking
Judicial declarations that the contracts between them and the NRTC do not
include rights of first refusal and will terminate when the DIRECTV-1 satellite
is removed from orbit. DIRECTV denies that it has wrongfully interfered with any
of the plaintiff's business relationships and will vigorously defend the
lawsuit.
***
As previously reported, a class action suit was filed against DIRECTV on
behalf of the NRTC participating members on February 29, 2000 asserting claims
identical to the claims that were asserted by Pegasus Satellite and Golden Sky
in their lawsuit against DIRECTV. Similar to Golden Sky, however, the class has
dismissed its equipment-related claims without prejudice. DIRECTV filed
counterclaims against the class identical to those filed against Pegasus
Satellite and Golden Sky described above on March 9, 2001.
***
On February 1, 2001, the NRTC filed a third lawsuit in the U.S. District
Court for the Central District of California against DIRECTV, seeking a
declaration from the court that it is not required to defend and indemnify
DIRECTV for the Pegasus Satellite and Golden Sky and class action lawsuits. The
NRTC has been and continues to pay DIRECTV's legal fees in those matters under
protest. DIRECTV filed a counterclaim on February 21, 2001 seeking a declaratory
judgement that the NRTC is indeed responsible for the defense and indemnity of
DIRECTV, and the NRTC's repudiation of its obligations entitled DIRECTV to
terminate the DBS Distribution Agreement with the NRTC.
***
With regard to the previously reported EchoStar Communications Corporation
("EchoStar") action filed on February 1, 2000 against DIRECTV, Hughes Network
Systems and Thomson Consumer Electronics, Inc., EchoStar received permission
from the court on April 5, 2001 to add Circuit City Stores, Inc., Best Buy Co.,
Inc. and RadioShack Corporation as defendants and a horizontal conspiracy claim
involving these defendants and DIRECTV to the lawsuit. Although an amount of
loss, if any, cannot be estimated at this time, an unfavorable outcome could be
reached that could be material to Hughes' results of operations or financial
position. DIRECTV believes that EchoStar's complaint, as amended, is without
merit and is vigorously defending against the allegations raised.
***
With respect to the previously reported Hughes Communications Galaxy, Inc.
("HCGI") action filed on March 22, 1991 against the U.S. Government that was
based upon the National Aeronautics and Space Administration's breach of
contract to launch ten satellites on the Space Shuttle, oral argument is
scheduled to be heard in July 2001 on the appeals. HCGI is requesting a greater
amount than the $103 million previously awarded to HCGI, and the Government
filed its cross appeal. As a result of the uncertainty regarding the outcome of
this matter, no amount has been recorded in the consolidated financial
statements to reflect the award. Final resolution of this issue could result in
a gain that would be material to Hughes.
***
- 17 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS (concluded)
(b) Previously reported legal proceedings which have been terminated, either
during the quarter ended March 31, 2001, or subsequent thereto, but before the
filing of this report are summarized below:
With respect to the Notices of Violation dated March 28, 2000 and July 5,
2000 which General Motors received from the Michigan Department of Environmental
Quality ("MDEQ") alleging non-compliance with certain applicable clean air
regulations at the GM Service Parts Operations - Flint Processing Center, GM has
entered into a Consent Order with MDEQ providing for a fine of $59,022 and GM's
agreement to retire certain emission credits.
* * * * * *
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit
Number Exhibit Name Page No.
------ ----------------------------------------------- --------
99 Hughes Electronics Corporation Financial Statements and
Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
(b) REPORTS ON FORM 8-K
Eleven reports on Form 8-K, dated October 3, 2000 (filed January 17, 2001),
January 3, 2001, January 8, 2001, January 16, 2001 (2), February 1, 2001,
February 6, 2001, February 9, 2001, February 22, 2001, March 1, 2001, and March
29, 2001 were filed during the quarter ended March 31, 2001 reporting matters
under Item 5, Other Events and reporting matters under Item 9, Regulation FD
Disclosure.
* * * * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS CORPORATION
--------------------------
(Registrant)
Date: May 10, 2001 /s/Peter R. Bible
------------------- -----------------------------------------
(Peter R. Bible, Chief Accounting Officer)
- 18 -