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) April 18, 2001
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GENERAL MOTORS CORPORATION
-----------------------------------------------------
(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 April 18, 2001, a news release was issued on the subject of first
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 Quarterly Report on Form 10-Q. The following
is the first quarter earnings release for GM, and their subsidiary Hughes
Electronics Corporation's (Hughes) earnings release dated April 17, 2001.
GM EARNS $225 MILLION, OR $0.50 PER SHARE, IN FIRST QUARTER
DETROIT -- General Motors Corp. (NYSE: GM) today reported that it earned
$225 million, or $0.50 diluted earnings per share, in the first quarter of 2001
-- excluding special items -- on revenues of $42.6 billion. The results exclude
the $12 million, or $0.03 per share, favorable effect of the initial adoption of
an accounting change (SFAS No. 133) relating to the treatment of derivatives.
Including the accounting change, GM's first-quarter 2001 income totaled $237
million, or $0.53 per share.
GM's first-quarter performance, although better than expected, was down
significantly from the record $2.80 per share in the first quarter of 2000 on
net income of $1.8 billion and revenues totaling $46.9 billion.
GM financial results described throughout the remainder of this release
exclude the special item relating to SFAS No. 133 unless otherwise noted.
"Our first-quarter performance was better than expected, considering
significantly reduced production volumes in North America," said GM Chairman
Jack Smith. "While the economic and competitive environment is challenging, we
remain focused on our key customer and business priorities."
GM President and Chief Executive Officer Rick Wagoner said, "The entire GM
organization is moving fast to bring new products to market, grow our business,
and improve our financial performance. We are committed to doing even better by
aggressively attacking costs while we focus on bringing innovative new products
and services to markets around the world."
Strong first-quarter earnings at General Motors Acceptance Corp. (GMAC) and
lower costs in the North American automotive business only partially offset the
effect of lower vehicle sales and intense pricing pressures in North America and
Europe.
GMAC earnings of $431 million in the first quarter reflected lower interest
rates and increased wholesale business, partially offset by weaker
vehicle-residual values. Mortgage operations also continued to perform very
strongly in this period.
The significant decline in automotive earnings versus last year's first
quarter are attributable primarily to North America and Europe. GM North
America's (GMNA) income was $120 million in the first quarter of 2001, down more
than $1.1 billion from the same period last year, as net price fell 1.0 percent
and vehicle sales to dealers fell by more than 300,000 units, reflecting
significant first-quarter production cuts designed to reduce dealer inventories.
"Continued progress in reducing costs helped offset the nearly 20-percent
reduction in North American production volume. Our dealer inventory levels are
much improved compared with levels at the end of last year," Wagoner said. "Our
U.S. and North American market share was stable in the first quarter and up
- 2 -
from the fourth quarter of 2000. While the North American industry volume
is down compared with the record highs of last year, we are still seeing a
lot of underlying strength in demand. As we continue to roll out new products
and expand industry-leading services such as OnStar, we are focused on growing
our market share and our revenue base."
GM Europe (GME) lost $86 million during the first quarter, down
significantly from a profit of $221 million in the same quarter last year.
Results were primarily affected by lower volume, continued pricing pressures,
particularly in the United Kingdom, a shift in demand to smaller, lower-profit
vehicles, and unfavorable country mix. While vehicle deliveries were down in
line with the overall industry, GME's market share increased slightly during the
quarter, and Opel/Vauxhall was the number-one brand for passenger-car sales in
Western and Central Europe in the month of March. "We've taken tough actions to
restructure our European operations, but the market is proving to be weaker than
expected. We are focusing intensely on our new product introductions to
strengthen our brands, and we are pushing even harder to reduce costs to meet
the pricing challenges in this demanding market," Wagoner said.
GM's Latin America/Africa/Mid-East (GMLAAM) region increased its
profitability to $6 million in the first quarter of 2001, primarily from
improved volume. The Asia Pacific (GMAP) region had a loss of $20 million in the
first quarter, which was more than accounted for by losses at GM's affiliate
Isuzu.
Hughes' net loss of $96 million in the first quarter of 2001 was related
primarily to the continued growth of DIRECTV. Hughes added 441,000 net new
DIRECTV subscribers in the first quarter, bringing the total subscriber base to
11.2 million.
LOOKING AHEAD
General Motors continues to expect that total U.S. vehicle sales in
calendar-year 2001 will be about 16.5 million units.
While there are considerable uncertainties in the economic environment, the
present consensus among automotive analysts that GM is expected to earn
approximately $0.95 per share for the second quarter of 2001 is consistent with
GM's internal expectations.
"We have a number of major vehicle introductions this year in key market
segments throughout the world as we continue to strengthen our global
portfolio," Wagoner said.
Key new products in North America include the Chevrolet Avalanche; the
Chevrolet Trailblazer, GMC Envoy and Oldsmobile Bravada midsize sport utilities;
the Cadillac Escalade and Escalade EXT; Buick Rendezvous, and the Saturn VUE.
In Europe, the new Corsa and Zafira offerings, Astra convertible, Speedster,
Vivaro commercial van, and improved availability of diesel engines are important
for building market momentum.
In Latin America, the Chevrolet Zafira and Grand Vitara are new entries,
joining the Celta, which was introduced last year.
The Buick Sail, the third distinct model from the Shanghai GM joint venture,
and the Chevrolet Blazer and the S-10 crewcab pickups, which will be produced by
the Jinbei GM joint venture, are important entries in this key growth market.
- 3 -
The Zafira was recently introduced in Asia and is produced at GM's Thailand
plant. GM will begin production in September of a small Chevrolet 4X4 lifestyle
vehicle at Suzuki's Kosai plant in Japan. That vehicle will initially be sold in
Japan and Australia.
# # #
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-10,11) 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.
* * * * * *
- 4 -
General Motors Corporation
Adjusted Corporate Financial Results
First Quarter
-------------
2001(1) 2000
---- ----
Total net sales and
revenues ($Mil's) $42,623 $46,858
Consolidated net income ($Mil's) $225 $1,783
Net margin from consolidated
net income 0.5% 3.8%
GM $1-2/3 par value earnings
per share
Basic EPS $0.51 $2.88
Diluted EPS $0.50 $2.80
GM Class H earnings per share (2)
Basic EPS $(0.09) $(0.08)
Diluted EPS $(0.09) $(0.08)
Return on net assets (RONA) for
continuing operations
excluding Hughes 5.1% 15.9%
Earnings attributable to GM $1-2/3 par
value ($Mil's)
Consolidated net income $225 $1,783
Preferred dividends (28) (29)
Losses attributable to GM Class H 81 32
--- -----
Total earnings attributable to
GM $1-2/3 par value $278 $1,786
=== =====
GM $1-2/3 par value average shares
outstanding (Mil's)
Basic shares 548 620
Diluted shares 554 637
Cash dividends per share of
common stocks
GM $1-2/3 par value $0.50 $0.50
GM Class H - -
Book value per share of common
stocks at March 31
GM $1-2/3 par value $38.23 $29.42
GM Class H (2) $7.65 $5.88
Total cash at March 31 ($Bil's) (3) $10.9 $13.4
Automotive, Communications Services,
and Other Operations ($Mil's)
Depreciation $1,031 $990
Amortization of special tools 565 654
Amortization of intangible assets 73 71
----- -----
Total $1,669 $1,715
===== =====
See footnotes on page 9.
- 5 -
General Motors Corporation
Adjusted Segment Financial Results
First Quarter
-------------
2001(1) 2000
---- ----
(Dollars in millions)
Total net sales and revenues
GMNA $25,106 $29,244
GME 6,268 6,834
GMLAAM 1,395 1,390
GMAP 1,010 863
------ ------
Total GMA 33,779 38,331
Hughes 1,917 2,118
Other 468 746
------ ------
Total ACO 36,164 41,195
------ ------
GMAC 6,377 5,621
Other Financing 82 42
------ ------
Total FIO 6,459 5,663
------ ------
Consolidated net sales
and revenues $42,623 $46,858
====== ======
Pre-tax income (loss)
GMNA $216 $1,923
GME (153) 349
GMLAAM 8 (36)
GMAP - 27
--- -----
Total GMA 71 2,263
Hughes (4) (152) (208)
Other (146) (43)
--- -----
Total ACO (227) 2,012
--- -----
GMAC 718 632
Other Financing (14) (12)
---- -----
Total FIO 704 620
---- -----
Consolidated pre-tax income $477 $2,632
=== =====
Net income (loss)
GMNA $120 $1,289
GME (86) 221
GMLAAM 6 1
GMAP (20) 7
-- -----
Total GMA 20 1,518
Hughes (4)(5) (96) (77)
Other (119) (36)
--- -----
Total ACO (195) 1,405
--- -----
GMAC 431 397
Other Financing (11) (19)
--- -----
Total FIO 420 378
--- -----
Consolidated net income $225 $1,783
=== =====
See footnotes on page 9.
- 6 -
General Motors Corporation
Supplementary Adjusted Segment Financial Results
First Quarter
-------------
2001(1) 2000
---- ----
(Dollars in millions)
Income tax expense (benefit)
GMNA $65 $615
GME (64) 130
GMLAAM 2 (23)
GMAP (2) 10
-- ---
Total GMA $1 $732
= ===
Equity income (loss) and
minority interests
GMNA $(31) $(19)
GME 3 2
GMLAAM - 14
GMAP (22) (10)
-- --
Total GMA $(50) $(13)
=== ===
Effective income tax rate
GMNA 30.1% 32.0%
GME 41.8% 37.2%
GMLAAM 25.0% 63.9%
GMAP N/A 37.0%
Net margins
GMNA 0.5% 4.4%
GME (1.4%) 3.2%
GMLAAM 0.4% 0.1%
GMAP (2.0%) 0.8%
Total GMA 0.1% 4.0%
Hughes (5.0%) (3.6%)
Total ACO (0.5%) 3.4%
GMAC 6.8% 7.1%
Consolidated net income 0.5% 3.8%
See footnotes on page 9.
- 7 -
General Motors Corporation
Operating Statistics
First Quarter
-------------
2001 2000
---- ----
(units in thousands)
Worldwide Wholesale Sales
United States - Cars 507 622
United States - Trucks 567 674
----- -----
Total United States 1,074 1,296
Canada, Mexico, and Other 151 193
----- -----
Total GMNA 1,225 1,489
GME 468 499
GMLAAM 159 135
GMAP 139 116
----- -----
Total Worldwide 1,991 2,239
===== =====
Vehicle Unit Deliveries
Chevrolet - Cars 232 233
Chevrolet - Trucks 422 453
Pontiac 138 155
GMC 125 139
Buick 86 103
Oldsmobile 77 77
Saturn 66 64
Cadillac 38 52
Other 12 7
----- -----
Total United States 1,196 1,283
Canada, Mexico, and Other 164 157
----- -----
Total GMNA 1,360 1,440
GME 496 522
GMLAAM 163 138
GMAP 125 111
----- -----
Total Worldwide 2,144 2,211
===== =====
Market Share
United States - Cars 28.9% 28.9%
United States - Trucks 28.0% 28.2%
Total United States 28.4% 28.6%
Total North America 28.0% 28.1%
Total Europe 9.6% 9.4%
Latin America (6) 21.5% 19.5%
Asia and Pacific 3.8% 3.3%
Total Worldwide 14.9% 14.8%
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 33.0% 29.0%
% Fleet Sales - Trucks 14.0% 15.1%
Total Vehicles 23.6% 22.1%
Retail Lease as % of Retail Sales
Total Smartlease and Smartbuy 16.5% 28.5%
Days Supply of Inventory at March 31
United States - Cars 75 82
United States - Trucks 100 86
Capacity Utilization
U.S. and Canada (2 shift rated) 69.6% 87.9%
GMNA Net Price (1.0%) (0.7%)
See footnotes on page 9.
- 8 -
General Motors Corporation
Operating Statistics
First Quarter
-------------
2001 2000
---- ----
GMAC's U.S. Cost of Borrowing 6.36% 6.32%
Current Debt Spreads Over U.S.
Treasuries
2 Year 145 bp 79 bp
5 Year 180 bp 122 bp
10 Year 210 bp 169 bp
Worldwide Employment at
March 31 (in 000's)
United States Hourly 130 135
United States Salary 43 44
--- ---
Total United States 173 179
Canada, Mexico, and Other 35 35
--- ---
GMNA 208 214
GME 79 90
GMLAAM 23 23
GMAP 11 11
Hughes 10 18
GMAC 28 26
Other 13 13
--- ---
Total 372 395
=== ===
Worldwide Payrolls ($Mil's) $5,002 $5,543
Footnotes:
---------
(1) The Q1 2001 adjusted amounts represent the reported amounts less the net
impact from initially adopting SFAS No. 133, Accounting for Derivatives
and Hedging Activities as follows ($Mil's):
Income (Expense)
Pre-Tax After-Tax
------- ---------
GMNA $(23) $(14)
GME 4 2
GMLAAM (2) (1)
GMAP (1) (1)
-- --
Total GMA (22) (14)
Hughes (13) (8)
-- --
Total ACO (35) (22)
GMAC 62 34
-- --
Total Consolidated $27 $12
== ==
(2) The 2000 GM Class H common stock earnings per share and book value per
share amounts have been adjusted to reflect the three-for-one stock
split, in the form of a 200% stock dividend, paid on June 30, 2000.
(3) Represents total cash for Automotive, Communications Services, and Other
Operations 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.
(4) Excludes the effects of purchase accounting adjustments related to
General Motors' acquisition of Hughes in 1985.
(5) Excludes Hughes Series A Preferred Stock dividends payable to General
Motors.
(6) Latin America excludes the Middle East and Africa.
- 9 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
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 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
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
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)
==== ====
- 10 -
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 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
=== =====
Three Months Ended
March 31,
---------
2001 2000
---- ----
(dollars in millions)
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
=== ===
- 11 -
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) 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,
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
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) 915 914 1,036
Class H common stock (issued, 875,728,294;
875,286,559; and 415,537,836 shares) 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 loss on derivatives (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
======= ======= =======
- 12 -
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
===== ===== ===== ===
* * *
- 13 -
Hughes Reports First Quarter 2001
Financial Results
DIRECTV U.S. Business Grows Revenue by 25%; EBITDA by 61%
El Segundo, Calif., April 17, 2001 -- Hughes Electronics Corporation, a
world-leading provider of digital television entertainment, broadband services,
satellite-based private business networks, and global video and data
broadcasting, today reported first quarter 2001 revenues increased 11.2% to
$1,893.0 million, compared with $1,703.1 million in the first quarter of 2000.
EBITDA1 for the quarter was $113.2 million and EBITDA margin1 was 6.0%, compared
to EBITDA of $152.7 million and EBITDA margin of 9.0% in the first quarter of
2000.
"Our DIRECTV U.S. business continues to be our primary growth driver,"
explained Michael T. Smith, HUGHES chairman and chief executive officer.
"Despite uncertain economic conditions, we activated a record number of DIRECTV
U.S. customers--on a gross basis--for the 14th consecutive quarter."
Smith continued, "As a result, DIRECTV generated more than $1.3 billion in
revenues in the quarter, an increase of 25% over the first quarter of 2000, and
$50 million in EBITDA, a 61% improvement over the same period last year. DIRECTV
Latin America also contributed to our growth with $165 million in revenues, a
45% increase over the previous year's first quarter."
Smith added that the improved DIRECTV U.S. EBITDA in the quarter was more
than offset by changes in sales and sales-type leases of PanAmSat satellite
transponders, increased investment in Hughes Network Systems' (HNS) DirecPC(R)
broadband business, and fewer sales of HNS' DIRECTV receiving systems.
"Given the slowing economy, we believe it's prudent to adopt a cautious
approach to growth at DIRECTV, while focusing even more on maximizing our
returns," Smith continued. "As such, we will manage our subscriber acquisition
costs (SAC) to ensure we maintain or increase our return on investment, redouble
our efforts to minimize churn, and generate increasing EBITDA."
HUGHES had a first quarter 2001 net loss of $105.3 million, compared to a
net loss of $81.9 million in the same period of 2000. The decline was due to the
reduced EBITDA and increased depreciation expense associated with PanAmSat's
larger satellite fleet and the increased number of leased DIRECTV set-top boxes
in Latin America, partially offset by the elimination of operating losses and
one-time after-tax charges related to the discontinued DIRECTV Japan business.
- 14 -
Segment Financial Review
Direct-To-Home Broadcast
First quarter revenues for the segment increased 26.9% to $1,489.9 million
from $1,173.8 million in the first quarter of 2000. The segment had EBITDA of
$6.0 million compared with negative EBITDA of $9.2 million in the first quarter
of 2000.
United States: DIRECTV reported quarterly revenues of $1,324 million, an
increase of 25% from last year's first quarter revenues of $1,059 million. The
increase was primarily due to continued strong subscriber growth.
DIRECTV added 840,000 gross subscribers in the quarter. After accounting
for expected churn, this resulted in net subscriber additions in the quarter of
340,000. As of March 31, 2001, DIRECTV had more than 9.8 million subscribers,
representing an 18% increase over the 8.3 million customers attained as of March
31, 2000.
EBITDA for the first quarter of 2001 was $50 million compared to EBITDA of
$31 million in last year's first quarter. This increase was principally due to
increased EBITDA resulting from the larger subscriber base, which more than
offset the higher marketing costs associated with the record first quarter gross
subscriber additions.
Latin America: DIRECTV Latin America generated $165 million in revenues
for the quarter compared with $114 million in the first quarter of 2000. This
45% increase was primarily due to continued strong subscriber growth.
The DIRECTV service in Latin America added 101,000 net subscribers in the
first quarter of 2001. The total number of DIRECTV subscribers in Latin America
as of March 31, 2001 was just over 1.4 million, compared to 909,000 as of March
31, 2000.
DIRECTV Latin America had negative EBITDA of $44 million in the quarter
compared to negative EBITDA of $38 million in the same period of 2000. The
change was primarily due to the impact of higher marketing expenses associated
with the subscriber growth, which more than offset the increased EBITDA
resulting from the larger subscriber base.
Satellite Services
PanAmSat, which is 81%-owned by HUGHES, reported first quarter 2001
revenues of $205.2 million compared with $299.1 million in the prior year's
period. The decrease was driven primarily by $94 million of first quarter 2000
outright sales and sales-type leases, for which there were no comparable sales
in the first quarter 2001. While revenues from outright sales and sales-type
leases represent substantial long-term commitments for PanAmSat services,
virtually all of these revenues are recognized at service commencement. Revenues
from operating lease agreements are recognized monthly over the term of the
agreement. As a result, revenues from sales and sales-type lease transactions
are subject to greater variation from period to period than revenues from
operating leases.
- 15 -
EBITDA for the quarter was $140.0 million, compared with first quarter
2000 EBITDA of $201.0 million. EBITDA margin in the first quarter of 2001 was
68.2%, compared to 67.2% in the same period of 2000. The decrease in EBITDA was
principally due to the sales and sales-type leases executed in the first quarter
2000, and an increase in direct operating, and selling, general and
administrative (SG&A) costs resulting from the company's continued fleet
expansion, and increased investment in the new NET-36 initiative. Excluding the
impact of new sales and sales-type leases and operating costs associated with
NET-36 from both quarters, EBITDA was $147.5 million and EBITDA margin was 72%
for the first quarter 2001, compared to EBITDA of $153.3 million and EBITDA
margin of 75% in the first quarter 2000.
As of March 31, 2001, PanAmSat had contracts for satellite services
representing future payments (backlog) of approximately $6.2 billion compared to
approximately $6.0 billion at the end of the fourth quarter of 2000. The
increase was due primarily to new contracts with HBO, TBS, The WB Television
Network and Warner Brothers Domestic Television Distribution services.
Network Systems
Hughes Network Systems (HNS) generated first quarter 2001 revenues of
$248.2 million versus $364.5 million in the first quarter of 2000. The decline
was principally due to lower sales of DIRECTV receiving equipment due primarily
to the completion of the PRIMESTAR by DIRECTV conversion process in the third
quarter of 2000. HNS shipped 252,000 DIRECTV receiver systems in the first
quarter of 2001, compared to 980,000 units in the same period last year. HNS
also introduced two new DIRECTV receivers during the quarter, one for
high-definition television and the other featuring TiVo functionality.
In the quarter, HNS had negative EBITDA of $38.3 million compared to
EBITDA of $16.8 million in the first quarter of 2000. The decline in EBITDA is
primarily attributable to lower shipments of and decreased manufacturing
subsidies on DIRECTV receivers, and increased investment in DirecPC to grow its
broadband subscriber base. In the quarter, DirecPC added nearly 11,000 net
subscribers, bringing the cumulative total to approximately 62,000 broadband
consumers in the United States.
HNS booked over $200 million of new orders in its Enterprise business in
the first quarter of 2001, a 17% increase from the same period a year ago. The
increase in backlog was primarily attributable to a new service agreement with a
major processor of debit and credit card transactions. HNS ended the first
quarter with a backlog of more than $500 million in its Enterprise business.
BALANCE SHEET
From December 31, 2000 to March 31, 2001, the Company's consolidated cash
balance increased $19.5 million to $1,527.6 million and total debt increased
$379.5 million to $1,696.1 million.
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).
- 16 -
A live webcast of HUGHES' first quarter 2001 earnings call will be
available at the company's website at www.hughes.com. The call will begin at
2:00 p.m. ET, today. Investors are advised to allow 15 minutes prior to the call
to register and download any necessary software. Following the completion of the
call, the webcast will be archived on the Investor Relations portion of the
HUGHES website. HUGHES invites reporters to participate in a listen-only mode on
its first quarter 2001 analyst call at 2 p.m. ET today. The dial-in number is
719-457-2638 and the confirmation code is 471288.
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.
----------------------
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.
###
- 17 -
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions) March 31,
2001 December 31,
ASSETS (Unaudited) 2000
------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $1,527.6 $1,508.1
Accounts and notes receivable 1,347.9 1,253.0
Contracts in process 168.6 186.0
Inventories 431.5 338.0
Deferred income taxes 94.7 89.9
Prepaid expenses and other 857.9 778.7
------------------------------------------------------------------------------
Total Current Assets 4,428.2 4,153.7
Satellites, net 4,372.4 4,230.0
Property, net 1,748.5 1,707.8
Net Investment in Sales-type Leases 202.3 221.1
Intangible Assets, net 7,104.7 7,151.3
Investments and Other Assets 1,386.3 1,815.4
------------------------------------------------------------------------------
Total Assets $19,242.4 $19,279.3
==============================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------------------------------------------------
Current Liabilities
Accounts payable $1,348.6 $1,224.2
Deferred revenues 136.6 137.6
Short-term borrowings and current
portion of long-term debt 382.9 24.6
Accrued liabilities and other 1,188.0 1,304.5
------------------------------------------------------------------------------
Total Current Liabilities 3,056.1 2,690.9
Long-Term Debt 1,313.2 1,292.0
Other Liabilities and Deferred Credits 1,646.2 1,647.3
Deferred Income Taxes 666.3 769.3
Commitments and Contingencies
Minority Interests 524.2 553.7
Stockholder's Equity 12,036.4 12,326.1
------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $19,242.4 $19,279.3
==============================================================================
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).
- 18 -
SELECTED SEGMENT DATA
(Dollars in Millions)
(Unaudited) Three Months
Ended March 31,
-----------------------
2001 2000
--------------------------------------------------------------------------------
DIRECT-TO-HOME BROADCAST
Total Revenues $ 1,489.9 $ 1,173.8
EBITDA (1) $ 6.0 $ (9.2)
EBITDA Margin (1) 0.4% N/A
Operating Loss $ (145.5) $ (126.0)
Depreciation and Amortization $ 151.5 $ 116.8
Capital Expenditures $ 127.6 $ 168.0
--------------------------------------------------------------------------------
SATELLITE SERVICES
Total Revenues $ 205.2 $ 299.1
EBITDA (1) $ 140.0 $ 201.0
EBITDA Margin (1) 68.2% 67.2%
Operating Profit $ 41.1 $ 127.3
Operating Profit Margin 20.0% 42.6%
Depreciation and Amortization $ 98.9 $ 73.7
Capital Expenditures $ 67.2 $ 158.0
--------------------------------------------------------------------------------
NETWORK SYSTEMS
Total Revenues $ 248.2 $ 364.5
EBITDA (1) $ (38.3) $ 16.8
EBITDA Margin (1) N/A 4.6%
Operating Profit (Loss) $ (52.6) $ 0.1
Depreciation and Amortization $ 14.3 $ 16.7
Capital Expenditures $ 178.2 $ 67.6
--------------------------------------------------------------------------------
ELIMINATIONS and OTHER
Total Revenues $ (50.3) $ (134.3)
EBITDA (1) $ 5.5 $ (55.9)
Operating Profit (Loss) $ 4.5 $ (58.9)
Depreciation and Amortization $ 1.0 $ 3.0
Capital Expenditures $ (21.8) $ 20.7
--------------------------------------------------------------------------------
TOTAL
Total Revenues $ 1,893.0 $ 1,703.1
EBITDA (1) $ 113.2 $ 152.7
EBITDA Margin (1) 6.0% 9.0%
Operating Loss $ (152.5) $ (57.5)
Depreciation and Amortization $ 265.7 $ 210.2
Capital Expenditures $ 351.2 $ 414.3
================================================================================
Certain 2000 amounts have been reclassified to conform to the 2001 presentation.
(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.
- 19 -
CONSOLIDATED STATEMENTS OF OPERATIONS AND
AVAILABLE SEPARATE CONSOLIDATED NET LOSS
(Dollars in Millions)
(Unaudited) Three Months
Ended March 31,
--------------------
2001 2000
------------------------------------------------------------------------------
Revenues
Direct broadcast, leasing and other services $1,698.2 $1,472.4
Product sales 194.8 230.7
------------------------------------------------------------------------------
-----------
Total Revenues 1,893.0 1,703.1
------------------------------------------------------------------------------
Operating Costs and Expenses
Broadcast programming and other costs 738.7 667.8
Cost of products sold 154.5 188.5
Selling, general and administrative expenses 886.6 694.1
Depreciation and amortization 265.7 210.2
------------------------------------------------------------------------------
Total Operating Costs and Expenses 2,045.5 1,760.6
------------------------------------------------------------------------------
Operating Loss (152.5) (57.5)
Interest income 23.8 3.9
Interest expense (50.6) (44.9)
Other, net 7.2 (239.2)
------------------------------------------------------------------------------
Loss From Continuing Operations Before
Income Taxes, Minority
Interests and Cumulative
Effect of Accounting Change (172.1) (337.7)
Income tax benefit 49.9 221.8
Minority interests in net losses of subsidiaries 24.3 7.6
------------------------------------------------------------------------------
Loss from continuing operations
before cumulative effect of
accounting change (97.9) (108.3)
Income from discontinued operations, net of taxes - 26.4
------------------------------------------------------------------------------
Loss before cumulative effect of accounting change (97.9) (81.9)
Cumulative effect of accounting change, net of taxes (7.4) -
------------------------------------------------------------------------------
Net Loss (105.3) (81.9)
Adjustment to exclude the effect of
GM purchase accounting 0.8 5.3
------------------------------------------------------------------------------
Loss Excluding the Effect of GM Purchase
Accounting Adjustment (104.5) (76.6)
Preferred stock dividends (24.1) (24.7)
------------------------------------------------------------------------------
Loss Used for Computation of Available
Separate Consolidated Net Loss $(128.6) $(101.3)
==============================================================================
Available Separate Consolidated Net Loss
Average number of shares of
General Motors Class H
Common Stock outstanding
(in millions) (Numerator) 875.4 413.4
Average Class H dividend base
(in millions) (Denominator) 1,299.1 1,294.5
Available Separate Consolidated Net Loss $(86.7) $(32.4)
==============================================================================
Certain 2000 amounts have been reclassified to conform to the 2001 presentation.
- 20 -
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 Arpil 18, 2001
-----------------
By
s/Peter R. Bible
-------------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 21 -