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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
- --- 1934
For the fiscal year ended December 31, 2000
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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
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(Exact Name of Registrant as Specified in its Charter)
STATE OF DELAWARE 38-0572515
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(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
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
- -------------------------------------------- -------------------------
Common, $1-2/3 par value (548,533,683 shares
outstanding as of February 28, 2001) New York Stock Exchange, Inc.
Class H Common, $0.10 par value (875,528,992
shares outstanding as of February 28, 2001) New York Stock Exchange, Inc.
Preference, $0.10 par value, Series G
9.12% Depositary Shares, stated value
$25 per share, dividends cumulative
(5,015,410 depositary shares outstanding
as of February 28, 2001) New York Stock Exchange, Inc.
General Motors Capital Trust G 9.87% Trust
Originated Preferred Securitiessm (TOPrSsm),
Series G (5,221,123 shares outstanding as of
February 28, 2001) New York Stock Exchange, Inc.
Note: The $1-2/3 par value common stock of the Registrant is also listed for
trading on:
Chicago Stock Exchange, Inc. Chicago, Illinois
Pacific Exchange, Inc. San Francisco, California
Philadelphia Stock Exchange, Inc. Philadelphia, Pennsylvania
Montreal Stock Exchange Montreal, Quebec, Canada
Toronto Stock Exchange Toronto, Ontario, Canada
Borse Frankfurt am Main Frankfurt on the Main, Germany
Borse Dusseldorf Dusseldorf, Germany
Bourse de Bruxelles Brussels, Belgium
Courtiers en Valeurs Mobilieres Paris, France
The London Stock Exchange London, England
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 .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value (based upon the average of the highest and lowest
sales prices on the Composite Tape on February 28, 2001) of General Motors
Corporation $1-2/3 par value and GM Class H common stocks held by nonaffiliates
on February 28, 2001 was approximately $29.5 billion and $19.7 billion,
respectively.
GM's Class H common stock is a "tracking stock" designed to provide holders with
financial returns based on the financial performance of Hughes. However, in the
event of a GM liquidation, insolvency or similar event, GM Class H stockholders
would have no direct claim against the assets of Hughes. Rather, GM Class H
stockholders would only have rights in the assets of GM as common stockholders
of GM.
We determine the earnings per share and the amounts available for the payment of
dividends on the GM Class H common stock by a fraction which reflects the
portion of Hughes' earnings that is allocated to the GM Class H common stock. We
sometimes refer to this fraction as the "Class H fraction." The numerator and
denominator of the Class H fraction are determined as follows:
- The numerator of the Class H fraction is the weighted average number of
shares of GM Class H common stock outstanding during the applicable
period.
- The denominator of the Class H fraction is the notional number of shares
of GM Class H common stock which, if outstanding, would represent 100% of
the tracking stock interest in the earnings of Hughes.
We sometimes also refer to the denominator of the Class H fraction as the
"Average Class H dividend base." It can be adjusted by the GM board of directors
in specified circumstances, including to reflect contributions by GM to Hughes.
Documents incorporated by reference are as follows:
Part and Item Number of Form
Document 10-K into Which Incorporated
- -------- ----------------------------
General Motors Notice of Annual Meeting
of Stockholders and Proxy Statement for
the Annual Meeting of Stockholders to be
held June 5, 2001 Part III, Items 10 through 13
- -------------------
sm "Trust Originated Preferred Securities" and "TOPrS" are service trademarks of
Merrill Lynch & Co.
COVER PAGE
PART I
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
THE CORPORATION
General Motors Corporation, incorporated in 1916 under the laws of the State
of Delaware, is hereinafter sometimes referred to as the "Registrant" or the
"Corporation" and, together with its subsidiaries, is hereinafter sometimes
referred to as "General Motors" or "GM."
ITEM 1. Business
General
The following information is incorporated herein by reference to the
indicated pages in Part II:
Item Page(s)
---- -------
Wholesale Sales II-6
Employment and Payrolls II-10
Note 23 of Notes to the GM Consolidated
Financial Statements
(Segment Reporting) II-49 through II-52
GM presents separate supplemental consolidating statements of income and
other financial information for the following businesses: (1) Automotive,
Communications Services, and Other Operations and (2) Financing and Insurance
Operations. GM participates in the automotive industry through the activities of
its automotive business operating segment: 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). GMNA designs,
manufactures, and markets vehicles primarily in North America under the
following nameplates: Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and
Saturn. GME, GMLAAM, and GMAP meet the demands of customers outside North
America with vehicles designed, manufactured, and marketed under the following
nameplates: Opel, Vauxhall, Holden, Isuzu, Saab, Buick, Chevrolet, GMC, and
Cadillac. GM's communications services relate to its Hughes Electronics
Corporation subsidiary (Hughes) which includes digital entertainment,
information and communications services, and satellite-based private business
networks. GM's other operations 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 Financing and Insurance Operations primarily
relate to General Motors Acceptance Corporation (GMAC). GMAC 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, commercial, vehicle,
and homeowners' insurance, and asset-based lending.
Substantially all automotive-related products are marketed through retail
dealers and through distributors and jobbers in the United States, Canada, and
Mexico, and through distributors and dealers overseas. At December 31, 2000,
there were approximately 8,000 GM vehicle dealers in the United States, 840 in
Canada, and 155 in Mexico. Additionally, there were a total of approximately
11,220 outlets overseas which include dealers and authorized sales, service, and
parts outlets.
Raw Materials and Services
GM purchases materials, parts, supplies, freight transportation, energy, and
other services from numerous unaffiliated firms. Interruptions in production or
delivery of these goods or services could adversely affect GM.
Backlog of Orders
Shipments of GM automotive products are made as promptly as possible after
receipt of firm sales orders; therefore, no significant backlog of unfilled
orders accumulates. Hughes had a $6.7 billion and $9.2 billion backlog of
commercial contracts relating to its telecommunications and space businesses at
the end of 2000 and 1999, respectively.
I-1
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Competitive Position
GM's principal competitors in passenger cars and trucks in the United States
and Canada include Ford Motor Company, DaimlerChrysler Corporation, Toyota
Corporation, Nissan Motor Corporation, Ltd., Honda Motor Company, Ltd., Mazda
Motor Corporation, Mitsubishi Motors Corporation, Volkswagen A.G. (Volkswagen),
Hyundai Motor Company, Ltd. (Hyundai), and Bayerische Motoren Werke AG (BMW).
All but Volkswagen and Hyundai currently operate vehicle manufacturing
facilities in the United States or Canada. Toyota and GM operate the New United
Motor Manufacturing, Inc. facility in Fremont, California as a joint venture
which currently builds passenger cars and light-duty trucks. Wholesale unit
sales of GM passenger cars and trucks during the three years ended December 31,
2000 are summarized in Management's Discussion and Analysis of Financial
Conditions and Results of Operations in Part II.
Total industry new motor vehicle (passenger cars, trucks, and buses)
registrations of domestic and foreign makes and GM's competitive position during
the years ended December 31, 2000, 1999, and 1998, respectively, were as
follows:
2000(1) 1999 1998
---- ---- ----
(units in thousands)
Total industry registrations
In the United States 17,817 17,418 15,966
In Canada and Mexico 2,474 2,231 2,092
In other countries 36,583 35,933 34,687
------ ------ ------
Total industry registrations - all countries 56,874 55,582 52,745
====== ====== ======
2000(1) 1999 1998
---- ---- ----
(percent of total industry)
GM's registrations
In the United States 28% 29% 29%
In Canada and Mexico 28 29 29
In other countries 8 8 9
Total GM's registrations - all countries 15 16 16
- -----------------
(1) Preliminary
The above information on registrations of new cars, trucks, and buses was
obtained from outside sources and that pertaining to GM's registrations includes
units which are manufactured overseas by other companies and which are imported
and sold by GM and affiliates.
Research and Development
In 2000, GM spent $6.6 billion for research, manufacturing engineering,
product engineering, and development activities related primarily to the
development of new products or services or the improvement of existing products
or services, including activities related to vehicle emissions control, improved
fuel economy, and the safety of persons using GM products. In addition, $278
million was spent for customer-sponsored activities. Comparably, $6.8 billion
and $6.3 billion were spent on company-sponsored activities in 1999 and 1998,
respectively, and $295 million and $717 million were spent on customer-sponsored
activities in 1999 and 1998, respectively.
Environmental Matters
Automotive Emissions Control
Both the federal and California governments currently impose stringent
emission control requirements on motor vehicles sold in their respective
jurisdictions. These requirements include pre-production testing of vehicles,
testing of vehicles after assembly, the imposition of emission defect and
performance warranties, and the obligation to recall and repair customer-owned
vehicles determined to be non-compliant with emissions requirements.
Both the U.S. Environmental Protection Agency (EPA) and the California Air
Resources Board (CARB) continue to place great emphasis on compliance testing of
customer-owned vehicles. Failure to comply with the emission standards or
defective emission control hardware discovered during such testing can lead to
substantial cost for General Motors related to emissions recalls. New CARB and
federal requirements will increase the time and mileage periods over which
manufacturers are responsible for a vehicle's emission performance.
I-2
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Automotive Emissions Control - (concluded)
Both the EPA and the CARB emission requirements will become even more
stringent in the future. A new tier of exhaust emission standards for cars and
light-duty trucks, the "LEV II" standards, will begin phasing in for California
vehicles in the 2004 model year. Similar federal "Tier 2" standards will also
start in 2004. In addition, both CARB and EPA have adopted more stringent
standards applicable to future heavy-duty trucks.
The requirement that, for model years 2003 and later, 10% of cars and small
light-duty trucks (up to 3,750 lbs. Loaded Vehicle Weight) sold in California
must be zero emission vehicles (ZEVs), was modified by the LEV II rules to allow
up to 6% of the 10% to be met using partial ZEV credits (PZEVs). In January
2001, CARB adopted additional changes to its ZEV requirements, including a
variety of credit multipliers that would reduce the number of ZEVs and PZEVs
required in the early years and increase the number of ZEVs and PZEVs required
in the later years. Also, GM and six other major vehicle manufacturers signed
Memorandums of Agreement (MOAs) with CARB to provide for a more market
driven-introduction of ZEVs. The MOAs include provisions for an advanced battery
ZEV demonstration program. General Motors is fulfilling this MOA commitment with
its EV1 and S-10 Electric Pickup products equipped with nickel-metal hydride
batteries. General Motors is also fulfilling its other MOA obligations which
include a National LEV program, the capability to produce specified numbers of
ZEVs as warranted by demand, and continued research and development of advanced
batteries.
The Clean Air Act permits states that have areas with air quality problems to
adopt the California car and truck emission standards in lieu of the federal
requirements and four states, New York, Massachusetts, Maine and Vermont, have
done so. To provide states an alternative to the adoption of California
standards, GM and other auto manufacturers began selling LEVs in the
remaining 45 states in 2001, under the provisions of the National Low Emission
Vehicle Program. In addition to the above-mentioned exhaust emission programs,
onboard diagnostic (OBD) devices, used to diagnose problems with emission
control systems, were required both federally and in California effective with
the 1996 model year. This system has the potential of increasing warranty costs
and the chance for recall. OBD requirements become more challenging each year as
vehicles meet lower emission standards, and new diagnostics are required.
New evaporative emission control requirements for cars and trucks began
phasing in with the 1995 model year in California and the 1996 model year
federally. Systems will need to be further modified to accommodate federal
onboard refueling vapor recovery (ORVR) control standards. ORVR phases in on
passenger cars in the 1998 through 2000 model years and will phase in on
light-duty trucks in the 2001 through 2006 model years. Beginning with the 2004
model year, even more stringent evaporative emission standards apply in
California, as well as federally.
Starting in the 2001 model year, today's test procedure for exhaust emissions
will become more complex with vehicles required to meet two additional test
requirements: 1) measuring exhaust emissions over a new test cycle with the air
conditioner operating; and 2) measuring exhaust emissions over a new high speed
(80 mph) and high load cycle. Both of these requirements have the potential of
adding hardware (and thus costs) to many vehicles.
Industrial Environmental Control
GM is subject to various laws relating to the protection of the environment
including laws regulating air emissions, water discharges, waste management, and
environmental cleanup.
GM is in various stages of investigation or remediation for sites where
contamination has been alleged and recorded a liability of $316 million at
December 31, 2000 and $404 million at December 31, 1999 for worldwide
environmental investigation and remediation as summarized below:
. GM has been identified as a potentially responsible party at sites
identified by the EPA and state regulatory agencies for investigation and
remediation under the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA) and similar state statutes. GM voluntarily and
actively participates in cleanup activity where such involvement is
verified. The total liability for sites involving GM was estimated to be
$97 million at December 31, 2000. This compares with $114 million at
December 31, 1999.
. For closed or closing plants owned by the Corporation, an estimated
liability for environmental investigation and remediation is typically
recognized at the time of the closure decision. Such liability, which is
based on an environmental assessment of the plant property, was estimated
at $74 million at December 31, 2000. This compares with $92 million at
December 31, 1999.
. GM is involved in investigation and remediation activities at additional
locations worldwide with an estimated liability of approximately $145
million at December 31, 2000. This compares with $198 million at December
31, 1999.
I-3
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Industrial Environmental Control (concluded)
The cost impact of the Clean Air Act Amendments under Title V is the annual
emission fees of approximately $9 million per year. Additional programs under
the Clean Air Act, including Hazardous Air Pollutant standards, and Compliance
Assurance Monitoring and periodic monitoring requirements are estimated to cost
$500 million to $700 million in aggregate through the year 2004.
For the years ended December 31, 2000, 1999, and 1998, expenditures by GM
in the U.S. for industrial environmental control facilities were $85 million,
$71 million, and $78 million, respectively. The Corporation currently estimates
that future expenditures for industrial environmental control facilities through
2004 will be approximately $216 million. Specific environmental expenses are
difficult to isolate since expenditures may be made for more than one purpose,
making precise classification difficult.
Vehicular Noise Control
Federal Truck Regulations preempt all state/local noise regulations for
trucks over 10,000 lb Gross Vehicle Weight Rating (GVWR). All jurisdictions
regulating noise levels of school buses which are built on medium-duty truck
chassis have adopted standards compatible with Federal regulations for
medium-duty trucks. Federal Truck Regulations contain label and owner's manual
requirements.
Passenger cars and light-duty trucks are subject to state and local motor
vehicle noise regulations. The current standard for vehicles in these classes is
80 dB as measured at 50 feet. Future implementation of more stringent exhaust
emission regulations and more stringent fuel economy regulations will require an
assessment of increased costs of noise control.
Safety Regulations & Consumer Information
Expenditures to maintain and improve the operational safety, occupant
protection, and vehicle theft deterrence capability of new GM models continue.
These expenditures include amounts for the study of alternative approaches for
meeting the needs of all three areas.
GM continues to meet the government requirement for passive restraints by
installing driver and passenger supplemental inflatable restraints (air bags) on
all passenger cars and many light trucks and vans.
Once permitted by federal regulatory changes to do so, GM introduced in 1998
and later models, less aggressive air bags in order to address concerns about
inflation injuries, particularly to children and smaller adult passengers who
are not properly positioned. GM continues to make available air bag on-off
switches for those customers eligible to request them under the requirements of
the National Highway Traffic Safety Administration (NHTSA) regulation allowing
these devices.
In 2000, the NHTSA adopted extensive modifications to Federal Motor Vehicle
Safety Standard (FMVSS) 208, an occupant protection regulation. The amendment
entails a substantial increase in the number of crash test configurations and
test dummy occupant sizes for which certification compliance performance will be
required beginning September 1, 2003. It also will add a large number of static
air bag suppression or low risk deployment test requirements. A significant
amount of engineering design and development is already underway, with more
anticipated, for the advanced air bag systems this amendment requires.
Dynamic side impact protection requirements apply to cars and certain light
trucks and vans. Side structure and interior trim designs of future models will
continue to be affected. Additional market pressure and future model design
effects are likely regarding side impact performance as the federal government
continues its consumer information side impact crash test program at elevated
impact speeds.
A new government requirement for vehicle interior impact protection continues
to significantly affect upper body structure and interior trim designs of future
model passenger cars and light trucks and vans. The phase-in for this rulemaking
began on September 1, 1998, and will apply to all these vehicles by September 1,
2002.
NHTSA has proposed changing the existing fuel system crash integrity
requirements of FMVSS 301. The potentially significant changes, especially
associated with the substantially increased rear impact crash test energy, would
compel some undetermined redesign, cost, and weight increases for some of GM's
vehicles.
The new FMVSS 225 requirement for universal child restraint anchorages in
motor vehicles continues to have significant mass and cost implications for many
near-future GM vehicles. Unless ongoing auto industry actions can convince the
NHTSA to modify certain FMVSS 225 test procedures and requirements, these
implications will continue to affect many GM vehicles.
I-4
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Safety Regulations & Consumer Information (concluded)
The expansion of vehicle parts marking, required by the passage of the
Anti-Car Theft Act of 1992, affected approximately 22 passenger car assembly
plants and 4 light-duty truck plants. For many of the affected plants, major
expenditures were required for new label printer installations and additional
stamping equipment. A recent opinion, favorable to the effectiveness of parts
marking, by the U.S. Attorney General, threatens to expand the requirement to
remaining unmarked low-theft vehicle lines. Eight additional vehicle lines and 4
additional assembly plants would be affected. The added cost would be
approximately $6.00 per vehicle.
The Transportation Recall Enhancement, Accountability and Documentation
(TREAD) Act requires certain regulatory and consumer information actions by the
NHTSA. Among other items, the agency must upgrade tire regulations, require a
vehicle tire pressure warning system, and develop and implement a consumer
information program for vehicle rollover resistance. Some undetermined redesign
and cost implications likely will result following implementation of these
changes.
Automotive Fuel Economy
The Energy Policy and Conservation Act passed in 1975 provided for
production-weighted average fuel economy standards for passenger cars for 1978
and thereafter. Based on EPA combined city-highway test data, the GM 2000 model
year domestic passenger car fleet is projected to attain a Corporate Average
Fuel Economy (CAFE) of 27.9 miles per gallon (mpg) versus the standard of 27.5
mpg. The CAFE estimate for 2001 model year domestic passenger cars is projected
at 28.4 mpg versus the standard of 27.5 mpg.
For GM's imported passenger cars, 2000 model year CAFE is projected to be
25.4 mpg versus a standard of 27.5 mpg. The CAFE estimate for 2001 model year
import passenger cars is 26.4 mpg versus the standard of 27.5 mpg. Projected
shortfalls to the standard will be offset by credits from previous model years.
Fuel economy standards for light-duty trucks became effective in 1979.
General Motors' light truck CAFE fleet average for the 2000 model year is 21.0
mpg versus a standard of 20.7 mpg. GM's 2001 model year truck CAFE is projected
at 20.6 mpg versus a standard of 20.7 mpg. Projected shortfalls to the standard
will be offset by credits from future model years.
GM's ability to meet increased CAFE standards is contingent on various future
economic, consumer, legislative, and regulatory factors that GM cannot control
and cannot predict with certainty. If GM could not comply with any new CAFE
standards, GM could be subject to sizeable civil penalties and could have to
close plants or severely restrict product offerings to remain in compliance.
End of Life Vehicles
During September 2000, the European parliament passed a directive requiring
member states to adopt legislation regarding end-of-life vehicles and the
responsibility of manufacturers for dismantling and recycling vehicles they have
sold. European Union member states are required to transform the concepts
detailed in the directive into national law by March 2002. Under the directive,
manufacturers are financially responsible for at least a portion of the cost of
the take-back of vehicles put on the market as of July 2002 and all of the cost
for all of the vehicles put on the market as of 2007. The laws developed in the
individual local legislatures throughout Europe will have a significant impact
on the amount ultimately paid by the manufacturers for this issue. GME is
currently assessing the impact of this potential legislation on their results of
operations and financial position.
Seasonal Nature of Business
In the automotive business, there are retail sales fluctuations of a seasonal
nature, so that production varies from month to month. Certain changeovers occur
throughout the year for reasons such as new market entries and new vehicle
changes; however, the changeover period related to the annual new model
introduction has traditionally occurred in the third quarter of each year. For
this reason, third quarter operating results are, in general, less favorable
than those in the other three quarters of the year, depending on the magnitude
of the changeover needed to commence production of new models incorporating, for
example, design modifications related to more fuel-efficient vehicle packaging,
stricter government standards for safety and emission controls, and
consumer-oriented improvements in performance, comfort, convenience, and style.
I-5
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Segment Reporting Data
Operating segment and principal geographic area data for 2000, 1999, and 1998
are summarized in Note 23 to the GM Consolidated Financial Statements in Part
II.
* * * * * *
The Registrant makes no attempt herein to predict the future trend of its
business and earnings or the effect thereon of the results of changes in general
economic, industrial, regulatory, and international conditions.
ITEM 2. Properties
The Corporation, excluding its Financing and Insurance Operations, has 194
locations operating in 33 states and 109 cities in the United States. Of these,
21 are engaged in the final assembly of GM cars and trucks; 43 are service parts
operations responsible for distribution or warehousing; 6 major plants, offices,
and research facilities relate to the operations of Hughes Electronics
Corporation; and the remainder are offices or involved primarily in the testing
of vehicles or the manufacturing of automotive components and power products. In
addition, the Corporation has 20 locations in Canada and assembly,
manufacturing, distribution, or warehousing operations in 51 other countries,
including equity interests in associated companies which conduct assembly,
manufacturing, or distribution operations. The major facilities outside the
United States and Canada, which are principally vehicle manufacturing and
assembly operations, are located in Germany, the United Kingdom, Brazil, Mexico,
Australia, Belgium, Spain, China, Thailand, Argentina, Portugal, and Poland.
Most facilities are owned by the Corporation or its subsidiaries. Leased
properties consist primarily of warehouses and administration, engineering, and
sales offices. The leases for warehouses generally provide for an initial period
of five years and contain renewal options. Leases for sales offices are
generally for shorter periods.
Properties of the Registrant and its subsidiaries include facilities which,
in the opinion of management, are suitable and adequate for the manufacture,
assembly, and distribution of their products.
Additional information regarding worldwide expenditures for plants and
equipment is presented in Note 23 to the GM Consolidated Financial Statements in
Part II.
ITEM 3. 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 year ended December 31, 2000, or subsequent thereto, but before
the filing of this report are summarized below:
Environmental Matters
In 1998, GM sold its vehicle lighting products operation in Anderson, Indiana
to Guide Corporation, but continued to own the land and buildings. More than a
year later an incident occurred in which a significant amount of fish died in a
50-mile stretch of the White River from Anderson to south of Indianapolis.
Federal and state agencies sued Guide Corporation and its subcontractor alleging
that the incident was caused by a chemical release from the Guide operation. A
citizen class action suit has also been filed against Guide and its
subcontractor related to the same incident. GM is not named in any of those
lawsuits and denies liability for this matter. On December 7, 2000 the federal
and state agencies made a settlement demand in excess of $100,000 against Guide,
Guide's parent, Guide's subcontractor and GM.
* * *
General Motors received Notices of Violation dated March 28, 2000 and July
5, 2000 from the Michigan Department of Environmental Quality ("MDEQ") alleging
non-compliance with certain clean air regulations at the GM Service Parts
Operations - Flint Processing Center. MDEQ representatives have indicated they
are seeking fines or penalties in excess of $100,000.
* * *
I-6
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Environmental Matters (concluded)
General Motors received two Notices of Violation dated May 25, 2000 and
August 23, 2000 from the MDEQ alleging non-compliance at the Lansing Craft
Centre with certain clean air regulations. General Motors has received two
additional Notices of Violation; one dated November 17, 2000 from the MDEQ and
another dated October 27, 2000 from the U.S. Environmental Protection Agency.
Government representatives have indicated they are seeking fines or penalties in
excess of $100,000.
* * *
Others Matters
Seven putative nationwide and statewide class actions are pending in state
and federal courts alleging that the paint or paint application process used on
some GM vehicles was defective due to the omissions of a surface layer primer.
Generally, plaintiffs allege that GM's failure to disclose the alleged paint
defects is a fraudulent omission and a violation of various states' consumer
protection laws. Two federal court actions have been consolidated in a federal
court in Chicago, Illinois for coordinated pretrial proceedings. No
determination has been made that any cases may proceed as class actions.
Christian Amedee and Louis Fuxan v. General Motors Corporation, et al, Civil
District Court for the Parish of New Orleans, State of Louisiana filed March 24,
1995 and Cherise Miller et al. v. General Motors Corporation, United States
District Court for the Northern District of Illinois, filed on April 8, 1998,
are purported nationwide class actions. Eddie Glorioso v. General Motors
Corporation and Scott Arnold v. General Motors Corporation, consolidated in
Superior Court for the City and County of San Francisco, California, both filed
in July 1998, are purported California statewide class actions. Scott
Haverdink v. General Motors Corporation), Court of Common Pleas of Philadelphia
County, Pennsylvania, filed on May 16, 1999, is a putative Pennsylvania
statewide class action. Ernesto Bravo et al. v. General Motors Corporation et
al., United States District Court for the Southern District of Texas, was
amended on October 27, 2000, to allege a purported Texas statewide class action
on behalf of owners and lessees of 1990 to 1997 vehicles painted without a
surface layer primer and which subsequently experienced peeling paint. In
Darryl Oshanek v. General Motors Corporation and General Motors of Canada,
Limited, Supreme Court of British Columbia, Canada, filed on June 2, 1999, a
putative class action on behalf of residents of British Columbia, on January 5,
2001, General Motors Corporation was dismissed as a defendant. Plaintiff has
appealed. Five other courts have denied class certification of similar paint
claims against other automobile manufacturers. GM intends to vigorously oppose
class certification and defend these cases.
* * *
General Electric Capital Corporation ("GECC") and DIRECTV entered into a
contract on July 31, 1995, in which GECC agreed to establish and manage a
private label consumer credit program for consumer purchases of hardware and
related DIRECTV programming. Under the contract, GECC also agreed to provide
certain related services to DIRECTV, including credit risk scoring, billing and
collections services. DIRECTV agreed to act as a surety for loans complying with
the terms of the contract. Hughes guaranteed DIRECTV's performance under the
contract. A complaint and counterclaim were filed by the parties in the U.S.
District Court for the District of Connecticut concerning GECC's performance and
DIRECTV's obligation to act as a surety. A trial commenced on June 12, 2000 with
GECC presenting evidence to the jury for damages of $157 million. DIRECTV sought
damages from GECC of $45 million. On July 21, 2000, the jury returned a verdict
in favor of GECC and awarded contract damages in the amount of $133 million. The
trial judge issued an order granting GECC $48.5 million in interest under
Connecticut's offer-of-judgment statute. With this order, the total judgment
entered in GECC's favor was $181.5 million. Hughes and DIRECTV filed a notice of
appeal on December 29, 2000. Hughes and DIRECTV believe that it is reasonably
possible that the jury verdict will be overturned and a new trial granted.
Although it is not possible to predict the result of any eventual appeal in this
case, Hughes does not believe that the litigation will ultimately have a
material adverse impact on Hughes.
* * *
I-7
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Others Matters (continued)
EchoStar Communications Corporation ("EchoStar") and others commenced an
action in the U.S. District Court in Colorado on February 1, 2000 against
DIRECTV, Hughes Network Systems and Thomson Consumer Electronics, Inc. seeking,
among other things, injunctive relief and unspecified damages, including treble
damages, in connection with allegations that the defendants have entered into
agreements with retailers and program providers and engaged in other conduct
that violates the antitrust laws and constitutes unfair competition. On March
13, 2000, DIRECTV filed a motion seeking a determination of the relevant market,
which, if granted, would result in the dismissal of EchoStar's antitrust claims.
Hughes and DIRECTV filed counterclaims against EchoStar on March 13, 2000,
alleging that EchoStar tortiously interfered with DIRECTV's relationship with
Kelly Broadcasting System, a provider of foreign-language programming, engaged
in unfair business practices in connection with improper sales of network
programming, misleading advertisements for National Football League games and
EchoStar's "PRIMESTAR bounty program," and infringed on PRIMESTAR (R)
trademarks. 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 is without merit and intends to vigorously defend against the
allegations raised.
* * *
On September 7, 2000, a putative class action was commenced against
DIRECTV, Inc., Thomson Consumer Electronics, Inc., Best Buy Co., Inc., Circuit
City Stores, Inc. and Tandy Corporation, Inc. in the U.S. District Court in Los
Angeles. The named plaintiffs purport to represent a class of all consumers who
purchased DIRECTV equipment and services at any time from March 1996 to
September 1, 2000. The plaintiffs allege that the defendants have violated
federal and California antitrust statutes by entering into agreements to exclude
competition and force retailers to boycott competitors' products and services.
The plaintiffs seek declaratory and injunctive relief, as well as unspecified
damages, including treble damages. DIRECTV believes that the complaint is
without merit and intends to vigorously defend against the allegations raised.
DIRECTV has moved to compel arbitration pursuant to the DIRECTV customer
agreement or, in the alternative, to stay the case pending the resolution of
relevant issues in the antitrust suit brought by EchoStar as described in the
preceeding paragraph. 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.
* * *
On June 3, 1999, the National Rural Telecommunications Cooperative
("NRTC") filed a lawsuit against DIRECTV, Inc. and Hughes Communications
Galaxy, Inc., which is referred to together in this description as "DIRECTV," in
the U.S. District Court for the Central District of California, alleging that
DIRECTV has breached the DBS Distribution Agreement with the NRTC. The DBS
Distribution Agreement provides the NRTC with certain distribution rights, in
certain specified portions of the United States, for a specified period of time,
with respect to DIRECTV(R) programming delivered over 27 of the 32 frequencies
at the 101(degrees) west longitude orbital location. The NRTC claims that
DIRECTV has wrongfully deprived it of the exclusive right to distribute
programming formerly provided by United States Satellite Broadcasting Company,
Inc. ("USSB") over the other five frequencies at 101(degrees), and seeks
recovery of related revenues from the date USSB was acquired by Hughes. DIRECTV
denies that the NRTC is entitled to exclusive distribution rights to the former
USSB programming because, among other things, the NRTC's exclusive distribution
rights are limited to programming distributed over 27 of the 32 frequencies at
101(degrees). The NRTC also plead, in the alternative, the right to distribute
former USSB programming on a non-exclusive basis, but stipulated to dismiss this
claim without prejudice on August 25, 2000. DIRECTV maintains that the NRTC's
right under the DBS Distribution Agreement is to market and sell the former USSB
(R) programming as its non-exclusive sales agent and that NRTC is not entitled
to the additional claimed revenues. DIRECTV intends to vigorously defend against
the NRTC claims. DIRECTV also filed a counterclaim against the NRTC seeking a
declaration of the parties' rights under the DBS Distribution Agreement.
On August 26, 1999, the NRTC filed a second lawsuit in the U.S. District
Court for the Central District of California against DIRECTV alleging that
DIRECTV has breached the DBS Distribution Agreement. In this lawsuit, the NRTC
is asking the Court to require DIRECTV to pay the NRTC a proportionate share of
unspecified financial benefits that DIRECTV derives from programming providers
and other third parties. DIRECTV denies that it owes any sums to the NRTC on
account of the allegations in these matters and plans to vigorously defend
itself against these claims or this claim.
I-8
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Others Matters (continued)
Pegasus Satellite Television, Inc. ("Pegasus Satellite") and Golden Sky
Systems, Inc. ("Golden Sky"), the two largest NRTC affiliates, filed an action
on January 11, 2000 against DIRECTV in the U.S. District Court for the Central
District of California. The plaintiffs alleged, among other things, that DIRECTV
has interfered with their contractual relationship with the NRTC. The plaintiffs
alleged that their rights and damages are derivative of the rights and damages
asserted by the NRTC in its two cases against DIRECTV. The plaintiffs also
alleged that DIRECTV interfered with their contractual relationships with
manufacturers and distributors by preventing those parties from selling
receiving equipment to the plaintiffs' dealers. On October 19, 2000, Golden Sky
agreed to dismiss its equipment-related claims with prejudice. DIRECTV denies
that it has wrongfully interfered with any of the plaintiffs' business
relationships and will vigorously defend the lawsuit.
A class action suit was filed in the U.S. District Court for the Central
District of California against DIRECTV on behalf of the NRTC's participating
members on February 29, 2000. The Court certified a class on December 29, 2000.
The class asserted claims identical to the claims that were asserted by Pegasus
Satellite and Golden Sky in their lawsuit against DIRECTV, described in the
preceding paragraph. Similar to Golden Sky, however, the class has agreed to
dismiss its equipment-related claims without prejudice.
The U.S. District Court for the Central District of California has
consolidated for purposes of discovery the NRTC, Pegasus Satellite and Golden
Sky and class action lawsuits, but has not determined if the cases will be
consolidated for trial. A trial date in February 2002 has been set in the first
NRTC case. Although an amount of loss, if any, cannot be estimated at this time,
an unfavorable outcome could be reached in the NRTC, Pegasus and class action
litigation that could be material to Hughes' results of operations or financial
position.
* * *
In connection with General Motors' 1997 spin-off of the defense electronics
business of Hughes' predecessor as part of the Hughes restructuring
transactions, and the subsequent merger of that business with Raytheon Company
("Raytheon"), the terms of the merger agreement provided processes for resolving
disputes that might arise in connection with post-closing financial adjustments
that were also called for by the terms of the merger agreement. These financial
adjustments might require a cash payment from Raytheon to Hughes or vice versa.
A dispute currently exists regarding the post-closing adjustments which
Hughes and Raytheon have proposed to one another and related issues regarding
the adequacy of disclosures made by Hughes to Raytheon in the period prior to
consummation of the merger. Hughes and Raytheon are proceeding with the dispute
resolution process. It is possible that the ultimate resolution of the
post-closing financial adjustment and of related disclosure issues may result in
Hughes making a payment to Raytheon that would be material to Hughes. However,
the amount of any payment that either party might be required to make to the
other cannot be determined at this time. Hughes intends to vigorously pursue
resolution of the disputes through the arbitration processes, opposing the
adjustments proposed by Raytheon, and seeking the payment from Raytheon that
Hughes has proposed.
* * *
There is a pending grand jury investigation into whether Hughes should be
accused of criminal violations of the United States export control laws arising
out of the participation of two of its employees on a committee formed to review
the findings of Chinese engineers regarding the failure of a Long March rocket
in China in 1996. Hughes is also subject to the authority of the State
Department to impose sanctions for non-criminal violations of the Arms Export
Control Act. The possible criminal and/or civil sanctions could include fines as
well as debarment from various export privileges and participating in government
contracts. On October 6, 2000, Hughes completed the sale of its satellite
systems manufacturing businesses to The Boeing Company ("Boeing"). In that
transaction, Hughes retained limited liability for certain possible fines and
penalties and the financial consequences of debarment related to the business
now owned by Boeing should such sanctions be imposed by either the Department of
Justice or State Department against the satellite systems manufacturing
businesses. Hughes does not expect sanctions imposed by the Department of
Justice or State Department, if any, to have a material adverse effect on
Hughes.
* * *
I-9
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Others Matters (concluded)
On December 5, 2000, Personalized Media Communications, LLC ("PMC") and
Pegasus Development Corporation ("Pegasus") filed suit in U. S. District Court
for the District of Delaware against DIRECTV, Hughes, Thomson Consumer
Electronics and Philips Electronics North American Corporation, alleging
infringement of seven U.S. patents. Based on the successful defense by Hughes
against an earlier action brought by PMC on one of the subject patents, Hughes
expects that strong defenses of invalidity and non-infringement exist, in
addition to numerous other defenses including license, laches and estoppel,
Lanham Act violations, patent misuse and abuse of process. Hughes answered the
complaint on January 21, 2001 raising these defenses and related counterclaims
and intends to vigorously defend the lawsuit and pursue counterclaims against
Pegasus and PMC.
* * *
Hughes Communications Galaxy, Inc. ("HCGI") filed a lawsuit on March 22,
1991 against the U.S. Government based upon the National Aeronautics and Space
Administration's breach of contract to launch ten satellites on the Space
Shuttle. The U.S. Court of Federal Claims granted HCGI's motion for summary
judgment on the issue of liability on November 30, 1995. A trial was held on May
1, 1998 on the issue of damages. On June 30, 2000, a final judgment was entered
in favor of HCGI in the amount of $103 million. On July 13, 2000, HCGI filed a
notice to appeal the judgment with the U.S. Court of Appeals for the Federal
Circuit and is requesting a greater amount than was previously awarded to HCGI.
On August 4, 2000, 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.
* * *
On July 9, 1999, a jury in a Los Angeles Superior Court in the matter of
Anderson et. al v. General Motors Corporation, returned a verdict of $4.9
billion against General Motors in a product liability lawsuit involving a
post-collision, fuel fed fire in a 1979 Chevrolet Malibu. The initial jury award
consisted of $102 million in compensatory damages and $4.8 billion in punitive
damages. After trial, the trial court reduced the punitive damages to $1.1
billion. GM will continue to vigorously pursue its appellate rights, including
efforts to secure a new trial and the complete elimination of responsibility to
pay any damages in this matter consistent with GM's view that the design of the
Chevrolet Malibu was not responsible for plaintiff's injuries. This matter now
constitutes ordinary routine litigation incidental to the Corporation's business
as to which reporting is no longer required.
* * *
(b)Previously reported legal proceedings which have been terminated, either
during the year ended December 31, 2000, or subsequent thereto, but before
the filing of this report are summarized below:
As previously reported in December 1998, the Louisiana Department of
Environmental Quality ("LDEQ") issued a Penalty Assessment to the Delphi
Automotive plant in Monroe, Louisiana ("Delphi") for alleged air permit
violations. On July 1, 1998 a Notice of Violation was issued by LDEQ to Delphi
alleging that the volatile organic compound limits for calendar year 1997 were
exceeded. Delphi was a division of GM when LDEQ brought the enforcement action.
In October 1998 the Monroe plant was sold to a third party, under the terms of
which GM retained responsibility for certain pre-sale environmental issues
including the permit violations alleged by LDEQ. After challenging the 1998
Penalty Assessment, GM entered into a settlement with the LDEQ on December 20,
2000 in which it paid $12,400 without admitting liability.
* * *
Thirty-nine class actions were filed in state, federal and Canadian courts
against the Corporation, claiming that the 1973-1987 model Chevrolet and GMC
full-size pickup trucks are defective because their fuel tanks are mounted below
the cab and outside the frame rails. A nationwide settlement was approved by a
Louisiana trial court on December 19, 1996. Following an appeal, the settlement
was again approved in January 20, 1999. GM appealed changes to the settlement
made by the trial court after the time for appeal had run. On January 16, 2001,
the Louisiana Court of Appeal ruled that the changes challenged by GM's appeal
were improper. No further appeals were timely filed. It is now expected that the
settlement will proceed and the remaining class actions against GM will be
dismissed.
* * * * * *
I-10
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4. Submission of Matters to a Vote of Security Holders
NONE
ITEM 4A. Executive Officers of the Registrant
The names and ages of all executive officers of the Registrant at February
28, 2001 and their positions and offices with the Registrant on that date are as
follows:
Name and (Age) Positions and Offices
- -------------- ---------------------
John F. Smith, Jr. (62) Chairman of the Board; Member,
Investment Funds Committee
Harry J. Pearce (58) Vice Chairman of the Board
G. Richard Wagoner, Jr. (48) President and Chief Executive Officer
John M. Devine (55) Vice Chairman and Chief Financial Officer
Ronald L. Zarrella (51) Executive Vice President; President,
GM North America
John D. Finnegan (52) Executive Vice President; President, GMAC
There are no family relationships, as defined, between any of the above
executive officers, and there is no arrangement or understanding between any of
the above executive officers and any other person pursuant to which he was
selected as an officer. Each of the above executive officers was elected by the
Board of Directors to hold office until the next annual election of officers and
until his successor is elected and qualified or until his earlier resignation or
removal. The Board of Directors elects the officers in conjunction with each
annual meeting of the stockholders.
I-11
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4A. Executive Officers of the Registrant - concluded
Mr. John F. Smith, Jr. has been associated with General Motors since
1961. He was elected Executive Vice President in charge of International
Operations in 1988. Effective August 1990, he was elected Vice Chairman of
the Board of Directors. On April 6, 1992, Mr. Smith was elected President
and Chief Operating Officer. Effective November 1992, he was elected Chief
Executive Officer and President. He served as President until October 1998
and Chief Executive Officer until June 2000. On January 1, 1996, Mr. Smith
became Chairman of the Board of Directors.
Mr. Harry J. Pearce has been associated with General Motors since 1985. In
May 1987, he was elected Vice President and General Counsel of General Motors.
Effective November 1992, he was elected Executive Vice President of General
Motors with responsibility for the Legal Staff, Industry-Government Relations,
Environmental and Energy, Worldwide Economics, Electronic Data Systems
Corporation and GM Hughes Electronics Corporation (now Hughes Electronics
Corporation). In July 1994, he assumed responsibility for GM's Strategic
Decision Center, Corporate Communications, Allison Transmission Division,
Electro-Motive Division (now GM Locomotive Group), Corporate Relations,
Worldwide Executive Compensation and Corporate Governance, and the Business
Support Group. He remained General Counsel through August 1, 1994. Effective
January 1996, Mr. Pearce was elected a director and became Vice Chairman of the
Board of Directors and assumed responsibility for Information System Services.
In 1997 he assumed responsibility for the Enterprise Activities Group and Global
Human Resources and GM University.
Mr. G. Richard Wagoner, Jr. has been associated with General Motors since
1977. He was elected Vice President in charge of finance for General Motors
Europe in June 1989. In July 1991, he was elected President and Managing
Director of General Motors do Brasil. Effective November 1992, he was
elected Executive Vice President and Chief Financial Officer of General
Motors. In July 1994, he was named President of North American Operations.
In October 1998, he was elected a director, President and Chief Operating
Officer of General Motors. Effective June 1, 2000, he was elected Chief
Executive Officer.
Mr. John M. Devine was named Vice Chairman and Chief Financial Officer of
General Motors Corporation, effective January 1, 2001. He has responsibility for
GM's Worldwide Financial Operations and GM Asset Management. He is a member of
the GM Automotive Strategy Board and serves as its global process leader for
finance. Mr. Devine was Chairman and Chief Executive Officer of Fluid Ventures,
LLC, immediately prior to his GM appointment. He retired from Ford Motor Company
in October 1999, after a 32 year career, as the company's Executive Vice
President and Chief Financial Officer.
Mr. Ronald L. Zarrella has been associated with General Motors since 1994. In
December 1994, he was elected Vice President of General Motors and Group
Executive in charge of GM's North American Vehicle Sales, Service and Marketing
Group. In October 1998, he was elected Executive Vice President of General
Motors and President of General Motors North America.
Mr. John D. Finnegan has been associated with General Motors since 1976. In
1992, he was elected as Executive Vice President and Chief Financial Officer of
General Motors Acceptance Corporation. During 1994, he added the
responsibilities of Chairman and President of GMAC Mortgage Corporation.
Effective December 1995, he was named Vice President and Treasurer of General
Motors. In November 1997, he was elected Vice President and Group Executive of
General Motors and President of General Motors Acceptance Corporation. Effective
May 1999, he was elected Chairman of General Motors Acceptance Corporation and
Executive Vice President of General Motors.
I-12
PART II
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
General Motors' (GM's) common stocks are listed on the stock exchanges
specified on the cover page of this Form 10-K under the trading symbols (GM) and
(GMH). GM's Dividend Policy is described in the Management's Discussion and
Analysis (MD&A) in Part II. As of December 31, 2000, there were 464,399 holders
of record of GM $1-2/3 par value common stock and 192,813 holders of record of
GM Class H common stock. As of December 31, 1999, there were 499,809 holders of
record of GM $1-2/3 par value common stock and 192,866 holders of record of GM
Class H common stock. The following table sets forth the high and low sale
prices of GM's common stocks as reported on the Composite Tape and the quarterly
dividends declared for the last two years, not adjusted to account for the
spin-off of Delphi which occurred during the second quarter of 1999.
2000 Quarters
----------------------------------------
1st 2nd 3rd 4th
Cash dividends per share of common stocks
$1-2/3 par value $0.50 $0.50 $0.50 $0.50
Class H $- $- $- $-
Price range of common stocks
$1-2/3 par value (1): High $88.13 $94.63 $76.63 $68.25
Low $70.75 $57.25 $56.94 $48.44
Class H (1)(2): High $47.00 $41.58 $37.61 $38.00
Low $30.50 $27.33 $24.63 $21.33
1999 Quarters
----------------------------------------
1st 2nd 3rd 4th
Cash dividends per share of common stocks
$1-2/3 par value $0.50 $0.50 $0.50 $0.50
Class H $- $- $- $-
Price range of common stocks
$1-2/3 par value (1): High $93.88 $94.88 $72.44 $79.06
Low $69.19 $61.06 $59.75 $60.69
Class H (1)(2): High $17.67 $21.29 $20.81 $32.54
Low $12.83 $16.31 $16.25 $18.65
(1)The principal market is the New York Stock Exchange, and prices are based on
the Composite Tape. GM $1-2/3 par value common stock is also listed on the
Chicago and Philadelphia stock exchanges and on the Pacific Exchange.
(2)The stock prices have been adjusted to reflect the three-for-one stock split
of the GM Class H common stock, in the form of a 200% stock dividend, paid on
June 30, 2000.
II-1
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 6. Selected Financial Data (Unaudited)
Years Ended December 31
------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(dollars in millions except per share amounts)
Total net sales and revenues $184,632 $176,558 $155,445 $172,580 $158,281
======= ======= ======= ======= =======
Income from continuing
operations $4,452 $5,576 $3,049 $6,483 $4,100
Income (loss) from
discontinued operations - 426 (93) 215 863
----- ----- ----- ----- -----
Net income $4,452 $6,002 $2,956 $6,698 $4,963
===== ===== ===== ===== =====
$1-2/3 par value common stock
Basic earnings per share (EPS)
from continuing operations $6.80 $8.70 $4.40 $8.52 $5.08
Basic earnings (losses)
per share from
discontinued operations $ - $0.66 $(0.14) $0.18 $0.98
Diluted EPS from continuing
operations $6.68 $8.53 $4.32 $8.45 $5.04
Diluted earnings (losses)
per share from
discontinued operations $ - $0.65 $(0.14) $0.17 $0.98
Cash dividends declared
per share $2.00 $2.00 $2.00 $2.00 $1.60
Class H common stock (1) (3)
Basic EPS from continuing
operations $ - $ - $ - $0.77 $0.61
Basic EPS from discontinued
operations $ - $ - $ - $0.29 $0.35
Diluted EPS from continuing
operations $ - $ - $ - $0.77 $0.61
Diluted EPS from discontinued
operations $ - $ - $ - $0.29 $0.35
Cash dividends declared
per share $ - $ - $ - $0.33 $0.32
Class H common stock (1) (4)
Basic earnings (losses)
per share from
continuing operations $0.56 $(0.26) $0.23 $0.01 $ -
Diluted earnings (losses)
per share from
continuing operations $0.55 $(0.26) $0.23 $0.01 $ -
Cash dividends declared
per share $ - $ - $ - $ - $ -
Class E common stock
Basic EPS from discontinued
operations $ - $ - $ - $ - $0.04
Diluted EPS from discontinued
operations $ - $ - $ - $ - $0.04
Cash dividends declared
per share $ - $ - $ - $ - $0.30
Total assets $303,100 $274,730 $246,688 $221,767 $216,965
Long-term debt (2) $7,410 $7,415 $7,118 $5,669 $5,352
GM-obligated mandatorily
redeemable preferred
securities of subsidiary
trusts $139 $218 $220 $222 $ -
Stockholders' equity $30,175 $20,644 $15,052 $17,584 $23,413
- --------------------
Reference should be made to the notes to GM's consolidated financial statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations.
(1)Adjusted to reflect the three-for-one stock split of the GM Class H common
stock, in the form of a 200% stock dividend, paid on June 30, 2000.
(2)Calculated from Automotive, Communications Services, and Other
Operations only.
(3)Prior to its recapitalization on December 17, 1997.
(4)Subsequent to its recapitalization on December 17, 1997.
* * * * * *
II-2
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 7. 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 Hughes
Electronics Corporation (Hughes) consolidated financial statements and MD&A for
the period ended December 31, 2000, included as Exhibit 99 to this GM Annual
Report on Form 10-K for the period ended December 31, 2000, and related Hughes
Annual Report on Form 10-K filed separately with the Securities and Exchange
Commission (SEC); and the General Motors Acceptance Corporation (GMAC) Annual
Report on Form 10-K for the period ended December 31, 2000, filed separately
with the SEC. 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.
II-3
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS
For the year ended December 31, 2000, income from continuing operations for
the Corporation was $4.5 billion, or $6.68 per share of GM $1-2/3 par value
common stock, compared with $5.6 billion and $3.0 billion, or $8.53 and $4.32
per share of GM $1-2/3 par value common stock, for 1999 and 1998, respectively.
Income from continuing operations includes the special items on an after-tax
basis outlined below:
Years Ended December 31, (dollars in millions except per share amounts)
- -----------------------------------------------------------------------------------------
2000
- -----------------------------------------------------------------------------------------
Phase- Post
out of Employment Capacity Satellite Adjusted
Income Oldsmobile Benefits Reduction Businesses Income
-----------------------------------------------------------------
GM Automotive
GMNA $3,174 $(939) $(294) $ - $ - $4,407
GME (676) - - (419) - (257)
GMLAAM 26 - - - - 26
GMAP (233) - - - - (233)
----- ------ ------ ----- ----- -----
Total GMA 2,291 (939) (294) (419) - 3,943
Hughes 829 - - - 1,132 (303)
Other Automotive (281) - - - - (281)
GMAC 1,602 - - - - 1,602
Other Financing 11 - - - - 11
------ ------ ------ ------ ----- ------
Total GM $4,452 $(939) $(294) $(419) $1,132 $4,972
===== === === === ===== =====
Earnings Per Share $6.68 $(1.59) $(0.50) $(0.71) $0.90 $8.58
==== ==== ==== ==== ==== ====
1999
- -----------------------------------------------------------------------------------------
Post Hourly
Employment Retiree Termination Wireless Adjusted
Income Benefits Benefits Benefits Business Income
-----------------------------------------------------------------
GM Automotive
GMNA $4,857 $553 $(257) $(39) $ - $4,600
GME 423 - - - - 423
GMLAAM (81) - - - - (81)
GMAP (218) - - - - (218)
----- ----- ----- ---- ------ -----
Total GMA 4,981 553 (257) (39) - 4,724
Hughes (270) - - - (165) (105)
Other Automotive (669) - (151) (35) - (483)
GMAC 1,527 - - (16) - 1,543
Other Financing 7 - - - - 7
------- ----- ----- ---- ----- -----
Total GM $5,576 $553 $(408) $(90) $(165) $5,686
===== === === == === =====
Earnings Per Share $8.53 $0.84 $(0.62) $(0.14) $(0.17) $8.62
==== ==== ==== ==== ==== ====
1998
- --------------------------------------------------------------------------------------
Work
Asset Schedule Termination Adjusted
Income Impairments Modification Benefits Income
-----------------------------------------------------------
GM Automotive
GMNA $1,633 $(38) $- $(42) $1,713
GME 419 - (44) - 463
GMLAAM (175) (30) - (21) (124)
GMAP (243) (97) - - (146)
----- ---- ---- ---- -----
Total GMA 1,634 (165) (44) (63) 1,906
Hughes 272 - - - 272
Other Automotive (279) - - - (279)
GMAC 1,325 - - - 1,325
Other Financing 97 - - - 97
------ ----- ---- ---- -----
Total GM $3,049 $(165) $(44) $(63) $3,321
===== === == == =====
Earnings Per Share $4.32 $(0.24) $(0.06) $(0.10) $4.72
==== ==== ==== ==== ====
II-4
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
The phase-out of Oldsmobile at GMNA represents the costs associated with
GM's decision in the fourth quarter of 2000 to phase-out the Oldsmobile division
as the current model lineup product lifecycles come to an end, or when the
models are no longer economically viable. Included in the $939 million charge
for the phase-out of Oldsmobile was $356 million related to underperforming
assets and $583 million related to estimated future payments to dealers and
others. Underperforming assets represent the write-down of impaired long-lived
assets, principally tooling and equipment on operating leases, recorded pursuant
to GM's policy for the evaluation of long-lived assets (see Note 2 to the GM
consolidated financial statements). Estimated future payments to dealers and
others represent transition assistance to be paid to Oldsmobile dealers and
increased sales incentives on Oldsmobile vehicles in dealer inventory. The $294
million charge for postemployment benefits at GMNA was attributable to
postemployment costs for termination and other postemployment benefits
associated with the four North American manufacturing facilities slated for
conversion and capacity reduction (Oklahoma City, Oklahoma; Delta Engine,
Lansing, Michigan; Spring Hill, Tennessee; and Wilmington, Delaware) (see Note 3
to the GM consolidated financial statements). This action will reduce production
capacity by approximately 376,000 engines per year and 127,000 vehicles per
year. The capacity reduction at GME represents the costs associated with the
reduction in production capacity, including the restructuring of Vauxhall Motors
Limited's manufacturing operations in the UK. Included in the $419 million
charge for capacity reduction was $231 million related to underperforming
assets, $80 million related to cancellation charges to be paid to suppliers
incurred as a result of certain GME restructuring actions, and $108 million
related to early retirements and other separation programs. The charge for these
programs primarily relates to approximately 2,000 employees at the Luton
assembly plant. This action will reduce production capacity by approximately
270,000 vehicles per year. GM's net of tax cash requirements relating to the
GMNA and GME charges are expected to total approximately $1.2 billion, with
anticipated spending of approximately 90% through 2003. The $1.1 billion gain at
Hughes was attributable to the sale of its satellite systems manufacturing
businesses to The Boeing Company for $3.8 billion in cash.
In 1999, the $553 million benefit for postemployment benefits was related to
the reversal of a liability for benefits payable to excess U.S. hourly employees
(see Note 3 to the GM consolidated financial statements). The $408 million
charge for hourly retiree benefits was related to the benefit increase granted
to hourly retirees in connection with the 1999 United Auto Workers (UAW)
agreement. The $90 million charge for termination benefits was related to a U.S.
salaried early retirement program (approximately 1,700 people elected
participation in this program). The $165 million charge for the Hughes Wireless
business was related to Hughes' decision to discontinue certain of its wireless
manufacturing operations at Hughes Network Systems.
In 1998, the $165 million charge for impairment represents the write-down of
impaired tooling and other property, plant, and equipment (see Note 2 to the GM
consolidated financial statements). The $44 million work schedule modification
charge resulted from schedule modifications at Opel Belgium. The $63 million
termination benefits charge represents voluntary early retirement and other
separation programs affecting approximately 4,450 employees.
Vehicle Unit Deliveries of Cars and Trucks - GMA
Years Ended December 31,
----------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------- ---------------------------- ----------------------------
GM as GM as GM as
a % of a % of a % of
Industry GM Industry Industry GM Industry Industry GM Industry
---------------------------- ---------------------------- ----------------------------
(units in thousands)
United States
Cars 8,857 2,532 28.6% 8,700 2,591 29.8% 8,141 2,456 30.2%
Trucks 8,960 2,421 27.0% 8,718 2,426 27.8% 7,825 2,148 27.5%
------ ----- ------ ----- ------ -----
Total United States 17,817 4,953 27.8% 17,418 5,017 28.8% 15,966 4,604 28.8%
Canada, Mexico, and Other 2,648 707 26.7% 2,562 683 26.7% 2,406 639 26.6%
------ ----- ------ ----- ------ -----
Total GMNA 20,465 5,660 27.7% 19,980 5,700 28.5% 18,372 5,243 28.5%
GME 19,972 1,855 9.3% 20,219 1,970 9.7% 19,230 1,849 9.6%
GMLAAM 3,708 603 16.3% 3,353 536 16.0% 4,179 654 15.6%
GMAP 12,729 473 3.7% 12,030 468 3.9% 10,964 439 4.0%
------ ----- ------ ------ ------ ------
Total Worldwide 56,874 8,591 15.1% 55,582 8,674 15.6% 52,745 8,185 15.5%
II-5
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Wholesale Sales
Years Ended December 31,
2000 1999 1998
-------- -------- --------
(units in thousands)
GMNA
Cars 2,933 2,992 2,731
Trucks 2,842 2,882 2,340
----- ----- -----
Total GMNA 5,775 5,874 5,071
----- ----- -----
GME
Cars 1,744 1,824 1,764
Trucks 135 144 118
----- ----- -----
Total GME 1,879 1,968 1,882
----- ----- -----
GMLAAM
Cars 438 350 404
Trucks 196 173 248
--- --- ---
Total GMLAAM 634 523 652
--- --- ---
GMAP
Cars 175 162 202
Trucks 283 259 217
--- --- ---
Total GMAP 458 421 419
--- --- ---
Total Worldwide 8,746 8,786 8,024
===== ===== =====
GMA Financial Review
GMA's income and margin adjusted to exclude special items (adjusted income
and margin) was $3.9 billion and 2.7% for 2000, $4.7 billion and 3.2% for 1999,
and $1.9 billion and 1.5% for 1998. The decrease in 2000 adjusted income and
margin, compared with 1999, was primarily due to an increase in spending for
product development activities, pricing pressures in North America and Europe, a
decrease in wholesale sales volume, and unfavorable product mix, primarily in
Europe. These unfavorable conditions were partially offset by cost structure
improvements, primarily in North America.
The improvement in 1999 adjusted income and margin, compared with 1998, was
primarily due to improvement in the profitability of new vehicles, higher
production volumes at GMNA compared with the prior year when work stoppages at
two component plants in Flint, Michigan, halted production of wholesale units at
26 of 29 assembly plants in North America, and lower material costs.
GMA's total net sales and revenues adjusted to exclude special items
(adjusted total net sales and revenues) for 2000 were $148.1 billion, which
represented an increase of $2.0 billion, compared with 1999. The increase in
adjusted total net sales and revenues was largely due to growth initiatives,
including OnStar and Service Parts Operations, which were partially offset by
lower wholesale volumes, and unfavorable net price in North America and Europe.
Net price 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. Adjusted total net sales and revenues for 1999 were $146.1
billion, which represented an increase of $17.0 billion compared with 1998. The
increase was primarily due to increases in wholesale sales volumes as a result
of the previously mentioned 1998 GMNA work stoppages.
GMNA's adjusted income was $4.4 billion, $4.6 billion, and $1.7 billion for
2000, 1999, and 1998, respectively. The decrease in 2000 adjusted income from
1999 was primarily due to unfavorable net price and lower wholesale sales
volumes. The decrease was partially offset by improvements in manufacturing
costs due to performance efficiencies and material cost savings. Net price was
unfavorable for 2000 at (0.7)% year-over-year.
The improvement in GMNA adjusted income for 1999, compared with 1998, was
primarily due to the 1998 work stoppages, higher wholesale sales volumes,
improvement in the cost and profitability of new vehicles, lower material costs,
and reduced warranty expense resulting from improved quality. This improvement
was partially offset by increased manufacturing costs, launch costs associated
with the new LeSabre, Impala, Monte Carlo, Saturn LS, DeVille, Aurora, Tahoe,
Suburban, Yukon, and Yukon XL models, as well as increased engineering costs for
further innovation in GM's portfolio.
GME's adjusted loss was $257 million for 2000, compared with adjusted income
of $423 million and $463 million for 1999 and 1998, respectively. The decrease
in GME's 2000 adjusted income from 1999 was due to the weakening of the European
industry, a shift in sales mix from larger, more profitable vehicles to the
smaller, less profitable entries, a continued increase in competitive pricing
pressure, and a decrease in wholesale sales volume which was further impacted by
the reduced availability of the new
II-6
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMA Financial Review (concluded)
Corsa during the launch period. The decrease in GME's 1999 adjusted income from
1998 was primarily due to increased competitive pricing pressure and increased
engineering expense associated with the model year 2000 mid-life cycle
enhancements for the Vectra and Omega and the new model year 2001 Corsa. These
decreases were partially offset by continued material cost improvements as a
result of GM's global purchasing efforts, as well as improved manufacturing
performance.
During September 2000, the European parliament passed a directive requiring
member states to adopt legislation regarding end-of-life vehicles and the
responsibility of manufacturers for dismantling and recycling vehicles they have
sold. European Union member states are required to transform the concepts
detailed in the directive into national law by March 2002. Under the directive,
manufacturers are financially responsible for at least a portion of the cost of
the take-back of vehicles put on the market as of July 2002 and all of the cost
for all of the vehicles put on the market as of 2007. The laws developed in the
individual local legislatures throughout Europe will have a significant impact
on the amount ultimately paid by the manufacturers for this issue. GME is
currently assessing the impact of this potential legislation on its results of
operations and financial position.
GMLAAM's adjusted income was $26 million for 2000 compared with adjusted
losses of $81 million and $124 million for 1999 and 1998, respectively. The
increase in 2000 adjusted income, compared with 1999, was primarily due to
nominal price increases and an increase in wholesale sales volumes. This was
partially offset by an increase in manufacturing costs and material costs. The
decrease in 1999 adjusted loss, compared with 1998, was primarily due to nominal
price increases and reduced structural costs (reducing employee and production
costs), partially offset by lower industry volumes due to the economic crisis
throughout Latin America, and increased material and freight costs driven by GM
do Brasil's and its suppliers' exposure to hard currencies.
GMAP's adjusted loss was $233 million for 2000 compared with adjusted losses
of $218 million and $146 million for 1999 and 1998, respectively. The increase
in 2000 adjusted loss, compared to 1999, was primarily due to increased equity
losses at Isuzu which were partially offset by increased wholesale sales
volumes. Increased adjusted losses for 1999 compared with 1998 were primarily
due to start-up costs in the region and equity losses at Isuzu due to the
economic downturn in Asia, partially offset by continued strong performance in
Australia and earnings improvements at Shanghai GM.
GMA's effective income tax rate on an adjusted basis was 30.9%, 31.7%, and
34.7% for 2000, 1999, and 1998, respectively. GMA's effective income tax rate on
a reported basis was 26.6%, 32.0%, and 34.8% for 2000, 1999, and 1998,
respectively.
Hughes Financial Review
Total adjusted net sales and revenues increased to $8.7 billion in 2000,
compared with $7.6 billion in 1999 and $6.1 billion in 1998. The increase in
adjusted net sales and revenues in 2000 compared with 1999 resulted from growth
in the DIRECTV businesses from the addition of more than 2.0 million net new
subscribers in the United States and Latin America since December 31, 1999.
PanAmSat Corporation also contributed to the increase in adjusted net sales and
revenues primarily due to increased revenues from outright sales and sales-type
lease transactions executed during 2000. The increase in adjusted net sales and
revenues from 1999 compared with 1998 resulted from the growth in the DIRECTV
businesses due to the addition of slightly more than 1.7 million net new
subscribers in the United States and Latin America since December 31, 1998, and
added revenues from acquisitions of PRIMESTAR and United States Satellite
Broadcasting Company, Inc., in mid-1999. Also contributing to the growth of 1999
revenues were increased sales of DIRECTV receiver equipment and a $155 million
pre-tax gain that resulted from the settlement of a patent infringement case.
The 1999 increase was partially offset by decreased revenues at the satellite
systems manufacturing businesses, which was principally due to contract revenue
adjustments and delayed revenue recognition that resulted from increased
development costs and schedule delays on several new product lines, and
decreased activity associated with a contract with ICO Global Communications.
Hughes' adjusted loss was $303 million for 2000, compared with an adjusted
loss of $105 million in 1999 and adjusted income of $272 million in 1998. The
increase in 2000 adjusted loss, compared with 1999, was primarily due to higher
marketing costs at the Direct-To-Home businesses, increased depreciation and
amortization expense due to 1999 acquisitions and additions to satellites and
property, as well as increased interest expense as a result of increased average
outstanding borrowings throughout the year. The adjusted loss in 1999, compared
with adjusted income in 1998, was a result of an $85 million decrease in
interest income, a $105 million increase in interest expense, increased
subscriber acquisition costs, and higher depreciation and amortization that
resulted from 1999 acquisitions.
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.
II-7
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMAC Financial Review
GMAC's adjusted income was $1.6 billion, $1.5 billion, and $1.3 billion in
2000, 1999, and 1998, respectively. Income from automotive and other financing
operations totaled $1.1 billion, $1.1 billion, and $1.0 billion in 2000, 1999,
and 1998, respectively. In 2000, increased financing volumes and asset levels
were offset by the negative impact from the higher level of market interest
rates compared with 1999. The increase in 1999 from 1998 was due to increased
financing volumes and reduced credit losses, partially offset by a higher
effective tax rate. Income from insurance operations totaled $220 million, $210
million, and $226 million in 2000, 1999, and 1998, respectively. The increase in
income from 1999 was primarily due to improved operating results and higher
investment income and capital gains. The decrease in 1999 from 1998 was
primarily attributable to pricing pressure in the personal lines insurance
business. Income from mortgage operations totaled $327 million, $260 million,
and $115 million in 2000, 1999, and 1998, respectively. The strong
year-over-year performance reflects the benefit of strong international growth,
lower cost of servicing, and increased mortgage originations during the second
half of 1999. The unusually low earnings in 1998 were largely due to reduced
mortgage asset values from higher prepayment levels.
Financing revenue totaled $15.5 billion in 2000, compared with $13.8 billion
and $12.7 billion for 1999 and 1998, respectively. These increases were mainly
due to higher average retail, wholesale, and commercial and other loan
receivable balances.
LIQUIDITY AND CAPITAL RESOURCES
Automotive, Communications Services, and Other Operations
At December 31, 2000, cash, marketable securities, and $3.0 billion of assets
of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in
fixed-income securities totaled $13.3 billion, compared with $14.4 billion at
December 31, 1999. The decrease from December 31, 1999 was primarily due to
decreased operating cash flows, GM's purchase of a 20% equity interest in Fuji
Heavy Industries Ltd. for approximately $1.3 billion, a $1.0 billion cash equity
injection in GMAC, and stock repurchases. These items were partially offset by
the net cash proceeds from the sale of the Hughes' satellite systems
manufacturing businesses to The Boeing Company and improvements in managed
working capital. Total assets in the VEBA trust used to pre-fund part of GM's
other postretirement benefits liability approximated $6.7 billion and $6.3
billion at December 31, 2000 and 1999, respectively. 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.
Net liquidity, calculated as cash and marketable securities less the total of
loans payable and long-term debt, was $662 million at December 31, 2000, a
decrease of $1.4 billion from the prior year.
Long-term debt was $7.4 billion at December 31, 2000 and 1999, respectively.
The ratio of long-term debt to long-term debt and GM's net assets of Automotive,
Communications Services, and Other Operations was 30.8% and 42.3% at December
31, 2000 and 1999, respectively. 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 36.6% and 48.2% at December
31, 2000 and 1999, respectively.
Financing and Insurance Operations
At December 31, 2000, GMAC owned assets and serviced automotive receivables
totaling $185.6 billion, compared with $162.3 billion at December 31, 1999.
Total consolidated assets of GMAC at December 31, 2000 were $168.4 billion,
compared with $148.8 billion at December 31, 1999. The increase over year-end
1999 was primarily the result of higher serviced retail receivables, commercial
and other loan receivables, serviced wholesale receivables, other assets,
factored receivables, mortgage lending receivables, mortgage servicing rights,
mortgage loans held for investment and due and deferred from receivable sales,
and receivables due from Automotive, Communications Services, and Other
Operations. These increases were partially offset by a decline in operating
lease assets.
Consolidated automotive and commercial finance receivables serviced by
GMAC, including sold receivables, totaled $112.5 billion and $97.0 billion at
December 31, 2000 and 1999, respectively. This increase was primarily the result
of a $7.4 billion increase in serviced retail receivables, a $4.9 billion
increase in commercial and other loan receivables, and a $4.4 billion increase
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. The growth at Commercial Credit LLC was partially
attributable to the acquisitions of the factoring businesses of Finova Capital
Corporation and Banc of America during the third and fourth quarters of 2000.
The increase in serviced wholesale loan receivables was due to higher dealer
inventory levels, as well as an increase in penetration.
II-8
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Financing and Insurance Operations - (concluded)
GMAC's liquidity, as well as its ability to profit from ongoing acquisition
activity, is in large part dependent on its timely access to capital and the
costs associated with raising funds in different segments of the capital
markets. In this regard, GMAC regularly accesses the short-term, medium-term,
and long-term debt markets, principally through commercial paper, notes, and
underwritten transactions.
At December 31, 2000, GMAC's total borrowings were $133.4 billion, compared
with $121.2 billion at December 31, 1999. Approximately 81% of this debt
represented funding for operations in the U.S. and the remaining 19% represented
borrowings for operations in Canada (9%), the United Kingdom (3%), Germany (3%),
and other countries (4%). GMAC's 2000 year-end ratio of total debt to total
stockholder's equity was 9.5:1, compared with 10.9:1 at December 31, 1999. The
higher year-to-year debt balances were principally used to fund increased asset
levels. Total short-term debt outstanding at December 31, 2000 amounted to
$56.9 billion, compared with $50.8 billion at December 31, 1999.
Book Value Per Share
Book value per share was 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 increased to $39.36 at December 31, 2000, from $27.02 at December
31, 1999. Book value per share of GM Class H common stock, adjusted to reflect
the GM Class H common stock split, increased to $7.87 at December 31, 2000, from
$5.40 at December 31, 1999.
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. GM's
four-quarter rolling-average RONA for continuing operations adjusted to exclude
special items, excluding Hughes, was 11.1% and 13.8% as of December 31, 2000 and
1999, respectively.
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.
At December 31, 2000, the amount available for the payment of dividends on GM
$1-2/3 par value and GM Class H common stocks was $9.8 billion and $19.7
billion, respectively. 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. Cash dividends per share of GM $1-2/3 par value common stock were
$2.00 in 2000, 1999, and 1998. 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.
The dividends per share for the GM Series H 6.25% Automatically Convertible
Preference Stock were $35.1172 in 2000. The GM Board also paid dividends in 2000
on the Series D and Series G Depositary Shares of $0.99 and $2.28 per share,
respectively. The Series D preference stock was redeemed on May 2, 2000, and as
a result, the amount paid on that date to the Series D shareholders of record
included accrued and unpaid dividends as part of the total redemption price.
Euro Conversion
On January 1, 1999, 11 of 15 member countries of the European Union
established fixed conversion rates between their existing currencies and adopted
the euro as their new common currency. The euro trades on currency exchanges and
the legacy currencies remain legal tender in the participating countries for a
transition period until January 1, 2002. Beginning on January 1, 2002, euro
denominated bills and coins will be issued and legacy currencies will be
withdrawn from circulation.
The Corporation has reviewed and has made required modifications to
applicable information technology systems and contracts based on the new
currency. At December 31, 2000, the conversion to the euro has not resulted, nor
is the remaining transition expected to result in any material adverse impact on
GM's financial position and results of operations.
II-9
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Employment and Payrolls
Worldwide employment at December 31,
(in thousands) 2000 1999 1998(1)
---- ---- ----
GMNA 212 217 226
GME 89 91 (2) 94(2)
GMLAAM 24 23 24
GMAP 11 10 10
GMAC 29 27 24
Hughes 9 18 15
Other 12 12 13
--- --- ---
Total employees 386 398 406
=== === ===
Worldwide payrolls - continuing operations
(in billions) (3) $21.6 $21.8 $20.4
U.S. hourly payrolls (in billions) (4) $9.4 $10.0 $8.8
Average labor cost per active hour
worked U.S. hourly $52.89 $50.51 $46.17
(1) Amounts have been adjusted to exclude Delphi employees.
(2) Amounts have been adjusted to include SAAB employees.
(3) Amounts have been adjusted to exclude Hughes' employees.
(4) Includes employees "at work" (excludes laid-off employees receiving
benefits).
New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In June 2000, the FASB issued
SFAS No. 138, which amended certain provisions of SFAS No. 133. GM adopted SFAS
No. 133, as amended, on January 1, 2001. GM will record a one-time after-tax
charge to income for the initial adoption of SFAS No. 133 totaling $6 million,
as well as an after-tax unrealized loss of $77 million to other comprehensive
income as of January 1, 2001. The outcome of pending issues at the FASB and the
Derivatives Implementation Group could impact the amount of the cumulative
transition adjustment presented herein.
In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125. This statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001, and is effective for the recognition and reclassification of
collateral and disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. Management does not
expect this statement to have a material impact on GM's results of operations
and financial position.
Forward-Looking Statements
In this report, in reports subsequently filed by GM with the SEC on Forms
10-Q and 8-K, and in related comments by management of GM and Hughes, 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 below
and other factors that may be described in subsequent reports which GM may file
with the SEC on Forms 10-Q and 8-K:
. Changes in economic conditions, currency exchange rates, or political
stability in the major markets where the Corporation procures material,
components, and supplies for the production of its principal products or
where its products are produced, distributed, or sold (i.e., North America,
Europe, Latin America, and Asia Pacific).
. Shortages of fuel or interruptions in transportation systems, labor
strikes, work stoppages, or other interruptions to or difficulties in the
employment of labor in the major markets where the Corporation purchases
material, components, and supplies for the production of its products or
where its products are produced, distributed, or sold.
. Significant changes in the competitive environment in the major markets
where the Corporation purchases material, components, and supplies for the
production of its products or where its products are produced, distributed,
or sold.
. Changes in the laws, regulations, policies, or other activities of
governments, agencies, and similar organizations where such actions may
affect the production, licensing, distribution, or sale of the
Corporation's products, the cost thereof, or applicable tax rates.
II-10
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Forward-Looking Statements (concluded)
. The ability of the Corporation to achieve reductions in cost and employment
levels, to realize production efficiencies, and to implement capital
expenditures, all at the levels and times planned by management.
. With respect to Hughes, additional risk factors include: economic
conditions, product demand and market acceptance, government action, local
political or economic developments in or affecting countries where Hughes
has operations, ability to obtain export licenses, competition, ability to
achieve cost reductions, technological risk, limitations on access to
distribution channels, the success and timeliness of satellite launches,
in-orbit performance of satellites, ability of customers to obtain
financing, and Hughes' ability to access capital to maintain its financial
flexibility. Additionally, the in-orbit satellites of Hughes and its 81%
owned subsidiary, PanAmSat Corporation, are subject to the risk of failing
prematurely due to, among other things, mechanical failure, collision with
objects in space, or an inability to maintain proper orbit. Satellites are
subject to the risk of launch delay and failure, destruction and damage
while on the ground or during launch, and failure to become fully
operational once launched. Delays in the production, or launch of a
satellite, or the complete or partial loss of a satellite, in-orbit or
during launch, could have a material adverse impact on the operation of
Hughes' businesses. Hughes purchases in-orbit and launch insurance for its
satellite fleet to mitigate the potential financial impact of in-orbit and
launch failures. The insurance generally does not compensate for business
interruption or loss of future revenues or customers. Certain of Hughes'
insurance policies contain exclusions related to known anomalies and Hughes
is self-insured for certain other satellites. Hughes has, in the past,
experienced technical anomalies on some of its satellites. Service
interruptions caused by these anomalies, depending on their severity, could
result in claims by affected customers for termination of their transponder
agreements, cancellation of other service contracts, or the loss of other
customers.
* * * * * *
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
GM is exposed to market risk from changes in foreign currency exchange rates,
interest rates, and certain commodity and equity security prices. GM enters into
a variety of foreign exchange, interest rate, and commodity forward contracts
and options, primarily to maintain the desired level of 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.
A discussion of GM's accounting policies for derivative financial instruments
is included in Note 1 to the GM consolidated financial statements. Further
information on GM's exposure to market risk is included in Notes 19 and 20 to
the GM consolidated financial statements.
The following analyses provide quantitative information regarding GM's
exposure to foreign currency exchange rate risk, interest rate risk, and
commodity and equity price risk. GM uses a model to evaluate the sensitivity of
the fair value of financial instruments with exposure to market risk that
assumes instantaneous, parallel shifts in exchange rates, interest rate yield
curves, and commodity and equity prices. For options and instruments with
non-linear returns, models appropriate to the instrument are utilized to
determine the impact of market shifts. There are certain shortcomings inherent
in the sensitivity analyses presented, primarily due to the assumption that
exchange rates change in a parallel fashion and that interest rates change
instantaneously. In addition, the analyses are unable to reflect the complex
market reactions that normally would arise from the market shifts modeled.
Foreign Exchange Rate Risk
GM has foreign currency exposures related to buying, selling, and financing
in currencies other than the local currencies in which it operates. More
specifically, GM is exposed to foreign currency risk related to the uncertainty
to which future earnings or asset and liability values are exposed to as the
result of operating cash flows and various financial instruments that are
denominated in foreign currencies. At December 31, 2000 and 1999, the net fair
value liability of financial instruments with exposure to foreign currency risk
was approximately $13.6 billion and $11.2 billion, respectively. The potential
loss in fair value for such financial instruments from a 10% adverse change in
quoted foreign currency exchange rates would be approximately $1.2 billion and
$1.0 billion for 2000 and 1999, respectively.
II-11
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Interest Rate Risk
GM is subject to market risk from exposure to changes in interest rates due
to its financing, investing, and cash management activities. More specifically,
the Corporation is exposed to interest rate risk associated with long term debt
and contracts to provide commercial and retail financing, retain mortgage
servicing rights, and retain assets related to mortgage securitization. In
addition, GM is exposed to prepayment risk associated with its capitalized
mortgage servicing rights. This risk is managed with U.S. Treasury options and
futures, which exposes GM to basis risk since the derivative instruments do not
have identical characteristics to the underlying mortgage servicing rights. At
December 31, 2000 and 1999, the net fair value liability of financial
instruments held for purposes other than trading with exposure to interest rate
risk was approximately $18.1 billion and $18.8 billion, respectively. The
potential loss in fair value resulting from a 10% adverse shift in quoted
interest rates would be approximately $385 million and $127 million for 2000 and
1999, respectively. At December 31, 2000 and 1999, the net fair value asset of
financial instruments held for trading purposes with exposure to interest rate
risk was approximately $3.2 billion and $2.7 billion, respectively. The
potential loss in fair value resulting from a 10% adverse shift in quoted
interest rates would be approximately $217 million and $39 million for 2000 and
1999, respectively. This analysis excludes GM's operating lease portfolio. A
fair value change in the debt that funds this portfolio would potentially have a
diametric impact on the fair value of the portfolio itself. As such, the overall
impact to the fair value of financial instruments from a hypothetical change in
interest rates may be overstated.
Commodity Price Risk
GM is exposed to changes in prices of commodities used in its Automotive
business, primarily associated with various non-ferrous metals used in the
manufacturing of automotive components. GM enters into commodity forward and
option contracts to offset such exposure. At December 31, 2000 and 1999, the net
fair value asset of such contracts was approximately $51 million and $151
million, respectively. The potential loss in fair value resulting from a 10%
adverse change in the underlying commodity prices would be approximately $152
million and $210 million for 2000 and 1999, respectively. This amount excludes
the offsetting impact of the price risk inherent in the physical purchase of the
underlying commodities.
Equity Price Risk
GM is exposed to changes in prices of various available-for-sale equity
securities in which it invests. At December 31, 2000 and 1999, the fair value of
such investments was approximately $3.3 billion and $3.2 billion, respectively.
The potential loss in fair value resulting from a 10% adverse change in equity
prices would be approximately $330 million and $323 million for 2000 and 1999,
respectively.
* * * * * *
II-12
RESPONSIBILITIES FOR CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of General Motors Corporation
and subsidiaries were prepared by management, which is responsible for their
integrity and objectivity. The statements have been prepared in conformity with
accounting principles generally accepted in the United States of America and, as
such, include amounts based on judgments of management.
Management is further responsible for maintaining internal control designed
to provide reasonable assurance that the books and records reflect the
transactions of the companies and that established policies and procedures are
carefully followed. From a stockholder's point of view, perhaps the most
important feature in internal control is that it is continually reviewed for
effectiveness and is augmented by written policies and guidelines, the careful
selection and training of qualified personnel, and a strong program of internal
audit.
Deloitte & Touche LLP, an independent auditing firm, is engaged to audit the
consolidated financial statements of General Motors Corporation and subsidiaries
and issue reports thereon. The audit is conducted in accordance with auditing
standards generally accepted in the United States of America that comprehend the
consideration of internal control and tests of transactions to the extent
necessary to form an independent opinion on the financial statements prepared by
management. The Independent Auditors' Report appears on the next page.
The Board of Directors, through the Audit Committee (composed entirely of
non-employee Directors), is responsible for assuring that management fulfills
its responsibilities in the preparation of the consolidated financial
statements. The Audit Committee annually recommends to the Board of Directors
the selection of the independent auditors in advance of the Annual Meeting of
Stockholders and submits the selection for ratification at the Meeting. In
addition, the Audit Committee reviews the scope of the audits and the accounting
principles being applied in financial reporting. The independent auditors,
representatives of management, and the internal auditors meet regularly
(separately and jointly) with the Audit Committee to review the activities of
each, to ensure that each is properly discharging its responsibilities, and to
assess the effectiveness of internal control. It is management's conclusion that
internal control at December 31, 2000 provides reasonable assurance that the
books and records reflect the transactions of the companies and that established
policies and procedures are complied with. To ensure complete independence,
Deloitte & Touche LLP has full and free access to meet with the Audit Committee,
without management representatives present, to discuss the results of the audit,
the adequacy of internal control, and the quality of financial reporting.
/s/John F. Smith, Jr. /s/G. Richard Wagoner, Jr. /s/John M. Devine
John F. Smith, Jr. G. Richard Wagoner, Jr. John M. Devine
Chairman President and Vice Chairman and
Chief Executive Officer Chief Financial Officer
II-13
Independent Auditors' Report
General Motors Corporation, its Directors, and Stockholders:
We have audited the Consolidated Balance Sheets of General Motors Corporation
and subsidiaries as of December 31, 2000 and 1999, and the related Consolidated
Statements of Income, Cash Flows, and Stockholders' Equity for each of the three
years in the period ended December 31, 2000. Our audits also included the
financial statement schedule listed at Item 14. These financial statements and
the financial statement schedule are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of General Motors Corporation and subsidiaries
at December 31, 2000 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Detroit, Michigan
January 17, 2001
II-14
ITEM 8
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
----------------------------------
2000 1999 1998
---- ---- ----
(dollars in millions except per share amounts)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Total net sales and revenues
(Notes 1, 2, and 22) $184,632 $176,558 $155,445
-------- -------- --------
Cost of sales and other expenses
(Notes 2, 3, and 22) 145,664 140,708 127,785
Selling, general, and administrative
expenses 22,252 19,053 16,087
Interest expense (Note 13) 9,552 7,750 6,629
------- ------- -------
Total costs and expenses 177,468 167,511 150,501
------- ------- -------
Income from continuing operations
before income taxes
and minority interests 7,164 9,047 4,944
Income tax expense (Note 8) 2,393 3,118 1,636
Equity income/(loss) and
minority interests (319) (353) (259)
----- ----- -----
Income from continuing operations 4,452 5,576 3,049
Income (loss) from discontinued
operations (Note 1) - 426 (93)
----- ----- -----
Net income 4,452 6,002 2,956
Dividends on preference stocks (Note 17) (110) (80) (63)
----- ----- -----
Earnings attributable to common stocks $4,342 $5,922 $2,893
===== ===== =====
Basic earnings (losses) per
share attributable to
common stocks (Note 18)
$1-2/3 par value
Continuing operations $6.80 $8.70 $4.40
Discontinued operations (Note 1) - 0.66 (0.14)
---- ---- ----
Earnings per share attributable
to $1-2/3 par value $6.80 $9.36 $4.26
==== ==== ====
Earnings per share attributable
to Class H $0.56 $(0.26) $0.23
==== ==== ====
Earnings (losses) per share
attributable to common
stocks assuming dilution (Note 18)
$1-2/3 par value
Continuing operations $6.68 $8.53 $4.32
Discontinued operations (Note 1) - 0.65 (0.14)
---- ---- ----
Earnings per share attributable
to $1-2/3 par value $6.68 $9.18 $4.18
==== ==== ====
Earnings per share attributable
to Class H $0.55 $(0.26) $0.23
==== ==== ====
Reference should be made to the notes to consolidated financial statements.
II-15
CONSOLIDATED STATEMENTS OF INCOME - concluded
Years Ended December 31,
----------------------------------
2000 1999 1998
---- ---- ----
(dollars in millions)
AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS
Total net sales and revenues
(Notes 1, 2, and 22) $160,627 $156,107 $137,161
-------- -------- --------
Cost of sales and other expenses
(Notes 2, 3, and 22) 138,303 134,111 121,491
Selling, general, and administrative
expenses 16,246 14,324 11,918
------- ------- -------
Total costs and expenses 154,549 148,435 133,409
------- ------- -------
Interest expense (Note 13) 815 828 786
Net expense from transactions with
Financing and Insurance Operations
(Note 1) 682 308 82
------ ------ -------
Income from continuing
operations before income
taxes and minority interests 4,581 6,536 2,884
Income tax expense (Note 8) 1,443 2,167 1,018
Equity income/(loss) and minority
interests (299) (327) (239)
----- ----- -----
Income from continuing operations 2,839 4,042 1,627
Income (loss) from discontinued
operations (Note 1) - 426 (93)
----- ----- -----
Net income - Automotive, Communications
Services, and Other Operations $2,839 $4,468 $1,534
===== ===== =====
Years Ended December 31,
----------------------------------
2000 1999 1998
---- ---- ----
(dollars in millions)
FINANCING AND INSURANCE OPERATIONS
Total revenues $24,005 $20,451 $18,284
------ ------ ------
Interest expense (Note 13) 8,737 6,922 5,843
Depreciation and amortization
expense (Note 9) 5,982 5,445 4,920
Operating and other expenses 5,805 4,595 4,067
Provisions for financing and
insurance losses (Notes 1 and 22) 1,580 1,286 1,476
----- ----- -----
Total costs and expenses 22,104 18,248 16,306
------ ------ ------
Net income from transactions
with Automotive,
Communications Services,
and Other Operations (Note 1) (682) (308) (82)
----- ----- -----
Income before income taxes and
minority interests 2,583 2,511 2,060
Income tax expense (Note 8) 950 951 618
Equity income/(loss) and
minority interests (20) (26) (20)
----- ----- -----
Net income - Financing and
Insurance Operations $1,613 $1,534 $1,422
====== ====== ======
The above supplemental consolidating information is explained in Note 1, "Nature
of Operations."
Reference should be made to the notes to consolidated financial statements.
II-16
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------
GENERAL MOTORS CORPORATION AND SUBSIDIARIES 2000 1999
---- ----
ASSETS (dollars in millions)
Automotive, Communications Services,
and Other Operations
Cash and cash equivalents (Note 1) $9,119 $9,730
Marketable securities (Note 4) 1,161 1,698
------- -------
Total cash and marketable securities 10,280 11,428
Accounts and notes receivable (less allowances) 5,835 5,093
Inventories (less allowances) (Note 6) 10,945 10,638
Equipment on operating leases (less accumulated
depreciation) (Note 7) 5,699 5,744
Deferred income taxes and other current assets (Note 8) 8,388 9,006
------- -------
Total current assets 41,147 41,909
Equity in net assets of nonconsolidated associates 3,497 1,711
Property - net (Note 9) 33,977 32,779
Intangible assets - net (Notes 1 and 10) 7,622 8,527
Deferred income taxes (Note 8) 14,870 15,277
Other assets (Note 11) 32,243 25,358
-------- --------
Total Automotive, Communications Services, and
Other Operations assets 133,356 125,561
Financing and Insurance Operations
Cash and cash equivalents (Note 1) 1,165 712
Investments in securities (Note 4) 9,595 9,110
Finance receivables - net (Note 5) 92,415 80,627
Investment in leases and other receivables (Note 7) 36,752 36,407
Other assets (Note 11) 27,846 21,312
Net receivable from Automotive,
Communications Services, and
Other Operations (Note 1) 1,971 1,001
------- -------
Total Financing and Insurance Operations assets 169,744 149,169
------- -------
Total assets $303,100 $274,730
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive, Communications Services, and Other Operations
Accounts payable (principally trade) $18,309 $17,254
Loans payable (Note 13) 2,208 1,991
Accrued expenses (Note 12) 33,252 32,854
Net payable to Financing and Insurance
Operations (Note 1) 1,971 1,001
------ ------
Total current liabilities 55,740 53,100
Long-term debt (Note 13) 7,410 7,415
Postretirement benefits other than pensions (Note 14) 34,306 34,166
Pensions (Note 14) 3,480 3,339
Other liabilities and deferred income taxes (Note 12) 15,768 17,426
------- -------
Total Automotive, Communications Services,
and Other Operations liabilities 116,704 115,446
Financing and Insurance Operations
Accounts payable 7,416 4,262
Debt (Note 13) 135,037 122,282
Other liabilities and deferred income taxes (Note 12) 12,922 11,282
-------- --------
Total Financing and Insurance Operations liabilities 155,375 137,826
Minority interests 707 596
General Motors - obligated mandatorily
redeemable preferred securities of
subsidiary trusts holding solely junior
subordinated debentures of General Motors
(Note 16)
Series D - 79
Series G 139 139
Stockholders' equity (Note 17)
$1-2/3 par value common stock (issued,
548,181,757 and 619,412,233 shares) 914 1,033
Class H common stock (issued, 875,286,559
and 411,345,561 shares) 88 14
Capital surplus (principally additional paid-in capital) 21,020 13,794
Retained earnings 10,119 6,961
------ ------
Subtotal 32,141 21,802
Accumulated foreign currency translation adjustments (2,502) (2,033)
Net unrealized gains on securities 581 996
Minimum pension liability adjustment (45) (121)
------ ------
Accumulated other comprehensive loss (1,966) (1,158)
------ ------
Total stockholders' equity 30,175 20,644
------- -------
Total liabilities and stockholders' equity $303,100 $274,730
======= =======
Reference should be made to the notes to consolidated financial statements.
II-17
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31,
-----------------------------------------------------------------------------------
2000 1999 1998
------------------------ ------------------------ -------------------------
Automotive, Financing Automotive, Financing Automotive, Financing
Comm.Serv., and Comm.Serv., and Comm.Serv., and
and Other Insurance and Other Insurance and Other Insurance
----------- --------- ----------- --------- ----------- ---------
Cash flows from operating activities (dollars in millions)
Income from continuing operations $2,839 $1,613 $4,042 $1,534 $1,627 $1,422
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities
Depreciation and amortization
expenses 7,429 5,982 6,873 5,445 6,227 4,920
Postretirement benefits
other than pensions,
net of payments and
VEBA contributions 772 27 (1,057) 21 157 31
Pension expense, net of contributions 128 - (808) - 223 -
Originations and purchases
of mortgage loans - (51,202) - (53,006) - (54,433)
Proceeds on sales of mortgage loans - 51,444 - 55,777 - 51,582
Originations and purchases of
mortgage securities - (1,571) - (1,309) - (2,237)
Proceeds on sales of
mortgage securities - 994 - 1,545 - 849
Change in other investments and
miscellaneous assets 1,154 (1,692) 522 (127) (162) 932
Change in other operating assets
and liabilities (Note 1) 724 2,505 7,523 (23) 90 1,468
Other (2,175) 779 (951) 944 581 1,066
------- ------ ------- -------- ------ ------
Net cash provided by operating
activities $10,871 $8,879 $16,144 $10,801 $8,743 $5,600
------- ------ ------- ------- ------ ------
Cash flows from investing activities
Expenditures for property (9,200) (522) (7,061) (323) (7,952) (279)
Investments in marketable securities
- acquisitions (2,520) (24,599) (4,149) (21,257) (13,010) (21,152)
Investments in marketable securities
- liquidations 3,057 24,114 2,886 20,593 16,272 21,688
Mortgage servicing rights
- acquisitions - (1,096) - (1,424) - (1,862)
Mortgage servicing rights
- liquidations - 12 - 35 - 80
Finance receivables - acquisitions - (214,666) - (186,379) - (155,613)
Finance receivables - liquidations - 143,242 - 130,293 - 114,662
Proceeds from sales of finance
receivables - 58,369 - 48,178 - 27,681
Operating leases - acquisitions (6,709) (15,174) (6,415) (16,750) (6,397) (17,128)
Operating leases - liquidations 6,149 9,844 4,243 7,836 5,609 9,777
Investments in companies,
net of cash acquired (4,302) (2,077) (2,706) (2,402) (971) (173)
Net investing activity with Financing
and Insurance Operations (1,069) - 75 - 338 -
Other 3,281 93 (924) 732 (889) (242)
------ ------ ------ ------ ----- ------
Net cash used in investing activities (11,313) (22,460) (14,051) (20,868) (7,000) (22,561)
------ ------ ------ ------ ----- ------
Cash flows from financing activities
Net increase (decrease) in loans
payable 142 7,723 140 (2,500) (94) 8,280
Long-term debt - borrowings 5,279 22,414 9,090 26,471 2,937 21,098
Long-term debt - repayments (6,196) (16,196) (8,281) (13,078) (1,492) (11,377)
Net financing activity with
Automotive, Communications
Services, and Other Operations - 1,069 - (75) - (338)
Repurchases of common and preference
stocks (1,613) - (3,870) - (3,089) -
Proceeds from issuing common and
preference stocks 2,792 - 2,090 - 343 -
Cash dividends paid to stockholders (1,294) - (1,367) - (1,388) -
----- ------ ----- ------ ----- ------
Net cash (used in) provided by
financing activities (890) 15,010 (2,198) 10,818 (2,783) 17,663
----- ------ ----- ------ ----- ------
Effect of exchange rate changes
on cash and cash equivalents (249) (6) (206) - 315 2
Net transactions with Automotive/
Financing Operations 970 (970) 185 (185) 1,135 (1,135)
--- ---- --- ---- ----- ------
Net cash (used in) provided by
continuing operations (611) 453 (126) 566 410 (431)
Net cash provided by (used in)
discontinued operations (Note 1) - - 128 - (378) -
----- ----- --- ----- --- -----
Net (decrease) increase in cash
and cash equivalents (611) 453 2 566 32 (431)
Cash and cash equivalents at
beginning of the year 9,730 712 9,728 146 9,696 577
----- ----- ----- ----- ----- -----
Cash and cash equivalents at
end of the year $9,119 $1,165 $9,730 $712 $9,728 $146
====== ====== ====== ==== ====== ====
Reference should be made to the notes to consolidated financial statements.
II-18
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, and 1998
Accumulated
Total Other Total
Capital Capital Comprehensive Retained Comprehensive Stockholders'
Stock Surplus Income Earnings Loss Equity
----- ------- ------ -------- ---- ------
(dollars in millions)
Balance at January 1, 1998 $1,167 $15,369 $5,416 $(4,368) $17,584
Shares reacquired (75) (3,105) - - (3,180)
Shares issued 12 397 - - 409
Comprehensive income:
Net income - - $2,956 2,956 - 2,956
-----
Other comprehensive income (loss):
Foreign currency translation adjustments - - (279) - - -
Unrealized losses on securities - - (23) - - -
Minimum pension liability adjustment - - (1,027) - - -
-----
Other comprehensive loss - - (1,329) - (1,329) (1,329)
-----
Comprehensive income - - $1,627 - - -
=====
Cash dividends - - (1,388) - (1,388)
----- ------ ------ ----- -------
Balance at December 31, 1998 1,104 12,661 6,984 (5,697) 15,052
Shares reacquired (76) (3,794) - - (3,870)
Shares issued 19 3,588 - - 3,607
Comprehensive income:
Net income - - $6,002 6,002 - 6,002
-----
Other comprehensive income (loss):
Foreign currency translation adjustments - - (944) - - -
Unrealized gains on securities - - 515 - - -
Minimum pension liability adjustment - - 4,968 - - -
-----
Other comprehensive income - - 4,539 - 4,539 4,539
-----
Comprehensive income - - $10,541 - - -
======
Cash dividends - - (1,367) - (1,367)
Delphi initial public offering (Note 1) - 1,244 - 1,244
Delphi spin-off (Note 1) - 95 (4,658) - (4,563)
----- ------ ------ ----- ------
Balance at December 31, 1999 1,047 13,794 6,961 (1,158) 20,644
Shares reacquired (184) (9,626) - - (9,810)
Shares issued 139 16,852 - - 16,991
Comprehensive income:
Net income - - $4,452 4,452 - 4,452
-----
Other comprehensive income (loss):
Foreign currency translation adjustments - - (469) - - -
Unrealized losses on securities - - (415) - - -
Minimum pension liability adjustment - - 76 - - -
-----
Other comprehensive loss - - (808) - (808) (808)
-----
Comprehensive income - - $3,644 - - -
=====
Cash dividends - - (1,294) - (1,294)
----- ------ ------ ----- ------
Balance at December 31, 2000 $1,002 $21,020 $10,119 $(1,966) $30,175
===== ====== ====== ===== ======
Reference should be made to the notes to consolidated financial statements.
II-19
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of General Motors
Corporation (hereinafter referred to as the Corporation) and domestic and
foreign subsidiaries that are more than 50% owned, principally General Motors
Acceptance Corporation and Subsidiaries (GMAC) and Hughes Electronics
Corporation and Subsidiaries (Hughes), (collectively referred to as "General
Motors" or "GM"). General Motors' share of earnings or losses of associates, in
which at least 20% of the voting securities is owned, is included in the
consolidated operating results using the equity method of accounting, except for
investments where GM is not able to exercise significant influence over the
operating and financial decisions of the investee, in which case, the cost
method of accounting is used. The financial data related to Delphi Automotive
Systems Corporation (Delphi) is presented as discontinued operations for the
periods ended December 31, 1999 and 1998. GM encourages reference to the GMAC
Annual Report on Form 10-K for the period ended December 31, 2000, filed
separately with the Securities and Exchange Commission, and the Hughes
consolidated financial statements included as Exhibit 99 to this GM Annual
Report on Form 10-K for the period ended December 31, 2000, and related Hughes
Annual Report on Form 10-K filed separately with the Securities and Exchange
Commission.
Certain amounts for 1999 and 1998 have been reclassified to conform with the
2000 classifications.
Nature of Operations
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. These transactions consist principally of
borrowings and other financial services provided by Financing and Insurance
Operations to Automotive, Communications Services, and Other Operations.
Use of Estimates in the Preparation of the Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the U.S. requires management to make estimates
and assumptions that affect amounts reported therein. Due to the inherent
uncertainty involved in making estimates, actual results reported in future
periods may differ from those estimates.
Revenue Recognition
Sales are generally recorded when products are shipped (when title and risks
and rewards of ownership have passed), or when services are rendered to
independent dealers or other third parties. Provisions for dealer sales
incentives, allowances, and rebates are made at the time of vehicle sales.
Incentives related to vehicles previously sold are recognized as reductions to
sales when announced.
Financing revenue is recorded over the terms of the receivables using the
interest method. Income from operating lease assets is recognized on a
straight-line basis over the scheduled lease term.
Insurance premiums are earned on a basis related to coverage provided over
the terms of the policies. Commission, premium taxes, and other costs incurred
in acquiring new business are deferred and amortized over the terms of the
related policies on the same basis as premiums are earned. The liability for
losses and loss expenses includes a provision for unreported losses, based on
past experience, net of the estimated salvage and subrogation recoverable.
Product-Related Expenses
Advertising and sales promotion, research and development, and other
product-related costs are charged to expense as incurred. Provisions for
estimated expenses related to product warranty are made at the time the products
are sold. Advertising expense was $4.3 billion in 2000, $4.5 billion in 1999,
and $3.7 billion in 1998. Research and development expense was $6.6 billion in
2000, $6.8 billion in 1999, and $6.3 billion in 1998.
II-20
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 1. Significant Accounting Policies (continued)
Depreciation and Amortization
Depreciation of real estate, plants and equipment is provided based on the
estimated useful lives of property groups, generally using accelerated methods,
which accumulate depreciation of approximately two-thirds of the depreciable
cost during the first half of the estimated useful lives.
Equipment on operating leases is depreciated on a straight-line basis over
the term of the lease agreement. The difference between the net book value and
the proceeds of sale or salvage on items disposed of is accounted for as a
charge against or credit to the provision for depreciation.
Expenditures for special tools are amortized over their estimated useful
lives, primarily using the units of production method. Replacement of special
tools for reasons other than changes in products is charged directly to cost of
sales.
Goodwill is amortized on a straight-line basis over periods ranging from 20
to 40 years.
Internal-Use Software
As of January 1, 1999, GM adopted Statement of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use, which, on
a prospective basis, revised the accounting for software development costs.
Based on this accounting standard, certain internal-use software costs
historically expensed are now capitalized once specific criteria are met and
these costs are amortized on a straight-line basis over a three-year period. The
adoption of this statement did not have a material impact on the Corporation's
financial statements.
Valuation of Long-Lived Assets
GM periodically evaluates the carrying value of long-lived assets to be held
and used and long-lived assets to be disposed of, including goodwill and other
intangible assets, when events and circumstances warrant such a review. If the
carrying value of a long-lived asset is considered impaired, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset for assets to be held and used, or the
amount by which the carrying value exceeds the fair market value less cost to
dispose for assets to be disposed. Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved.
Foreign Currency Translation
Foreign currency exchange transaction and translation losses on an after-tax
basis included in consolidated net income in 2000, 1999, and 1998, pursuant to
Statement of Financial Accounting Standards (SFAS) No. 52, Foreign Currency
Translation, amounted to $100 million, $162 million, and $298 million,
respectively.
Stock-Based Compensation
As permitted by SFAS No. 123, Accounting for Stock-Based Compensation, GM
applies the recognition and measurement principles of Accounting Principles
Board Opinion No. 25 to its stock options and other stock-based employee
compensation awards.
Cash and Cash Equivalents
Cash equivalents are defined as short-term, highly liquid investments with
original maturities of 90 days or less.
Statement of Cash Flows Supplementary Information
Years Ended December 31,
----------------------------
2000 1999 1998
---- ---- ----
(dollars in millions)
Automotive, Communications Services,
and Other Operations
- -----------------------------------
Changes in other operating assets and
liabilities were as follows:
Accounts receivable $(625) $(659) $(80)
Prepaid expenses and other deferred charges 66 (623) 217
Inventories (297) (66) (494)
Accounts payable 1,254 5,606 1,249
Deferred taxes and income taxes payable (629) (160) (2,315)
Accrued expenses and other liabilities 955 3,425 1,513
--- ----- -----
Total $724 $7,523 $90
=== ===== ==
Cash paid for interest and income
taxes was as follows:
Interest $968 $526 $435
Income taxes $2,310 $2,166 $1,132
II-21
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 1. Significant Accounting Policies (continued)
Statement of Cash Flows Supplementary Information (concluded)
During 2000, Automotive, Communications Services, and Other Operations made
investments in companies, net of cash acquired of approximately $4.3 billion.
This amount consists primarily of GM's purchase of a 20% equity interest in Fuji
Heavy Industries Ltd. (Fuji) for approximately $1.3 billion and GM's acquisition
of a 20% interest in Fiat Auto Holdings, B.V. (Fiat Auto) for $2.4 billion. In
addition, Fiat S.p.A. purchased approximately 32 million shares of GM $1-2/3 par
value common stock for $2.4 billion which is included in proceeds from issuing
common and preference stocks.
Years Ended December 31,
-----------------------------
Financing and Insurance Operations 2000 1999 1998
- ---------------------------------- ---- ---- ----
(dollars in millions)
Changes in other operating assets and
liabilities were as follows:
Other receivables $(726) $(269) $206
Other assets (29) (83) (36)
Accounts payable 3,155 114 858
Deferred taxes and other liabilities 105 215 440
----- --- -----
Total $2,505 $(23) $1,468
===== == =====
Cash paid for interest and income
taxes was as follows:
Interest $8,511 $6,618 $5,695
Income taxes $475 $214 $138
Derivative Instruments
GM is party to a variety of foreign exchange, interest rate, and commodity
forward contracts and options entered into in connection with the management of
its exposure to fluctuations in foreign exchange rates, interest rates, and
certain commodity prices. These financial exposures are managed in accordance
with corporate policies and procedures.
Foreign exchange forward and option contracts are accounted for as hedges to
the extent they are designated, and are effective, as hedges of firm foreign
currency commitments. Additionally, certain foreign exchange option contracts
receive hedge accounting treatment to the extent such contracts hedge certain
anticipated foreign currency transactions. Gains and losses on such contracts
are deferred and recognized with the related transactions.
Gains and losses from interest rate swaps and options that are designated,
and are effective, as hedges of underlying debt obligations are used to adjust
interest expense recognized over the lives of the underlying debt agreements.
Gains and losses from terminated hedge contracts are deferred and amortized over
the remaining period of the original swap or the remaining term of the
underlying exposure, whichever is shorter. Open interest rate contracts are
reviewed regularly to ensure that they remain effective as hedges of interest
rate exposure.
GM also enters into commodity forward and option contracts. Since GM has
the discretion to settle these transactions either in cash or by taking physical
delivery, these contracts are not considered financial instruments for
accounting purposes. Commodity forward contracts and options are accounted for
as hedges to the extent they are designated, and are effective, as hedges of
firm or anticipated commodity purchase contracts. Gains and losses on such
contracts are deferred and recognized with the related transactions. Derivative
instruments that do not qualify for hedge accounting treatment are marked to
market and the related gains and losses are included in net income.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. In June
2000, the FASB issued SFAS No. 138, which amended certain provisions of SFAS No.
133. GM adopted SFAS No. 133, as amended, on January 1, 2001. GM will record a
one-time after-tax charge to income for the initial adoption of SFAS No. 133
totaling $6 million, as well as an after-tax unrealized loss of $77 million to
other comprehensive income as of January 1, 2001. The outcome of pending issues
at the FASB and the Derivatives Implementation Group could impact the amount of
the cumulative transition adjustment presented herein.
In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125. This statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001, and is effective for the recognition and reclassification of
collateral and disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. Management does not
expect this statement to have a material impact on GM's results of operations
and financial position.
II-22
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 1. Significant Accounting Policies (concluded)
Discontinued Operations
On February 5, 1999, Delphi completed an initial public offering (IPO) of 100
million shares of its common stock, which represented 17.7% of its outstanding
common shares. On April 12, 1999, the GM Board of Directors (GM Board) approved
the complete separation of Delphi from GM by means of a spin-off (which was
tax-free to GM and its stockholders for U.S. federal income tax purposes). On
May 28, 1999, GM distributed to holders of its $1-2/3 par value common stock
80.1% of the outstanding shares of Delphi, which resulted in 0.69893 shares of
Delphi common stock being distributed for each share of GM $1-2/3 par value
common stock outstanding on the record date of May 25, 1999. In addition, GM
contributed the remaining 2.2% of Delphi shares (around 12.4 million shares), to
a Voluntary Employee Beneficiary Association (VEBA) trust established by GM to
fund benefits to its hourly retirees. In total, the complete separation of
Delphi in the year ended December 31, 1999 resulted in a reduction to
stockholders' equity of approximately $3.3 billion.
The financial data related to GM's investment in Delphi through May 28, 1999
is classified as discontinued operations for the periods ended December 31, 1999
and 1998.
Delphi net sales (including sales to GM) included in discontinued
operations totaled $12.5 billion and $28.5 billion for the years ended December
31, 1999 and 1998, respectively. Income (loss) from Delphi discontinued
operations of $426 million and $(93) million for the years ended December 31,
1999 and 1998, is reported net of income tax expense (benefit) of $314 million
and $(173) million, respectively.
NOTE 2. Asset Impairments
GM periodically evaluates the carrying value of long-lived assets to be held
and used and long-lived assets to be disposed of, when events and circumstances
warrant such review. These evaluations and reviews are generally done in
conjunction with the annual business planning cycle.
In 2000, GM recorded pre-tax charges against income for asset impairments of
$917 million ($587 million after-tax, or $0.99 per share of GM $1-2/3 par value
common stock). GM did not record any such pre-tax charges against income in
1999. In 1998, GM recorded pre-tax charges against income of $122 million ($165
million after-tax, or $0.24 per share of GM $1-2/3 par value common stock).
These charges are components of the following line items in the income
statement:
Years Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
(dollars in millions)
Total net sales and revenues $315 $ - $-
Cost of sales and other expenses 602 - 122
--- -- ---
Total $917 - $122
=== == ===
In 2000, the pre-tax charges were comprised of $572 million ($356 million
after-tax) for GM North America (GMNA), and $345 million ($231 million
after-tax) for GM Europe (GME). The amount is related to the write-down of
special tools and equipment on operating leases as a result of the phase-out of
the Oldsmobile division as the current model lineup product lifecycles come to
an end, or until the models are no longer economically viable, and the reduction
in production capacity at GME, including the restructuring of Vauxhall Motors
Limited's manufacturing operations in the U.K.
In 1998, the pre-tax charges were comprised of $37 million ($38 million
after-tax) for GMNA, $48 million ($30 million after-tax) for GM Latin
America/Africa/Mid-East (GMLAAM), and $37 million ($97 million after-tax) for GM
Asia Pacific (GMAP). The amount represents the write-down of certain tooling and
other property, plant, and equipment that was determined to be impaired.
NOTE 3. Postemployment Benefit Costs
GM records liabilities for termination and other postemployment benefits to
be paid pursuant to union or other contractual agreements in connection with
closed plants in North America. GM reviews the adequacy and continuing need for
these liabilities on an annual basis in conjunction with its year-end production
and labor forecasts. Furthermore, GM reviews the reasonableness of these
liabilities on a quarterly basis.
In the fourth quarter of 2000, GM recognized postemployment benefits
liabilities associated with reductions in production capacity and conversions at
the following U.S. plants: Oklahoma City, Oklahoma; Delta Engine, Lansing,
Michigan; Spring Hill, Tennessee; and Wilmington, Delaware. The 2000 charge
relates to approximately 4,000 U.S. employees and increased cost of sales by
$473 million ($294 million after-tax, or $0.50 per share of GM $1-2/3 par value
common stock).
II-23
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 3. Postemployment Benefit Costs (concluded)
In the fourth quarter of 1999, as a result of several factors, including the
separation of Delphi from GM, a stronger than expected U.S. vehicle market, and
changes to the National Labor Agreement between GM and the UAW, GM reversed
postemployment benefits liabilities for employees at closed plants through an
adjustment to cost of sales totaling approximately $892 million ($553 million
after-tax, or $0.84 per share of GM $1-2/3 par value common stock). The 1999
adjustment of postemployment benefit costs reflects the decrease in the number
of excess employees at December 31, 1999, as compared with December 31, 1998, as
well as a shortened duration of benefit payments based on current redeployment
assumptions.
The liability for postemployment benefits as of December 31, 2000 totals
approximately $665 million, with anticipated spending of approximately 86% over
the next three years. The following tables summarize the activity from December
31, 1998 through December 31, 2000 for this liability (dollars in millions):
December 31, 1999 2000 Activity December 31, 2000
------------------- --------------------------------- -------------------
Excess Interest Excess
Plant Employees Balance Spending Accretion Adjustment Balance Employees
----- --------- ------- -------- --------- ---------- ------- ---------
Buick City/
Flint V-6 403 $50 $(19) $3 $ - $34 313
Kalamazoo 459 43 (18) 2 - 27 289
Flint V-8 659 51 (46) 2 - 7 106
Van Nuys 366 96 (23) 5 - 78 329
Tarrytown 61 6 (2) - - 4 61
Framingham 91 16 (4) 1 - 13 37
Danville 16 4 (1) - - 3 7
Delta Engine - - - - 26 26 664
Oklahoma City - - - - 221 221 2,080
Spring Hill - - - - 107 107 444
Wilmington - - - - 119 119 879
Other 615 29 (3) - - 26 572
----- ---- ---- --- --- --- ---
Total 2,670 $295 $(116) $13 $473 $665 5,781
===== === === == === === =====
December 31, 1998 1999 Activity December 31, 1999
------------------- --------------------------------- -------------------
Excess Interest Excess
Plant Employees Balance Spending Accretion Adjustment Balance Employees
----- --------- ------- -------- --------- ---------- ------- ---------
Buick City/
Flint V-6 (1) 2,123 $537 $(56) $29 $(460) $50 403
Kalamazoo 1,254 229 (46) 12 (152) 43 459
Flint V-8 876 224 (30) 11 (154) 51 659
Van Nuys 396 156 (17) 8 (51) 96 366
Tarrytown 79 30 (4) 2 (22) 6 61
Framingham 99 21 (2) 1 (4) 16 91
Danville 47 18 (1) 1 (14) 4 16
Other 658 72 (12) 4 (35) 29 615
------ ----- ---- --- ----- ---- -----
Total 5,532 $1,287 $(168) $68 $(892) $295 2,670
===== ===== === == === === =====
(1)The reduction in excess employees at the Buick City assembly and Flint
V-6 engine plants was a result of redeployment to other GM and Delphi
plants (1,239) and retirement (481).
NOTE 4. Marketable Securities
Marketable securities held by GM are classified as available-for-sale, except
for certain mortgage-related securities, which are classified as trading
securities. Unrealized gains and losses, net of related income taxes, for
available-for-sale securities are included as a separate component of
stockholders' equity. Unrealized gains and losses for trading securities are
included in income on a current basis. GM determines cost on the specific
identification basis.
II-24
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 4. Marketable Securities (continued)
Automotive, Communications Services, and Other Operations
- ---------------------------------------------------------
Investments in marketable securities were as follows (dollars in millions):
December 31, 2000
--------------------------------------
Fair Unrealized Unrealized
Cost Value Gains Losses
---- ----- ----- ------
Type of security
Bonds, notes, and other securities
United States government and agencies $90 $91 $ 1 $ -
States and municipalities 9 9 - -
Corporate debt securities and other 1,063 1,061 - 2
----- ----- -- --
Total marketable securities $1,162 $1,161 $ 1 $ 2
===== ===== == ==
December 31, 1999
---------------------------------------
Fair Unrealized Unrealized
Cost Value Gains Losses
---- ----- ----- ------
Type of security
Bonds, notes, and other securities
United States government and agencies $533 $528 $- $5
States and municipalities 21 21 - -
Corporate debt securities and other 1,154 1,149 1 6
----- ----- - ---
Total marketable securities $1,708 $1,698 $1 $11
===== ===== = ==
Debt securities totaling $256 million mature within one year and $905 million
mature after one through five years. Proceeds from sales of marketable
securities totaled $1.3 billion in 2000, $2.0 billion in 1999, and $4.4 billion
in 1998. The gross gains related to sales of marketable securities were $1
million, $21 million, and $17 million in 2000, 1999, and 1998, respectively. The
gross losses related to sales of marketable securities were $12 million, $6
million, and $11 million in 2000, 1999, and 1998, respectively.
Financing and Insurance Operations
- ----------------------------------
Investments in securities were as follows (dollars in millions):
December 31, 2000
--------------------------------------
Fair Unrealized Unrealized
Cost Value Gains Losses
---- ----- ----- ------
Type of security
Bonds, notes, and other securities
United States government and agencies $556 $565 $10 $ 1
States and municipalities 1,492 1,567 81 6
Mortgage-backed securities 387 384 14 17
Corporate debt securities and other 2,520 2,506 47 61
----- ----- --- --
Total debt securities
available-for-sale 4,955 5,022 152 85
Mortgage-backed securities held for
trading purposes 3,516 3,516 - -
----- ----- ----- -----
Total debt securities 8,471 8,538 152 85
Equity securities 766 1,057 395 104
------ ----- --- ---
Total investment in securities $9,237 $9,595 $547 $189
===== ===== === ===
II-25
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 4. Marketable Securities (concluded)
Investments in securities were as follows (dollars in millions):
December 31, 1999
--------------------------------------
Fair Unrealized Unrealized
Cost Value Gains Losses
---- ----- ----- ------
Type of security
Bonds, notes, and other securities
United States government and agencies $488 $476 $- $12
States and municipalities 1,534 1,540 47 41
Mortgage-backed securities 480 453 10 37
Corporate debt securities and other 2,515 2,491 39 63
----- ----- -- ---
Total debt securities
available-for-sale 5,017 4,960 96 153
Mortgage-backed securities held for
trading purposes 2,889 2,889 - -
----- ----- --- ---
Total debt securities 7,906 7,849 96 153
Equity securities 685 1,261 634 58
------ ----- --- ----
Total investment in securities $8,591 $9,110 $730 $211
===== ===== === ===
Debt securities available-for-sale totaling $891 million mature within one
year, $2.1 billion mature after one through five years, $797 million mature
after five years through 10 years, and $1.3 billion mature after 10 years.
Proceeds from sales of marketable securities totaled $3.5 billion in 2000, $2.9
billion in 1999, and $3.6 billion in 1998. The gross gains related to sales of
marketable securities were $315 million, $292 million, and $218 million in 2000,
1999, and 1998, respectively. The gross losses related to sales of marketable
securities were $147 million, $126 million, and $49 million in 2000, 1999, and
1998, respectively.
NOTE 5. Finance Receivables and Securitizations
Finance Receivables - Net
Finance receivables - net included the following (dollars in millions):
December 31,
----------------------
2000 1999
---- ----
Retail $51,337 $46,036
Wholesale 26,993 23,987
Commercial 5,546 3,550
Leasing and lease financing 2,178 2,681
Term loans to dealers and others 12,565 9,640
------ ------
Total finance receivables 98,619 85,894
Less - Unearned income (4,872) (4,153)
Allowance for financing losses (1,332) (1,114)
------ ------
Total finance receivables - net $92,415 $80,627
====== ======
Finance receivables that originated outside the U.S. are $21.4 billion and
$20.8 billion at December 31, 2000 and 1999, respectively. The aggregate amount
of total finance receivables maturing in each of the five years following
December 31, 2000 is as follows: 2001-$52.5 billion; 2002-$18.1 billion;
2003-$14.9 billion; 2004-$7.3 billion; 2005-$3.8 billion; and 2006 and
thereafter-$2.0 billion.
Securitizations of Finance Receivables and Mortgage Loans
The Corporation has sold retail finance receivables through special purpose
subsidiaries with principal aggregating $5.2 billion in 2000, $5.1 billion in
1999, and $1.6 billion in 1998. These subsidiaries generally retain a
subordinated investment of no greater than 6.25% of the total receivables pool
and sell the remaining portion. Net pre-tax gains relating to such sales
amounted to $14 million in 2000, $64 million in 1999, and $31 million in 1998.
The Corporation's sold retail finance receivable servicing portfolio amounted to
$7.0 billion and $5.6 billion at December 31, 2000 and 1999, respectively.
II-26
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 5. Finance Receivables and Securitizations (continued)
Securitizations of Finance Receivables and Mortgage Loans (continued)
The Corporation has sold wholesale receivables on a revolving basis
resulting in decreases in wholesale outstandings of $10.0 billion and $8.4
billion at December 31, 2000 and 1999, respectively. The Corporation is
committed to sell eligible wholesale receivables arising in certain dealer
accounts. During the years 2000, 1999, and 1998, there were no gains recorded on
the sale of wholesale receivables. Due to the short-term nature of wholesale
receivables, the fair value of retained interests in wholesale securitizations
is assumed to approximate cost.
When the Corporation securitizes retail and wholesale receivables, it retains
interest-only strips, all or a portion of senior and subordinated tranches,
servicing rights, and cash reserve accounts, all of which are retained interests
in the securitized receivables. Interest-only strip receivables, cash deposits,
and other related amounts are generally restricted assets and subject to limited
recourse provisions. With respect to retained servicing responsibilities, the
Corporation receives annual servicing fees approximating 2.0% (for retail
receivables) and 1.0% (for wholesale receivables) of the outstanding balance.
Additionally, the Corporation receives the rights to future cash flows arising
after the investors in the securitization trust have received their contracted
return.
During 2000, GM sold residential, commercial, and other mortgage loans in
securitization transactions, generally retaining servicing responsibilities and,
in some cases, subordinated interests. In 2000, 1999 and 1998, GM recognized
pre-tax gains of $723 million, $603 million, and $320 million, respectively, on
the securitization of residential and commercial mortgages.
At December 31, 2000, total mortgage loans owned or securitized totaled $86.8
billion, of which $79.1 billion had been securitized, $5.8 billion was held for
sale, and $1.9 billion was held for investment (see Note 11). At that date,
mortgage loans owned or securitized which were 60 days or more past due, totaled
$3.0 billion.
The investors and the securitization trusts associated with the sales of
finance receivables and mortgage loans have no recourse to GM's other assets for
failure of debtors to pay when due. The Corporation's retained interests are
subordinate to the investors' interests. Their fair value is subject to credit,
prepayment, and interest rate risks on the transferred assets.
The resulting gain or loss on securitization transactions is determined by
allocating the carrying amount of the loans or finance receivables between the
securities sold and the interests retained based on their relative fair value at
the date of sale. Fair values are based on quoted market prices if available.
Otherwise, the fair value of the retained interests is estimated based on the
present value of expected future cash flows.
Key economic assumptions used in measuring the fair value of retained
interests at the date of the securitization, for securitizations completed
during 2000, were as follows:
Mortgage Loans
Retail Finance ------------------------------
Receivables Residential Commercial
-------------- ----------- ----------
Prepayment speed 1.2% to 1.7% 10.5% to 38.0% 0.0% to 68.0%
Weighted-average life (in years) 1.4 to 1.7 1.7 to 6.3 2.6 to 10.4
Residual cash flows discounted at 9.5% to 12.0% 6.5% to 14.0% 12.7% to 34.0%
Variable returns to transferees One month LIBOR Forward benchmark
plus contractual interest rate yield curve
spread ranging plus contractual spread
from 7 to 9 basis
points
Expected credit losses used in measuring the fair value of retained
interests in residential and commercial mortgage loans securitized during 2000
were 0.0% to 21.7% and 0.0% to 2.0%, respectively, at the date of
securitization.
II-27
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 5. Finance Receivables and Securitizations (concluded)
Securitization of Finance Receivables and Mortgage Loans (concluded)
At December 31, 2000, key economic assumptions and the sensitivity of the
current fair value of residual cash flows to immediate 10% and 20% adverse
changes in those assumptions were as follows (dollars in millions):
Mortgage Loans
Retail Finance ------------------------------
Receivables Residential Commercial
-------------- ----------- ----------
Carrying amount/fair value
of retained interests $1,196 $2,368 $292
Prepayment speed (annual rate) 1.2% to 1.7% 12.7% to 38.9% 0.0% to 68.0%
Reduction in fair value due to
10% adverse change $3 $160 $1
Reduction in fair value due to
20% adverse change $6 $313 $1
Residual cash flows discount
rate (annual rate) 9.3% to 12.0% 6.5% to 13.9% 9.9% to 34.0%
Reduction in fair value due to
10% adverse change $4 $89 $23
Reduction in fair value due to
20% adverse change $9 $168 $37
Variable returns to transferees
Reduction in fair value due to
10% adverse change $4 $27 $ -
Reduction in fair value due to
20% adverse change $7 $55 $ -
Expected credit losses used in the calculation of the fair value of
residual cash flows at December 31, 2000 for residential and commercial mortgage
loans were 0.0% to 21.7% and 0.0% to 3.0%, respectively. An immediate 10%
adverse change in these assumptions would reduce the fair value of such cash
flows by $97 million and $2 million for residential and commercial mortgage
loans, respectively. An immediate 20% adverse change in these assumptions would
reduce the fair value of such cash flows by $191 million and $4 million for
residential and commercial mortgage loans, respectively.
These sensitivities are hypothetical and should be used with caution. As the
figures indicate, changes in fair value based on a 10% variation in assumptions
generally cannot be extrapolated because the relationship of the change in
assumption to the change in fair value may not be linear. Also, in this table,
the effect of a variation in a particular assumption on the fair value of the
retained interest is calculated without changing any other assumption. In
reality, changes in one factor may result in changes in another (for example,
increases in market interest rates may result in lower prepayments and increased
credit losses), which might magnify or counteract the sensitivities. Further,
these sensitivities show only the change in the asset balances and do not show
any expected changes in the fair value instruments used to manage the interest
rate and prepayment risks associated with these assets, as discussed in Note 19.
The following summarizes cash flows received from (paid to) securitization
trusts during the year ended December 31, 2000 (dollars in millions):
Mortgage Loans
Retail Finance ------------------------------
Receivables Residential Commercial
--------------- ----------- ----------
Proceeds from new securitizations $3,717 $24,959 $2,476
Servicing fees received 190 212 13
Other cash flows received on
retained interests 2,181 483 46
Pool buybacks and purchases of
delinquent assets (530) (282) -
Servicing advances (75) (616) (82)
Repayments of servicing advances 66 586 74
Mortgage Servicing Rights
The fair value of GM's mortgage servicing rights totaled $4.1 billion and
$3.5 billion at December 31, 2000 and 1999, respectively. The key economic
assumptions used in the calculation of such fair values are prepayment speeds
and discount rates. At December 31, 2000, a prepayment speed of 13.6% and a
discount rate of 10.6% were used in the calculation of fair value. At that date,
an immediate 10% and 20% adverse change in the assumed prepayment speed would
reduce the fair value of mortgage servicing rights by $135 million and $262
million, respectively. An immediate 10% and 20% adverse change in the assumed
discount rate would reduce the fair value of mortgage servicing rights by $113
million and $218 million, respectively. These sensitivities are hypothetical and
should be used with caution for reasons similar to those discussed above.
II-28
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 6. Inventories
Inventories included the following for Automotive, Communications Services,
and Other Operations (dollars in millions):
December 31,
-----------------
2000 1999
---- ----
Productive material, work in process, and supplies $5,555 $5,505
Finished product, service parts, etc. 7,319 7,023
----- -------
Total inventories at FIFO 12,874 12,528
Less LIFO allowance 1,929 1,890
----- -------
Total inventories (less allowances) $10,945 $10,638
====== ======
Inventories are stated generally at cost, which is not in excess of market.
The cost of approximately 90% of U.S. inventories is determined by the last-in,
first-out (LIFO) method. Generally, the cost of all other inventories is
determined by either the first-in, first-out (FIFO) or average cost methods.
NOTE 7. Equipment on Operating Leases
The Corporation has significant investments in the residual values of its
leasing portfolios. The residual values represent the estimate of the values of
the assets at the end of the lease contracts and are initially recorded based on
appraisals and estimates. Realization of the residual values is dependent on the
Corporation's future ability to market the vehicles under then prevailing market
conditions. Management reviews residual values periodically to determine that
recorded amounts are appropriate.
Automotive, Communications Services, and Other Operations
- ---------------------------------------------------------
Equipment on operating leases and other assets was as follows (dollars in
millions):
December 31,
------------------
2000 1999
---- ----
Equipment on operating leases $11,268 $10,754
Less accumulated depreciation (1,335) (1,099)
------ ------
Net book value $9,933 $9,655
====== =====
Current $5,699 $5,744
Noncurrent (Note 11) 4,234 3,911
----- -----
Net book value $9,933 $9,655
===== =====
Financing and Insurance Operations
- ----------------------------------
Equipment on operating leases included in investment in leases and other
receivables was as follows (dollars in millions):
December 31,
-------------------
2000 1999
Equipment on operating leases $41,295 $41,522
Less accumulated depreciation (8,762) (8,336)
------- -------
Net book value $32,533 $33,186
====== ======
The lease payments to be received related to equipment on operating leases
maturing in each of the five years following December 31, 2000 are as follows:
Automotive, Communications Services, and Other Operations - 2001-$2.1 billion;
2002-$580 million; 2003-$544 million; 2004-$505 million; and 2005 - $450
million. Financing and Insurance Operations - 2001-$7.2 billion; 2002-$4.7
billion; 2003-$1.7 billion; 2004-$171 million; and 2005 - $10 million.
II-29
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 8. Income Taxes
Income from continuing operations before income taxes and minority interests
included the following (dollars in millions):
Years Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
U.S. income $3,019 $4,156 $1,783
Foreign income 4,145 4,891 3,161
----- ----- -----
Total $7,164 $9,047 $4,944
===== ===== =====
The provision for income taxes was estimated as follows (dollars in
millions):
Years Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Income taxes estimated to be payable currently
U.S. federal $45 $156 $83
Foreign 971 1,368 1,952
U.S. state and local 72 308 295
------ ------ ------
Total payable currently 1,088 1,832 2,330
----- ----- -----
Deferred income tax expense (credit) - net
U.S. federal 742 1,008 354
Foreign 281 244 (852)
U.S. state and local 282 34 (196)
----- ------ ---
Total deferred 1,305 1,286 (694)
----- ----- -----
Total income taxes $2,393 $3,118 $1,636
===== ===== =====
Annual tax provisions include amounts considered sufficient to pay
assessments that may result from examination of prior year tax returns; however,
the amount ultimately paid upon resolution of issues raised may differ
materially from the amount accrued.
Provisions are made for estimated U.S. and foreign income taxes, less
available tax credits and deductions, which may be incurred on the remittance of
the Corporation's share of subsidiaries' undistributed earnings not deemed to be
permanently invested. Taxes have not been provided on foreign subsidiaries'
earnings, which are deemed essentially permanently reinvested, of $13.4 billion
at December 31, 2000, and $13.2 billion at December 31, 1999. Quantification of
the deferred tax liability, if any, associated with permanently reinvested
earnings is not practicable.
A reconciliation of the provision for income taxes compared with the amounts
at the U.S. federal statutory rate was as follows (dollars in millions):
Years Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Tax at U.S. federal statutory income tax rate $2,507 $3,166 $1,730
Foreign rates other than 35% 78 (109) 1
Taxes on unremitted earnings of subsidiaries - 138 92
Tax credits (45) (207) (203)
Subsidiary settlement of affirmative
claim with IRS - - (92)
Other adjustments (147) 130 108
----- ----- -----
Total income tax $2,393 $3,118 $1,636
===== ===== =====
Deferred income tax assets and liabilities for 2000 and 1999 reflect the
impact of temporary differences between amounts of assets, liabilities, and
equity for financial reporting purposes and the bases of such assets,
liabilities, and equity as measured by tax laws as well as tax loss and tax
credit carryforwards.
II-30
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 8. Income Taxes (concluded)
Temporary differences and carryforwards that gave rise to deferred tax assets
and liabilities included the following (dollars in millions):
December 31,
------------------------------------------
2000 1999
---- ----
Deferred Tax Deferred Tax
------------ ------------
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
Postretirement benefits other
than pensions $14,393 $ - $14,351 $ -
Employee benefit plans 2,884 8,182 3,189 7,596
Policy and warranty reserves 2,405 - 2,471 -
Sales and product reserves 2,547 - 2,587 -
Depreciation and amortization 652 3,742 577 3,696
Tax carryforwards 3,202 - 3,184 -
Lease transactions - 3,911 - 3,844
Miscellaneous foreign 4,150 1,372 3,233 887
Other 7,287 4,493 6,718 4,249
------ ------ ------ ------
Subtotal 37,520 21,700 36,310 20,272
Valuation allowances (717) - (789) -
------ ------ ------ ------
Total deferred taxes $36,803 $21,700 $35,521 $20,272
====== ====== ====== ======
Of the tax carryforwards, approximately 26% relates to the alternative
minimum tax credit (which can be carried forward indefinitely) and approximately
18% relates to the U.S. state net operating loss carryforwards which will expire
in the years 2001-2020 if not used. However, a substantial portion of the U.S.
state net operating loss carryforwards will not expire until after the year
2005. The other tax credit carryforwards, consisting primarily of research and
experimentation credits, will expire in the years 2004, 2011-2012, and 2018-2020
if not used.
NOTE 9. Property - Net
Property - net included the following for Automotive, Communications
Services, and Other Operations (dollars in millions):
Estimated December 31,
Useful ----------------
Lives (Years) 2000 1999
------------- ---- ----
Land - $924 $751
Buildings and land improvements 2-40 12,997 13,898
Machinery and equipment 3-30 40,900 41,341
Construction in progress - 4,664 3,787
------- -------
Real estate, plants, and equipment 59,485 59,777
Less accumulated depreciation (32,875) (34,363)
------ ------
Real estate, plants, and equipment - net 26,610 25,414
Special tools - net 7,367 7,365
------- -------
Total property - net $33,977 $32,779
====== ======
Financing and Insurance Operations had net property of $1.4 billion and $496
million recorded in other assets at December 31, 2000 and 1999, respectively.
II-31
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 9. Property - Net (concluded)
Depreciation and amortization expense was as follows (dollars in millions):
Years Ended December 31,
-----------------------------
2000 1999 1998
---- ---- ----
Automotive, Communications Services,
and Other Operations
Depreciation $4,368 $4,155 $3,772
Amortization of special tools 2,753 2,492 2,350
Amortization of intangible assets (Note 10) 308 226 105
----- ----- -----
Total $7,429 $6,873 $6,227
===== ===== =====
Financing and Insurance Operations
Depreciation and amortization expense $5,982 $5,445 $4,920
===== ===== =====
NOTE 10. Intangible Assets - Net
Automotive, Communications Services, and Other Operations had net intangible
assets of $7.6 billion and $8.5 billion at December 31, 2000 and December 31,
1999, respectively.
Financing and Insurance Operations had net intangible assets of $3.2 billion
and $2.9 billion recorded in other assets at December 31, 2000 and 1999,
respectively.
Intangible assets primarily consist of goodwill, which is the cost of
acquired businesses in excess of the fair value of their identifiable net
assets.
NOTE 11. Other Assets
Automotive, Communications Services, and Other Operations
- ---------------------------------------------------------
Other assets included the following (dollars in millions):
December 31,
--------------------
2000 1999
---- ----
Equipment on operating leases - noncurrent (Note 7) $4,234 $3,911
Notes receivable from Delphi - 1,538
Investments in equity securities (1) 4,666 1,970
U.S. prepaid pension assets (Note 14) 20,184 15,267
Other 3,159 2,672
------ ------
Total other assets $32,243 $25,358
====== ======
(1)The balance at December 31, 2000 includes GM's 20% interest in Fiat Auto of
$2.4 billion. This investment is accounted for using the cost method of
accounting. Amounts also include the fair value of investments in equity
securities classified as available-for-sale for all periods presented. It is
GM's intent to hold these securities for greater than one year. Balances
include historical costs of $1.9 billion and $1.3 billion with unrealized
gains of $495 million and $687 million and unrealized losses of $146 million
and $36 million at December 31, 2000 and 1999, respectively.
II-32
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 11. Other Assets (concluded)
Financing and Insurance Operations
- ----------------------------------
Other assets included the following (dollars in millions):
December 31,
--------------------
2000 1999
---- ----
Mortgage servicing rights $3,985 $3,422
Real estate mortgage - held for sale 5,759 5,678
- held for investment 1,895 1,497
- lending receivables 2,960 1,801
Other mortgage - related assets 1,451 1,094
Receivables purchased from factored clients 2,291 765
Due and deferred from receivables sales 1,097 742
Rental car buybacks 826 712
Intangible assets 3,188 2,898
Other 4,394 2,703
------ ------
Total other assets $27,846 $21,312
====== ======
NOTE 12. Accrued Expenses, Other Liabilities, and Deferred Income Taxes
Automotive, Communications Services, and Other Operations
- ---------------------------------------------------------
Accrued expenses, other liabilities, and deferred income taxes included the
following (dollars in millions):
December 31,
-------------------
2000 1999
---- ----
Warranties, dealer and customer allowances,
claims, and discounts $15,993 $15,284
Deferred revenue 9,974 9,504
Payrolls and employee benefits
(excludes postemployment) 4,609 5,211
Unpaid losses under self-insurance programs 2,031 1,923
Taxes, other than income taxes 1,009 1,084
Interest 1,401 1,542
Income taxes 445 1,006
Deferred income taxes 2,430 2,926
Postemployment benefits (including
extended disability benefits) 2,380 2,097
Other 8,748 9,703
------ ------
Total accrued expenses, other liabilities,
and deferred income taxes $49,020 $50,280
======= =======
Financing and Insurance Operations
- ----------------------------------
Other liabilities and deferred income taxes included the following (dollars
in millions):
December 31,
--------------------
2000 1999
---- ----
Unpaid insurance losses, loss adjustment
expenses, and unearned insurance premiums $3,870 $3,811
Postemployment benefits 761 722
Income taxes 571 439
Deferred income taxes 4,021 3,730
Interest 1,828 1,602
Other 1,871 978
------ ------
Total other liabilities and deferred income taxes $12,922 $11,282
====== ======
II-33
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 13. Long-Term Debt and Loans Payable
Automotive, Communications Services, and Other Operations
- ---------------------------------------------------------
Long-term debt and loans payable were as follows (dollars in millions):
Weighted-Average
Interest Rate December 31,
---------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
Long-term debt and loans payable
Payable within one year
Current portion of long-term debt 6.3% 6.3% $415 $681
Commercial paper (1) 5.8% 5.8% 519 405
All other 4.8% 4.8% 1,274 905
----- ------
Total loans payable - - 2,208 1,991
Payable beyond one year 8.1% 8.9% 7,438 7,444
Unamortized discount (28) (29)
------ ------
Total long-term debt and loans payable $9,618 $9,406
(1) The weighted-average interest rates for commercial paper include the impact
of interest rate swap agreements.
Long-term debt payable beyond one year at December 31, 2000 included
maturities as follows: 2002 - $426 million; 2003 - $715 million; 2004 - $454
million; 2005 - $799 million; 2006 and after - $5.0 billion.
Amounts payable beyond one year after consideration of foreign currency swaps
at December 31, 2000 included $1.5 billion in currencies other than the U.S.
dollar, primarily the Swedish krona ($776 million), the Japanese yen ($435
million), the Brazilian real ($151 million), and the Canadian dollar ($64
million).
At December 31, 2000 and 1999, long-term debt and loans payable for
Automotive, Communications Services, and Other Operations included $8.3 billion
and $7.4 billion, respectively, of obligations with fixed interest rates and
$1.3 billion and $2.0 billion, respectively, of obligations with variable
interest rates (predominantly LIBOR), after considering the impact of interest
rate swap agreements.
To achieve its desired balance between fixed and variable rate debt, GM has
entered into interest rate swap and cap agreements. The notional amounts of such
agreements as of December 31, 2000 for Automotive, Communications Services, and
Other Operations were approximately $1.2 billion ($200 million pay variable and
$1.0 billion pay fixed) and $90 million, respectively. The notional amounts of
such agreements as of December 31, 1999 were approximately $600 million ($400
million pay variable and $200 million pay fixed), and $100 million,
respectively.
GM and its subsidiaries maintain substantial lines of credit with various
banks that totaled $11.6 billion at December 31, 2000, of which $4.3 billion
represented short-term credit facilities and $7.3 billion represented long-term
credit facilities. At December 31, 1999, bank lines of credit totaled $9.6
billion, of which $3.9 billion represented short-term credit facilities and $5.7
billion represented long-term credit facilities. The unused short-term and
long-term portions of the credit lines totaled $3.1 billion and $6.2 billion at
December 31, 2000, compared with $3.5 billion and $4.8 billion at December 31,
1999. Certain bank lines of credit contain covenants with which the Corporation
and applicable subsidiaries were in compliance during the year ended December
31, 2000.
II-34
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 13. Long-Term Debt and Loans Payable (concluded)
Financing and Insurance Operations
- ----------------------------------
Debt was as follows (dollars in millions):
Weighted-Average
Interest Rate December 31,
---------------- ----------------
2000 1999 2000 1999
---- ---- ---- ----
Debt
Payable within one year
Current portion of debt 6.5% 6.6% $18,603 $14,996
Commercial paper (1) 6.5% 5.8% 43,634 33,229
All other 4.6% 4.6% 14,506 18,727
Payable beyond one year 6.4% 6.3% 58,846 55,952
Unamortized discount (552) (622)
------- -------
Total debt $135,037 $122,282
======= =======
- -----------------
(1) The weighted-average interest rates for commercial paper include the impact
of interest rate swap agreements.
Debt payable beyond one year at December 31, 2000 included maturities as
follows: 2002 - $19.9 billion; 2003 - $14.1 billion; 2004 - $7.2 billion; 2005 -
$5.9 billion; 2006 and after - $11.7 billion.
Amounts payable beyond one year after consideration of foreign currency swaps
at December 31, 2000 included $9.8 billion in currencies other than the U.S.
dollar, primarily the Canadian dollar ($6.6 billion), the euro ($1.6 billion),
the U.K. pound sterling ($738 million), and the Australian dollar ($573
million).
At December 31, 2000 and 1999, debt for Financing and Insurance Operations
included $86.1 billion and $78.3 billion, respectively, of obligations with
fixed interest rates and $48.9 billion and $44.0 billion, respectively, of
obligations with variable interest rates (predominantly LIBOR), after
considering the impact of interest rate swap agreements.
To achieve its desired balance between fixed and variable rate debt, GM has
entered into interest rate swap, cap, and floor agreements. The notional amounts
of such agreements as of December 31, 2000 for financing and insurance
operations were approximately $35.2 billion ($24.0 billion pay variable and
$11.2 billion pay fixed), $74 million, and $83 million, respectively. The
notional amounts for interest rate swap, cap, and floor agreements as of
December 31, 1999, were approximately $26.1 billion ($18.1 billion pay variable
and $8.0 billion pay fixed), $483 million, and $93 million, respectively.
GM's financing and insurance subsidiaries maintain substantial lines of
credit with various banks that totaled $48.5 billion at December 31, 2000, of
which $17.5 billion represented short-term credit facilities and $31.0 billion
represented long-term credit facilities. At December 31, 1999, bank lines of
credit totaled $46.9 billion, of which $16.8 billion represented short-term
credit facilities and $30.1 billion represented long-term credit facilities. The
unused short-term and long-term portions of the credit lines totaled $8.1
billion and $30.5 billion at December 31, 2000, compared with $6.3 billion and
$29.3 billion at December 31, 1999. Certain bank lines of credit contain
covenants with which the Corporation and applicable subsidiaries were in
compliance during the year ended December 31, 2000.
NOTE 14. Pensions and Other Postretirement Benefits
GM has a number of defined benefit pension plans covering substantially all
employees. Plans covering U.S. and Canadian represented employees generally
provide benefits of negotiated, stated amounts for each year of service as well
as significant supplemental benefits for employees who retire with 30 years of
service before normal retirement age. The benefits provided by the plans
covering U.S. and Canadian salaried employees and employees in certain foreign
locations are generally based on years of service and salary history. GM also
has certain nonqualified pension plans covering executives that are based on
targeted wage replacement percentages and are unfunded.
Pension plan assets are primarily invested in U.S. Government obligations,
equity and fixed income securities, commingled pension trust funds, insurance
contracts, and GM Class H common stock (valued at December 31, 2000 at $3.4
billion).
II-35
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 14. Pensions and Other Postretirement Benefits (continued)
GM's funding policy with respect to its qualified pension plans is to
contribute annually not less than the minimum required by applicable law and
regulations. GM made pension contributions to the U.S. hourly and salary plans
of $5.0 billion in 2000 (consisting entirely of GM Class H common stock
contributed during the second quarter of 2000), $794 million in 1999, and $1.1
billion in 1998. In addition, GM made pension contributions to all other U.S.
plans of $69 million, $67 million, and $51 million in 2000, 1999, and 1998,
respectively.
Additionally, GM maintains hourly and salary benefit plans that provide
postretirement medical, dental, vision, and life insurance to most U.S. retirees
and eligible dependents. The cost of such benefits is recognized in the
consolidated financial statements during the period employees provide service to
GM. Postretirement plan assets in GM's VEBA trust are invested primarily in
fixed income securities and GM Class H common stock (valued at December 31, 2000
at $438 million).
Certain of the Corporation's non-U.S. subsidiaries have postretirement plans,
although most participants are covered by government-sponsored or administered
programs. The cost of such programs generally is not significant to GM.
II-36
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 14. Pensions and Other Postretirement Benefits (continued)
U.S. Plans Non-U.S. Plans
Pension Benefits Pension Benefits Other Benefits
---------------- ---------------- --------------
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
Change in benefit obligations (dollars in millions)
Benefit obligation at
beginning of year $73,269 $76,963 $9,728 $10,283 $44,683 $47,346
Service cost 900 1,007 177 202 448 502
Interest cost 5,425 4,722 630 604 3,346 2,802
Plan participants'
contributions 32 37 25 29 47 41
Amendments 5 5,326 3 381 (49) 4
Actuarial losses(gains) 4,269 (4,565) 251 (700) 4,392 32
Benefits paid (6,299) (5,636) (503) (511) (2,805) (2,368)
Divestitures-
Delphi Spin-Off - (4,652) - - - (3,590)
Hughes' satellite
systems (1,263) - - - - -
Curtailment charges
and other (207) 67 (400) (560) (173) (86)
------ ------ ----- ----- ------ -----
Benefit obligation
at end of year 76,131 73,269 9,911 9,728 49,889 44,683
------ ------ ----- ----- ------ ------
Change in plan assets
Fair value of plan assets
at beginning of year 80,462 75,007 7,062 5,976 6,291 4,574
Actual return on plan assets 634 13,582 821 965 421 207
Employer contributions 5,031 861 187 566 743 1,970
Plan participants'
contributions 32 37 25 29 - -
Benefits paid (6,299) (5,636) (386) (391) (731) (460)
Divestitures-
Delphi Spin-Off - (3,369) - - - -
Hughes' satellite
systems (1,841) - - - - -
Settlement charges
and other (153) (20) (312) (83) - -
------ ------ ----- ------ ----- -----
Fair value of plan
assets at end of year 77,866 80,462 7,397 7,062 6,724 6,291
------ ------ ----- ------ ----- -----
Funded status 1,735 7,193 (2,514) (2,666) (43,165) (38,392)
Unrecognized actuarial
loss(gain) 9,195 (2,463) 555 586 6,444 1,842
Unrecognized prior
service cost 8,442 9,850 909 1,048 207 212
Unrecognized transition
obligation (asset) 1 (47) 63 52 - -
------ ------ --- ---- ------ ------
Net amount recognized $19,373 $14,533 $(987) $(980)$(36,514) $(36,338)
====== ====== === === ====== ======
Amounts recognized in the
consolidated balance
sheets consist of:
Prepaid benefit cost $20,184 $15,267 $1,676 $809 $ - $ -
Accrued benefit
liability (936) (815) (2,668) (2,612) (36,514) (36,338)
Intangible asset 56 13 1 700 - -
Accumulated other
comprehensive income 69 68 4 123 - -
------ ------ --- --- ------ ------
Net amount recognized $19,373 $14,533 $(987) $(980)$(36,514) $(36,338)
====== ====== === === ====== ======
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $4.0 billion, $3.4 billion, and $0, respectively,
as of December 31, 2000, and $7.3 billion, $6.8 billion, and $3.5 billion,
respectively, as of December 31, 1999.
U.S. Plans Non-U.S. Plans
Pension Benefits Pension Benefits Other Benefits
-------------------- ------------------- --------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
(dollars in millions)
Components of expense
Service cost $900 $1,007 $1,270 $177 $202 $214 $448 $502 $663
Interest cost 5,425 4,722 4,974 630 604 643 3,346 2,802 3,113
Expected return on
plan assets (7,666) (6,726) (6,815) (578) (526) (516) (650) (377) (286)
Amortization of prior
service cost 1,416 926 1,173 97 99 99 (42) (104) (116)
Amortization of transition
asset (48) (37) (44) (17) (17) (17) - - -
Recognized net actuarial loss 8 348 331 2 79 75 70 124 97
Curtailments, settlements,
and other 235 2,351 207 24 22 48 - - -
Discontinued operations - (2,349) (409) - - - - - (966)
--- ----- --- --- --- --- ----- ----- -----
Net expense $270 $242 $687 $335 $463 $546 $3,172 $2,947 $2,505
=== ==== === === === === ===== ===== =====
II-37
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 14. Pensions and Other Postretirement Benefits (concluded)
U.S. Plans Non-U.S. Plans
Pension Benefits Pension Benefits Other Benefits
-------------------- ------------------- --------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
Weighted-average assumptions
Discount rate 7.3% 7.8% 6.8% 7.1% 7.1% 6.4% 7.7% 7.7% 6.7%
Expected return on
plan assets 10.0% 10.0% 10.0% 9.0% 9.0% 9.2% 8.1% 8.3% 7.7%
Rate of compensation increase 5.0% 5.0% 5.0% 4.0% 4.0% 3.5% 4.3% 4.4% 4.4%
For measurement purposes, an approximate 8.6% annual rate of increase in the
per capita cost of covered health care benefits was assumed for 2001. The rate
was assumed to decrease on a linear basis to 5.0% through 2007 and remain at
that level thereafter.
A one percentage point increase in the assumed health care trend rate would
have increased the Accumulated Projected Benefit Obligation (APBO) by $5.2
billion at December 31, 2000 and increased the aggregate service and interest
cost components of non-pension postretirement benefit expense for 2000 by $450
million. A one percentage point decrease would have decreased the APBO by $4.4
billion and decreased the aggregate service and interest cost components of
non-pension postretirement benefit expense for 2000 by $375 million.
NOTE 15. Commitments and Contingent Matters
Commitments
GM had the following minimum commitments under noncancelable operating leases
having terms in excess of one year primarily for real property: 2001-$541
million; 2002-$484 million; 2003-$406 million; 2004-$319 million; 2005-$273
million, and $1.3 billion in 2006 and thereafter. Certain of the leases contain
escalation clauses and renewal or purchase options. Rental expenses under
operating leases were $861 million, $825 million, and $826 million in 2000,
1999, and 1998, respectively.
GM sponsors a credit card program, entitled the GM Card program, that offers
rebates that can be applied primarily against the purchase or lease of GM
vehicles. The amount of rebates available to qualified cardholders at December
31, 2000 was $3.8 billion and $3.7 billion at December 31, 1999 and 1998,
respectively.
As part of a marketing agreement entered into with America Online, Inc. (AOL)
on June 21, 1999, Hughes committed to increase its sales and marketing
expenditures through 2002 by approximately $1.5 billion related to
DirecPC/AOL-Plus, DIRECTV, DIRECTV/AOL TV, and DirecDuo. At December 31, 2000,
Hughes' remaining commitment under this agreement was approximately $1.1
billion.
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 would 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 December 31, 2000. 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.
II-38
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 16. Preferred Securities of Subsidiary Trusts
General Motors - Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trusts
In July 1997, the General Motors Capital Trust D (Series D Trust) issued
approximately $79 million of its 8.67% Trust Originated Preferred Securitiessm
(TOPrSsm) Series D, (Series D Preferred Securities), in a one-for-one exchange
for 3,055,255 of the outstanding GM Series D 7.92% Depositary Shares, each
representing one-fourth of a share of GM Series D Preference Stock, $0.10 par
value per share. In addition, the General Motors Capital Trust G (Series G
Trust) issued approximately $143 million of its 9.87% TOPrS, Series G (Series G
Preferred Securities), in a one-for-one exchange for 5,064,489 of the
outstanding GM Series G 9.12% Depositary Shares, each representing one-fourth of
a share of GM Series G Preference Stock, $0.10 par value per share.
Concurrently with the exchanges and the related purchases by GM from the
Series D and Series G Trusts (Trusts) of the common securities of such Trusts,
which represent approximately 3% of the total assets of such Trusts, GM issued
to the wholly-owned Trusts, as the Series D Trust's sole assets its 8.67% Junior
Subordinated Deferrable Interest Debentures, Series D, due July 1, 2012 and as
the Series G Trust's sole assets, its 9.87% Junior Subordinated Deferrable
Interest Debentures, Series G, due July 1, 2012 (the "Series D Debentures" and
"Series G Debentures" or collectively the "Debentures"), having aggregate
principal amounts equal to the aggregate stated liquidation amounts of the
Series D and Series G Preferred Securities and the related common securities,
respectively ($79 million with respect to the Series D Debentures and $131
million with respect to the Series G Debentures).
On May 2, 2000, GM redeemed the Series D Trust's sole assets causing the
Series D Trust to redeem the approximately 3 million Series D Preferred
Securities. The Series D Preferred Securities were redeemed at a price of $25
per share plus accrued and unpaid distributions of $0.01 per share. Also, on May
2, 2000, GM redeemed the approximately 3 million outstanding Series D 7.92%
Depositary Shares. The Series D 7.92% Depositary Shares were redeemed at a price
of $25 per share plus accrued and unpaid dividends of $0.18 per share. The
securities together had a total face value of approximately $154 million.
On April 2, 2001, GM will redeem 5,064,489 outstanding Series G 9.87% TOPrS.
The Series G TOPrS will be redeemed at a price of $25 per security plus accrued
and unpaid dividends of $0.42 per share, for a total redemption price of $25.42
per share.
- ---------------------
sm "Trust Originated Preferred Securities" and "TOPrS" are service trademarks of
Merrill Lynch & Co.
NOTE 17. Stockholders' Equity
The following table presents changes in capital stock for the period from
January 1, 1998 to December 31, 2000 (dollars in millions):
Common Stocks
----------------------- Total
Preference $1-2/3 Capital
Stocks par value Class H Stock
---------- --------- ------- -------
Balance at January 1, 1998 $ 1 $1,156 $10 $1,167
Shares reacquired - (75) - (75)
Shares issued - 11 1 12
-- ----- -- -----
Balance at December 31, 1998 1 1,092 11 1,104
Shares reacquired (1) (75) - (76)
Shares issued - 16 3 19
-- ----- -- -----
Balance at December 31, 1999 - 1,033 14 1,047
Shares reacquired - (184) - (184)
Shares issued - 65 74 139
-- ----- -- -----
Balance at December 31, 2000 $ - $914 $88 $1,002
== === == =====
II-39
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 17. Stockholders' Equity (continued)
Preference Stocks
On June 24, 1999, as part of a strategic alliance with Hughes, AOL invested
$1.5 billion in return for approximately 2.7 million shares of GM Series H 6.25%
Automatically Convertible Preference Stock, par value $0.10 per share. This
preference stock will automatically convert into GM Class H common stock in
2002, based upon a variable conversion factor linked to the GM Class H common
stock price at the time of conversion, and accrues quarterly dividends at a rate
of 6.25% per year. It may be converted earlier in certain limited circumstances.
GM immediately invested the $1.5 billion received from AOL into shares of Hughes
Series A Preferred Stock designed to correspond to the financial terms of the GM
Series H 6.25% Automatically Convertible Preference Stock. Dividends on the
Hughes Series A Preferred Stock are payable to GM quarterly at an annual rate of
6.25%. Upon conversion of the GM Series H 6.25% Automatically Convertible
Preference Stock into GM Class H common stock, Hughes will redeem the Series A
Preferred Stock through a cash payment to GM equal to the fair market value of
GM Class H common stock issuable upon the conversion. Simultaneous with GM's
receipt of the cash redemption proceeds, GM will make a capital contribution to
Hughes of the same amount.
Common Stocks
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 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.
On July 24, 2000, Fiat S.p.A. purchased for $2.4 billion approximately 32
million shares of GM $1-2/3 par value common stock, or approximately 5.4% of
GM's $1-2/3 par value common stock outstanding as of that date.
The liquidation rights of the GM $1-2/3 par value and GM Class H common
stocks are subject to certain adjustments if outstanding common stock is
subdivided, by stock split or otherwise, or if shares of one class of common
stock are issued as a dividend to holders of another class of common stock.
Holders of GM Class H common stock have no direct rights in the equity or assets
of Hughes, but rather have rights in the equity and assets of GM (which includes
100% of the stock of Hughes).
The outstanding shares of GM Class H common stock may be recapitalized as
shares of GM $1-2/3 par value common stock at any time after December 31, 2002,
at the sole discretion of the GM Board, or automatically, if at any time the
Corporation should sell, liquidate, or otherwise dispose of 80% or more of the
business of Hughes, based on fair market value of the assets, both tangible and
intangible, of Hughes as of the date that such proposed transaction is approved
by the GM Board. In the event of any recapitalization, all outstanding shares of
GM Class H common stock will automatically be converted into GM's $1-2/3 par
value common stock at an exchange rate that would provide GM Class H common
stockholders with that number of shares of GM $1-2/3 par value common stock that
would have a value equal to 120% of the value of their GM Class H common stock,
on such date. A recapitalization of the type described in the prior sentence
would occur if any of the triggering events took place unless the holders of GM
common stock (including the holders of GM $1-2/3 par value common stock and
holders of the GM Class H common stock voting separately as individual classes)
vote to approve an alternative proposal from the GM Board.
II-40
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 17. Stockholders' Equity (concluded)
Other Comprehensive Income
The changes in the components of other comprehensive income (loss) are
reported net of income taxes, as follows (dollars in millions):
Years Ended December 31,
---------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------ ------------------------------ ---------------------------------
Pre-tax Tax Exp. Net Pre-tax Tax Exp. Net Pre-tax Tax Exp. Net
Amount (Credit) Amount Amount (Credit) Amount Amount (Credit) Amount
------ ------ ------ ------ ------- ------ -------- ------- ------
Foreign currency translation
adjustments $(741) $(272) $(469) $(1,519) $(575) $(944) $(280) $(1) $(279)
Unrealized (loss) gain
on securities:
Unrealized holding
(loss) gain (481) (179) (302) 998 372 626 38 (14) 52
Reclassification
adjustment (175) (62) (113) (171) (60) (111) (115) (40) (75)
---- --- ---- ---- --- ---- ---- --- ---
Net unrealized
(loss) gain (656) (241) (415) 827 312 515 (77) (54) (23)
---- ---- ---- --- --- --- --- --- ---
Minimum pension
liability adjustment 118 42 76 7,980 3,012 4,968 (1,657) (630) (1,027)
--- -- -- ----- ----- ----- ------ ---- ------
Other comprehensive
(loss) income from
continuing
operations $(1,279) $(471) $(808) $7,288 $2,749 $4,539 $(2,014) $(685) $(1,329)
======= ===== ===== ====== ====== ====== ======= ===== =======
NOTE 18. 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.
All GM Class H common stock per share amounts and numbers of shares for all
periods presented have been adjusted to reflect the three-for-one stock split,
in the form of a 200% stock dividend, paid on June 30, 2000.
The attribution of earnings to each class of GM common stock was as follows
(dollars in millions):
Years Ended December 31,
----------------------------
2000 1999 1998
---- ---- ----
Earnings (losses) attributable to common stocks
$1-2/3 par value
Continuing operations $3,957 $5,592 $2,914
Discontinued operations - 426 (93)
----- ----- -----
Earnings attributable to $1-2/3 par value $3,957 $6,018 $2,821
===== ===== =====
Earnings (losses) attributable to Class H $385 $(96) $72
=== == ==
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.
Earnings (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 earnings (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 (681
million, 374 million, and 316 million for 2000, 1999, and 1998, 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, 1.3 billion,
and 1.2 billion during 2000, 1999, and 1998, respectively. Upon conversion of
the GM Series H 6.25% Automatically Convertible Preference Stock into GM Class H
common stock, and the redemption of Series A Preferred Stock and simultaneous
capital contribution to Hughes, both the numerator and the denominator used in
the computation of ASCNI will increase by the number of shares of the GM Class H
common stock issued.
II-41
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 18. Earnings Per Share Attributable to Common Stocks (continued)
In addition, the denominator used in determining the ASCNI of Hughes may be
adjusted on occasion as deemed appropriate by the GM Board to reflect
subdivisions or combinations of the GM Class H common stock, certain transfers
of capital to or from Hughes, the contribution of shares of capital stock of GM
to or for the benefit of Hughes employees, and the retirement of GM Class H
common stock purchased by Hughes. The GM Board's discretion to make such
adjustments is limited by criteria set forth in GM's Restated Certificate of
Incorporation.
Effective January 1, 1999, shares of GM Class H common stock delivered by GM
in connection with the award of such shares to and the exercise of stock options
by employees of Hughes increase the numerator and denominator of the fraction
referred to above. Prior to January 1, 1999, there was no dilutive effect
resulting from the assumed exercise of stock options, because the exercise of
stock options did not affect the GM Class H common stock dividend base
(denominator). On occasion, in anticipation of exercises of stock options,
Hughes purchases GM Class H common stock from the open market. Upon purchase,
these shares are retired and therefore decrease the numerator and denominator of
the fraction referred to above.
The reconciliation of the amounts used in the basic and diluted earnings per
share computations for income from continuing operations 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
------ ------ ------ ----- ------ ------
Year ended December 31, 2000
Income from continuing
operations $4,016 $436
Less:Dividends on preference
stocks 59 51
----- ----
Basic EPS
Income from continuing
operations attributable
to common stocks $3,957 582 $6.80 $385 681 $0.56
==== ====
Effect of Dilutive Securities
Assumed exercise of
dilutive stock options (7) 9 7 27
----- --- --- ----
Diluted EPS
Adjusted income from
continuing operations
attributable to
common stocks $3,950 591 $6.68 $392 708 $0.55
===== === ==== === === ====
Year ended December 31, 1999
Income (loss) from
continuing operations $5,657 $(81)
Less:Dividends on
preference stocks 65 15
----- --
Basic EPS
Income (loss) from
continuing operations
attributable to
common stocks 5,592 643 $8.70 (96) 374 $(0.26)
==== ====
Effect of Dilutive Securities
Assumed exercise of
dilutive stock options - 12 - -
----- --- --- ---
Diluted EPS
Adjusted income (loss)
from continuing
operations attributable
to common stocks $5,592 655 $8.53 $(96) 374 $(0.26)
===== === ==== == === =====
Year ended December 31, 1998
Income from continuing
operations $2,977 $72
Less:Dividends on
preference stocks 63 -
------ ---
Basic EPS
Income from continuing
operations attributable
to common stocks 2,914 663 $4.40 72 316 $0.23
==== ====
Effect of Dilutive Securities
Assumed exercise of
dilutive stock options (3) 11 3 12
----- --- --- ---
Diluted EPS
Adjusted income from
continuing operations
attributable to
common stocks $2,911 674 $4.32 $75 328 $0.23
===== === ==== == === ====
II-42
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 19. Derivative Financial Instruments and Risk Management
GM is a party to financial instruments with off-balance-sheet risk. These
financial instruments are used in the normal course of business to manage
exposure to fluctuations in interest rates and foreign exchange rates, and to
meet the financing needs of its customers.
The primary classes of derivatives used by GM are foreign exchange forward
contracts and options, interest rate swaps and options, and forward contracts to
purchase or sell mortgages or mortgage-backed securities. Those instruments
involve, to varying degrees, market risk, as the instruments are subject to rate
and price fluctuations, and elements of credit risk in the event a counterparty
should default. Credit risk is managed through the approval and periodic
monitoring of financially sound counterparties.
Derivative transactions are used to hedge underlying business exposures.
Market risk in these instruments is offset by opposite movements in the
underlying exposure. Cash receipts or payments on these contracts normally occur
at maturity, or for interest rate swap agreements, at periodic contractually
defined intervals.
Foreign Exchange Forward Contracts and Options
GM is an international corporation with operations in over 50 countries and
has foreign currency exposures at these operations related to buying, selling,
and financing in currencies other than the local currency. GM's most significant
foreign currency exposures relate to Canada, Mexico, Western European countries
(primarily Germany, United Kingdom, Spain, Italy, Belgium, and France),
Australia, Japan, and Brazil. The magnitude of these exposures significantly
varies over time depending upon the strength of local automotive markets and
sourcing decisions.
GM uses derivative financial instruments to manage certain of its foreign
exchange exposures, primarily through foreign exchange forward contracts and
purchased and written foreign exchange options. These agreements primarily hedge
cash flows such as debt, firm commitments, and anticipated transactions
involving vehicles, components, fixed assets, and subsidiary dividends. At
December 31, 2000 and 1999, the Automotive, Communications Services, and Other
Operations held foreign exchange forward contracts and options of $6.2 billion
and $4.5 billion, respectively. At December 31, 2000 and 1999, the Financing and
Insurance Operations held foreign exchange forward contracts and options of
$15.3 billion and $13.3 billion (including cross-currency swaps of $4.7 billion
and $5.2 billion), respectively.
The Automotive, Communications Services, and Other Operations had deferred
hedging gains (losses) on outstanding foreign exchange forward contracts and
options totaling $34 million and $(22) million at December 31, 2000 and 1999,
respectively. The Financing and Insurance Operations had no deferred hedging
gains on outstanding foreign exchange forward contracts and options (including
cross-currency swaps) at December 31, 2000, compared with a deferred hedging
gain of $1 million at December 31, 1999.
The fair value of foreign exchange forward contracts (including
cross-currency swaps) was determined by using current exchange rates. The fair
value of foreign exchange options was estimated using pricing models with
indicative quotes obtained for the market variables.
Interest Rate Swaps and Options
GM's financing and cash management activities subject it to market risk from
exposure to changes in interest rates. GM has entered into various financial
instrument transactions to maintain the desired level of exposure to the risk of
interest rate fluctuations and to minimize interest expense. To achieve this
objective, GM will at times use written options in the management of these
exposures.
At December 31, 2000 and 1999, the total notional amount of interest rate
contracts with off-balance-sheet risk was $1.6 billion and $1.0 billion,
respectively, for the Automotive, Communications Services, and Other Operations.
At December 31, 2000 and 1999, the Financing and Insurance Operations held such
agreements with off-balance-sheet risk with notional amounts totaling $44.3
billion and $33.4 billion, respectively.
The Automotive, Communications Services, and Other Operations' net gains on
interest rate swaps totaled approximately $6 million and $3 million at December
31, 2000 and 1999, respectively. Net (losses) gains on interest rate swaps for
the Financing and Insurance Operations totaled approximately $(5) million and
$45 million at December 31, 2000 and 1999, respectively.
The fair value of interest rate swaps, including contracts with optionality,
was estimated using pricing models based upon current market interest rates.
Exchange traded options are valued at quoted market prices.
Mortgage Contracts
The Corporation has also entered into contracts to purchase and sell
mortgages at specific future dates and has entered into certain exchange-traded
futures and option contracts to reduce exposure to interest rate risk. At
December 31, 2000 and 1999, commitments to sell mortgage loans and securities
totaled $2.2 billion and $1.6 billion, respectively, and commitments to purchase
or originate mortgage
II-43
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 19. Derivative Financial Instruments and Risk Management - concluded
Mortgage Contracts (concluded)
loans totaled $5.0 billion and $4.8 billion, respectively. Exchange-traded
futures and option contracts, used to hedge mortgage loans held for sale, had
notional values of $1.1 billion and $6.3 billion at December 31, 2000 and 1999,
respectively. Gains and losses on derivatives, including exchange-traded futures
and option contracts, used to hedge interest rate risk associated with
rate-locked funding commitments and mortgage loans held for sale, are deferred
and considered in the reporting of the underlying mortgages on a lower of cost
or market basis.
The notional values of derivatives used to hedge price and interest rate risk
associated with mortgage-related securities totaled $11.8 billion and $7.5
billion at December 31, 2000 and 1999, respectively. Gains and losses associated
with these instruments are recognized in income in the current period on a
marked to market basis. Derivatives used to hedge mortgage servicing rights had
notional values of $31.1 billion and $17.2 billion at December 31, 2000 and
1999, respectively. Gains and losses on such contracts are recorded as an
adjustment to amortization expense.
The fair value of mortgage contracts was estimated based upon the amount that
would be received or paid to terminate the contracts based on market prices of
similar financial instruments and current rates for mortgage loans. Book values
and estimated fair values of financial instrument derivatives were as follows
(dollars in millions):
Fair Value of Open Contracts at
December 31,
-------------------------------------
2000 1999
---- ----
Asset Liability Asset Liability
Position Position Position Position
-------- -------- -------- --------
Automotive, Communications Services,
and Other Operations
Foreign exchange contracts (1) $111 $103 $30 $85
Interest rate contracts (2) $33 $3 $2 $18
Financing and Insurance Operations
Foreign exchange contracts (3)(5) $239 $1,106 $386 $862
Interest rate contracts (4) $605 $633 $82 $586
Mortgage contracts (6) $446 $101 $105 $102
(1)The related asset (liability) recorded on the balance sheet totaled $14
million and $(15) million, at December 31, 2000 and 1999, respectively.
(2)The related asset (liability) recorded on the balance sheet totaled $2
million and $(12) million, at December 31, 2000 and 1999, respectively.
(3)The related (liability) recorded on the balance sheet totaled $(959) million
and $(374) million, at December 31, 2000 and 1999, respectively.
(4)The related asset recorded on the balance sheet totaled $114 million and $33
million, at December 31, 2000 and 1999, respectively.
(5)Foreign exchange forward contracts included certain derivatives with both
foreign exchange and interest rate exposures which had a fair value of $(613)
million and $(368) million at December 31, 2000 and 1999, respectively.
(6)The related asset recorded on the balance sheet totaled $266 million and $23
million, at December 31, 2000 and December 31, 1999, respectively.
Credit Risk
The financial instruments previously discussed contain an element of risk
that the counterparties may be unable to meet the terms of the agreements.
However, GM minimizes such risk exposure by limiting the counterparties to major
international banks and financial institutions that meet established credit
guidelines and by limiting the amount of its risk exposure with any one bank or
financial institution. Management also reduces its credit risk for unused lines
of credit by applying the same credit policies in making commitments as it does
for extending loans. Management does not expect to incur any losses as a result
of counterparty default. GM generally does not require or place collateral for
these financial instruments, except for the lines of credit it extends. Because
loans extended under these commitments are at market interest rates, there is no
significant fair value position related to outstanding commitments.
GM has business activities with customers, dealers, and associates around the
world. The Corporation's receivables from, and guarantees to, such parties are
well diversified, and when warranted, are secured by collateral. Consequently,
in management's opinion, no significant concentration of credit risk exists for
GM.
II-44
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 20. Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined using
available market information or other appropriate valuation methodologies.
However, considerable judgment is required in interpreting market data to
develop estimates of fair value; therefore, the estimates are not necessarily
indicative of the amounts that could be realized or would be paid in a current
market exchange. The effect of using different market assumptions and/or
estimation methodologies may be material to the estimated fair value amounts.
Book and estimated fair values of financial instruments, for which it is
practicable to estimate fair value, were as follows (dollars in millions):
December 31,
------------------------------------------
2000 1999
---- ----
Book Fair Book Fair
Value Value Value Value
----- ----- ----- -----
Automotive, Communications Services,
and Other Operations
Assets
Other assets (1) $3,269 $3,244 $4,450 $4,431
Liabilities
Long-term debt (2) $7,410 $7,019 $7,415 $7,139
Other liabilities (1) $516 $548 $535 $559
Preferred securities of
subsidiary trusts (3)
(Note 16) $139 $136 $218 $206
Financing and Insurance Operations
Assets
Finance receivables - net (4) $91,853 $91,781 $80,287 $79,934
Other assets (1) $14,002 $14,054 $10,484 $10,509
Liabilities
Debt (payable beyond
one year) (2) $58,295 $57,863 $55,330 $53,936
(1) Other assets include various financial instruments (e.g., long-term
receivables and certain investments) that have fair values based on
discounted cash flows, market quotations, and other appropriate
valuation techniques. The fair values of retained subordinated interests
in trusts and excess servicing assets (net of deferred costs) were
derived by discounting expected cash flows using current market rates.
Estimated values of Industrial Development Bonds, included in other
liabilities, were based on quoted market prices for the same or similar
issues.
(2) Long-term debt has an estimated fair value based on quoted market prices
for the same or similar issues or based on the current rates offered to
GM for debt of similar remaining maturities.
(3) The fair value of the GM-obligated mandatorily redeemable preferred
securities of subsidiary trusts (see Note 16) was determined based on
quoted market prices.
(4) The fair value was estimated by discounting the future cash flows using
applicable spreads to approximate current rates applicable to each
category of finance receivables.
Due to their short-term nature, the book value approximates fair value for
cash and marketable securities, accounts and notes receivable (less allowances),
accounts payable (principally trade), Automotive, Communications Services, and
Other Operations' loans payable and Financing and Insurance Operations' debt
payable within one year for the periods ending December 31, 2000 and 1999. Refer
to Note 19 for fair value of derivative financial instruments.
II-45
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 21. Stock Incentive Plans
Stock-Based Compensation
If compensation cost for stock options and other stock-based employee
compensation awards had been determined based on the fair value at the grant
date, consistent with the method prescribed by SFAS No. 123, GM's pro forma net
income, earnings attributable to common stocks, and basic and diluted earnings
per share attributable to common stocks would have been as follows (dollars in
millions except per share amounts):
2000 1999 1998
---- ---- ----
Net income - as reported $4,452 $6,002 $2,956
- pro forma $4,125 $5,788 $2,761
Earnings (losses) attributable
to common stocks
$1-2/3 - as reported $3,957 $6,018 $2,821
- pro forma $3,709 $5,823 $2,646
Class H - as reported $385 $(96) $72
- pro forma $306 $(115) $52
Basic earnings (losses) per
share attributable to
common stocks
$1-2/3 - as reported $6.80 $9.36 $4.26
- pro forma $6.38 $9.06 $4.00
Class H - as reported $0.56 $(0.26) $0.23
- pro forma $0.45 $(0.31) $0.16
Diluted earnings (losses) per
share attributable to
common stocks
$1-2/3 - as reported $6.68 $9.18 $4.18
- pro forma $6.26 $8.88 $3.92
Class H - as reported $0.55 $(0.26) $0.23
- pro forma $0.44 $(0.31) $0.16
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option- pricing model with the following weighted-average
assumptions:
2000 1999 1998
------------------ ----------------- -----------------
GM Hughes GM GM Hughes GM GM Hughes GM
SIP Plan SSOP SIP Plan SSOP SIP Plan SSOP
--- ---- ---- --- ---- ---- --- ---- ----
Interest rate 6.4% 6.5% 6.5% 4.8% 5.2% 4.8% 5.2% 5.6% 5.2%
Expected life
(years) 5.0 6.9 5.0 5.0 7.0 5.0 5.0 6.2 5.0
Expected
volatility 27.8% 42.1% 27.6% 27.9% 38.0% 27.9% 26.2% 32.8% 26.2%
Dividend yield 2.7% - 2.7% 2.3% - 2.3% 3.6% - 3.6%
The effects of the Delphi spin-off adjustment on the number of options and
related exercise prices, as described below, are considered, under SFAS No. 123,
to be modifications of the terms of the outstanding options. Accordingly, the
pro forma disclosure includes compensation cost for the incremental fair value,
under SFAS No. 123, resulting from such modifications. The pro forma amounts for
compensation cost are not indicative of the effects on operating results for
future periods.
GM's stock incentive plans consist of the General Motors 1997 Stock Incentive
Plan, formerly the General Motors Amended Stock Incentive Plan (the "GMSIP"),
the Hughes Electronics Corporation Incentive Plan (the "Hughes Plan"), and the
General Motors 1998 Salaried Stock Option Plan (the "GMSSOP"). The GMSIP and
GMSSOP are administered by the Executive Compensation Committee of the GM Board.
The Hughes Plan is administered by the Executive Compensation Committee of the
Board of Directors of Hughes.
Under the GMSIP, 60 million shares of GM $1-2/3 par value and 7.5 million
shares of GM Class H common stocks may be granted from June 1, 1997 through May
31, 2002, of which approximately 27.2 million and 7.0 million were available for
grants at December 31, 2000. Options granted prior to 1997 under the GMSIP
generally are exercisable one-half after one year and one-half after two years
from the dates of grant. Stock option grants awarded since 1997 vest ratably
over three years from the date of grant. Option prices are 100% of fair market
value on the dates of grant and the options generally expire 10 years from the
dates of grant, subject to earlier termination under certain conditions.
II-46
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 21. Stock Incentive Plans - (continued)
Under the Hughes Plan, Hughes may grant shares, rights, or options to acquire
up to 232.8 million shares of GM Class H common stock through December 31, 2000,
of which 106.7 million were available for grants at December 31, 2000. Option
prices are 100% of fair market value on the dates of grant and the options
generally vest over two to five years and expire 10 years from the dates of
grant, subject to earlier termination under certain conditions.
Under the GMSSOP, 50 million shares of GM $1-2/3 par value common stock may
be granted from January 1, 1998 through December 31, 2007, of which
approximately 38.0 million were available for grants at December 31, 2000. Stock
options vest one year following the date of grant and are exercisable two years
from the date of grant. Option prices are 100% of fair market value on the dates
of grant and the options generally expire 10 years and two days from the dates
of grant subject to earlier termination under certain conditions.
In connection with the Delphi spin-off, the number of options and related
exercise prices for outstanding options under the affected plans were adjusted
to reflect the change in the fair market value of GM $1-2/3 par value common
stock that resulted from this transaction. The number of shares under option and
the exercise price were adjusted such that the aggregate intrinsic value of the
options immediately before and immediately after the transaction remained
unchanged. All Class H common stock share amounts and numbers of shares for all
periods presented have been adjusted to reflect the three-for-one stock split in
the form of a 200% stock dividend paid on June 30, 2000.
II-47
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 21. Stock Incentive Plans (concluded)
Changes in the status of outstanding options were as follows:
GMSIP and
GMSIP Hughes Plan GMSSOP
$1-2/3 Par Value Common Class H Common $1-2/3 Par Value Common
--------------------------------------------------------------------
Weighted- Weighted- Weighted
Shares Average Shares Average Shares Average
under Exercise under Exercise under Exercise
Option Price Option Price Option Price
- -------------------------------------------------------------------------------------
Options outstanding at
January 1, 1998 32,366,657 $51.40 46,483,887 $9.57 - $ -
- -------------------------------------------------------------------------------------
Granted 9,854,805 $56.14 12,703,860 $16.93 4,637,267 $56.00
Exercised 8,242,624 $44.08 6,165,504 $7.57 - $ -
Terminated 454,558 $54.45 2,941,392 $10.65 341,644 $56.00
- -------------------------------------------------------------------------------------
Options outstanding at
December 31, 1998 33,524,280 $50.72 50,080,851 $11.62 4,295,623 $56.00
- -------------------------------------------------------------------------------------
Granted 9,811,209 $85.79 15,277,260 $16.05 4,764,052 $85.97
Exercised 7,902,380 $46.04 10,798,119 $9.83 - $ -
Terminated 3,198,739 $55.25 4,294,746 $13.49 2,285,969 $73.56
Delphi Spin-Off
adjustment 6,774,777 $ - - $ - 1,288,914 $ -
- -------------------------------------------------------------------------------------
Options outstanding at
December 31, 1999 39,009,147 $51.30 50,265,246 $13.10 8,062,620 $58.73
- -------------------------------------------------------------------------------------
Granted 11,231,004 $74.14 35,641,517 $37.05 4,182,955 $75.50
Exercised 6,831,078 $42.95 6,545,206 $11.45 1,635,248 $46.59
Terminated 283,967 $64.48 11,249,673 $30.96 242,863 $63.46
- -------------------------------------------------------------------------------------
Options outstanding at
December 31, 2000 43,125,106 $58.49 68,111,884 $22.76 10,367,464 $67.30
- -------------------------------------------------------------------------------------
Options exercisable at
December 31, 2000 21,985,984 $47.57 29,640,511 $12.93 2,411,586 $46.59
- -------------------------------------------------------------------------------------
The following table summarizes information about GM's stock option plans at
December 31, 2000:
Weighted-Average
Range of Remaining Weighted-Avg. Weighted-Average
Exercise Options Contractual Exercise Options Exercise
Prices Outstanding Life (yrs.) Price Exercisable Price
--------------------------------------------------------------------------------------------------
GMSIP $1-2/3
Par Value Common
$13.00 to $39.99 2,480,534 3.1 $31.19 2,480,534 $31.19
40.00 to 49.99 18,377,123 6.0 $44.84 15,781,278 $44.55
50.00 to 83.50 22,267,449 8.6 $72.79 3,724,172 $71.29
--------------------------------------------------------------------------------------------------
$13.00 to $83.50 43,125,106 7.2 $58.49 21,985,984 $47.57
--------------------------------------------------------------------------------------------------
GMSIP and
Hughes Plan
Class H Common
$3.00 to $8.99 2,486,235 3.6 $6.95 2,486,235 $6.95
9.00 to 16.99 30,482,236 6.9 $12.52 21,001,250 $12.05
17.00 to 24.99 6,686,826 7.5 $18.41 6,050,526 $18.27
25.00 to 32.99 2,600,900 9.7 $31.12 9,500 $28.57
33.00 to 41.50 25,855,687 9.3 $36.97 93,000 $41.06
--------------------------------------------------------------------------------------------------
$3.00 to $41.50 68,111,884 7.9 $22.76 29,640,511 $12.93
--------------------------------------------------------------------------------------------------
GMSSOP $1-2/3
Par Value
Common
$46.59 2,411,586 7.0 $46.59 2,411,586 $46.59
71.53 3,846,103 8.0 $71.53 - $ -
75.50 4,109,775 9.0 $75.50 - $ -
--------------------------------------------------------------------------------------------------
$46.59 to $75.50 10,367,464 8.2 $67.30 2,411,586 $46.59
--------------------------------------------------------------------------------------------------
II-48
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 22. Other Income and Other Expenses
Other income (included in Total net sales and revenues) and other expenses
(included in Cost of sales and other expenses) consisted of the following
(dollars in millions):
Years Ended December 31,
----------------------------
2000 1999 1998
---- ---- ----
Automotive, Communications Services,
and Other Operations
Other income
Interest income $619 $769 $726
Rental car lease revenue 1,722 1,765 1,229
Gain on sale of Hughes' satellite systems (1) 2,036 - -
Other 865 938 930
----- ----- ------
Total other income $5,242 $3,472 $2,885
===== ===== =====
Total other expenses $348 $503 $792
=== === ===
(1)Represents the gain on the sale of Hughes' satellite systems manufacturing
businesses to The Boeing Company for $3.8 billion in cash.
Financing and Insurance Operations
- ----------------------------------
Other income
Interest income $1,794 $1,479 $1,379
Insurance premiums 1,394 1,339 1,426
Mortgage operations investment income and
servicing fees 3,445 2,742 1,836
Other 870 157 58
----- ----- -----
Total other income $7,503 $5,717 $4,699
===== ===== =====
Other expenses
Provision for financing losses $552 $404 $463
Insurance losses and loss adjustment expenses 1,028 882 1,013
----- ------ -----
Total other expenses $1,580 $1,286 $1,476
===== ===== =====
NOTE 23: Segment Reporting
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, established standards for reporting information about operating
segments in financial statements. Operating segments are defined as components
of an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or decision making
group, in deciding how to allocate resources and in assessing performance. GM's
chief operating decision maker is the Chief Executive Officer. The operating
segments are managed separately because each operating segment represents a
strategic business unit that offers different products and serves different
markets.
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: GMNA, GME, GMLAAM, GMAP), Hughes, and
Other. GMNA designs, manufactures, and markets vehicles primarily in North
America under the following nameplates: Chevrolet, Pontiac, GMC, Oldsmobile,
Buick, Cadillac, and Saturn. GME, GMLAAM, and GMAP meet the demands of customers
outside North America with vehicles designed, manufactured, and marketed under
the following nameplates: Opel, Vauxhall, Holden, Isuzu, Saab, Buick, Chevrolet,
GMC, and Cadillac. Hughes includes activities relating to digital entertainment,
information and communications services, and satellite-based private business
networks. The Other segment 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. GMAC
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,
commercial, vehicle and homeowners' insurance, and asset-based lending. The
Financing and Insurance Operations' Other segment includes financing entities
operating in the U.S., Canada, Brazil, Germany, Sweden, and Mexico which are not
associated with GMAC.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies except that the
disaggregated financial results have been prepared using a management approach,
which is consistent with the basis and manner in which GM management internally
disaggregates financial information for the purposes of assisting in making
internal operating decisions. GM evaluates performance based on stand-alone
operating segment net income and generally accounts for intersegment sales and
transfers as if the sales or transfers were to third parties, that is, at
current market prices. Revenues are attributed to geographic areas based on the
location of the assets producing the revenues.
II-49
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 23. Segment Reporting (continued)
Total Other Total
GMNA GME GMLAAM GMAP GMA Hughes Other Automotive GMAC Financing Financing
---- --- ------ ---- --- ------ ----- ---------- ---- --------- ---------
(dollars in millions)
2000
Manufactured products
sales and revenues:
External customers $111,481 $23,815 $5,470 $2,999 $143,765 $8,514 $3,106 $155,385 $ - $ - $ -
Intersegment (1,659) 1,040 184 435 - 34 (34) - - - -
------- ------- ------ ----- ------- ----- ------ ------- --- --- ---
Total manufactured
products 109,822 24,855 5,654 3,434 143,765 8,548 3,072 155,385 - - -
Financing revenue - - - - - - - - 15,493 1,009 16,502
Other income 2,901 503 59 172 3,635 2,141 (534) 5,242 8,168 (665) 7,503
------- ------ ----- ----- ------- ----- ----- ------ ------ ----- ------
Total net sales
and revenues $112,723 $25,358 $5,713 $3,606 $147,400 $10,689 $2,538 $160,627 $23,661 $344 $24,005
======= ====== ===== ===== ======= ====== ===== ======= ====== === ======
Depreciation and
amortization $4,564 $1,357 $272 $107 $6,300 $996(b)(d) $133 $7,429 $5,505 $477 $5,982
Interest income $633 $403 $22 $13 $1,071 $106 $(558) $619 $2,231 $(437) $1,794
Interest expense $1,175 $408 $101 $4 $1,688 $218 $(1,091) $815 $8,295 $442 $8,737
Income tax expense
(benefit) $1,218 $(209) $(122) $17 $904 $577 $(38) $1,443 $954 $(4) $950
(Losses) earnings of
nonconsolidated
associates $(74) $7 $69 $(195) $(193) $(142) $(1) $(336) $- $4 $4
Net income (loss) $3,174 $(676) $26 $(233) $2,291 $829(b)(d) $(281) $2,839 $1,602 $11 $1,613
Investments in
nonconsolidated
affiliates $780 $170 $436 $1,915 $3,301 $82 $114 $3,497 $982 $(982) $-
Segment assets $90,502 $18,857 $4,166 $1,108 $114,633 $18,893 $(170) $133,356 $168,410 $1,334 $169,744
Expenditures for
property $6,073 $1,517 $233 $168 $7,991 $993(c) $216 $9,200 $518 $4 $522
1999
Manufactured products
sales and revenues:
External customers $110,388 $24,646 $4,445 $2,706 $142,185 $7,325 $3,125 $152,635 $ - $ - $ -
Intersegment (1,595) 1,025 234 336 - 16 (16) - - - -
------- ------ ----- ------ ------- ----- ----- ------ -- -- --
Total manufactured
products 108,793 25,671 4,679 3,042 142,185 7,341 3,109 152,635 - - -
Financing revenue - - - - - - - - 13,778 956 14,734
Other income 3,142 554 30 145 3,871 253 (652) 3,472 6,440 (723) 5,717
------- ------ ----- ----- ------- ----- ----- ------- ------ --- ------
Total net sales
and revenues $111,935 $26,225 $4,709 $3,187 $146,056 $7,594 $2,457 $156,107 $20,218 $233 $20,451
======= ====== ===== ===== ======= ===== ===== ======= ====== === ======
Depreciation and
amortization $4,457 $1,086 $228 $154 $5,925 $706 (b) $242 $6,873 $5,136 $309 $5,445
Interest income $929 $433 $45 $8 $1,415 $27 $(673) $769 $1,744 $(265) $1,479
Interest expense $1,223 $337 $95 $11 $1,666 $123 $(961) $828 $6,526 $396 $6,922
Income tax expense
(benefit) $2,361 $220 $(156) $(7) $2,418 $(194) $(57) $2,167 $960 $(9) $951
(Losses) earnings of
nonconsolidated
associates $(30) $1 $45 $(149) $(133) $(189) $(3) $(325) $(1) $1 $ -
Net income (loss) $4,857 $423 $(81) $(218) $4,981 $(270) (b) $(243)(a) $4,468 $1,527 $7 $1,534
Investments in
nonconsolidated
affiliates $539 $52 $332 $926 $1,849 $(11) $(127) $1,711 $2,257 $(2,257) $-
Segment assets $82,851 $18,156 $4,102 $1,343 $106,452 $18,841 $268 $125,561 $148,789 $380 $149,169
Expenditures for property $4,604 $1,228 $358 $150 $6,340 $472 (c) $249 $7,061 $321 $2 $323
See notes on next page
II-50
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 23. Segment Reporting (continued)
Total Other Total
GMNA GME GMLAAM GMAP GMA Hughes Other Automotive GMAC Financing Financing
---- --- ------ ---- --- ------ ----- ---------- ---- --------- ---------
(dollars in millions)
1998
Manufactured products
sales and revenues:
External customers $91,771 $23,948 $7,150 $2,814 $125,683 $5,924 $2,669 $134,276 $ - $ - $ -
Intersegment (1,450) 1,088 253 109 - 40 (40) - - - -
------ ------ ----- ----- ------- ----- ----- ------- -- -- --
Total manufactured
products 90,321 25,036 7,403 2,923 125,683 5,964 2,629 134,276 - - -
Financing revenue - - - - - - - - 12,731 854 13,585
Other income 2,296 804 150 121 3,371 131 (617) 2,885 5,183 (484) 4,699
------ ------ ------ ------ ------- ------ ----- ------- ------ --- ------
Total net sales
and revenues $92,617 $25,840 $7,553 $3,044 $129,054 $6,095 $2,012 $137,161 $17,914 $370 $18,284
====== ====== ===== ===== ======= ===== ===== ======= ====== === ======
Depreciation and
amortization $4,138 $1,102 $366 $95 $5,701 $434(b) $92 $6,227 $4,812 $108 $4,920
Interest income $537 $544 $116 $9 $1,206 $112 $(592) $726 $1,524 $(145) $1,379
Interest expense $939 $433 $92 $7 $1,471 $18 $(703) $786 $5,787 $56 $5,843
Income tax expense
(benefit) $787 $319 $(213) $9 $902 $(45) $161 $1,018 $612 $6 $618
Earnings (losses) of
nonconsolidated
associates $14 $(14) $102 $(152) $(50) $(128) $(61) $(239) $ - $ - $ -
Net income (loss) $1,633 $419 $(175) $(243) $1,634 $272(b) $(372)(a) $1,534 $1,325 $97 $1,422
Investments in
nonconsolidated
affiliates $414 $262 $445 $395 $1,516 $41 $(607) $950 $557 $(557) $ -
Segment assets $65,765 $18,440 $5,548 $1,557 $91,310 $13,008 $10,276 $114,594 $131,760 $334 $132,094
Expenditures for
property $5,464 $1,205 $534 $197 $7,400 $344(c) $208 $7,952 $279 $ - $279
(a)Other includes income (loss) from discontinued operations related to Delphi
of $426 million and $(93) million for the years ended December 31, 1999 and
1998, respectively.
(b)The amount reported for Hughes excludes amortization of GM purchase
accounting adjustments related to GM's acquisition of Hughes Aircraft Company
of approximately $16 million ($3 million related to PanAmSat and $13 million
related to the satellite systems manufacturing businesses prior to its sale
to Boeing on October 6, 2000), $21 million and $21 million for 2000, 1999,
and 1998, respectively.
(c)Excludes satellite expenditures totaling $766 million, $789 million,
and $797 million in 2000, 1999, and 1998, respectively. Also excludes
expenditures related to the early buy-out of satellite sale-leasebacks
totaling $0, $370 million, and $156 million in 2000, 1999, and 1998,
respectively.
(d)The amount reported for Hughes includes the write-off of approximately $329
million of unamortized goodwill related to the satellite systems
manufacturing businesses at the time of the sale to Boeing.
II-51
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
NOTE 23. Segment Reporting (concluded)
Information concerning principal geographic areas was as follows (dollars in
millions):
2000 1999 1998
----------------- ----------------- ---------------
Net Sales Net Sales Net Sales
& Net & Net & Net
Revenues Property Revenues Property Revenues Property
-------- -------- -------- -------- -------- ---------
North America
United States $136,399 $22,798 $130,073 $20,634 $105,672 $19,454
Canada and Mexico 13,986 3,687 12,661 3,760 11,009 2,358
-------- ------- -------- ------- ------- ------
Total North America 150,385 26,485 142,734 24,394 116,681 21,812
Europe
France 1,986 139 2,130 151 2,042 186
Germany 6,582 2,687 8,968 2,912 10,567 3,349
Spain 1,650 709 2,001 542 1,966 422
United Kingdom 5,035 834 5,390 1,070 5,379 1,192
Other 11,935 2,397 9,407 1,635 9,679 1,748
------ ----- ------- ----- ------- -----
Total Europe 27,188 6,766 27,896 6,310 29,633 6,897
Latin America
Brazil 3,395 1,047 2,830 1,409 4,773 1,879
Other Latin America 1,843 380 1,686 403 2,909 409
----- ----- ----- ----- ----- -----
Total Latin America 5,238 1,427 4,516 1,812 7,682 2,288
All Other 1,821 698 1,412 759 1,449 1,611
-------- ------- -------- -------- -------- -------
Total $184,632 $35,376 $176,558 $33,275 $155,445 $32,608
======= ====== ======= ====== ======= ======
* * * * * * * *
II-52
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Selected Quarterly Data (Unaudited)
2000 Quarters
--------------------------------------
1st 2nd 3rd 4th (1)
--- --- --- ---
(dollars in millions except per share amounts)
Total net sales and revenues $46,858 $48,743 $42,690 $46,341
====== ====== ====== ======
Income before income taxes
and minority interests $2,632 $2,835 $1,266 $431
Income tax expense 783 929 436 245
Minority interests 2 2 (2) 11
Losses of nonconsolidated associates (68) (157) 1 (108)
----- ------ ----- -----
Net income 1,783 1,751 829 89
Dividends on preference stocks (29) (27) (27) (27)
---- ------ ----- --
Earnings attributable to
common stocks $1,754 $1,724 $802 $62
===== ===== === ==
Earnings (losses) attributable
to $1-2/3 par value $1,786 $1,762 $878 (635)
(Losses) earnings attributable
to Class H $(32) $(38) $(76) $697
Basic earnings (losses) per
share attributable to
$1-2/3 par value $2.88 $2.99 $1.57 $(1.14)
Basic (losses) earnings
per share attributable
to Class H (2) $(0.08) $(0.07) $(0.09) $0.80
Average number of shares
of common stocks
outstanding - basic (in millions)
$1-2/3 par value 620 590 559 559
Class H (2) 413 563 874 875
Diluted earnings (losses)
per share attributable to
$1-2/3 par value $2.80 $2.93 $1.55 $(1.16)
Diluted (losses) earnings
per share attributable
to Class H (2) $(0.08) $(0.07) $(0.09) $0.76
Average number of
shares of common stocks
outstanding - diluted
(in millions)
$1-2/3 par value 637 602 567 559
Class H (2) 413 563 874 962
II-53
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - continued
Selected Quarterly Data (Unaudited) - continued
(1) Fourth quarter 2000 results include: a $939 million after-tax charge
for the phase-out of Oldsmobile; an after-tax charge of $294 million
related to postemployment costs for termination and other postemployment
benefits associated with the four North American manufacturing facilities
slated for conversion and capacity reduction (see Note 3 to the GM
consolidated financial statements); a $419 million after-tax charge related
to the reduction in production capacity at GME, including the restructuring
of Vauxhall Motors Limited's manufacturing operations in the UK; and a
$1.1 billion after-tax gain at Hughes related to the sale of its satellite
systems manufacturing businesses to The Boeing Company for $3.8 billion
in cash.
(2) Adjusted to reflect the three-for-one stock split of the GM Class H common
stock, in the form of a 200% stock dividend, paid on June 30, 2000.
II-54
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - continued
Selected Quarterly Data (Unaudited) - continued
1999 Quarters
--------------------------------------
1st 2nd 3rd 4th (1)
--- --- --- ---
(dollars in millions except per share amounts)
Total net sales and revenues $42,435 $45,067 $42,794 $46,262
====== ====== ====== ======
Income from continuing operations
before income taxes
and minority interests $2,940 $2,784 $1,518 $1,805
Income tax expense 1,029 956 553 580
Minority interests (14) (7) (7) -
Losses of nonconsolidated associates (77) (87) (81) (80)
----- ----- ----- -----
Income from continuing operations 1,820 1,734 877 1,145
Income from discontinued operations 242 184 - -
----- ----- ----- -----
Net income 2,062 1,918 877 1,145
Dividends on preference stocks (16) (7) (28) (29)
----- ----- ---- -----
Earnings attributable to
common stocks $2,046 $1,911 $849 $1,116
===== ===== === =====
Earnings (losses) attributable
to common stocks
$1-2/3 par value
Continuing operations $1,783 $1,754 $866 $1,196
Discontinued operations 242 184 - -
----- ----- --- -----
Earnings attributable to
$1-2/3 par value $2,025 $1,938 $866 $1,196
===== ===== === =====
Earnings (losses) attributable
to Class H $21 $(27) $(17) $(80)
== == == ==
Basic earnings (losses) per
share attributable to common stocks
$1-2/3 par value
Continuing operations $2.73 $2.71 $1.35 $1.90
Discontinued operations 0.37 0.28 - -
---- ---- ---- -----
Earnings per share
attributable to $1-2/3
par value $3.10 $2.99 $1.35 $1.90
==== ==== ==== ====
Earnings (losses) per
share attributable
to Class H (2) $0.07 $(0.08) $(0.04) $(0.19)
==== ==== ==== ====
Average number of shares
of common stocks
outstanding - basic (in millions)
$1-2/3 par value 654 648 641 630
Class H (2) 319 363 405 409
Earnings (losses) per share
attributable to common
stocks assuming dilution
$1-2/3 par value
Continuing operations $2.68 $2.66 $1.33 $1.86
Discontinued operations 0.36 0.28 - -
---- ---- ---- ----
Earnings per share
attributable to $1-2/3
par value $3.04 $2.94 $1.33 $1.86
==== ==== ==== ====
Earnings (losses) per share
attributable
to Class H (2) $0.06 $(0.08) $(0.04) $(0.19)
==== ==== ==== ====
Average number of shares of common stocks
outstanding - diluted (in millions)
$1-2/3 par value 667 660 652 643
Class H (2) 335 363 405 409
II-55
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - continued
Selected Quarterly Data (Unaudited) - continued
(1) Fourth quarter 1999 results included: an after-tax charge of $553 million
for postemployment benefits related to the reversal of a liability
for benefits payable to excess U.S. hourly employees (see Note 3 to the
GM consolidated financial statements); an after-tax charge of $408
million for hourly retiree benefits related to the benefit increase
granted to hourly retirees in connection with the 1999 United Auto Workers
(UAW) agreement; a $90 million after-tax charge for termination
benefits related to a U.S. salaried early retirement program; and an
after-tax charge of $165 million related to Hughes' decision to
discontinue certain of its wireless manufacturing operations.
(2) Adjusted to reflect the three-for-one stock split of the GM Class H common
stock, in the form of a 200% stock dividend, paid on June 30, 2000.
II-56
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 9. Changes in and disagreements with accountants on accounting and
financial disclosure
None
II-57
PART III
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEMS 10, 11, 12, AND 13
Information required by Part III (Items 10, 11, 12, and 13) of this Form 10-K
is incorporated by reference from General Motors Corporation's definitive Proxy
Statement for its 2001 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission, pursuant to Regulation 14A, not later
than 120 days after the end of the fiscal year, all of which information is
hereby incorporated by reference in, and made part of, this Form 10-K, except
that the information required by Item 10 with respect to executive officers of
the Registrant is included in Item 4A of Part I of this report.
III-1
PART IV
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
Page
Number
-------
(a) 1. All Financial Statements See Part II
2. Financial Statement Schedule II - Allowances for
the Years Ended December 31, 2000, 1999, and 1998 IV-3
3. Exhibits (Including Those Incorporated by Reference)
Exhibit
Number
- -------
(3)(a) Restated Certificate of Incorporation, as amended, filed as
Exhibit 3(i) to the Current Report on Form 8-K of General
Motors Corporation dated June 6, 2000, and Amendment to
Article Fourth of the Certificate of Incorporation -
Division III - Preference Stock, by reason of the
Certificates of Designations filed with the Secretary
of State of the State of Delaware on September 14, 1987
and the Certificate of Decrease filed with the Secretary of
State of the State of Delaware on September 29, 1987
(pertaining to the Six Series of Preference
Stock contributed to the General Motors pension trusts),
incorporated by reference to Exhibit 19 to the Quarterly
Report on Form 10-Q of General Motors Corporation for the
quarter ended June 30, 1990 in the Form SE of General
Motors Corporation dated August 6, 1990; as further
amended by the Certificate of Designations filed with the
Secretary of State of the State of Delaware on
June 28, 1991 (pertaining to Series A Conversion
Preference Stock), incorporated by reference to
Exhibit 4(a) to Form S-8 Registration Statement No.
33-43744 in the Form SE of General Motors Corporation
dated November 1, 1991; as further amended by the
Certificate of Designations filed with the Secretary
of State of the State of Delaware on December 9,
1991 (pertaining to Series B 9-1/8% Preference Stock),
incorporated by reference to Exhibit 4(a) to
Form S-3 Registration Statement No. 33-45216 in the Form
SE of General Motors Corporation dated January 27, 1992;
as further amended by the Certificate of Designations
filed with the Secretary of State of the State of
Delaware on February 14, 1992 (pertaining to Series C
Convertible Preference Stock), incorporated by reference
to Exhibit (3)(a) to the Annual Report on Form
10-K of General Motors Corporation for the year ended
December 31, 1991 in the Form SE of General Motors
Corporation dated March 20, 1992; as further
amended by the Certificate of Designations filed with the
Secretary of State of the State of Delaware on July 15, 1992
(pertaining to Series D 7.92% Preference Stock),
incorporated by reference to Exhibit 3(a)(2) to
the Quarterly Report on Form 10-Q of General Motors
Corporation for the quarter ended June 30, 1992
in the Form SE of General Motors Corporation dated
August 10, 1992; as further amended by the Certificate
of Designations filed with the Secretary of
State of the State of Delaware on December 15, 1992
(pertaining to Series G 9.12% Preference Stock),
incorporated by reference to Exhibit 4(a) to Form S-3
Registration Statement No. 33-49309 in the Form SE of
General Motors Corporation dated January 25, 1993; and
as further amended by the Certificate of Designations
filed with the Secretary of State of the State of Delaware
on June 24, 1999 (pertaining to Series H 6.25%
Automatically Convertible Preference Stock), incorporated
by reference to Exhibit 4(a) to Form S-8 Registration
Statement No. 333-31846 in the Form SE of General Motors
Corporation dated March 6, 2000. N/A
(3)(b) By-Laws, of General Motors Corporation, as amended,
incorporated by reference to Exhibit 3(ii) to the Current
Report on Form 8-K of General Motors Corporation dated
March 2, 1998; as further amended, incorporated by
reference to Exhibit 3(ii) to the Current Reports
on Form 8-K of General Motors Corporation dated June 24,
1999, August 2, 1999, March 6, 2000, June 6, 2000, and
October 3, 2000. N/A
(4)(a) Form of Indenture relating to the $500,000,000 8-1/8%
Debentures Due April 15, 2016 dated as of April 1, 1986
between General Motors Corporation and Citibank,
N.A., Trustee, incorporated by reference to Exhibit 4
to Amendment No. 1 to Form S-3 Registration Statement
No. 33-4452 and resolutions adopted by the Special
Committee on April 15, 1986, incorporated by reference
to Exhibit 4(a) to the Current Report on Form 8-K of
General Motors Corporation dated April 24, 1986. N/A
IV-1
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
PART IV - continued
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
(continued)
Exhibit Page
Number Number
- ------- ------
(4)(b) Form of Indenture relating to the $700,000,000 9-5/8%
Notes Due December 1, 2000 and the $1,400,000,000
Medium-Term Note Program dated as of November 15, 1990
between General Motors Corporation and Citibank, N.A.,
Trustee,incorporated by reference to Exhibit 4(a) to
Form S-3 Registration Statement No. 33-37737. N/A
(4)(c) Form of Indenture relating to the $377,377,000 7.75%
Debentures Due March 15, 2036 dated as of December 7,
1995 between General Motors Corporation and
Citibank, N.A., Trustee, filed as Exhibit 4(a) to
Amendment No. 1 to Form S-3 Registration Statement
No. 33-64229. N/A
(4)(d) Instruments defining the rights of holders of nonregistered
debt of the Registrant have been omitted from this exhibit
index because the amount of debt authorized under any such
instrument does not exceed 10% of the total assets of the
Registrant and its subsidiaries. The Registrant agrees
to furnish a copy of any such instrument to the
Commission upon request. N/A
(4)(e)(ii)Amended and Restated Declaration of Trust of General Motors
Capital Trust G, incorporated by reference to Exhibit
4(c)(ii) to the Current Report on Form 8-K of General
Motors Corporation dated July 1, 1997. N/A
(4)(f)(i) Indenture between General Motors Corporation and Wilmington
Trust Company, incorporated by reference to Exhibit 4(d)(i)
to the Current Report on Form 8-K of General Motors
Corporation dated July 1, 1997. N/A
(4)(f)(iii)Second Supplemental Indenture between General Motors
Corporation and Wilmington Trust Company With Respect To
The Series G Junior Subordinated Debentures, incorporated
by reference to Exhibit 4(d)(iii) to the Current Report on
Form 8-K of General Motors Corporation dated July 1, 1997. N/A
(4)(g)(ii)Series G Preferred Securities Guarantee Agreement,
General Motors Capital Trust G, incorporated by reference
to Exhibit 4(g)(ii) to the Current Report on Form 8-K of
General Motors Corporation dated July 1, 1997. N/A
(10)(a)** General Motors 1997 Annual Incentive Plan, incorporated
by reference to Exhibit B to the Proxy Statement of
General Motors Corporation dated April 16,1997. N/A
(10)(b)** General Motors 1997 Stock Incentive Plan, incorporated
by reference to Exhibit B to the Proxy Statement of
General Motors Corporation dated April 16, 1997. N/A
(10)(c)** General Motors 1997 Performance Achievement Plan,
incorporated by reference to Exhibit B to the Proxy
Statement of General Motors Corporation dated
April 16, 1997. N/A
(10)(d)** Non-Employee Director Long-Term Stock Incentive Plan,
incorporated by reference to Exhibit A to the Proxy
Statement of General Motors Corporation dated
April 16, 1997. N/A
(10)(e) Employment Contract with John M. Devine dated
December 12, 2000. IV-6
(12) Computation of Ratios of Earnings to Fixed Charges
for the Years Ended December 31, 2000, 1999, and 1998. IV-11
(21) Subsidiaries of the Registrant as of December 31, 2000 IV-12
(23) Consent of Independent Auditors IV-18
(99) Hughes Electronics Corporation Financial Statements
and Management's Discussion and Analysis of Financial
Condition and Results of Operations IV-19
* The registrant hereby undertakes to furnish supplementally a copy of any
omitted schedule or other attachment to the Securities and Exchange
Commission upon request.
** Required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
Nine reports on Form 8-K, dated September 28, 2000 (filed October 2, 2000),
October 3, 2000, November 1, 2000 (2), November 20, 2000, December 1, 2000,
December 7, 2000, December 12, 2000, and December 13, 2000 were filed during the
quarter ended December 31, 2000 reporting matters under Item 5, Other Events,
reporting certain agreements under Item 7, Financial Statements, Pro Forma
Financial Information, and Exhibits, and reporting matters under Item 9,
Regulation FD Disclosure. Subsequently, one report on Form 8-K, dated October 3,
2000 was filed on January 17, 2001 reporting matters under Item 5, Other Events.
IV-2
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SCHEDULE II - ALLOWANCES
Additions Additions
Balance at charged to charged to
beginning costs and other Balance at
Description of year expenses accounts Deductions end of year
- ----------- -------- -------- -------- ---------- -----------
(dollars in millions)
For the Year Ended December 31, 2000
Allowances Deducted from Assets
Finance receivables (unearned income) $4,153 $ - $3,942 $3,223 $4,872
Allowance for credit losses 1,114 552 169(a) 503(b) 1,332
Accounts and notes receivable (for doubtful
receivables) 301 173 44(a) 277(b) 241
Inventories (principally for obsolescence of
service parts) 364 - - 64(c) 300
Other investments and miscellaneous assets
(receivables and other) 5 - 1 - 6
Miscellaneous allowances (mortgage and other) 225 35 1 75 186
------ ---- ------- ------- ------
Total Allowances Deducted from Assets $6,162 $760 $4,157 $4,142 $6,937
===== === ===== ===== =====
For the Year Ended December 31, 1999
Allowances Deducted from Assets
Finance receivables (unearned income) $4,027 $ - $3,411 $3,285 $4,153
Allowance for credit losses 1,021 404 109(a) 420(b) 1,114
Accounts and notes receivable (for doubtful
receivables) 309 75 29(a) 112(b) 301
Inventories (principally for obsolescence of
service parts) 257 107(c) - - 364
Other investments and miscellaneous assets
(receivables and other) 14 - - 9 5
Miscellaneous allowances (mortgage and other) 252 54 1 82 225
----- --- ----- ----- -----
Total Allowances Deducted from Assets $5,880 $640 $3,550 $3,908 $6,162
===== === ===== ===== =====
For the Year Ended December 31, 1998
Allowances Deducted from Assets
Finance receivables (unearned income) $3,516 $ - $3,288 $2,777 $4,027
Allowance for credit losses 903 463 96(a) 441(b) 1,021
Accounts and notes receivable (for doubtful
receivables) 161 208 19(a) 79(b) 309
Inventories (principally for obsolescence of
service parts) 258 - - 1(c) 257
Other investments and miscellaneous assets
(receivables and other) 13 - 1 - 14
Miscellaneous allowances (mortgage and other) 202 52 113 115 252
----- --- ----- ----- -----
Total Allowances Deducted from Assets $5,053 $723 $3,517 $3,413 $5,880
===== === ===== ===== =====
Notes:(a) Primarily reflects the recovery of accounts previously written-off.
(b) Accounts written off.
(c) Represents net change of inventory allowances.
Reference should be made to the notes to the GM consolidated financial
statements.
IV-3
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of Section 13 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: March 5, 2001 By
/s/JOHN F. SMITH, JR.
----------------------------------
(John F. Smith, Jr.
Chairman of the Board of Directors)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on this 5th day of March 2001 by the following
persons on behalf of the Registrant and in the capacities indicated.
Signature Title
- -------------------------- ----------------------------------
/s/JOHN F. SMITH, JR. Chairman of the Board of Directors
- ---------------------
(John F. Smith, Jr.)
/s/HARRY J. PEARCE Vice Chairman of the Board of
- ------------------ Directors
(Harry J. Pearce)
/s/G. RICHARD WAGONER, JR. President and Chief Executive
- ------------------------- Officer
(G. Richard Wagoner, Jr.)
/s/JOHN M. DEVINE Vice Chairman and )
- ----------------- Chief Financial Officer )
(John M. Devine) )
)Principal
)Financial
/s/ERIC A. FELDSTEIN Vice President and Treasurer)Officers
- -------------------- )
(Eric A. Feldstein) )
)
/s/WALLACE W. CREEK Controller )
- ------------------- )
(Wallace W. Creek) )Principal
)Accounting
/s/PETER R. BIBLE Assistant Controller and )Officers
- ----------------- Chief Accounting Officer )
(Peter R. Bible) )
IV-4
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SIGNATURES - concluded
Signature Title
--------- -----
/s/PERCY BARNEVIK Director
- -----------------
(Percy Barnevik)
/s/JOHN H. BRYAN Director
- ----------------
(John H. Bryan)
/s/THOMAS E. EVERHART Director
- ---------------------
(Thomas E. Everhart)
/s/GEORGE M. C. FISHER Director
- ----------------------
(George M. C. Fisher)
/s/NOBUYUKI IDEI Director
- ----------------
(Nobuyuki Idei)
/s/KAREN KATEN Director
- --------------
(Karen Katen)
/s/J. WILLARD MARRIOTT, JR. Director
- ---------------------------
(J. Willard Marriott, Jr.)
/s/ECKHARD PFEIFFER Director
- -------------------
(Eckhard Pfeiffer)
/s/LLOYD D. WARD Director
- ----------------
(Lloyd D. Ward)
/s/DENNIS WEATHERSTONE Director
- ----------------------
(Dennis Weatherstone)
IV-5