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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004


FORM 10-Q


X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2003


OR


TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
- ---- 1934


For the transition period from to

Commission file number 1-143



GENERAL MOTORS CORPORATION
--------------------------
(Exact Name of Registrant as Specified in its Charter)



STATE OF DELAWARE 38-0572515
----------------- ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

300 Renaissance Center, Detroit, Michigan 48265-3000
- ----------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)



Registrant's telephone number, including area code (313) 556-5000
--------------



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X. No .

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes X. No .

As of April 30, 2003, there were outstanding 560,631,107 shares of the
issuer's $1-2/3 par value common stock and 1,107,648,029 shares of GM Class H
$0.10 par value common stock.









- 1 -







GENERAL MOTORS CORPORATION AND SUBSIDIARIES


INDEX

Page No.
--------
Part I - Financial Information

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Income for the Three Months
Ended March 31, 2003 and 2002 3


Supplemental Information to the Consolidated Statements
of Income for the Three Months Ended March 31,
2003 and 2002 4

Consolidated Balance Sheets as of March 31, 2003,
December 31, 2002, and March 31, 2002 5


Supplemental Information to the Consolidated Balance
Sheets as of March 31, 2003, December 31, 2002,
and March 31, 2002 6

Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2003 and 2002 7


Supplemental Information to the Condensed Consolidated
Statements of Cash Flows for the Three Months Ended
March 31, 2003 and 2002 8

Notes to Consolidated Financial Statements 9

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19


Item 4. Controls and Procedures 27

Part II - Other Information (Unaudited)

Item 1. Legal Proceedings 28

Item 6. Exhibits and Reports on Form 8-K 29

Signatures 29

Certifications 30

Exhibit 99 Hughes Electronics Corporation Financial Statements
(Unaudited) and Management's Discussion and Analysis
of Financial Condition and Results of Operations 32

Exhibit 99.1 Certification of the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 79

Exhibit 99.2 Certification of the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 80







- 2 -





PART I


GENERAL MOTORS CORPORATION AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended
March 31,
--------------------
2003 2002
---- ----
(dollars in millions
except per share
amounts)

Total net sales and revenues $49,365 $46,214
------ ------
Cost of sales and other expenses 39,383 38,401
Selling, general, and administrative expenses 5,706 5,601
Interest expense 2,128 1,858
------- -------
Total costs and expenses 47,217 45,860
Income before income taxes and minority interests 2,148 354
Income tax expense 656 125
Equity income (loss) and minority interests (9) (1)
------- -------
Net income 1,483 228
Dividends on preference stocks - (24)
------- -------
Earnings attributable to common stocks $1,483 $204
===== ===

Basic earnings (losses) per share attributable
to common stocks (Note 7)
Earnings per share attributable to $1-2/3 par value $2.71 $0.58
==== ====
Losses per share attributable to Class H $(0.04) $(0.14)
==== ====

Earnings (losses) per share attributable to
common stocks assuming dilution (Note 7)
Earnings per share attributable to $1-2/3 par value $2.71 $0.57
==== ====
Losses per share attributable to Class H $(0.04) $(0.14)
==== ====






Reference should be made to the notes to consolidated financial statements.








- 3 -






GENERAL MOTORS CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


Three Months Ended
March 31,
-------------------
2003 2002
---- ----
(dollars in
millions)
AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS

Total net sales and revenues $42,042 $39,773
------ ------
Cost of sales and other expenses 37,313 36,211
Selling, general, and administrative expenses 3,341 3,690
------ ------
Total costs and expenses 40,654 39,901
------ ------
Interest expense 321 162
Net expense from transactions with
Financing and Insurance Operations 41 90
----- ----
Income (loss) before income taxes and minority interests 1,026 (380)
Income tax expense (benefit) 226 (160)
Equity income (loss) and minority interests 1 11
----- ----
Net income (loss) - Automotive, Communications
Services, and Other Operations $801 $(209)
=== ===

FINANCING AND INSURANCE OPERATIONS

Total revenues $7,323 $6,441
----- -----

Interest expense 1,807 1,696
Depreciation and amortization expense 1,506 1,361
Operating and other expenses 2,177 1,905
Provisions for financing and insurance losses 752 835
----- -----
Total costs and expenses 6,242 5,797
----- -----
Net income from transactions with Automotive,
Communications Services, and Other Operations (41) (90)
----- ---
Income before income taxes and minority interests 1,122 734
Income tax expense 430 285
Equity income (loss) and minority interests (10) (12)
----- ---
Net income - Financing and Insurance Operations $682 $437
=== ===



The above Supplemental Information is intended to facilitate analysis of General
Motors Corporation's businesses: (1) Automotive, Communications Services, and
Other Operations; and (2) Financing and Insurance Operations.

Reference should be made to the notes to consolidated financial statements.






- 4 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Mar. 31, Mar. 31,
2003 Dec. 31, 2002
(Unaudited) 2002 (Unaudited)
--------- ------- ---------
ASSETS (dollars in millions)

Cash and cash equivalents $26,982 $21,449 $19,049
Marketable securities 16,841 16,825 13,282
------ ------ ------
Total cash and marketable securities 43,823 38,274 32,331
Finance receivables - net 141,273 134,647 112,686
Accounts and notes receivable (less allowances) 16,209 15,715 11,091
Inventories (less allowances) (Note 2) 10,769 9,967 9,802
Deferred income taxes 39,000 39,865 28,677
Equipment on operating leases - (less
accumulated depreciation) 36,997 32,988 32,378
Equity in net assets of nonconsolidated
associates 4,990 5,044 4,871
Property - net 37,681 37,514 35,512
Intangible assets - net (Note 3) 17,961 17,954 16,972
Other assets 33,733 37,028 40,360
------- ------- -------
Total assets $382,436 $368,996 $324,680
======= ======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable (principally trade) $28,738 $27,452 $26,456
Notes and loans payable 211,726 201,940 166,470
Postretirement benefits other than pensions 38,239 38,187 38,586
Pensions 22,536 22,762 11,113
Deferred income taxes 7,342 7,178 6,318
Accrued expenses and other liabilities 63,654 63,829 55,395
------- ------- -------
Total liabilities 372,235 361,348 304,338
Minority interests 835 834 766
Stockholders' equity
$1-2/3 par value common stock (outstanding,
560,616,422; 560,447,797; and 560,021,275
shares) (Note 7) 934 936 934
Class H common stock (outstanding,
1,107,517,793; 958,284,272; and
877,777,148 shares) (Note 7) 111 96 88
Capital surplus (principally additional paid-in
capital) 22,808 21,583 21,589
Retained earnings 11,234 10,031 9,387
------ ------ ------
Subtotal 35,087 32,646 31,998
Accumulated foreign currency translation
adjustments (2,665) (2,784) (3,014)
Net unrealized loss on derivatives (196) (205) (256)
Net unrealized gains on securities 344 372 428
Minimum pension liability adjustment (23,204) (23,215) (9,580)
------- ------- -------
Accumulated other comprehensive loss (25,721) (25,832) (12,422)
------- ------- -------
Total stockholders' equity 9,366 6,814 19,576
------- ------- -------
Total liabilities and stockholders' equity $382,436 $368,996 $324,680
======= ======= =======



Reference should be made to the notes to consolidated financial statements.






- 5 -





GENERAL MOTORS CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED BALANCE SHEETS


Mar. 31, Mar. 31,
2003 Dec. 31, 2002
(Unaudited) 2002 (Unaudited)
--------- ------- ---------
ASSETS (dollars in millions)

Automotive, Communications Services,
and Other Operations
Cash and cash equivalents $16,977 $13,291 $14,656
Marketable securities 3,239 2,174 781
------ ------ ------
Total cash and marketable securities 20,216 15,465 15,437
Accounts and notes receivable (less allowances) 6,085 5,861 5,957
Inventories (less allowances) (Note 2) 10,769 9,967 9,802
Equipment on operating leases - (less
accumulated depreciation) 5,661 5,305 3,675
Deferred income taxes and other current assets 10,957 10,816 7,974
------ ------ ------
Total current assets 53,688 47,414 42,845
Equity in net assets of nonconsolidated
associates 4,990 5,044 4,871
Property - net 35,856 35,693 33,888
Intangible assets - net (Note 3) 14,623 14,611 13,745
Deferred income taxes 30,473 31,431 22,826
Other assets 7,753 7,781 17,494
------- ------- -------
Total Automotive, Communications Services,
and Other Operations assets 147,383 141,974 135,669
Financing and Insurance Operations
Cash and cash equivalents 10,005 8,158 4,393
Investments in securities 13,602 14,651 12,501
Finance receivables - net 141,273 134,647 112,686
Investment in leases and other receivables 39,476 35,517 31,794
Other assets 30,697 34,049 27,637
Net receivable from Automotive, Communications
Services, and Other Operations 486 1,089 477
------- ------- -------
Total Financing and Insurance Operations
assets 235,539 228,111 189,488
------- ------- -------
Total assets $382,922 $370,085 $325,157
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY

Automotive, Communications Services,
and Other Operations
Accounts payable (principally trade) $21,659 $20,169 $19,367
Loans payable 815 1,516 1,591
Accrued expenses 41,718 40,518 34,352
Net payable to Financing and Insurance
Operations 486 1,089 477
------- ------- -------
Total current liabilities 64,678 63,292 55,787
Long-term debt 19,228 16,651 16,797
Postretirement benefits other than pensions 34,291 34,275 34,719
Pensions 22,481 22,709 11,072
Other liabilities and deferred income taxes 15,307 15,461 13,741
------- ------- -------
Total Automotive, Communications Services,
and Other Operations liabilities 155,985 152,388 132,116

Financing and Insurance Operations
Accounts payable 7,079 7,283 7,089
Debt 191,683 183,773 148,082
Other liabilities and deferred income taxes 17,974 18,993 17,528
------- ------- -------
Total Financing and Insurance Operations
liabilities 216,736 210,049 172,699
------- ------- -------
Total liabilities 372,721 362,437 304,815
Minority interests 835 834 766
Stockholders' equity
$1-2/3 par value common stock (outstanding,
560,616,422; 560,447,797; and 560,021,275
shares) (Note 7) 934 936 934
Class H common stock (outstanding,
1,107,517,793; 958,284,272;
and 877,777,148 shares) (Note 7) 111 96 88
Capital surplus (principally additional
paid-in capital) 22,808 21,583 21,589
Retained earnings 11,234 10,031 9,387
------ ------ ------
Subtotal 35,087 32,646 31,998
Accumulated foreign currency translation (2,665) (2,784) (3,014)
adjustments
Net unrealized loss on derivatives (196) (205) (256)
Net unrealized gains on securities 344 372 428
Minimum pension liability adjustment (23,204) (23,215) (9,580)
------ ------ ------
Accumulated other comprehensive loss (25,721) (25,832) (12,422)
------ ------ ------
Total stockholders' equity 9,366 6,814 19,576
------- ------- -------
Total liabilities and stockholders' equity $382,922 $370,085 $325,157
======= ======= =======


The above Supplemental Information is intended to facilitate analysis of General
Motors Corporation's businesses: (1) Automotive, Communications Services, and
Other Operations; and (2) Financing and Insurance Operations.

Reference should be made to the notes to consolidated financial statements.


- 6 -






GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended
March 31,
---------------------
2003 2002
---- ----
(dollars in millions)

Net cash provided by operating activities $10,055 $7,707

Cash flows from investing activities
Expenditures for property (1,686) (1,904)
Investments in marketable securities -
acquisitions (2,830) (12,883)
Investments in marketable securities -
liquidations 2,906 12,182
Net originations and purchases of mortgage
servicing rights (461) (551)
Increase in finance receivables (33,775) (32,185)
Proceeds from sales of finance receivables 23,446 28,196
Operating leases - acquisitions (3,661) (2,991)
Operating leases - liquidations 2,510 2,307
Investments in companies, net of cash acquired (32) (161)
Proceeds from sale of business units 1,076 -
Other (504) 318
------ -----
Net cash used in investing activities (13,011) (7,672)
------ -----

Cash flows from financing activities
Net decrease in loans payable (585) (6,391)
Long-term debt - borrowings 19,391 13,667
Long-term debt - repayments (10,066) (6,543)
Proceeds from issuing common stocks - 50
Proceeds from sales of treasury stocks - 19
Cash dividends paid to stockholders (280) (304)
----- -----
Net cash provided by financing activities 8,460 498
----- ---

Effect of exchange rate changes on cash and
cash equivalents 29 (39)
------ ------
Net increase in cash and cash equivalents 5,533 494
Cash and cash equivalents at beginning of the
period 21,449 18,555
------ ------
Cash and cash equivalents at end of the period $26,982 $19,049
====== ======





Reference should be made to the notes to consolidated financial statements.











- 7 -







GENERAL MOTORS CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Automotive, Comm. Financing and
Serv. and Other Insurance
---------------- --------------
Three Months Ended March 31,
----------------------------------
2003 2002 2003 2002
---- ---- ---- ----
(dollars in millions)

Net cash provided by operating activities $4,680 $3,762 $5,375 $3,945

Cash flows from investing activities
Expenditures for property (1,582) (1,888) (104) (16)
Investments in marketable securities -
acquisitions (1,155) (399) (1,675) (12,484)
Investments in marketable securities -
liquidations 90 408 2,816 11,774
Net originations and purchases of mortgage
servicing rights - - (461) (551)
Increase in finance receivables - - (33,775) (32,185)
Proceeds from sales of finance receivables - - 23,446 28,196
Operating leases - acquisitions - - (3,661) (2,991)
Operating leases - liquidations - - 2,510 2,307
Investments in companies, net of cash
acquired (32) (39) - (122)
Proceeds from sale of business units 1,076 - - -
Other (306) 524 (198) (206)
----- ----- ------ -----
Net cash used in investing activities (1,909) (1,394) (11,102) (6,278)
----- ----- ------ -----

Cash flows from financing activities
Net increase (decrease) in loans payable (733) (811) 148 (5,580)
Long-term debt - borrowings 2,566 6,414 16,825 7,253
Long-term debt - repayments (36) (392) (10,030) (6,151)
Proceeds from issuing common stocks - 50 - -
Proceeds from sales of treasury stocks - 19 - -
Cash dividends paid to stockholders (280) (304) - -
----- ----- ----- -----
Net cash provided by (used in) financing
activities 1,517 4,976 6,943 (4,478)
----- ----- ----- -----

Effect of exchange rate changes on cash and
cash equivalents 1 (40) 28 1
Net transactions with Automotive/Financing
Operations (603) (1,080) 603 1,080
----- ----- ----- -----
Net increase (decrease) in cash and cash
equivalents 3,686 6,224 1,847 (5,730)
Cash and cash equivalents at beginning of
the period 13,291 8,432 8,158 10,123
------ ------ ------ ------
Cash and cash equivalents at end of the
period $16,977 $14,656 $10,005 $4,393
====== ====== ====== =====


The above Supplemental Information is intended to facilitate analysis of General
Motors Corporation's businesses: (1) Automotive, Communications Services, and
Other Operations; and (2) Financing and Insurance Operations.


Reference should be made to the notes to consolidated financial statements.






- 8 -






GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Financial Statement Presentation

The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the U.S.
for interim financial information. In the opinion of management, all adjustments
(consisting of only normal recurring items), which are necessary for a fair
presentation have been included. The results for interim periods are not
necessarily indicative of results which may be expected for any other interim
period or for the full year. For further information, refer to the December 31,
2002 consolidated financial statements and notes thereto included in General
Motors Corporation's (the Corporation, General Motors, or GM) 2002 Annual Report
on Form 10-K, and all other GM, Hughes Electronics Corporation (Hughes), and
General Motors Acceptance Corporation (GMAC) filings with the U.S. Securities
and Exchange Commission.
GM presents its primary financial statements on a fully consolidated basis.
Transactions between businesses have been eliminated in the Corporation's
consolidated financial statements. These transactions consist principally of
borrowings and other financial services provided by Financing and Insurance
Operations (FIO) to Automotive, Communications Services, and Other Operations
(ACO).
To facilitate analysis, GM presents supplemental information to the
statements of income, balance sheets, and statements of cash flows for the
following businesses: (1) ACO, 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) FIO, which
consists primarily of 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, vehicle and homeowners' insurance, and asset-based
lending.
Certain amounts for 2002 were reclassified to conform with the 2003
classifications.

New Accounting Standards

Beginning January 1, 2003, the Corporation began expensing the fair market
value of stock options newly granted to employees pursuant to Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." The fair value of each option grant is estimated on the date of
the grant using the Black-Scholes option-pricing model. Such expense for the
three months ended March 31, 2003 was $13 million, net of tax, recorded in cost
of sales and other expenses. For the three months ended March 31, 2002, as
permitted by SFAS No. 123, GM applied the intrinsic value method of recognition
and measurement under Accounting Principles Board Opinion No. 25 (APB No. 25),
"Accounting for Stock Issued to Employees", to its stock options and other
stock-based employee compensation awards. No compensation expense related to
employee stock options is reflected in net income for this period, as all
options granted had an exercise price equal to the market value of the
underlying common stock on the date of the grant.
In accordance with the disclosure requirements of SFAS No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure", since GM adopted SFAS
No. 123 effective January 1, 2003 for newly granted options only, the following
table illustrates the effect on net income and earnings per share if
compensation cost for all outstanding and unvested stock options and other
stock-based employee compensation awards had been determined based on their fair
values at the grant date (dollars in millions except per share amounts):






- 9 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Financial Statement Presentation (continued)

Three Months Ended
March 31
------------------
2003 2002
---- ----

Net income, as reported $1,483 $228
Add: stock-based compensation expense with
respect to newly granted options, included
in reported net income, net of related tax
effects 13 -
Less: stock-based compensation expense
determined with respect to all outstanding
options, net of related tax effects (57) (94)
----- ---
Pro forma net income $1,439 $134
===== ===

Earnings (losses) attributable to common
stocks
$1-2/3 par value - as reported $1,521 $325
- pro forma 1,499 271
Class H - as reported $(38) $(121)
- pro forma (60) (161)

Basic earnings (losses) per share
attributable to common stocks
$1-2/3 par value - as reported $2.71 $0.58
- pro forma 2.67 0.48
Class H - as reported $(0.04) $(0.14)
- pro forma (0.06) (0.18)

Diluted earnings (losses) per share
attributable to common stocks
$1-2/3 par value - as reported $2.71 $0.57
- pro forma 2.67 0.48
Class H - as reported $(0.04) $(0.14)
- pro forma (0.06) (0.18)

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46),
which requires the consolidation of certain entities considered to be variable
interest entities (VIEs). An entity is considered to be a VIE when it has equity
investors who lack the characteristics of having a controlling financial
interest, or its capital is insufficient to permit it to finance its activities
without additional subordinated financial support. Consolidation of a VIE by an
investor is required when it is determined that the investor will absorb a
majority of the VIE's expected losses or residual returns if they occur. FIN 46
provides certain exceptions to these rules, including qualifying special purpose
entities (SPEs) subject to the requirements of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
VIEs created after January 31, 2003 must be consolidated immediately, while VIEs
that existed prior to February 1, 2003 must be consolidated as of July 1, 2003.
GM may be required to consolidate certain VIEs (previously collectively
referred to as SPEs) with which it does business. Management is currently
reviewing existing VIEs that may require consolidation. With respect to GM's ACO
business, it is reasonably possible that certain VIEs with assets totaling
approximately $1.1 billion, established exclusively to facilitate GM's ACO
leasing activities, may require consolidation. Should GM default on all of its
obligations with respect to its involvement in these entities, GM's maximum
exposure to loss would be approximately $1.1 billion ($680 million after-tax).
With respect to the FIO business, VIE structures are used to facilitate
various activities of GMAC, including securitization of loans, mortgage funding,
and other investing activities. Based on management's preliminary assessment, it
is reasonably possible that VIEs with assets totaling approximately $14.0
billion may require consolidation. Management is considering revising
involvement in these entities, which could have an impact on the consolidation
analysis under FIN 46. In the absence of any such revisions, the consolidation
of such VIEs would have the effect of increasing both assets and liabilities in
an amount equal to the assets of the VIEs. GM's exposure to loss related to
these entities is approximately $4.4 billion ($2.7 billion after-tax) which
primarily relates to retained interests in these facilities.


- 10 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Financial Statement Presentation (concluded)

Sale of GM Defense Business

On March 1, 2003 GM closed the transaction to sell its GM Defense operations
(light armored vehicle business) to General Dynamics Corporation for net
proceeds of approximately $1.1 billion in cash. The sale resulted in a pre-tax
gain of approximately $814 million, or approximately $505 million after-tax
($0.90 per diluted share of GM $1-2/3 par value common stock), which was
recorded in net sales and revenues in GM's Consolidated Statements of Income for
Other ACO operations.

Note 2. Inventories

Inventories included the following for Automotive, Communications Services,
and Other Operations (dollars in millions):

March 31, Dec. 31, March 31,
2003 2002 2002
----- ---- ----


Productive material, work in process,
and supplies $4,857 $4,915 $5,130
Finished product, service parts, etc. 7,693 6,859 6,517
------ ------ ------
Total inventories at FIFO 12,550 11,774 11,647
Less LIFO allowance 1,781 1,807 1,845
------ ------ ------
Total inventories (less allowances) $10,769 $9,967 $9,802
====== ===== =====

Note 3. Goodwill and Acquired Intangible Assets

The components of the Corporation's acquired intangible assets as of March 31,
2003, were as follows (dollars in millions):
Gross Net
Carrying Accumulated Carrying
Amount Amortization Amount
----------------------------------
Automotive, Communications Services,
and Other Operations
- -----------------------------------
Amortizing intangible assets:
Patents and intellectual property rights $228 $5 $223
Dealer network and subscriber base 356 183 173
--- --- ---
Total $584 $188 396
=== ===

Non-amortizing intangible assets:
License fees - orbital slots 432
---

Total acquired intangible assets 828
-----

Goodwill 7,103
Pension intangible asset 6,692
------
Total intangible assets $14,623
======

Financing and Insurance Operations
- ----------------------------------
Amortizing intangible assets:
Customer lists and contracts $67 $25 $42
Trademarks and other 39 13 26
Covenants not to compete 18 18 -
--- -- --
Total $124 $56 68
=== ==

Total acquired intangible assets 68


Non-amortizing intangible assets:

Goodwill 3,270
-----
Total intangible assets 3,338
=====

Total consolidated intangible assets $17,961
======


- 11 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 3. Goodwill and Acquired Intangible Assets (concluded)

Estimated amortization expense in each of the next five years is as follows:
2004 - $70 million; 2005 - $47 million; 2006 - $46 million; 2007 - $46 million;
and 2008 - $43 million.
The changes in the carrying amounts of goodwill for the quarter ended March
31, 2003, were as follows (dollars in millions):

(1) (1) Total Total
GMNA GME Other Hughes ACO GMAC GM
---- --- ----- ------ ----- ---- -----

Balance as of December 31, $139 $338 $57 $6,458 $6,992 $3,273 $10,265
2002
Goodwill acquired during 104 - - - 104 12 116
the period
Effect of foreign currency - 7 - - 7 (8) (1)
translation
Impairment losses - - - - - (7) (7)
--- --- -- ------ ----- ----- ------
Balance as of
March 31, 2003 $243 $345 $57 $6,458 $7,103 $3,270 $10,373
=== === == ===== ===== ===== ======

(1) The amount recorded for Hughes excludes GM's purchase accounting adjustments
related to GM's acquisition of Hughes Aircraft Company. The carrying value of
$57 million in goodwill associated with the purchase is reported in the Other
segment.

Note 4. Product Warranty Liability

Policy, product warranty and recall campaigns liability included the following
(dollars in millions):

Three Months Twelve Months
Ended Ended
March 31, 2003 Dec. 31, 2002
-------------- -------------

Beginning balance $8,856 $8,177
Payments (1,096) (4,182)
Increase in liability (warranties issued
during period) 1,072 4,418
Adjustments to liability (pre-existing
warranties) 4 323
Effect of foreign currency translation 27 120
----- -----
Ending balance $8,863 $8,856
===== =====

Note 5. Commitments and Contingent Matters

Commitments
At March 31, 2003, GM had unconditionally guaranteed approximately $45
million of the debt of unaffiliated suppliers. The debt is fully collateralized
with supplier company assets and accordingly no liability has been recorded. In
addition, GM has entered into agreements with certain suppliers that may require
GM to make payments based on changes in the suppliers' costs. GM's maximum
exposure under such agreements is approximately $38 million. GM has also
guaranteed a minimum value of $1.6 billion upon expiration of various leases or
approximately 89% of appraised fair value at such time. These leases have terms
of up to six years and many contain renewal options. At expiration, the fair
values of all such properties are expected to fully mitigate GM's obligations
under these guarantees. Guarantees entered into by GM during the first quarter
of 2003 were not significant. Accordingly, no liabilities were recorded with
respect to such guarantees.
The Corporation has guaranteed certain amounts related to the securitization
of mortgage loans. In addition, GMAC issues financial standby letters of credit
as part of their financing and mortgage operations. At March 31, 2003
approximately $50 million was recorded with respect to these guarantees, the
maximum exposure under which is approximately $3.0 billion.
In addition to guarantees, GM has entered into agreements indemnifying
certain parties with respect to environmental conditions pertaining to ongoing
or sold GM properties. Due to the nature of the indemnifications, GM's maximum
exposure under these agreements cannot be estimated. No amounts have been
recorded for such indemnities as the Corporation's obligations under them are
not probable and estimable.


- 12 -




GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5. Commitments and Contingent Matters (continued)

Commitments - concluded
In addition to the above, in the normal course of business GM periodically
enters into agreements that incorporate indemnification provisions. While the
maximum amount to which GM may be exposed under such agreements cannot be
estimated, it is the opinion of management that these guarantees and
indemnifications are not expected to have a material adverse effect on the
Corporation's consolidated financial position or results of operations.

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.
On March 18, 2003, DIRECTV Latin America, LLC (DLA LLC) filed a voluntary
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware
(Bankruptcy Court). The filing does not include any of its operating companies
in Latin America and the Caribbean, which will continue regular operations. DLA
LLC continues to manage its business as a debtor-in-possession. As a
debtor-in-possession, management is authorized to operate the business, but may
not engage in transactions outside the ordinary course of business without
Bankruptcy Court approval. Subsequent to the filing of its Chapter 11 petition,
DLA LLC obtained Bankruptcy Court orders that, among other things, authorized
DLA LLC to pay certain pre-petition obligations related to employee wages and
benefits and to take certain actions where such payments or actions will
benefit its estate or preserve the going concern value of the business
enterprise, thereby enhancing the prospects of reorganization.
In connection with the 2000 sale by Hughes of its satellite systems
manufacturing businesses to The Boeing Company (Boeing), the stock purchase
agreement provides for potential adjustment to the purchase price based upon the
final closing date financial statements of the satellite systems manufacturing
businesses. The stock purchase agreement also provides for a dispute resolution
process to resolve any disputes that arise in determining the purchase price
adjustment. Based upon the final closing date financial statements of the
satellite systems manufacturing businesses that were prepared by Hughes, Boeing
is owed a purchase price adjustment of $164 million plus interest at a rate of
9.5% from the date of sale, the total amount of which has been provided for in
Hughes' consolidated financial statements. However, Boeing has submitted
additional proposed adjustments, which are being resolved through the dispute
resolution process. As of March 31, 2003, approximately $670 million of proposed
adjustments remain unresolved. Hughes is contesting the matter in the
arbitration process, which will result in a binding decision unless the matter
is otherwise settled. Although Hughes believes it has adequately provided for
the disposition of this matter, the impact of its disposition cannot be
determined at this time. The final resolution of this matter could result in
Hughes making a cash payment to Boeing that would be material to Hughes'
consolidated results of operations and financial position.
GM has established reserves for matters in which losses are probable and can
be reasonably estimated. Some of the matters may involve compensatory, punitive,
or other treble damage claims, or demands for recall campaigns, environmental
remediation programs, or sanctions, that if granted, could require the
Corporation to pay damages or make other expenditures in amounts that could not
be estimated at March 31, 2003. 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.

Investment in Fiat Auto Holdings
At the April 23, 2003, Annual General Shareholders Meeting of Fiat Auto
Holdings, B.V. (FAH), FAH adopted a Euro 5 billion recapitalization plan that
provides shareholders the option to make pro-rata capital contributions over the
next eighteen months. When the plan was adopted, Fiat S.p.A. (Fiat) held 80% of
FAH and GM 20%. Fiat has stated that it intends to participate with a Euro 3
billion contribution. Currently, GM does not plan to participate. If and to the
extent GM does not participate, GM's interest in FAH may be diluted to a lesser
amount and Fiat's interest may increase.



- 13 -




GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5. Commitments and Contingent Matters (concluded)

As discussed in the December 31, 2002 Annual Report on Form 10-K, the Master
Agreement provides that, from January 24, 2004 to July 24, 2009, Fiat has the
right to exercise a put option (the "Put") to require GM to purchase Fiat's FAH
shares at fair market value. Whether and when Fiat may seek to exercise the Put
is unknown. It is uncertain as to whether the Put would ever be exercised due to
the possibilities that it could be affected by subsequent agreements of the
companies, it could become non-exercisable under other provisions of the Master
Agreement, it could be rendered unenforceable by reason of actions Fiat may have
taken, or Fiat may choose to not exercise the Put.
If and when the Put is implemented, the fair market value of FAH shares would
be determined by investment banks under procedures set forth in the Master
Agreement. Until any such valuation is completed, the amount, if any, that GM
might have to pay for Fiat's FAH shares is not quantifiable.
If GM were to acquire Fiat's FAH shares and thus become the sole owner of
Fiat Auto, GM would decide what, if any, additional capitalization would then be
appropriate for Fiat Auto. Specifically, if Fiat Auto were to need additional
funding, GM would have to decide whether or not to provide such funding and
under what conditions to provide any funding.
Unless FAH or Fiat Auto were subject to liquidation or insolvency, FAH's
consolidated financial statements would be required for financial reporting
purposes to be consolidated with those of GM. Any indebtedness, losses and
capital needs of FAH and Fiat Auto after their acquisition by GM are not
presently determinable, but they could have a material adverse effect on GM.
While GM and Fiat have discussed potential alternatives to the Master Agreement,
no changes to it have been agreed upon.

European Matters
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 were required to transform the concepts
detailed in the directive into national law. The laws developed in the
individual national legislatures throughout Europe will have a significant
impact on the amount ultimately paid by the manufacturers for this issue.
Management is assessing the impact of this potential legislation on GM's
financial position and results of operations, and may include charges to
earnings in future periods.
The European Commission has approved a new block exemption regulation that
provides for a reform of the rules governing automotive distribution and service
in Europe. The European Commission's proposal would eliminate the current block
exemption in place since 1985 that permits manufacturers to control where their
dealerships are located and the brands that they sell. In order to implement
both the new regulatory changes as well as desired commercial strategies, GME
issued a termination letter to all European Union dealers (excluding those
already under termination notice) while simultaneously also offering an
unconditional Letter of Intent to remain part of GME's network. Dealers and
authorized repairers are expected to sign new agreements by September 30, 2003,
when the new regulation becomes fully effective. Management does not believe
that the future impact of the changes to the block exemption regulation will
have a material adverse effect on GM's consolidated financial position or
results of operations.

Note 6. Comprehensive Income (Loss)

GM's total comprehensive income (loss) was as follows (dollars in millions):

Three Months Ended
March 31,
---------------------
2003 2002

Net income $1,483 $228
Other comprehensive income (loss) 111 (127)
----- ---
Total $1,594 $101
===== ===

Note 7. 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.


- 14 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 7. Earnings Per Share Attributable to Common Stocks (continued)

The attribution of earnings to each class of GM common stock was as follows
(dollars in millions):

Three Months Ended
March 31,
-------------------
2003 2002
---- ----
Earnings (losses) attributable to common stocks
Earnings attributable to $1-2/3 par value $1,521 $325
Losses attributable to Class H $(38) $(121)

Earnings attributable to GM $1-2/3 par value common stock for the period
represent the earnings attributable to all GM common stocks, reduced by the
losses attributable to GM Class H common stock for the respective period.
Losses attributable to GM Class H common stock represent the net loss of
Hughes, adjusted to exclude: (1) the effects of GM purchase accounting
adjustments arising from GM's acquisition of Hughes Aircraft Company, and (2)
the write-off of goodwill for DirecTV Latin America and DirectTV Broadband
recorded in Hughes' stand alone financial statements and other adjustments. In
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," GM
evaluated the carrying value of goodwill associated with its Direct-to-Home
Broadcast reporting unit in the aggregate and determined the goodwill was not
impaired. In addition, the calculated losses adjusted for these items are
reduced by the amount of dividends accrued on the Series A Preferred Stock of
Hughes (as an equivalent measure of the effect that GM's payment of dividends on
the GM Series H 6.25% Automatically Convertible Preference Stock would have if
paid by Hughes).
The calculated losses are 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 (990 million and 878 million during the three months ended
March 31, 2003 and 2002, 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 1.4 billion and 1.3 billion for the three months ended March 31, 2003 and
2002, respectively.
In addition, the denominator used 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.
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. 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.
On March 12, 2003, GM contributed 149.2 million shares of GM Class H common
stock valued at approximately $1.24 billion to certain of its U.S. employee
benefit plans. The contribution increased the amount of GM Class H common stock
held by GM's employee benefit plans to approximately 331 million shares and
reduced GM's retained economic interest in Hughes to approximately 19.9% from
30.7%.




- 15 -




GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 7. Earnings Per Share Attributable to Common Stocks (concluded)


The reconciliation of the amounts used in the basic and diluted earnings per
share computations was as follows (dollars in millions except per share
amounts):


$1-2/3 Par Value Common Class H Common Stock
Stock
----------------------------------------------------
Per Share Per Share
Income Shares Amount (Loss) Shares Amount
------ ------ ------ ------ ------ ------

Three Months Ended
March 31, 2003
Income (loss) $1,521 $(38)
Less: Dividends on preference
stocks - -
----- ---
Basic EPS
Income (loss) attributable
to common stocks $1,521 561 $2.71 $(38) 990 $(0.04)
==== ====
Effect of Dilutive Securities
Assumed exercise of dilutive
stock options - - - -
----- --- --- ---
Diluted EPS
Adjusted income (loss)
attributable to sstocks $1,521 561 $2.71 $(38) 990 $(0.04)
===== === ==== == === ====

Three Months Ended
March 31, 2002
Income (loss) $333 $(105)
Less: Dividends on preference
stocks 8 16
--- ---
Basic EPS
Income (loss) attributable
to common stocks $325 559 $0.58 $(121) 878 $(0.14)
==== ====
Effect of Dilutive Securities
Assumed exercise of dilutive
stock options - 11 - -
--- --- --- ---
Diluted EPS
Adjusted income (loss)
attributable to stocks $325 570 $0.57 $(121) 878 $(0.14)
=== === ==== === === ====


Certain stock options were not included in the computation of diluted
earnings per share for the periods presented since the options' underlying
exercise prices were greater than the average market prices of the GM $1-2/3 par
value common stock and GM Class H common stock. In addition, for periods in
which there was an adjusted loss attributable to common stocks, options to
purchase shares of GM $1-2/3 par value common stock and GM Class H common stock
with underlying exercise prices less than the average market prices were
outstanding, but were excluded from the calculations of diluted loss per share,
as inclusion of these securities would have been antidilutive to the net loss
per share.

Note 8. Depreciation and Amortization

Depreciation and amortization included in Cost of sales and other expenses
for Automotive, Communications Services, and Other Operations was as follows (in
millions):


Three Months Ended
March 31,
------------------
2003 2002
---- ----

Depreciation $1,236 $1,132
Amortization of special tools 702 629
Amortization of intangible assets 24 3
------- --------
Total $1,962 $1,764
===== =====





- 16 -





GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - concluded
(Unaudited)

Note 9. Segment Reporting


GM's reportable operating segments within its ACO business consist of General
Motors Automotive (GMA) (which is comprised of four regions: GM North America
(GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM Asia
Pacific (GMAP)), Hughes, and Other. GM's reportable operating segments within
its FIO business consist of GMAC and Other. Selected information regarding GM's
reportable operating segments were as follows:


(b) Other Total Total
GMNA GME GMLAAM GMAP GMA Hughes Other (b) ACO GMAC Financing Financing GM
---- --- ------ ---- --- ------ -------- --- ---- --------- --------- -----
For the Three Months Ended (dollars in millions)
March 31, 2003

Manufactured products
sales and revenues:
External customers $30,471 $6,357 $933 $1,016 $38,777 $2,223 $1,042 $42,042 $7,330 $(7) $7,323 $49,365
Intersegment (508) 265 112 131 - 4 (4) - - - - -
------- ------ -------------- ------ ----- ----- ------ ----- -- ----- ------
Total manufactured
products $29,963 $6,622 $1,045 $1,147 $38,777 $2,227 $1,038 $42,042 $7,330 $(7) $7,323 $49,365
====== ===== ===== ===== ====== ===== ===== ====== ===== == ===== ======
Interest income (a) $111 $82 $7 $1 $201 $6 $(131) $76 $998 $(70) $928 $1,004
Interest expense $311 $91 $17 $2 $421 $81 $(181) $321 $1,774 $33 $1,807 $2,128
Net income (loss) $548 $(65) $(12) $75 $546 $(54) $309 $801 $699 $(17) $682 $1,483
Segment assets (d) $111,538 $19,536 $3,010 $1,833 $135,917 $20,310(c) $(8,844) $147,383 $235,528 $11 $235,539 $382,436

For the Three Months Ended
March 31, 2002
Manufactured products
sales and revenues:
External customers $29,743 $5,384 $1,250 $904 $37,281 $2,007 $485 $39,773 $6,353 $88 $6,441 $46,214
Intersegment (404) 200 51 153 - 5 (5) - - - - -
------ ----- ----- ----- ------ ----- ---- ------ ----- -- ----- ------
Total manufactured
products $29,339 $5,584 $1,301 $1,057 $37,281 $2,012 $480 $39,773 $6,353 $88 $6,441 $46,214
====== ===== ===== ===== ====== ===== === ====== ===== == ===== ======
Interest income (a) $85 $64 $7 $2 $158 $4 $(89) $73 $704 $(89) $615 $688
Interest expense $114 $79 $28 $2 $223 $76 $(137) $162 $1,677 $19 $1,696 $1,858
Net income (loss) $654 $(532) $(40) $7 $89 $(156) $(142) $(209) $439 $(2) $437 $228
Segment assets (d) $97,023 $17,589 $4,017 $1,115 $119,744 $19,684(c) $(3,759) $135,669 $189,413 $75 $189,488 $324,680



(a) Interest income is included in net sales and revenues from external
customers.
(b) The amount reported for Hughes excludes the unamortized GM purchase
accounting adjustments of approximately $57 million.
(c) The amount reported for Hughes excludes a write-off of $739 million that was
recorded in the first quarter of 2002 by Hughes in its stand-alone financial
statements for goodwill impairments at DIRECTV Latin America and DIRECTV
Broadband and other adjustments; in accordance with SFAS No. 142, GM
evaluated the carrying value of goodwill associated with its Hughes
Direct-to-Home Broadcast reporting unit in the aggregate and determined that
the goodwill was not impaired.
(d) Total GM assets exclude net payable/receivable between ACO and FIO of $486
million and $477 million as of March 31, 2003 and 2002, respectively.


* * * * * *




- 17 -





GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 10. Subsequent Events

On April 9, 2003, GM, Hughes and The News Corporation Limited (News Corp.)
announced the signing of definitive agreements that provide for, among other
things, the split-off of Hughes from GM and the simultaneous sale of GM's
approximately 19.9% economic interest in Hughes to News Corp. for $14 per share,
or approximately $3.8 billion. GM would receive at least $3.1 billion in cash
with the remainder payable in News Corp. preferred American Depositary Shares
("News Corp. ADSs") and/or cash at News Corp.'s election. News Corp. would
acquire an additional 14.1% stake in Hughes from the holders of GM Class H
common stock through a mandatory exchange of a portion of their Hughes common
stock received in the split-off, which would provide News Corp. with a total of
34% of the then outstanding capital stock of Hughes. In addition, GM would
receive a cash dividend from Hughes of $275 million in connection with the
transactions. This dividend is expected to be paid by Hughes through available
cash balances.
Under the terms of the proposed transactions, holders of GM Class H common
stock would first exchange their shares for Hughes common stock on a
share-for-share basis in the split-off, followed immediately by an exchange of
approximately 17.6% of the Hughes common stock they receive in the split-off for
approximately $14 per share in News Corp. ADSs and/or cash. The number of News
Corp. ADSs payable to GM and Hughes common stockholders, based on a fixed-price
of $14 per Hughes share, will be adjusted within a collar range of 20% above or
below the News Corp. ADS price of $22.40. This mandatory exchange of about 17.6%
of the shares of Hughes common stock for News Corp. ADSs and/or cash would be
taxable to the Hughes common stockholders at the time. The transactions are
structured in a manner that will not result in the recapitalization of GM Class
H common stock into GM $1-2/3 par value common stock at a 120% exchange ratio,
as currently provided for under certain circumstances in the General Motors
Restated Certificate of Incorporation, as amended.
If the transactions are completed, Rupert Murdoch, chairman and chief
executive officer of News Corp., would become chairman of Hughes, and Chase
Carey, who is currently serving as an advisor to News Corp., would become
president and chief executive officer of Hughes. Eddy Hartenstein, Hughes senior
executive vice president, would be named vice chairman of Hughes. Hughes would
have 11 directors, the majority of which would be independent directors.
The transactions are subject to a number of conditions, including, among
other things, obtaining U.S. antitrust and Federal Communications Commission
approvals, approval by a majority of each class of GM stockholders - GM $1-2/3
and GM Class H - voting both as separate classes and together as a single class
and a favorable ruling from the Internal Revenue Service that the split-off of
Hughes from GM would be tax-free to GM and its stockholders for U.S. federal
income tax purposes. No assurances can be given that the approvals will be
obtained or the transactions will be completed. The financial and other
information regarding Hughes contained in this Quarterly Report do not give any
effect to or make any adjustment for the anticipated completion of the
transactions.
During April 2003, the Hughes Board of Directors approved the
reclassification of the outstanding Hughes Series B convertible preferred stock
into Hughes Class B common stock of equivalent value, and a subsequent stock
split of Hughes common stock and Hughes Class B common stock through dividends
of additional shares. GM, in its capacity as the holder of all outstanding
Hughes capital stock, approved the reclassification. Shortly thereafter, GM
converted some of its Hughes common stock into an equivalent number of shares
of Hughes Class B common stock. As a result of these transactions, Hughes
currently has 1,207,518,237 shares of Hughes common stock and 274,373,316 shares
of Hughes Class B common stock issued and outstanding, all of which are owned by
GM. The terms of the Hughes common stock and Hughes Class B common stock are
identical in all respects (with the exception of provisions regarding
stock-on-stock dividends) and, at the option of the holder, the Hughes common
stock may be converted at any time into Hughes Class B common stock and vice
versa. These transactions had no impact on the outstanding number of shares of
GM Class H common stock or the Class H dividend base. In connection with the
News Corp. transactions, GM Class H common stock will be exchanged for Hughes
common stock, and the Hughes Class B common stock will be sold by GM to News
Corp. Immediately after the completion of the News Corp. transactions, all of
the shares of Hughes Class B common stock held by News Corp. will be converted
into Hughes common stock.


- 18 -




GENERAL MOTORS CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition and
results of operations (MD&A) should be read in conjunction with the December 31,
2002 consolidated financial statements and notes thereto along with the MD&A
included in General Motors Corporation's (the Corporation, General Motors, or
GM) 2002 Annual Report on Form 10-K, and all other GM, Hughes Electronics
Corporation (Hughes), and General Motors Acceptance Corporation (GMAC) filings
with the U.S. Securities and Exchange Commission. All earnings per share amounts
included in the MD&A are reported as diluted.
GM presents separate financial information for the following businesses:
Automotive, Communications Services, and Other Operations (ACO) and Financing
and Insurance Operations (FIO).
GM's reportable operating segments within its ACO 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, the elimination of intersegment transactions, certain
non-segment specific revenues and expenditures, and certain corporate
activities.

GM's reportable operating segments within its FIO business consist of GMAC
and Other Financing, which includes financing entities operating in the U.S.,
Canada, Brazil, 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 ACO
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.










- 19 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Vehicle Unit Sales (1)

Three Months Ended March 31,
-----------------------------------------------------
2003 2002
-----------------------------------------------------
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
-------- -- -------- -------- -- --------
(units in thousands)
GMNA
United States
Cars 1,824 454 24.9% 1,900 470 24.7%
Trucks 1,999 564 28.2% 2,101 660 31.4%
----- --- ----- -----
Total United States 3,823 1,018 26.6% 4,001 1,130 28.2%
Canada, Mexico, and Other 653 151 23.1% 676 178 26.3%
--- --- ------ -----
Total GMNA 4,476 1,169 26.1% 4,677 1,308 28.0%
GME 4,917 473 9.6% 5,069 465 9.2%
GMLAAM 808 128 15.8% 905 139 15.3%
GMAP 4,052 166 4.1% 3,605 159 4.4%
----- --- ------ -----
Total Worldwide 14,253 1,936 13.6% 14,256 2,071 14.5%
====== ===== ====== =====

Wholesale Sales (2)

Three Months Ended
March 31,
----------------------
2003 2002
---- ----
(units in thousands)
GMNA
Cars 598 612
Trucks 840 750
----- -----
Total GMNA 1,438 1,362
----- -----
GME
Cars 400 395
Trucks 27 29
--- ---
Total GME 427 424
--- ---
GMLAAM
Cars 96 111
Trucks 25 44
--- ---
Total GMLAAM 121 155
--- ---
GMAP
Cars 87 47
Trucks 55 61
--- ---
Total GMAP 142 108
--- ---

Total Worldwide 2,128 2,049
===== =====

(1) GM vehicle unit sales represent the transfer of vehicle ownership from GM's
initial customer (e.g. a dealer) to a final customer (e.g. a retail
consumer). These vehicles are manufactured by GM or manufactured by GM's
affiliates and sold either under a GM nameplate or through a GM-owned
distribution network. Consistent with industry practice, vehicle unit sales
information employs estimates of sales in certain countries where public
reporting is not legally required or otherwise available on a consistent
basis.
(2) Wholesale sales represent the transfer of vehicle ownership from GM to its
initial customer (e.g. a dealer). These vehicles are manufactured by GM and
certain affiliates and distributed through a GM-owned distribution network.

GMA Financial Review

GMA's net income was $546 million and net margin was 1.4% on net sales and
revenues of $38.8 billion for the first quarter of 2003, compared with net
income of $89 million and net margin of 0.2% on net sales and revenues of $37.3
billion for the prior year quarter. Included in the first quarter 2002 results
was a $407 million restructuring charge for GME relating to the initiative
implemented in the quarter to improve the competitiveness of GM's automotive
operations in Europe. The remaining increase in net income and net sales and
revenues from the prior year quarter was primarily due to an increase in
wholesale sales and cost reductions. These favorable conditions were primarily
offset by continued pricing pressures in North America and Europe as well as
increased pension and other postretirement employee benefit costs (OPEB) expense
in the U.S.

- 20 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GMA Financial Review (concluded)

GMNA's net income was $548 million for the first quarter of 2003, compared
with net income of $654 million for the prior year quarter. The decrease in
GMNA's first quarter 2003 net income was primarily the result of unfavorable net
price of (3.2%) quarter-over-quarter. Net price comprehends the percent
increase/(decrease) in revenue recognized by GMNA related to changes in vehicle
pricing, sales incentives offers, and any adjustments made to incentives on
previously sold vehicles. Net price represents a change in the current period
revenue versus the same period in the prior year for a similar vehicle.
Increased pension and OPEB expenses and currency exchange losses also resulted
in decreased net income from the prior year quarter. These unfavorable
conditions were partially offset by increased wholesale sales volume, favorable
product mix and material cost savings.
GME's net loss was $65 million for the first quarter of 2003, compared with a
net loss of $532 million for the prior year quarter. Included in the 2002 net
loss was a $407 million restructuring charge relating to the initiative
implemented in the quarter to improve the competitiveness of GM's automotive
operations in Europe. The remaining improvement in the results in the first
quarter of 2003 was primarily due to structural cost reductions at SAAB and
improved wholesale sales volume. These favorable conditions were partially
offset by a deterioration in net price and currency exchange losses.
GMLAAM's net loss was $12 million for the first quarter of 2003, compared
with a net loss of $40 million for the prior year quarter. The decrease in net
loss for the first quarter of 2003 was primarily due to improvements in
Argentina resulting from greater exchange stability and vehicle exports and cost
control in Brazil. These favorable conditions were partially offset by increased
losses in Venezuela related to lower industry volume, as a result of the adverse
economic climate in Venezuela.
GMAP's net income was $75 million for the first quarter of 2003, compared
with net income of $7 million for the prior year quarter. The increase in net
income for the first quarter of 2003 was primarily due to improved equity
earnings for the Shanghai GM and Suzuki investments.

Hughes Financial Review

Total net sales and revenues increased to $2.2 billion for the first quarter
of 2003, compared with $2.0 billion for the prior year quarter. Included in the
prior year quarter's net sales and revenues was a $29 million loan guarantee
charge relating to a Hughes Network Systems affiliate in India. The remaining
increase in net sales and revenues for the first quarter of 2003 resulted
primarily from increased revenues at DIRECTV(R) U.S. due to growth in subscriber
base and higher monthly revenue per subscriber.
Hughes' net loss was $54 million for the first quarter of 2003, compared with
a net loss of $156 million for the prior year quarter. Included in the 2002 net
loss were after-tax charges of $18 million for a loan guarantee relating to a
Hughes Network Systems affiliate in India and $51 million for a contractual
dispute associated with a General Electric Capital Corporation contract. Also
included in the prior quarter net loss was an after-tax gain of $59 million for
the favorable resolution of a lawsuit filed against the U.S. government by
Hughes on the National Aeronautics and Space Administration's breach of contract
to launch 10 satellites on the Space Shuttle. The remaining decrease in the net
loss for the first quarter of 2003 was primarily due to an increase in operating
profit at DIRECTV U.S. due to increased revenues discussed above, reduced
expenses resulting from cost saving initiatives and the approximate $32 million
loss recognized by DIRECTV Latin America in the first quarter of 2002 resulting
from the devaluation of Argentina's currency. These favorable factors were
partially offset by a lower income tax benefit for the first quarter of 2003 due
primarily to lower pre-tax losses.
On March 18, 2003, DIRECTV Latin America, LLC (DLA LLC) filed a voluntary
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware
(Bankruptcy Court). The filing does not include any of its operating companies
in Latin America and the Caribbean, which will continue regular operations. DLA
LLC continues to manage its business as a debtor-in-possession. As a
debtor-in-possession, management is authorized to operate the business, but may
not engage in transactions outside the ordinary course of business without
Bankruptcy Court approval. Subsequent to the filing of its Chapter 11 petition,
DLA LLC obtained Bankruptcy Court orders that, among other things, authorized
DLA LLC to pay certain pre-petition obligations related to employee wages and
benefits and to take certain actions where such payments or actions will
benefit its estate or preserve the going concern value of the business
enterprise, thereby enhancing the prospects of reorganization.

Sale of GM Defense Business

Other ACO operations included a pre-tax gain of approximately $814 million,
or approximately $505 million after-tax ($0.90 per diluted share of GM $1-2/3
par value common stock), recorded in net sales and revenues in GM's Consolidated
Statements of Income related to the sale of GM's Defense operations (light
armored vehicle business) to General Dynamics Corporation on March 1, 2003. The
sale also generated net proceeds of approximately $1.1 billion in cash.


- 21 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GMAC Financial Review

GMAC's net income was $699 million for the first quarter of 2003, compared
with net income of $439 million for the prior year quarter. Income from
financing operations totaled $302 million for the first quarter of 2003,
compared with income of $255 million for the prior year quarter. The increase
reflects a combination of higher asset levels and lower credit loss provisions,
which more than offset the unfavorable effect of wider borrowing spreads and
weakness in lease residuals. Income from insurance operations totaled $26
million for the first quarter of 2003, compared with income of $36 million for
the prior year quarter. The overall reduction in earnings reflects a write-down
of certain investment securities due to continued weakness in equity markets,
partially offset by improved underwriting results. Income from mortgage
operations totaled $371 million for the first quarter of 2003, compared with
income of $148 million for the prior year quarter. The increased earnings from
mortgage operations reflect increased production volumes in both the residential
and commercial mortgage divisions.

LIQUIDITY AND CAPITAL RESOURCES

Financing Structure

In the first quarter of 2003, GM and GMAC experienced adequate access to the
capital markets as GM and GMAC were able to issue various securities to raise
capital and extend borrowing terms consistent with GM's need for financial
flexibility. Downgrades to GM's and GMAC's credit ratings in October 2002 have
reduced GM's long-term debt rating by Standard & Poor's to BBB and A3 by Moody's
(GMAC is rated A2 by Moody's). On April 9, 2003 Standard & Poor's lowered its
debt rating outlook on GM and GMAC to negative from stable. On April 22, 2003
Dominion Bond Rating Service (DBRS) downgraded GM's and GMAC's senior debt
rating from A to A (low) and at the same time, confirmed the commercial paper
rating at R-1 (low) with a stable outlook. On April 28, 2003, Fitch affirmed
GM's and GMAC's long term debt rating at A-. On May 2, 2003, Moody's placed GM's
and GMAC's credit rating under review for a possible downgrade. Refer to the
table below for a summary of GM's and GMAC's credit ratings. Despite these
actions GM's and GMAC's access to the commercial paper and unsecured debt
markets remains sufficient to meet the Corporation's capital needs. Moreover,
these actions have not had a significant adverse effect on GM's and GMAC's
ability to obtain bank credit or to sell asset-backed securities. Accordingly,
GM and GMAC expect that they will continue to have adequate access to the
capital markets sufficient to meet the Corporation's needs for financial
flexibility.

GM GMAC GM GMAC GM GMAC
- --------------------------------------------------------------------------------
Rating Agency Senior Debt Commercial Paper Outlook
- --------------------------------------------------------------------------------
DBRS A (low) A (low) R-1 (low) R-1 (low) Stable Stable

Fitch A- A- F-2 F-2 Negative Negative

Moody's A-3 A-2 Prime-2 Prime-1 Negative Negative

S&P BBB BBB A-2 A-2 Negative Negative

As an additional source of funds, GM currently has unrestricted access to a
$5.6 billion line of credit with a syndicate of banks which is committed through
June 2006, an additional $3.2 billion in committed facilities with various
maturities and uncommitted lines of credit of $2.7 billion. Similarly, GMAC has
a $1.5 billion syndicated line of credit committed through June 2003, $7.4
billion committed through June 2006, $4.2 billion of bilateral committed lines
with various maturities, and uncommitted lines of credit of $17.8 billion. In
addition, New Center Asset Trust (NCAT) has $18.1 billion of liquidity
facilities committed through June 2003. Mortgage Interest Networking Trust
(MINT) has $3.8 billion of liquidity facilities committed through April 2003.
Effective April 2003, MINT renewed its liquidity facility for $3.4 billion,
committed through April 2004. NCAT and MINT are non-consolidated limited purpose
statutory trusts established to issue asset-backed commercial paper. See
Off-Balance Sheet Arrangements for more discussion.

Automotive, Communications Services, and Other Operations

At March 31, 2003, cash, marketable securities, and $3.4 billion of assets of
the Voluntary Employees' Beneficiary Association (VEBA) trust invested in
fixed-income securities totaled $23.6 billion, compared with cash, marketable
securities, and $3.0 billion of assets of the VEBA trust invested in
fixed-income securities totaling $18.5 billion at December 31, 2002 and $18.4
billion at March 31, 2002. The increase from December 31, 2002 was primarily due
to earnings from automotive operations, sale of the GM Defense business,
favorable working capital and approximately $2.0 billion of financing
initiatives at Hughes. Total assets in the VEBA trust used to pre-fund part of
GM's other postretirement benefits liability approximated $6.4 billion at March
31, 2003, compared with $5.8 billion at December 31, 2002 and $5.2 billion at
March 31, 2002. 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.

- 22 -


GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Automotive, Communications Services, and Other Operations (concluded)

Long-term debt was $19.2 billion at March 31, 2003, compared with $16.7
billion at December 31, 2002 and $16.8 billion at March 31, 2002. The ratio of
long-term debt to long-term debt and GM's net assets of Automotive,
Communications Services, and Other Operations was 181.0% at March 31, 2003,
compared with 267.0% at December 31, 2002 and 82.5% at March 31, 2002. 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
175.2% at March 31, 2003, compared with 234.3% at December 31, 2002 and 83.8% at
March 31, 2002.
Net liquidity, calculated as cash, marketable securities, and $3.4 billion of
assets of the VEBA trust invested in fixed-income securities less the total of
loans payable and long-term debt, was $3.6 billion at March 31, 2003, compared
with, including $3.0 billion of assets of the VEBA, $298 million at December 31,
2002 and $49 million at March 31, 2002.
In order to provide financial flexibility to GM and its suppliers, GM
maintains a two-part financing program through GECC wherein GECC (1) purchases
GM receivables at a discount from GM suppliers prior to the due date of those
receivables, and pays on behalf of GM the amount due on other receivables which
have reached their due date (the first part) and (2) from time to time allows GM
to defer payment to GECC with respect to all or a portion of receivables which
it has purchased or paid on behalf of GM, which deferral could last from 10 days
and up to 40 days.
To the extent GECC can realize favorable economics from transactions arising
in the first part of the program, they are shared with GM. Whenever GECC and GM
agree that GM will defer payment beyond the normal due date for receivables
under the second part of the program, GM becomes obligated to pay interest for
the period of such deferral. Outstanding balances of GM receivables held by GECC
are classified as accounts payable in GM's financial statements. If any of GM's
long-term unsecured debt obligations become subject to a rating by S&P of BBB-
with a negative outlook (GM's current rating is BBB with a negative outlook) or
below BBB-, or a rating by Moody's of Baa3 (GM's current rating is A3) with a
negative outlook or below Baa3, the program would be unavailable to GM and its
suppliers. The maximum amount permitted under the program is $2 billion. At
March 31, 2003, the outstanding balance under the first part of the program
amounted to approximately $1.4 billion, and there was no outstanding balance
under the second part of the program.

Financing and Insurance Operations

At March 31, 2003, GMAC's consolidated assets totaled $235.5 billion,
compared with $227.7 billion at December 31, 2002 and $189.4 billion at March
31, 2002. The increase from December 31, 2002 was primarily the result of an
increase in earning assets such as finance receivables and loans. The continued
use of GM sponsored special rate financing programs, combined with an increased
use of securitizations structured as financing transactions (primarily in
mortgage operations) resulted in an increase in consumer finance receivables and
loans. Additional asset growth was the result of an increase in wholesale
receivables outstanding due to higher dealer inventories.
Consistent with the growth in assets, GMAC's total debt increased to $191.0
billion at March 31, 2003, compared with $183.1 billion at December 31, 2002 and
$147.0 billion at March 31, 2002. GMAC's ratio of total debt to total
stockholder's equity at March 31, 2003 and December 31, 2002 was 10.3:1,
compared with 8.9:1 at March 31, 2002. GMAC's liquidity, as well as its ability
to profit from ongoing activity, is in large part dependent upon its timely
access to capital and the costs associated with raising funds in different
segments of the capital markets. Liquidity is managed to preserve stable,
reliable and cost effective sources of cash to meet all current and future
obligations. GMAC's strategy in managing liquidity risk has been to develop
diversified funding sources across a global investor base. A weak corporate bond
market, combined with further negative rating agency actions, increased GMAC's
unsecured borrowing spreads. As a result, GMAC continues to place greater
emphasis on securitization and retail debt in its funding mix. Management
expects to continue to use diverse funding sources to maintain its financial
flexibility and expects that access to the capital markets will continue at
levels sufficient to meet GMAC's funding needs.

Investment in Fiat Auto Holdings

At the April 23, 2003, Annual General Shareholders Meeting of Fiat Auto
Holdings, B.V. (FAH), FAH adopted a Euro 5 billion recapitalization plan that
provides shareholders the option to make pro-rata capital contributions over the
next eighteen months. When the plan was adopted, Fiat S.p.A. (Fiat) held 80% of
FAH and GM 20%. Fiat has stated that it intends to participate with a Euro 3
billion contribution. Currently, GM does not plan to participate. If and to the
extent GM does not participate, GM's interest in FAH may be diluted to a lesser
amount and Fiat's interest may increase.
As discussed in the December 31, 2002 Annual Report on Form 10-K, the Master
Agreement provides that, from January 24, 2004 to July 24, 2009, Fiat has the
right to exercise a put option (the "Put") to require GM to purchase Fiat's



- 23 -

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Investment in Fiat Auto Holdings (concluded)

FAH shares at fair market value. Whether and when Fiat may seek to exercise the
Put is unknown. It is uncertain as to whether the Put would ever be exercised
due to the possibilities that it could be affected by subsequent agreements of
the companies, it could become non-exercisable under other provisions of the
Master Agreement, it could be rendered unenforceable by reason of actions Fiat
may have taken, or Fiat may choose to not exercise the Put.
If and when the Put is implemented, the fair market value of FAH shares would
be determined by investment banks under procedures set forth in the Master
Agreement. Until any such valuation is completed, the amount, if any, that GM
might have to pay for Fiat's FAH shares is not quantifiable.
If GM were to acquire Fiat's FAH shares and thus become the sole owner of
Fiat Auto, GM would decide what, if any, additional capitalization would then be
appropriate for Fiat Auto. Specifically, if Fiat Auto were to need additional
funding, GM would have to decide whether or not to provide such funding and
under what conditions to provide any funding.
Unless FAH or Fiat Auto were subject to liquidation or insolvency, FAH's
consolidated financial statements would be required for financial reporting
purposes to be consolidated with those of GM. Any indebtedness, losses and
capital needs of FAH and Fiat Auto after their acquisition by GM are not
presently determinable, but they could have a material adverse effect on GM.
While GM and Fiat have discussed potential alternatives to the Master Agreement,
no changes to it have been agreed upon.

Off-Balance Sheet Arrangements

GM and GMAC use off-balance sheet special purpose entities (SPEs) where the
economics and sound business principles warrant their use. GM's principal use of
SPEs occurs in connection with the securitization and sale of financial assets
generated or acquired in the ordinary course of business by GM's wholly-owned
subsidiary GMAC and its subsidiaries and, to a lesser extent, by GM. The assets
securitized and sold by GMAC and its subsidiaries consist principally of
mortgages, and wholesale and retail loans secured by vehicles sold through GM's
dealer network. The assets sold by GM consist of trade receivables. GM and GMAC
use SPEs in a manner consistent with conventional practices in the
securitization industry, the purpose of which is to isolate the receivables for
the benefit of securitization investors. The use of SPEs enables GM and GMAC to
access the highly liquid and efficient markets for the sale of these types of
financial assets when they are packaged in securitized forms.
GM leases real estate and equipment from various SPEs which have been
established to facilitate the financing of those assets for GM by nationally
prominent, creditworthy lessors. These assets consist principally of office
buildings, warehouses, and machinery and equipment. The use of SPEs allows the
parties providing the financing to isolate particular assets in a single entity
and thereby syndicate the financing to multiple third parties. This is a
conventional financing technique used to lower the cost of borrowing and, thus,
the lease cost to a lessee such as GM. There is a well-established market in
which institutions participate in the financing of such property through their
purchase of interests in these SPEs. All of the SPEs established to facilitate
property leases to GM are owned by institutions which are truly independent of,
and not affiliated with, GM. These institutions maintain substantial equity
investments in their SPEs. No officers, directors or employees of GM, GMAC, or
their affiliates hold any direct or indirect equity interests in such SPEs.
Assets in SPEs were as follows (dollars in millions):

Automotive, Communications Services, and March 31, Dec. 31, March 31,
Other Operations 2003 2002 2002
- ---------------------------------------- ----------------------------------
Assets leased under operating leases $2,685 $2,904 $2,678
Trade receivables sold 407 439 453
------ ------ ------
Total $3,092 $3,343 $3,131
====== ====== ======

Financing and Insurance Operations
- ----------------------------------
Receivables sold or securitized:
- Mortgage loans $108,854 $112,128 $110,623
- Retail finance receivables 14,855 16,164 12,732
- Wholesale finance receivables 17,520 17,415 16,244
-------- -------- --------
Total $141,229 $145,707 $139,599
======== ======== ========

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46),
which requires the consolidation of certain entities considered to be variable
interest entities (VIEs). An entity is considered to be a VIE when it has equity
investors who lack the characteristics of having a controlling financial
interest, or its capital is insufficient to permit it to finance its activities
without additional subordinated financial support. Consolidation of a VIE by an
investor is required when it is determined that the investor will absorb a
majority of the VIE's expected losses or residual returns if they occur. FIN 46
provides certain exceptions to these rules, including qualifying special purpose


- 24 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Off-Balance Sheet Arrangements (concluded)

entities (SPEs) subject to the requirements of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
VIEs created after January 31, 2003 must be consolidated immediately, while VIEs
that existed prior to February 1, 2003 must be consolidated as of July 1, 2003.
GM may be required to consolidate certain VIEs (previously collectively
referred to as SPEs) with which it does business. Management is currently
reviewing existing VIEs that may require consolidation. With respect to GM's ACO
business, it is reasonably possible that certain VIEs with assets totaling
approximately $1.1 billion, established exclusively to facilitate GM's ACO
leasing activities, may require consolidation. Should GM default on all of its
obligations with respect to its involvement in these entities, GM's maximum
exposure to loss would be approximately $1.1 billion ($680 million after-tax).
With respect to the FIO business, VIE structures are used to facilitate
various activities of GMAC, including securitization of loans, mortgage funding,
and other investing activities. Based on management's preliminary assessment, it
is reasonably possible that VIEs with assets totaling approximately $14.0
billion may require consolidation. Management is considering revising
involvement in these entities, which could have an impact on the consolidation
analysis under FIN 46. In the absence of any such revisions, the consolidation
of such VIEs would have the effect of increasing both assets and liabilities in
an amount equal to the assets of the VIEs. GM's exposure to loss related to
these entities is approximately $4.4 billion ($2.7 billion after-tax) which
primarily relates to retained interests in these facilities.

BOOK VALUE PER SHARE

Book value per share is determined based on the liquidation rights of the
various classes of common stock. Book value per share of GM $1-2/3 par value
common stock was $11.98 at March 31, 2003, compared with $9.06 at December 31,
2002 and $24.58 at March 31, 2002. Book value per share of GM Class H common
stock was $2.40 at March 31, 2003, compared with $1.81 at December 31, 2002 and
$4.92 at March 31, 2002.

DIVIDENDS

Dividends may be paid on GM's common stocks only when, as, and if declared by
the GM Board in its sole discretion. The amount available for the payment of
dividends on each class of common stock will be reduced on occasion by dividends
paid on that class and will be adjusted on occasion for changes to the amount of
surplus attributed to the class resulting from the repurchase or issuance of
shares of that class.
GM's policy is to distribute dividends on its $1-2/3 par value common stock
based on the outlook and indicated capital needs of the business. On February 4,
2003, the GM Board declared a quarterly cash dividend of $0.50 per share on GM
$1-2/3 par value common stock, paid March 10, 2003, to holders of record on
February 14, 2003. With respect to GM Class H common stock, the GM Board has
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 businesses.

EUROPEAN MATTERS

During 2001, GM Europe announced its plan to turn around its business with
the implementation of Project Olympia. The initial stages of Project Olympia
sought to identify initiatives that could deliver:
. Solid and profitable business performance as of 2003
. A strengthened and optimized sales structure
. A revitalized Opel/Vauxhall brand
. Further market growth opportunities
. Continuous improvement by refocusing the organizational structure
The project identified several initiatives which aim to address the goals
mentioned above. These initiatives include, among other things, reducing GME's
manufacturing capacity, restructuring the dealer network in Germany, and
redefining the way vehicles are marketed. These initiatives resulted in a
decrease to GM's pre-tax earnings and were recorded in the GME region in the
first quarter of 2002 as follows: (1) $298 million related to employee
separation costs for approximately 4,000 employees; (2) $235 million related to
asset write-downs; and (3) $108 million related to the dealer network
restructuring in Germany. The net income impact of these charges in the first
quarter of 2002 was $407 million, or $0.72 per diluted share of GM $1-2/3 par
value common stock ($553 million included in cost of sales and other expenses;
$88 million included in selling, general, and administrative expenses; and
$(234) million included in income tax expense).


- 25 -



GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONTRIBUTION OF GM CLASS H COMMON STOCK

On March 12, 2003, GM contributed 149.2 million shares of GM Class H common
stock valued at approximately $1.24 billion to certain of its U.S. employee
benefit plans. The contribution increased the amount of GM Class H common stock
held by GM's employee benefit plans to approximately 331 million shares and
reduced GM's retained economic interest in Hughes to approximately 19.9% from
30.7%.

HUGHES TRANSACTIONS

On April 9, 2003, GM, Hughes and The News Corporation Limited (News Corp.)
announced the signing of definitive agreements that provide for, among other
things, the split-off of Hughes from GM and the simultaneous sale of GM's
approximately 19.9% economic interest in Hughes to News Corp. for $14 per share,
or approximately $3.8 billion. GM would receive at least $3.1 billion in cash
with the remainder payable in News Corp. preferred American Depositary Shares
("News Corp. ADSs") and/or cash at News Corp.'s election. News Corp. would
acquire an additional 14.1% stake in Hughes from the holders of GM Class H
common stock through a mandatory exchange of a portion of their Hughes common
stock received in the split-off, which would provide News Corp. with a total of
34% of the then outstanding capital stock of Hughes. In addition, GM would
receive a cash dividend from Hughes of $275 million in connection with the
transactions. This dividend is expected to be paid by Hughes through available
cash balances.
Under the terms of the proposed transactions, holders of GM Class H common
stock would first exchange their shares for Hughes common stock on a
share-for-share basis in the split-off, followed immediately by an exchange of
approximately 17.6% of the Hughes common stock they receive in the split-off for
approximately $14 per share in News Corp. ADSs and/or cash. The number of News
Corp. ADSs payable to GM and Hughes common stockholders, based on a fixed-price
of $14 per Hughes share, will be adjusted within a collar range of 20% above or
below the News Corp. ADS price of $22.40. This mandatory exchange of about 17.6%
of the shares of Hughes common stock for News Corp. ADSs and/or cash would be
taxable to the Hughes common stockholders at the time. The transactions are
structured in a manner that will not result in the recapitalization of GM Class
H common stock into GM $1-2/3 par value common stock at a 120% exchange ratio,
as currently provided for under certain circumstances in the General Motors
Restated Certificate of Incorporation, as amended.
If the transactions are completed, Rupert Murdoch, chairman and chief
executive officer of News Corp., would become chairman of Hughes, and Chase
Carey, who is currently serving as an advisor to News Corp., would become
president and chief executive officer of Hughes. Eddy Hartenstein, Hughes senior
executive vice president, would be named vice chairman of Hughes. Hughes would
have 11 directors, the majority of which would be independent directors.
The transactions are subject to a number of conditions, including, among
other things, obtaining U.S. antitrust and Federal Communications Commission
approvals, approval by a majority of each class of GM stockholders - GM $1-2/3
and GM Class H - voting both as separate classes and together as a single class
and a favorable ruling from the Internal Revenue Service that the split-off of
Hughes from GM would be tax-free to GM and its stockholders for U.S. federal
income tax purposes. No assurances can be given that the approvals will be
obtained or the transactions will be completed. The financial and other
information regarding Hughes contained in this Quarterly Report do not give any
effect to or make any adjustment for the anticipated completion of the
transactions.

INVESTMENT IN GM DAEWOO

As of December 31, 2002, GM had invested $251 million in GM Daewoo Auto &
Technology Company (GM Daewoo) common stock. The original transaction agreements
contemplated the Daewoo Creditor Group receiving approximately 82 million shares
(of the total 250 million of authorized shares for this transaction) for a
projected 33% equity participation in GM Daewoo, with the remaining shares
allocated to GM, Suzuki Motor Corporation and Shanghai Automotive Industry
Corporation (SAIC) for projected ownership of 42.1%, 14.9% and 10% in GM Daewoo,
respectively.
The Korea Development Bank (KDB), which was the sole member of the Daewoo
Creditor Group at closing, subscribed for only 29.9% of the total common shares.
Through June 30, 2003, GM and the other shareholders have the option to
subscribe for the unsubscribed shares. Under the assumption that GM and the
other shareholders do not subscribe for the remaining authorized shares, GM
expects the capital structure to be allocated based on GM, Suzuki, SAIC and KDB
owning 44.6%, 14.9%, 10.6% and 29.9%, respectively. GM will continue to account
for its investment in GM Daewoo using the equity method.



- 26 -




GENERAL MOTORS CORPORATION AND SUBSIDIARIES

EMPLOYMENT AND PAYROLLS

Worldwide employment at March 31, (in thousands) 2003 2002
---- ----

GMNA 194 201
GME 66 71
GMLAAM 23 24
GMAP 12 11
Hughes 11 12
GMAC 32 30
Other 7 10
--- ---
Total employees 345 359
=== ===


Three Months Ended
March 31
------------------
2003 2002
---- ----
Worldwide payrolls - (in billions)
$5.4 $5.0
=== ===

CRITICAL ACCOUNTING ESTIMATES

The consolidated financial statements of GM are prepared in conformity with
GAAP, which requires the use of estimates, judgments, and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the periods presented.
GM has identified a number of critical accounting estimates. An accounting
estimate is considered critical if: the estimate requires management to make
assumptions about matters that were highly uncertain at the time the estimate
was made; different estimates reasonably could have been used; or if changes in
the estimate that would have a material effect on the Corporation's financial
condition or results of operations are reasonably likely to occur from period to
period.
GM's critical accounting estimates relate to the following areas: sales
allowances, policy and warranty, impairment of long-lived assets, pension and
OPEB costs, postemployment benefits, allowance for credit losses, investments in
operating leases, mortgage servicing rights, and accounting for derivatives and
other contracts at fair value. These critical accounting estimates are discussed
in the Corporation's 2002 Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission.
Management believes that the accounting estimates employed are appropriate
and resulting balances are reasonable; however, actual results could differ from
the original estimates, requiring adjustments to these balances in future
periods. The Corporation has discussed the development, selection and
disclosures of these critical accounting estimates with the Audit Committee of
GM's Board of Directors, and the Audit Committee has reviewed the Corporation's
disclosures relating to these estimates. There have been no material changes to
the Corporation's significant accounting policies that affected the
Corporation's financial condition or results of operations in the first quarter
of 2003.


* * * * * * *


ITEM 4. Controls and Procedures

The Corporation maintains disclosure controls and procedures designed to
ensure that information required to be disclosed in reports filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the specified time periods. Within 90 days prior to the date
of this report, the Corporation's Chief Executive Officer and Chief Financial
Officer evaluated, with the participation of GM's management, the effectiveness
of the Corporation's disclosure controls and procedures. Based on the
evaluation, which disclosed no significant deficiencies or material weaknesses,
the Corporation's Chief Executive Officer and Chief Financial Officer concluded
that the Corporation's disclosure controls and procedures are effective. There
were no significant changes in the Corporation's internal controls or in other
factors that could significantly affect internal controls subsequent to the
evaluation.


* * * * * * *

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

PART II

ITEM 1. LEGAL PROCEEDINGS

(a) Material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Corporation became party during the
quarter ended March 31, 2003, or subsequent thereto, but before the filing of
this report are summarized below:

Environmental Matters

In March 2003, the Michigan Department of Environmental Quality (MDEQ)
asserted a claim for penalties in excess of $100,000 relating to various alleged
violations of air discharge regulations at the GM-Powertrain Saginaw Metal
Castings Plant. Officials of GM and the MDEQ continue to discuss resolution of
these matters.

* * *

On January 20, 2003, the Georgia Department of Natural Resources (GDNR)
delivered a proposed consent order to GM with respect to alleged violations of
hazardous waste regulations at GM's plant in Doraville, Georgia seeking fines in
excess of $100,000. Officials of GM and the GDNR continue to discuss resolution
of this matter.

* * *

Other Matters

On April 11 and 14, 2003, two purported class actions (Young v. Pearce, et
al.; Silverstein v. Pearce, et al.) were filed in Delaware Chancery Court on
behalf of owners of GM Class H shares against Hughes Electronics Corporation,
General Motors Corporation, News Corporation and the Hughes directors. On April
11 and 15, 2003, two purported class actions (Matcovsky, et al. v. Hughes
Electronics Corporation, et al.; Brody v. Hughes Electronics Corporation, et
al.) were filed in Superior Court in Los Angeles, California, against Hughes, GM
and the Hughes and GM directors. The lawsuits allege that the proposed
transactions involving News Corp.'s acquisition of a 34% interest in
Hughes provides benefits to GM not available to all GM Class H shareholders, in
violation of fiduciary duties. GM, Hughes and the director defendants believe
these actions are without merit and intend to vigorously defend the lawsuits.

* * *

In addition to the above cases, two other purported stockholder class actions
which name only General Motors and the GM directors have been brought in
Delaware Chancery Court challenging the recently announced agreements with News
Corp., Wyser-Pratte Management Company v. General Motors Corporation, et al.,
which was filed April 18, 2003, and Robert LaMarche v. General Motors
Corporation, et al., which was filed April 28, 2003. The cases allege that GM
and the GM directors performed ultra vires acts and that the GM directors
breached their fiduciary duties by approving a transaction that is more
favorable to the holders of GM $1-2/3 par value common stock than the holders of
GM Class H Common Stock. They claim that the holders of GM Class H Common Stock
will be treated unfairly because (i) GM will receive mostly cash for its shares
while the holders of GM Class H Common Stock will receive News Corp. ADSs that
may fluctuate in value, (ii) GM will be receiving a $275 million payment from
Hughes, (iii) a substantial number of shares of GM Class H Common Stock were
contributed to various GM employee benefit plans prior to announcement of the
deal to improve the prospects of shareholder approval, and (iv) the transaction
was announced just prior to the announcement of improved financial results at
Hughes and PanAmSat to make it appear that holders of GM Class H Common Stock
would receive a premium that would exceed the 20 percent recapitalization
premium provided for in the GM Restated Certificate of Incorporation, as
amended. Plaintiffs seek to enjoin the shareholder vote on the sale of GM's
interest in Hughes, enjoin the transactions from proceeding and unspecified
damages. GM and the director defendants believe these actions are without merit
and intend to vigorously defend the lawsuits.




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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

Exhibit Page
Number Exhibit Name Number
- ------ ------------ ------

(99) Hughes Electronics Corporation Financial Statements
and Management's Discussion and Analysis of
Financial Condition and Results of Operations 32
(99.1) Certification of the Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 79
(99.2) Certification of the Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 80



(b) Reports on Form 8-K
Fifteen reports on Form 8-K, were filed January 3, 2003, January 9, 2003*(2),
January 10, 2003**, January 16, 2003, February 3, 2003, February 13, 2003*,
February 25, 2003, February 27, 2003*, February 28, 2003, March 3, 2003 (2),
March 7, 2003, March 19, 2003, and March 20, 2003 during the quarter ended March
31, 2003 reporting matters under Item 5, Other Events, reporting certain
agreements under Item 7, Financial Statements, Pro Forma Financial Information,
and Exhibits.

- --------------------------
* Reports submitted to the U.S. Securities and Exchange Commission under Item 9,
Regulation FD Disclosure. Pursuant to General Instruction B of Form 8-K the
reports submitted under Item 9 are not deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934 and we are not subject to the
liabilities of that section. We are not incorporating, and will not incorporate
by reference these reports into a filing under the Securities Act or the
Exchange Act.

** Includes a Form 8-K Amendment by subsequent filing on the following day.


* * * * * *




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


GENERAL MOTORS CORPORATION
(Registrant)

Date: May 8, 2003 By: /s/PETER R. BIBLE.
--- -------------------------
(Peter R. Bible,
Chief Accounting Officer)








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CERTIFICATION


I, G. Richard Wagoner, Jr., Chairman and Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of General Motors
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.




Date: May 8, 2003


/s/ G. RICHARD WAGONER, JR.
---------------------------
G. Richard Wagoner, Jr.
Chairman and Chief Executive Officer






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CERTIFICATION


I, John M. Devine, Vice Chairman and Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of General Motors
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.




Date: May 8, 2003



/s/ JOHN M. DEVINE
-------------------------
John M. Devine
Vice Chairman and
Chief Financial Officer







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