GENERAL MOTORS ACCEPTANCE CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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

o		TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission file number: 1-3754

GENERAL MOTORS ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		38-0572512 (I.R.S. Employer Identification No.)

200 Renaissance Center
P.O. Box 200 Detroit, Michigan
48265-2000
(Address of principal executive offices)
(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 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 o

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

As of March 31, 2003, there were outstanding 10 shares of the issuer’s $.10 par value common stock.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

TABLE OF CONTENTS


Part I — Financial Information
Item 1. Financial Statements (unaudited)
	Consolidated Statement of Income for the Three Months Ended March 31, 2003 and 2002
	Consolidated Balance Sheet as of March 31, 2003 and December 31, 2002
	Consolidated Statement of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2003 and 2002
	Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2003 and 2002
	Notes to the Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
Part II — Other Information
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Certifications of Disclosure
Index of Exhibits
EX-3.3 By-Laws of General Motors Acceptance Corp.
Ex-99.1 Certification-Prinicpal Executive Officer
Ex-99.2 Certification-Prinicpal Financial Officer

INDEX
General Motors Acceptance Corporation


		Page

Part I – Financial Information

Item 1.	Financial Statements (unaudited)

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

	Consolidated Balance Sheet as of March 31, 2003 and December 31, 2002	4

	Consolidated Statement of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2003 and 2002	5

	Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2003 and 2002	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	*

Item 4.	Controls and Procedures	23

Part II – Other Information

Item 1. Legal Proceedings		24

Item 2. Changes in Securities and Use of Proceeds		*

Item 3. Defaults Upon Senior Securities		*

Item 4. Submission of Matters to a Vote of Security Holders		*

Item 5. Other Information		24

Item 6. Exhibits and Reports on Form 8-K		24

Signatures		25

Certifications of Disclosure		26

Index of Exhibits		28

* Item is omitted pursuant to the Reduced Disclosure Format, as set forth on the cover page of this filing.

Consolidated Statement of Income (unaudited)
General Motors Acceptance Corporation


Three months ended March 31, (in millions)		2003			2002

Revenue
Consumer		$	1,940		$	1,600
Commercial			523			532
Loans held for sale			274			211
Operating leases, net of depreciation expense of $1,362 and $1,170			426			556

	Total financing revenue		3,163			2,899
Interest and discount expense			(1,774	)		(1,651	)

	Net financing revenue before provision for credit losses		1,389			1,248
Provision for credit losses			(378	)		(506	)

	Net financing revenue		1,011			742
Insurance premiums and service revenue earned			732			590
Mortgage banking income			838			526
Investment income			80			42
Other income			783			747

	Total net revenue		3,444			2,647
Expense
Compensation and benefits expense			680			545
Insurance losses and loss adjustment expenses			533			457
Other operating expenses			1,094			921

	Total noninterest expense		2,307			1,923
Income before income tax expense			1,137			724
Income tax expense			438			285

Net income		$	699		$	439

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Balance Sheet (unaudited)
General Motors Acceptance Corporation


		March 31,			December 31,
(in millions)		2003			2002

Assets
Cash and cash equivalents		$	9,958		$	8,103
Investment securities			13,537			14,605
Loans held for sale			11,126			14,563
Finance receivables and loans, net of unearned income
	Consumer		98,007			92,630
	Commercial		46,611			45,246
Allowance for credit losses			(3,154	)		(3,059	)

	Total finance receivables and loans, net		141,464			134,817
Investment in operating leases, net			27,841			24,163
Notes receivable from General Motors			2,582			2,801
Mortgage servicing rights, net			2,680			2,683
Premiums and other insurance receivables			1,837			1,742
Other assets			24,503			24,193

Total assets		$	235,528		$	227,670

Liabilities
Debt		$	191,030		$	183,091
Interest payable			2,189			2,719
Unearned insurance premiums and service revenue			3,720			3,497
Reserves for insurance losses and loss adjustment expenses			2,168			2,140
Accrued expenses and other liabilities			14,287			14,837
Deferred income taxes			3,542			3,555

Total liabilities			216,936			209,839
Stockholder’s equity
Common stock, $.10 par value (10,000 shares authorized, 10 shares outstanding) and paid-in capital			5,641			5,641
Retained earnings			12,984			12,285
Accumulated other comprehensive loss			(33	)		(95	)

Total stockholder’s equity			18,592			17,831

Total liabilities and stockholder’s equity		$	235,528		$	227,670

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Statement of Changes in Stockholder’s Equity (unaudited)
General Motors Acceptance Corporation


Three months ended March 31, (in millions)	2003			2002

Common stock and paid-in capital
Balance at beginning of year and at March 31,	$	5,641		$	5,641

Retained earnings
Balance at beginning of year		12,285			10,815
Net income		699			439

Balance at March 31,		12,984			11,254

Accumulated other comprehensive income (loss)
Balance at beginning of year		(95	)		(322	)
Other comprehensive income (loss)		62			(73	)

Balance at March 31,		(33	)		(395	)

Total stockholder’s equity
Balance at beginning of year		17,831			16,134
Net income		699			439
Other comprehensive income (loss)		62			(73	)

Total stockholder’s equity at March 31,	$	18,592		$	16,500

Comprehensive income
Net income	$	699		$	439
Other comprehensive income (loss)		62			(73	)

Comprehensive income	$	761		$	366

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Statement of Cash Flows (unaudited)
General Motors Acceptance Corporation


Three months ended March 31, (in millions)	2003			2002

Operating activities
Net cash provided by operating activities	$	5,610		$	4,917

Investing activities
Purchases of available for sale securities		(1,640	)		(11,868	)
Proceeds from sales of available for sale securities		2,074			1,167
Proceeds from maturities of available for sale securities		707			9,924
Maturities of held to maturity securities		19			38
Net increase in finance receivables and loans		(33,775	)		(32,185	)
Proceeds from sales of finance receivables and loans		23,446			28,196
Purchases of operating lease assets		(3,661	)		(2,991	)
Disposals of operating lease assets		2,511			2,093
Net originations and purchases of mortgage servicing rights		(461	)		(551	)
Net decrease in notes receivable from General Motors		327			429
Acquisitions of subsidiaries, net of cash acquired		(4	)		(122	)
Other, net		(245	)		(372	)

Net cash used in investing activities		(10,702	)		(6,242	)

Financing activities
Net change in short-term debt		124			(5,532	)
Proceeds from issuance of long-term debt		16,825			7,253
Repayments of long-term debt		(10,030	)		(6,151	)

Net cash provided by (used in) financing activities		6,919			(4,430	)

Effect of exchange rates on cash and cash equivalents		28			—

Net increase (decrease) in cash and cash equivalents		1,855			(5,755	)
Cash and cash equivalents at beginning of year		8,103			10,101

Cash and cash equivalents at March 31,	$	9,958		$	4,346

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Notes to Consolidated Financial Statements (unaudited)
General Motors Acceptance Corporation

1 Basis of Presentation

General Motors Acceptance Corporation (GMAC or the Company) is a wholly-owned subsidiary of General Motors Corporation (General Motors or GM). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after eliminating all significant intercompany balances and transactions.

The consolidated financial statements as of March 31, 2003 and for the three-month periods ended March 31, 2003 and 2002 are unaudited, but in management’s opinion include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Certain prior period amounts have been reclassified to conform to the current period presentation.

The interim period consolidated financial statements, including the related notes, are condensed and do not include all disclosures required by generally accepted accounting principles in the United States of America. These interim period consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements, which are included in the GMAC Annual Report on Form 10-K for the year ended December 31, 2002 filed with the United States Securities and Exchange Commission (SEC) on March 13, 2003.

Recently Issued Accounting Standards

FASB Interpretation No. 46 — In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, Consolidated Financial Statements. FIN 46 addresses consolidation by business enterprises of variable interest entities, representing those entities whose total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties. More specifically, FIN 46 defines variable interest entities as those entities in which the equity investment at risk is not greater than the expected losses of the entity. FIN 46 explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity, to decide whether to consolidate that entity. FIN 46 requires variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or combination of interests that effectively recombines risks that were previously dispersed. FIN 46 does not impact the consolidation guidance for qualifying special purpose entities (QSPEs), as described in SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.

FIN 46 is effective for all enterprises with interests in variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the consolidation provisions of the Interpretation shall be applied no later than the beginning of the first interim or annual reporting period beginning after June 15, 2003. The Company has certain interests in variable interest entities and is in the process of analyzing the provisions of FIN 46 to determine the resulting impact to the Company’s financial position, results of operations and cash flows.

In analyzing these entities, it was determined that GMAC may be deemed to be the primary beneficiary of Central Originating Lease Trust (COLT) and therefore required to consolidate COLT effective July 1, 2003, pursuant to FIN 46. COLT is a limited purpose business trust that purchased vehicles and related consumer leases from GM franchised dealers through October 2002. COLT funded these acquisitions through secured notes, which were sold to GMAC, and through the issuance of equity. In addition to acting as the originating agent and servicer for COLT leases, GMAC reimbursed COLT’s third-party insurance provider for any losses on the underlying leases (subject to a limit). In March 2003, GMAC purchased the third-party equity of COLT. GMAC now owns all of the outstanding equity and COLT is a fully consolidated entity of GMAC. The impact of this consolidation is that the underlying COLT lease assets (approximately $4 billion at the time of the purchase of the third-party equity by GMAC) are now reflected as operating lease assets of the Company, replacing the secured notes that were previously reported as commercial finance receivables and loans. The net impact of consolidating COLT was an increase in the Company’s consolidated total assets by the amount of the third-party equity purchased ($168 million).

The Company continues to analyze its interests in certain other entities to determine if GMAC is the primary beneficiary and if consolidation is appropriate under FIN 46. In the course of performing this analysis, management is considering revising GMAC’s involvement in the entities, which could have an impact on the consolidation analysis under FIN 46. Management has identified the following entities where it is reasonably possible (as currently structured) that GMAC will consolidate or disclose information in the Consolidated Financial Statements when FIN 46 becomes effective.

Mortgage warehouse funding — GMAC’s Mortgage operations sell commercial and residential mortgage loans through various structured finance arrangements in order to provide funds for the origination and purchase of future loans. Certain of these structured finance arrangements include sales to off-balance sheet warehouse funding special purpose entities (SPEs), including GMAC- and bank-sponsored commercial paper conduits. Transfers of assets into each facility are accounted for as sales based on the provisions of SFAS No. 140. Certain of these warehouse funding SPEs may be considered variable interest entities under FIN 46. As the Company retains some of the risks and rewards associated with the underlying assets, it is possible that the Company could be deemed to be the primary beneficiary and thereby required to consolidate the SPEs. Total assets in these facilities approximated

Notes to Consolidated Financial Statements (unaudited)
General Motors Acceptance Corporation

$12.6 billion at March 31, 2003. The exposure to loss related to these facilities was $3.8 billion as of March 31, 2003, representing the Company’s retained interests in these facilities.

Collateralized debt obligations (CDOs) — GMAC’s Mortgage operations sponsors, purchases subordinate and equity interests in, and serves as collateral manager for CDOs. Equity investments in CDOs have been purchased from SPEs that are not QSPEs and may be considered variable interest entities under FIN 46. Total assets held in CDOs, which are not QSPEs, approximated $844 million at March 31, 2003. The Company’s exposure to loss represents the retained interests in these CDOs ($77 million at March 31, 2003).

Guaranteed tax credit funds — The Company’s Mortgage operations have sold investments in tax credit funds to unaffiliated investors and have guaranteed the timely payment of a specified return to those investors. The investors’ return is generated from each fund’s share of low income housing tax credits and tax losses derived from their investments in entities that develop, own, and operate affordable housing properties throughout the United States. As of March 31, 2003, the aggregate amount of such investments approximated $528 million.

2 Mortgage Banking Income

The following table presents the components of mortgage banking income.


Three months ended March 31, (in millions)	2003			2002

Mortgage servicing fees	$	335		$	324
Amortization and impairment of mortgage servicing rights		(505	)		(355	)
Gains (losses) on derivatives (a)		174			(12	)
Gains on investment securities (b)		46			—

Net loan servicing income (loss)		50			(43	)
Gains from sales of loans		642			490
Mortgage processing fees		62			30
Other		84			49

Mortgage banking income	$	838		$	526

(a)		Includes SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities hedge ineffectiveness, amounts excluded from the hedge effectiveness calculation and the change in value of derivatives not qualifying for hedge accounting.

(b)		Includes realized net gains related to investment securities used to manage risk associated with mortgage servicing rights.

Notes to Consolidated Financial Statements (unaudited)
General Motors Acceptance Corporation

3 Finance Receivables and Loans

The composition of finance receivables and loans outstanding was as follows.


			March 31, 2003						December 31, 2002

(in millions)			Domestic		Foreign		Total		Domestic		Foreign		Total

Consumer
	Retail automotive		$	65,264	$	13,372	$	78,636	$	64,317	$	13,075	$	77,392
	Residential mortgages			19,287		84		19,371		15,147		91		15,238

Total consumer				84,551		13,456		98,007		79,464		13,166		92,630
Commercial
	Automotive
		Wholesale		19,437		7,131		26,568		14,904		6,558		21,462
		Leasing and lease financing (a)		468		934		1,402		5,087		898		5,985
		Term loans to dealers and other		4,486		1,041		5,527		4,687		1,067		5,754
	Commercial and industrial			8,615		1,774		10,389		7,842		1,619		9,461
	Commercial real estate:
		Commercial mortgage		522		96		618		526		95		621
		Construction		2,014		93		2,107		1,925		38		1,963

Total commercial				35,542		11,069		46,611		34,971		10,275		45,246

Total finance receivables and loans (b)(c)			$	120,093	$	24,525	$	144,618	$	114,435	$	23,441	$	137,876

(a)		Following the March 2003 purchase of the third-party equity of Central Originating Lease Trust (and the resulting consolidation), $4 billion in secured notes that were classified as commercial receivables and loans at December 31, 2002 are now classified as operating leases. Refer to the Recently Issued Accounting Standards section of Note 1 for further discussion.

(b)		Total is net of unearned income of $6,593 and $6,455 at March 31, 2003 and December 31, 2002, respectively.

(c)		As further discussed in Note 5, certain of the Company’s finance receivables and loans serve as collateral under certain financing arrangements.

The following table presents an analysis of the activity in the allowance for credit losses on finance receivables and loans.


Three months ended March 31, (in millions)			2003			2002

Allowance at beginning of year			$	3,059		$	2,167
	Provision for credit losses			378			506
	Charge-offs
		Domestic		(280	)		(205	)
		Foreign		(41	)		(27	)

	Total charge-offs			(321	)		(232	)

	Recoveries
		Domestic		25			30
		Foreign		9			7

	Total recoveries			34			37

	Net charge-offs			(287	)		(195	)
	Other (a)			4			(113	)

Allowance at March 31,			$	3,154		$	2,365

(a)

Includes allowances related to the acquisitions of discounted loan portfolios, net of allowances removed upon sale of the related finance receivables and loans.

Notes to Consolidated Financial Statements (unaudited)
General Motors Acceptance Corporation

4 Mortgage Servicing Rights

For a further description of mortgage servicing rights and the related hedge strategy, see Notes 1 and 10 to the 2002 Annual Report on Form 10-K. The following table summarizes mortgage servicing rights activity and related amortization.


Three months ended March 31, (in millions)	2003			2002

Balance at beginning of year	$	2,683		$	4,840
Originations and purchases, net of sales		461			557
Amortization		(265	)		(201	)
SFAS No. 133 hedge valuation adjustments		49			98
Increase in valuation allowance		(248	)		(156	)

Balance at March 31,	$	2,680		$	5,138

The Company has implemented risk management strategies, including the use of actively managed derivatives and a portfolio of investment securities that increase in value as interest rates decline, to protect the value of mortgage servicing rights. As the investment securities are designated as available for sale, unrealized changes in the value of these securities are reflected in accumulated other comprehensive income on the Consolidated Balance Sheet.

5 Debt

Debt is presented below and is segregated between domestic and foreign based on the location of the office recording the transaction.


		March 31, 2003						December 31, 2002

(in millions)		Domestic		Foreign		Total		Domestic		Foreign		Total

Short-term debt
	Commercial paper	$	9,225	$	4,316	$	13,541	$	8,344	$	5,049	$	13,393
	Demand notes		6,573		240		6,813		5,887		231		6,118
	Bank loans and overdrafts		3,442		4,630		8,072		2,910		5,299		8,209
	Other		7,933		2,178		10,111		9,474		1,013		10,487

Total short-term debt			27,173		11,364		38,537		26,615		11,592		38,207
Long-term debt
Senior indebtedness
	Due within one year		21,803		5,595		27,398		22,506		4,833		27,339
	Due after one year		108,377		13,805		122,182		100,768		13,657		114,425

Total long-term debt			130,180		19,400		149,580		123,274		18,490		141,764
Fair value adjustment (a)			2,777		136		2,913		2,961		159		3,120

Total debt (b)		$	160,130	$	30,900	$	191,030	$	152,850	$	30,241	$	183,091

(a)		To adjust designated fixed rate debt to fair value in accordance with SFAS No. 133.

(b)		At March 31, 2003, $2,326 of loans held for sale, $17,201 of mortgage loans and $77 of trading investment securities were restricted for the repayment of $20,096 of debt. Additionally, $11,340 of finance receivables were restricted for the repayment of $10,771 of debt, at March 31, 2003. At December 31, 2002, $2,652 of loans held for sale, $13,011 of mortgage loans and $350 of trading investment securities were restricted for the repayment of $17,198 of debt. Additionally, $8,216 of finance receivables were restricted for the repayment of $7,716 of debt at December 31, 2002. Finally, under repurchase agreements, the Mortgage Group has pledged $1,309 and $2,213 of available for sale investment securities as collateral for approximately the same amount of debt at March 31, 2003 and December 31, 2002, respectively.

Notes to Consolidated Financial Statements (unaudited)
General Motors Acceptance Corporation

Liquidity facilities

Liquidity facilities represent additional funding sources, if required. The financial institutions providing the uncommitted facilities are not legally obligated to fund those facilities. The following table summarizes the liquidity facilities maintained by the company.

Unused

Committed

Uncommitted

Total liquidity

liquidity

facilities

Mar 31,

Dec 31,

Mar 31,

Dec 31,

Mar 31,

Dec 31,

Mar 31,

Dec 31,

(in billions)

2003

2002

2003

2002

2003

2002

2003

2002

Automotive operations:

Syndicated multi-currency global credit facility (a)

8.9

8.9

–

8.9

8.9

8.9

8.9

U.S. asset-backed commercial paper liquidity and receivables facilities for NCAT and MINT (b)

21.9

22.2

–

21.9

22.2

21.9

22.2

Other foreign facilities (c)

4.2

4.1

12.9

13.3

17.1

17.4

7.6

9.0

Mortgage operations (d)

–

4.9

4.5

4.9

4.5

2.3

2.0

Total facilities

35.0

35.2

17.8

17.8

52.8

53.0

40.7

42.1

(a)		The entire $8.9 is available for use by GMAC in the U.S., $1.0 is available for use by GMAC (UK) plc and $0.9 is available for use by GMAC International Finance B.V. in Europe. This facility serves primarily as backup for the Company’s unsecured commercial paper programs. The Company has transferred $5.8 of the 364-day syndicated multi-currency global credit facility to the NCAT asset-backed liquidity and receivables facility.

(b)		New Center Asset Trust (NCAT) and Mortgage Interest Networking Trust (MINT) are non-consolidated limited purpose statutory trusts established to issue asset-backed commercial paper.

(c)		Consists primarily of credit facilities supporting operations in Canada, Europe, Latin America and Asia-Pacific.

(d)		Includes $1.2 secured master note program with a third-party financial institution, guaranteed by GMAC. The borrowing is currently unsecured; however, upon request by the financial institution or any assignee, the Mortgage Group is required to pledge mortgage servicing rights valued at 200% of the outstanding balance as collateral.

The syndicated multi-currency global facility includes a $7.4 billion five year facility (expires June 2006) and a $1.5 billion 364-day facility (expires June 2003) with a one-year term-out option. Additionally, a leverage covenant restricts the ratio of consolidated debt to total stockholder’s equity to no greater than 11:1, under certain conditions. This covenant is only applicable on the last day of any fiscal quarter (other than the fiscal quarter during which a change in rating occurs) during such times as the Company has senior unsecured long-term debt outstanding, without third-party enhancement, which is rated BBB+ or less by Standard & Poor’s Ratings Services (S&P) or Baa1 or less by Moody’s. These conditions are currently in effect, and the Company is in compliance with the covenant.

6 Derivative Instruments and Hedging Activities

In managing the interest rate and foreign exchange exposures of a multinational finance entity, GMAC utilizes a variety of interest rate and currency derivative financial instruments. In accordance with SFAS No. 133, as amended, GMAC records derivative financial instruments on the balance sheet as assets or liabilities, carried at fair value. Changes in fair value are accounted for depending on the use of the derivative financial instrument and whether it qualifies for hedge accounting treatment. Refer to GMAC’s 2002 Annual Report on Form 10-K for a more detailed description of GMAC’s use of and accounting for derivative financial instruments.

The following table presents information on the income impacts of derivatives designated as fair value hedges.


Three months ended March 31, (in millions)		2003			2002

Fair value hedge ineffectiveness gain (loss) related to hedges of:
	Debt obligations	$	1		$	8
	Mortgage servicing rights		132			(48	)
	Other		(1	)		23
Net gain on fair value hedges excluded from assessment of effectiveness		$	65		$	36

GMAC recognized an immaterial amount of hedge ineffectiveness on cash flow hedges for the three months ended March 31, 2003 and 2002.

Notes to Consolidated Financial Statements (unaudited)
General Motors Acceptance Corporation

7 Segment Information

Financial results for GMAC’s operating segments are summarized below.


	GMAC			GMAC
	North American			International			GMAC			GMAC		Eliminations/
Three months ended March 31, (in millions)	Operations (a)			Operations (a)			Mortgage			Insurance		Reclassifications			Consolidated

2003
Net financing revenue before provision for credit losses	$	622		$	249		$	379		$	—	$	139		$	1,389
Provision for credit losses		(259	)		(47	)		(72	)		—		—			(378	)
Other revenue		519			255			1,027			775		(143	)		2,433

Total net revenue		882			457			1,334			775		(4	)		3,444
Noninterest expense		482			359			733			737		(4	)		2,307

Income before income tax expense		400			98			601			38		—			1,137
Income tax expense		157			39			230			12		—			438

Net income	$	243		$	59		$	371		$	26	$	—		$	699

Total assets	$	175,580		$	21,722		$	53,908		$	9,023	$	(24,705	)	$	235,528

2002
Net financing revenue before provision for credit losses	$	674		$	216		$	186		$	—	$	172		$	1,248
Provision for credit losses		(458	)		(28	)		(20	)		—		—			(506	)
Other revenue		590			173			663			660		(181	)		1,905

Total net revenue		806			361			829			660		(9	)		2,647
Noninterest expense		471			275			578			608		(9	)		1,923

Income before income tax expense		335			86			251			52		—			724
Income tax expense		127			39			103			16		—			285

Net income	$	208		$	47		$	148		$	36	$	—		$	439

Total assets	$	155,602		$	17,899		$	32,842		$	8,042	$	(24,972	)	$	189,413

(a)

GMAC North American Operations consists of automotive financing in the U.S. and Canada as well as commercial financing operations. GMAC International Operations consists of automotive financing and full service leasing in all other countries and Puerto Rico.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

Overview

GMAC is a leading global financial services firm with over $200 billion of assets and operations in 41 countries. Founded in 1919 as a wholly-owned subsidiary of General Motors, GMAC was established to provide GM dealers with the automotive financing necessary for the dealers to acquire and maintain vehicle inventories and to provide retail customers means by which to finance vehicle purchases through GM dealers. GMAC products and services have expanded beyond automotive financing and GMAC currently operates in three primary business segments — Financing, Mortgage and Insurance operations. Refer to GMAC’s Annual Report on Form 10-K for the year ended December 31, 2002 for a more complete description of the Company’s business segments, along with the products and services offered and the market competition.

Net income for GMAC’s segments is summarized as follows.


Three months ended March 31, ($ in millions)	2003			2002

Financing (a)	$	302		$	255
Mortgage		371			148
Insurance		26			36

Net income	$	699		$	439

Return on average equity (annualized)		15.3	%		10.8	%

(a)

Includes North America and International business segments, separately identified in Note 7 to the Consolidated Financial Statements.

GMAC recorded its highest quarterly earnings ever in the first quarter of 2003, in large part due to record results at the Mortgage operations. Consolidated net income of $699 million was up 59% from the $439 million earned in the same quarter of 2002.

For the quarter, net income from Financing operations totaled $302 million, up $47 million from the $255 million earned in the prior year. The increase reflects a combination of higher asset levels and lower credit loss provisions, which more than offset the unfavorable impact of wider borrowing spreads and the continued weakness in lease residuals.

GMAC’s Mortgage operations earned a quarterly record $371 million in the first quarter of 2003, up 151% from the $148 million earned in the same period of 2002. The higher earnings reflect exceptional production volumes across all three of the Company’s Mortgage divisions.

Insurance operations generated net income of $26 million in the first quarter of 2003, down $10 million from the same period in 2002. The overall reduction in earnings reflects a write down of certain investment securities due to the continued weaknesses in equity markets, partially offset by improved underwriting results.

Financing Operations

GMAC’s Financing operations offer a wide range of financial services and products (directly and indirectly) to retail automotive consumers, automotive dealerships, and other commercial businesses. These products and services include the purchase of installment sales contracts and leases, extension of term loans, dealer floorplan financing (wholesale) and other lines of credit, and factoring of receivables. Refer to pages 10-17 of the Company’s 2002 Annual Report on Form 10-K for further discussion of the business profile of GMAC’s Financing operations.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

The following table summarizes the operating results of the Company’s Financing operations for the periods indicated. The amounts presented are before the elimination of balances and transactions with the Company’s other operating segments.


Three months ended March 31, ($ in millions)	2003			2002			Change			%

Revenue
Consumer	$	1,643		$	1,524		$	119			8
Commercial		381			402			(21	)		(5	)
Operating leases, net of depreciation		427			557			(130	)		(23	)

Total financing revenue		2,451			2,483			(32	)		(1	)
Interest and discount expense		(1,580	)		(1,593	)		13			1
Provision for credit losses		(306	)		(486	)		180			37

Net financing revenue		565			404			161			40
Other income		774			763			11			1
Noninterest expense		(841	)		(746	)		(95	)		(13	)
Income tax expense		(196	)		(166	)		(30	)		(18	)

Net income	$	302		$	255		$	47			18

A combination of increased asset levels and lower credit loss provisions (particularly as it relates to the commercial loan portfolio) contributed to the 18% increase in first quarter net income for GMAC’s Financing operations. These favorable income impacts were mitigated by the negative effect of wider borrowing spreads caused by weakness in the corporate capital markets and credit concerns specific to GM.

Total financing revenue for the first quarter decreased 1% as compared to 2002. Consumer revenue increased due to asset growth resulting from the continued use of special rate financing programs by GM. Because the commercial portfolio is predominately floating rate based, lower market interest rates reduced commercial financing revenue, despite higher wholesale finance receivables. Average wholesale finance receivable outstandings increased as a result of higher GMAC penetration and increased GM dealer stocks. The Company’s first quarter net operating lease revenue declined as GMAC’s average operating lease portfolio declined, consistent with GM’s marketing focus on special rate financing for retail installment sale contracts (retail contracts). A continued deterioration in off-lease vehicle remarketing results also lowered net operating lease revenue. Weakness in the used vehicle market resulted in an average net loss per operating lease terminated in the United States of $63 in the first quarter, as compared to the average net gain of $426 realized in the first quarter of 2002.

Notwithstanding an increase in debt to fund higher asset levels, interest and discount expense decreased compared to the prior year due to the general market decline in interest rates. However, the decrease in market rates was mitigated by a sharp increase in GMAC’s borrowing spreads caused by weakness in the corporate capital markets and credit concerns specific to GM (refer to the Funding and Liquidity section of this MD&A for further discussion).

Despite a challenging economic environment, the provision for credit losses decreased by 37%. This decline was due to higher provisions in the first quarter of 2002 on the Company’s non-automotive dealer portion of the commercial loan portfolio. In addition, the 2003 first quarter loss provision for the consumer portfolio declined relative to 2002 due to a slower rate of asset growth in 2003 as compared to 2002. Refer to the Credit Quality section of this MD&A for a further discussion of the credit performance of the Company’s financing portfolio.

The most notable items impacting other income were a reduction of securitization related income and an increase in full service leasing revenues. Beginning in the fourth quarter of 2002, the Company began executing securitization transactions that are accounted for as secured financings. As secured financings, the underlying receivables (and related revenue) continue to be carried on the Company’s consolidated financial statements (along with the associated debt), reducing the amount of revenue recognized in other income as compared to an off-balance sheet securitization, which typically results in up-front gains. GMAC’s continued expansion of the international full service leasing business has also led to an increase in non-financing revenues.

Total noninterest expense for the first quarter increased by 13% from the prior year. Compensation expense increased due to increased pension and postretirement allocations from GM. Noninterest expense was also impacted by higher vehicle maintenance costs in the growing international full service leasing business. In addition, a higher volume of consumer lease terminations in the United States resulted in an increase in costs related to vehicle disposal.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

Financing Volume

The following table summarizes GMAC’s new vehicle consumer financing volume, the Company’s share of GM retail sales, GMAC’s wholesale financing of new vehicles and the Company’s share of GM sales to dealers.


			GMAC volume				Share of GM sales

Three months ended March 31, (units in thousands)			2003		2002		2003			2002

New vehicle consumer financing
GM vehicles
	North America
		Retail contracts		304		431		35	%		42	%
		Leases		143		116		17	%		11	%

	Total North America			447		547		52	%		53	%
	International (retail contracts and leases)			117		107		38	%		33	%

Total GM vehicles				564		654		48	%		49	%

Non-GM vehicles				17		18

	Total consumer automotive financing volume			581		672
Wholesale financing of new vehicles
GM vehicles
	North America			1,079		978		78	%		75	%
	International			456		469		94	%		94	%

Total GM vehicles				1,535		1,447		82	%		80	%

Non-GM vehicles				50		45

	Total wholesale volume			1,585		1,492

GMAC’s first quarter consumer financing volume on new vehicles decreased as compared to the prior year consistent with the decrease in GM retail sales. However, the Company’s penetration share of GM vehicle sales remained relatively steady as compared to the historically high levels experienced in 2002. The strong penetration levels are the result of GM’s continued aggressive use of financing incentive programs to market its vehicles. The shift in financing mix between retail contracts to leases is primarily the result of unusually high retail contract volume in the first quarter of 2002 as a result of GM’s concentrated use of retail financing incentives, combined with the timing of GM-sponsored lease pull-ahead programs that allow consumers to terminate their existing lease prior to scheduled maturity while in turn buying or leasing a new vehicle.

Wholesale financing volume increased in 2003 primarily because of an increase in GMAC’s North American penetration rate and an increase in GM wholesale deliveries for the period. GM’s wholesale sales to dealers increased even though retail sales declined resulting in a higher level of dealer inventories in the first quarter of 2003 as compared to 2002.

Credit Quality

The following tables summarize pertinent credit quality information in the Company’s consumer automotive retail and commercial receivables portfolios.

Consumer


	Average retail			Credit losses,						Annualized net						Percent of retail contracts
	contracts (a)			net of recoveries						credit loss rate						30 days or more past due

	Three months ended March 31,
																Mar 31,			Dec 31,			Mar 31,
($ in millions)	2003			2003			2002			2003			2002			2003			2002			2002

North America	$	83,451		$	236		$	181			1.13	%		1.00	%		2.02	%		2.00	%		2.12	%
International		9,873			24			11			0.97	%		0.57	%		3.61	%		3.54	%		3.89	%

Total managed (b)		93,324			260			192									2.34	%		2.32	%		2.49	%

Securitized amounts		(14,875	)		(21	)		(15	)

Total on-balance sheet	$	78,449		$	239		$	177			1.22	%		1.05	%

(a)		Consistent with the presentation in the Consolidated Balance Sheet, retail contracts presented in the table represent the principal balance of the finance receivable discounted for the unearned rate support received from General Motors.

(b)		Managed includes both retail contracts held on-balance sheet for investment and retail contracts securitized and sold that the Company continues to service.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

Consumer credit losses as a percentage of receivables increased in 2003 despite stable delinquency trends. The percentage increase in consumer losses is primarily caused by an increase in loss severity. A weaker used vehicle market has resulted in an increase in the loss per occurrence as GMAC is realizing less upon repossession and disposal of an underlying vehicle.

Commercial


													Average			Credit losses,				Annualized net
	Total loans			Impaired loans (a)									loans			net of recoveries				credit loss rate

													Three months ended March 31,
	Mar 31,			Mar 31,			Dec 31,			Mar 31,
($ in millions)	2003			2003			2002			2002			2003			2003		2002		2003			2002

Wholesale	$	44,088		$	317		$	278		$	321		$	40,319		$	—	$	1		—	%		0.01	%
					0.72	%		0.72	%		0.94	%
Other commercial financing		13,910			744			731			754			17,317			2		12		0.05	%		0.23	%
					5.35	%		4.06	%		3.63	%

Total managed (b)		57,998			1,061			1,009			1,075			57,636			2		13
Securitized amounts		(17,520	)		—			—			—			(17,470	)		—		—

Total on-balance sheet	$	40,478		$	1,061		$	1,009		$	1,075		$	40,166		$	2	$	13		0.02	%		0.14	%
					2.62	%		2.56	%		2.79	%

(a)		Includes loans where it is probable that the Company will be unable to collect all amounts due according to the terms of the loan.

(b)		Managed includes loans held on-balance sheet for investment and loans securitized and sold that the Company continues to service.

The higher commercial credit losses in 2002 were concentrated in the Company’s Commercial Finance Group, which provides financing to companies in the apparel, textile, automotive supplier and other industries. Losses in the commercial portfolio in 2003 have trended down toward historical levels.

The following table summarizes the applicable allowance for credit losses as a percentage of total on-balance sheet finance receivables and loans.


		March 31,			December 31,
($ in millions)		2003			2002

Allowance for credit losses
	Consumer	$	2,208		$	2,160
			2.81	%		2.79	%
	Commercial	$	588		$	567
			1.45	%		1.44	%

Management’s Discussion and Analysis
General Motors Acceptance Corporation

Mortgage Operations

GMAC’s Mortgage operations involve the origination, purchase, servicing and securitization of consumer (i.e., residential) and commercial mortgage loans and mortgage related products. Typically, mortgage loans are originated and sold to investors in the secondary market. Refer to pages 17-22 of the Company’s 2002 Annual Report on Form 10-K for further discussion of the business profile of GMAC’s Mortgage operations.

The following table summarizes the operating results of the Mortgage operations for the periods indicated. The amounts presented are before the elimination of balances and transactions with the Company’s other operating segments.


Three months ended March 31, ($ in millions)	2003			2002			Change			%

Revenue
Total financing revenue	$	713		$	417		$	296			71
Interest and discount expense		(334	)		(231	)		(103	)		(45	)
Provision for credit losses		(72	)		(20	)		(52	)		(260	)

Net financing revenue		307			166			141			85
Mortgage servicing fees		336			325			11			3
MSR amortization and impairment		(505	)		(355	)		(150	)		(42	)
MSR risk management activities		220			(12	)		232			1,933
Gains on sales of loans		642			490			152			31
Other income		334			215			119			55
Noninterest expense		(733	)		(578	)		(155	)		(27	)
Income tax expense		(230	)		(103	)		(127	)		(123	)

Net income	$	371		$	148		$	223			151

Interest rates, including those on originated 15- and 30- year mortgages, remained near historic lows during the quarter ended March 31, 2003, sustaining the mortgage refinancing boom that existed throughout most of 2002. As a result, loan production at the Mortgage Group increased to a record $46.4 billion, 61% more than the same period in 2002. Improved pricing margins enabled by strong demand, coupled with record volume, resulted in significant year-over-year increases in gains on sales of loans.

Net financing revenue, including provision for credit losses, also increased significantly year-over-year. This reflected continued growth primarily in the balance of mortgage loans held as collateral for secured financings, which increased from $2.8 billion at March 31, 2002 to $17.8 billion at March 31, 2003. Also contributing to the increase were higher average inventories of loans held for sale and net interest on investment securities held in 2003 to manage interest rate risk.

Other income improved for the quarter ended March 31, 2003 compared to the same period in 2002, primarily due to substantial valuation losses on residual interest asset- and mortgage-backed securities experienced in 2002, and increased loan origination fees accompanying increased production volume in 2003. Noninterest expense also grew compared to the same period in 2002, reflecting increased compensation, technology, and loan processing costs, all corresponding to business growth.

While positive for loan production volumes, the low interest rate environment and resulting loan refinancing activity continued to adversely impact the value of the Company’s mortgage servicing rights. Amortization and impairment expense increased by $150 million for the quarter ended March 31, 2003 compared to the same period in 2002, reflecting increased actual and expected loan prepayments, including the impact of updating the third-party prepayment model to incorporate recent loan prepayment experience. However, this increased expense was more than offset by improved results from mortgage servicing risk management activities, including recognized gains and net interest income on related derivative financial instruments designated as hedges ($180 million improvement) and realized gains on available-for-sale investment securities held in 2003 to mitigate mortgage servicing risk ($46 million in 2003).

Management’s Discussion and Analysis
General Motors Acceptance Corporation

Insurance Operations

GMAC Insurance insures and reinsures automobile service contracts, personal automobile insurance coverages (ranging from preferred to non-standard risks) and selected commercial insurance coverages. Refer to pages 22-24 of the Company’s 2002 Annual Report on Form 10-K for further discussion of the business profile of GMAC’s Insurance operations.

The following table summarizes the operating results of the Insurance operations for the periods indicated. The amounts presented are before the elimination of balances and transactions with the Company’s other operating segments.


Three months ended March 31, ($ in millions)	2003			2002			Change			%

Revenue
Insurance premiums and service revenue earned	$	732		$	595		$	137			23
Investment income		17			52			(35	)		(67	)
Other income		30			19			11			58

Total revenue		779			666			113			17
Insurance losses and loss adjustment expenses		(533	)		(457	)		(76	)		(17	)
Acquisition and underwriting expense		(189	)		(138	)		(51	)		(37	)
Premium tax and other expense		(19	)		(19	)		—			—

Income before income taxes		38			52			(14	)		(27	)
Income tax expense		(12	)		(16	)		4			25

Net income	$	26		$	36		$	(10	)		(28	)

Net income from Insurance operations totaled $26 million for the quarter ended March 31, 2003, $10 million lower than 2002 earnings of $36 million. The decrease was attributed mainly to net capital losses incurred during first quarter 2003, which included the write down of certain investment securities.

Total revenue at GMAC Insurance and its subsidiaries totaled $779 million for the quarter ended March 31, 2003 compared with $666 million in 2002. The increase over 2002 was due primarily to rate increases in personal automobile policies, a different mix of assumed reinsurance contracts containing premium at contract inception and revenue at ABA Seguros (one of Mexico’s largest auto insurers that was acquired by the Company in January 2002), partially offset by lower investment income.

The reduction in investment income was attributable to net capital losses and other than temporary impairment in the investment portfolio. GMAC Insurance earned dividends and interest of $58 million, partially offset by net capital losses of $41 million for the quarter ended March 31, 2003, compared with $52 million of dividends and interest and no net capital losses for the quarter ended March 31, 2002. The net capital losses in 2003 were attributable to realized losses of $17 million from security sales and recognition of other than temporary impairment of $24 million relating to certain securities with market values below the cost basis. Management performed analyses of individual securities and concluded that those for which recovery to cost was not foreseeable were other than temporarily impaired. The carrying values of these securities were written down to market value, with the resulting loss recognized in earnings.

Total expenses amounted to $741 million for the quarter ended March 31, 2003 compared with $614 million in 2002. The increase in 2003 was primarily attributable to insurance losses and loss adjustment expenses and acquisition expenses. These components of expenses increased commensurately with increases in revenue earned.

Critical Accounting Estimates

The Company has identified critical accounting estimates that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved, could result in material changes to its financial condition, results of operations or cash flows under different conditions or using different assumptions. GMAC’s most critical accounting estimates are:

• Determination of the allowance for credit losses

• Valuation of automotive lease residuals

• Valuation of mortgage servicing rights

• Determination of reserves for insurance losses and loss adjustment expenses

• Valuation of securitized residual interests

There have been no significant changes in the methodologies and processes used in developing these estimates from what is described in the Company’s 2002 Annual Report on Form 10-K.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

Funding and Liquidity

Funding Sources and Strategy

GMAC’s liquidity, as well as its ongoing profitability, in large part depends upon its timely access to capital and the costs associated with raising funds in different segments of the capital markets. The Company’s strategy in managing liquidity risk has been to develop diversified funding sources across a global investor base. As an important part of its overall funding and liquidity strategy, the Company maintains substantial bank lines of credit. These bank lines of credit, which totaled $53 billion at March 31, 2003, provide “back-up” liquidity and represent additional funding sources, if required. Refer to Note 5 to the Consolidated Financial Statements for details of these liquidity lines. Refer to the Funding and Liquidity section in the Company’s 2002 Annual Report on Form 10-K for a further discussion of GMAC’s funding strategy and sources.

The following table summarizes GMAC’s funding sources for the periods indicated.


		Outstanding

		March 31,		December 31,
($ in millions)		2003		2002

Commercial paper		$	13,541	$	13,393
Institutional term debt			94,071		95,336
Retail debt programs			29,527		27,368
Secured financings			27,573		20,296
Bank loans, master notes and other			23,405		23,578

	Total debt (a)		188,117		179,971
Off-balance sheet securitizations (b)			30,943		31,744

	Total funding	$	219,060	$	211,715

Debt to equity ratio (c)			10.3:1		10.3:1

(a) Excludes fair value adjustment as described in Note 5 to the Consolidated Financial Statements.

(b) Represents net funding on securitizations of automotive finance receivables accounted for as sales under SFAS No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, as further described in Note 8 in the Company’s 2002 Annual Report on Form 10-K. For purposes of this analysis, securitizations of mortgage loans are excluded.

(c) Represents total debt (including the fair value adjustment described in Note 5) divided by total equity as presented on the Consolidated Balance Sheet.

The Company’s worldwide borrowing costs (including the effects of derivatives) for the first quarter of 2003 averaged 3.77% compared to 4.47% for the same period in 2002. The reduction in borrowing costs is reflective of the overall decrease in market interest rates over the past year. However, the Company is experiencing historically high borrowing spreads due to weakness in the corporate capital markets and credit concerns specific to GM. In response, the Company’s funding efforts continued to emphasize securitization and retail debt programs. Management expects to continue to use diverse funding sources to maintain its financial flexibility and expects that access to the capital markets will be sufficient to meet the Company’s funding needs.

Credit Ratings

Substantially all of the Company’s debt has been rated by nationally recognized statistical rating organizations. As of May 7, 2003, all GMAC ratings were within the investment grade category, summarized as follows.


	Senior	Commercial
Rating Agency	Debt	Paper	Outlook

Fitch	A-	F-2	Negative
Moody’s	A2	Prime-1	Negative
S&P	BBB	A-2	Negative
DBRS	A (low)	R-1 (low)	Stable

In April 2003, Standard & Poor’s lowered its debt rating outlook on GMAC to negative from stable. S&P indicated that the change in rating outlook was caused by concerns with how GM will fund its multibillion-dollar pension and retiree health care liabilities. Also, in April 2003, Fitch affirmed GMAC’s A- rating on senior debt and its F-2 rating on commercial paper, while maintaining an outlook of negative. On May 2, 2003, Moody’s announced that they were reviewing the long-term rating of GM and the long- and short-term ratings of GMAC for possible downgrade.

In February 2003, Dominion Bond Rating Service (DBRS) was accepted by the SEC as a nationally recognized statistical rating organization in the United States. As a result of this designation, DBRS credit ratings may be used to distinguish among grades of

Management’s Discussion and Analysis
General Motors Acceptance Corporation

creditworthiness for purposes of various U.S. federal and state laws, rules issued by financial and other regulators and even some non-U.S. regulations. In April 2003, DBRS downgraded GMAC’s senior debt from A to A (low), citing concerns with GM’s profitability and financial profile while at the same time confirming the commercial paper rating at R-1 (low) with a stable outlook. DBRS has described these ratings as follows:

• The A (low) rating is assigned by DBRS to bonds of satisfactory credit quality. Protection of interest and principal is still substantial and the company is considered by DBRS to be more susceptible to adverse economic conditions and have greater cyclical tendencies than higher rated companies. The “low” designation indicates the relative standing DBRS has given to a credit within a particular rating category.

• The R-1 (low) rating is assigned to short term debt of satisfactory credit quality. The overall strength and outlook for key liquidity, debt and profitability ratios is not normally as favorable as with higher rating categories, but these considerations are still considered by DBRS to be respectable. Any qualifying negative factors which exist are considered by DBRS to be manageable, and the entity is normally of sufficient size to have some influence in its industry.

Off-balance Sheet Activities

The Company uses off-balance sheet entities as part of its operating and funding activities. For a further discussion of GMAC’s use of off-balance sheet entities, refer to the Off-balance Sheet Activities section of Management's Discussion and Analysis in GMAC’s 2002 Annual Report on Form 10-K. The following table summarizes assets carried in these entities.


		March 31,		December 31,
(in billions)		2003		2002

Securitization (a)
	Retail finance receivables	$	14.9	$	16.2
	Wholesale loans		17.5		17.4
	Mortgage loans		85.8		90.4

Total securitization			118.2		124.0
Other off-balance sheet activities
	Mortgage warehouse		15.5		13.5
	Other mortgage		7.6		8.2

Total off-balance sheet activities		$	141.3	$	145.7

(a) Represents securitizations of automotive finance receivables and mortgage loans accounted for as sales under SFAS No. 140, as further described in Note 8 in the Company’s 2002 Annual Report on Form 10-K.

Accounting and Reporting Developments

FASB Interpretation No. 46 — In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, Consolidated Financial Statements. FIN 46 addresses consolidation by business enterprises of variable interest entities, representing those entities whose total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties. More specifically, FIN 46 defines variable interest entities as those entities in which the equity investment at risk is not greater than the expected losses of the entity. FIN 46 explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity, to decide whether to consolidate that entity. FIN 46 requires variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or combination of interests that effectively recombines risks that were previously dispersed. FIN 46 does not impact the consolidation guidance for qualifying special purpose entities (QSPEs), as described in SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

originating agent and servicer for COLT leases, GMAC reimbursed COLT’s third-party insurance provider for any losses on the underlying leases (subject to a limit). In March 2003, GMAC purchased the third-party equity of COLT. GMAC now owns all of the outstanding equity and COLT is a fully consolidated entity of GMAC. The impact of this consolidation is that the underlying COLT lease assets (approximately $4 billion at the time of the purchase of the third-party equity by GMAC) are now reflected as operating lease assets of the Company, replacing the secured notes that were previously reported as commercial finance receivables and loans. The net impact of consolidating COLT was an increase in the Company’s consolidated total assets by the amount of the third-party equity purchased ($168 million).

Mortgage warehouse funding GMAC’s Mortgage operations sell commercial and residential mortgage loans through various structured finance arrangements in order to provide funds for the origination and purchase of future loans. Certain of these structured finance arrangements include sales to off-balance sheet warehouse funding special purpose entities (SPEs), including GMAC- and bank-sponsored commercial paper conduits. Transfers of assets into each facility are accounted for as sales based on the provisions of SFAS No. 140. Certain of these warehouse funding SPEs may be considered variable interest entities under FIN 46. As the Company retains some of the risks and rewards associated with the underlying assets, it is possible that the Company could be deemed to be the primary beneficiary and thereby required to consolidate the SPEs. Total assets in these facilities approximated $12.6 billion at March 31, 2003. The exposure to loss related to these facilities was $3.8 billion as of March 31, 2003, representing the Company’s retained interests in these facilities.

Collateralized debt obligations (CDOs) GMAC’s Mortgage operations sponsors, purchases subordinate and equity interests in, and serves as collateral manager for CDOs. Equity investments in CDOs have been purchased from SPEs that are not QSPEs and may be considered variable interest entities under FIN 46. Total assets held in CDOs, which are not QSPEs, approximated $844 million at March 31, 2003. The Company’s exposure to loss represents the retained interests in these CDOs ($77 million at March 31, 2003).

Consolidated Operating Results

The following section provides a discussion of GMAC’s consolidated results of operations as displayed in the Consolidated Statement of Income. The individual business segment sections of this MD&A provide a further discussion of the operating results.

Revenues

Total financing revenue increased by 9% to $3,163 million in the first quarter of 2003. Most notable was a 21% increase in consumer financing revenue due to growth in the consumer automotive portfolio caused by GM-sponsored special rate financing programs and due to the increased use of secured financing structures in the Mortgage operations. Total financing revenue was adversely affected as a result of declining yields on the commercial portfolio (consistent with the decline in interest rates during the year), and a reduction in net operating lease revenue attributable to a continued decrease in the Company’s average operating lease portfolio combined with lower off-lease proceeds on terminated leases.

Interest and discount expense was favorably impacted by declining market interest rates, offset by increased debt (used to fund higher asset levels) and wider borrowing spreads, resulting in a net increase of 7% or $123 million from first quarter 2002 to 2003. The provision for credit losses decreased 25% from $506 million in the first quarter 2002 to $378 million in 2003. Lower loss provisions on the consumer and commercial financing portfolios more than offset increased loss provisions on the Company’s mortgage loan portfolio corresponding to the increased balance of loans held as collateral for secured financings. The 24% increase in insurance premiums and service revenue earned in the first quarter of 2003 was related to volume and rate increases at the Company’s Insurance operations.

Mortgage banking income increased by $312 million or 59% in 2003 as compared to the first quarter 2002. Increased loan production along with higher pricing margins resulted in an increase in gains from the sale of mortgage loans. While amortization and impairment of mortgage servicing rights increased in 2003, these effects were more than offset by improved results from risk management activities on the mortgage servicing rights asset.

Management’s Discussion and Analysis
General Motors Acceptance Corporation

The increase in investment income in the first quarter of 2003 was due to higher impairment charges taken in the first quarter of 2002 on the value of mortgage-related securities. In contrast, the Company’s Insurance operations had a reduction in investment income due to net capital losses incurred during the first quarter 2003 (including other than temporary impairment write downs of certain investment securities).

Expenses

Compensation and benefits expense was $680 million in the first quarter 2003 as compared to $545 million in 2002. The majority of this 25% increase was due to higher compensation costs at the Company’s Mortgage operations commensurate with growth in the business. Additional increases in compensation benefits were incurred in the Financing operations due to increased pension and postretirement allocations from GM. The 17% increase in insurance losses and loss adjustment expenses was primarily due to higher written premium and service revenue volumes.

Other operating expense increased $173 million, to $1,094 million in the first quarter of 2003. Contributing to this 19% increase were higher expenses associated with the Company’s full service leasing business, consistent with the growth in that business, and other miscellaneous increases attributable to general growth in the Company. The Company’s effective tax rate remained relatively consistent as the first quarter 2003 rate was 38.5% versus 39.4% for the comparable period in 2002.

Forward Looking Statements

The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations contains various forward-looking statements within the meaning of applicable federal securities laws that are based upon GMAC’s current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.

Controls and Procedures
General Motors Acceptance Corporation

The Company 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, GMAC’s President and GMAC’s Chief Financial Officer evaluated, with the participation of GMAC’s management, the effectiveness of the Company’s disclosure controls and procedures. Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, GMAC’s President and GMAC’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation.

Other Information
General Motors Acceptance Corporation

Legal Proceedings

The Company did not become a party to any material pending legal proceedings during the three-month period ended March 31, 2003, or during the period from March 31, 2003 to the filing date of this report.

Other Information

Ratio of Earnings to Fixed Charges


Three months ended March 31,	2003		2002

Ratio of earnings to fixed charges		1.64		1.43

The ratio of earnings to fixed charges has been computed by dividing earnings before income taxes and fixed charges by the fixed charges. This ratio includes the earnings and fixed charges of the Company and its consolidated subsidiaries. Fixed charges consist of interest, debt discount and expense and the portion of rentals for real and personal properties in an amount deemed to be representative of the interest factor.

Exhibits and Reports on Form 8-K

(a) Exhibits – The exhibits listed on the accompanying Index of Exhibits are filed or incorporated by reference as a part of this report and such Index is incorporated herein by reference.

(b) Reports on Form 8-K – The Company filed the following Current Reports on Form 8-K during the three-month period ended March 31, 2003:

• On January 16, 2003, under Item 5, Other Events, summarizing the Company’s financial results for the year ended December 31, 2002.

• On March 7, 2003, under Item 5, Other Events, discussing the possible sale of all or a portion of the Company’s commercial mortgage business.

No other reports on Form 8-K were filed during the three-month period ended March 31, 2003; however,

• On April 10, 2003, under Item 5, Other Events, the Company filed a Current Report on Form 8-K relating to credit rating agency actions by Standard & Poor’s occurring on April 9, 2003.

• On April 15, 2003, under Item 9, Regulation FD Disclosure, the Company filed a Current Report on Form 8-K summarizing financial results for the quarter ended March 31, 2003.

• On April 23, 2003, under Item 5, Other Events, the Company filed a Current Report on Form 8-K relating to credit rating agency actions by Dominion Bond Rating Service occurring on April 22, 2003.

Signatures
General Motors Acceptance Corporation

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 thereunto duly authorized, this 7th day of May, 2003.

General Motors Acceptance Corporation
(Registrant)

/s/ WILLIAM F. MUIR

William F. Muir
Executive Vice President and
Chief Financial Officer

/s/ LINDA K. ZUKAUCKAS

Linda K. Zukauckas
Controller and Principal Accounting Officer

Certifications of Disclosure
General Motors Acceptance Corporation

I, Eric A. Feldstein, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GMAC;

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 officer 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 officer 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 officer 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 7, 2003

/s/ ERIC A. FELDSTEIN

Eric A. Feldstein
Chairman and President

Certifications of Disclosure
General Motors Acceptance Corporation

I, William F. Muir, certify that:

Date: May 7, 2003

/s/ WILLIAM F. MUIR

William F. Muir
Executive Vice President and
Chief Financial Officer

Index of Exhibits
General Motors Acceptance Corporation


Exhibit	Description	Method of Filing

3.1	Certificate of Incorporation of GMAC Financial Services Corporation dated February 20, 1997	Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002 (File No. 1-3754); incorporated herein by reference.

3.2	Certificate of Merger of GMAC and GMAC Financial Services Corporation dated December 17, 1997	Filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002 (File No. 1-3754); incorporated herein by reference.

3.3	By-Laws of General Motors Acceptance Corporation as amended through March 17, 2003	Filed herewith.

4.1	Form of Indenture dated as of July 1, 1982 between the Company and Bank of New York (Successor Trustee to Morgan Guaranty Trust Company of New York), relating to Debt Securities	Filed as Exhibit 4(a) to the Company’s Registration Statement No. 2-75115; incorporated herein by reference.

4.1.1	Form of First Supplemental Indenture dated as of April 1, 1986 supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(g) to the Company’s Registration Statement No. 33-4653; incorporated herein by reference.

4.1.2	Form of Second Supplemental Indenture dated as of June 15, 1987 supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(h) to the Company’s Registration Statement No. 33-15236; incorporated herein by reference.

4.1.3	Form of Third Supplemental Indenture dated as of September 30, 1996 supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(i) to the Company’s Registration Statement No. 333-33183; incorporated herein by reference.

4.1.4	Form of Fourth Supplemental Indenture dated as of January 1, 1998 supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(j) to the Company’s Registration Statement No. 333-48705; incorporated herein by reference.

4.1.5	Form of Fifth Supplemental Indenture dated as of September 30, 1998 supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(k) to the Company’s Registration Statement No. 333-75463; incorporated herein by reference.

4.2	Form of Indenture dated as of September 24, 1996 between the Company and The Chase Manhattan Bank, Trustee, relating to SmartNotes	Filed as Exhibit 4 to the Company’s Registration Statement No. 333-12023; incorporated herein by reference.

4.2.1	Form of First Supplemental Indenture dated as of January 1, 1998 supplementing the Indenture designated as Exhibit 4.2	Filed as Exhibit 4(a)(1) to the Company’s Registration Statement No. 333-48207; incorporated herein by reference.

4.3	Form of Indenture dated as of October 15, 1985 between the Company and U.S. Bank Trust (Successor Trustee to Comerica Bank), relating to Demand Notes	Filed as Exhibit 4 to the Company’s Registration Statement No. 2-99057; incorporated herein by reference.

4.3.1	Form of First Supplemental Indenture dated as of April 1, 1986 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(a) to the Company’s Registration Statement No. 33-4661; incorporated herein by reference.

4.3.2	Form of Second Supplemental Indenture dated as of June 24, 1986 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(b) to the Company’s Registration Statement No. 33-6717; incorporated herein by reference.

4.3.3	Form of Third Supplemental Indenture dated as of February 15, 1987 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(c) to the Company’s Registration Statement No. 33-12059; incorporated herein by reference.

4.3.4	Form of Fourth Supplemental Indenture dated as of December 1, 1988 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(d) to the Company’s Registration Statement No. 33-26057; incorporated herein by reference.

4.3.5	Form of Fifth Supplemental Indenture dated as of October 2, 1989 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(e) to the Company’s Registration Statement No. 33-31596; incorporated herein by reference.

Index of Exhibits
General Motors Acceptance Corporation


Exhibit	Description	Method of Filing

4.3.6	Form of Sixth Supplemental Indenture dated as of January 1, 1998 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(f) to the Company’s Registration Statement No. 333-56431; incorporated herein by reference.

4.3.7	Form of Seventh Supplemental Indenture dated as of June 15, 1998 supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(g) to the Company’s Registration Statement No. 333-56431; incorporated herein by reference.

99.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

99.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

	•		Determination of the allowance for credit losses

	•		Valuation of automotive lease residuals

	•		Valuation of mortgage servicing rights

	•		Determination of reserves for insurance losses and loss adjustment expenses

	•		Valuation of securitized residual interests


(a)		Excludes fair value adjustment as described in Note 5 to the Consolidated Financial Statements.

(b)		Represents net funding on securitizations of automotive finance receivables accounted for as sales under SFAS No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, as further described in Note 8 in the Company’s 2002 Annual Report on Form 10-K. For purposes of this analysis, securitizations of mortgage loans are excluded.

(c)		Represents total debt (including the fair value adjustment described in Note 5) divided by total equity as presented on the Consolidated Balance Sheet.

	•		The A (low) rating is assigned by DBRS to bonds of satisfactory credit quality. Protection of interest and principal is still substantial and the company is considered by DBRS to be more susceptible to adverse economic conditions and have greater cyclical tendencies than higher rated companies. The “low” designation indicates the relative standing DBRS has given to a credit within a particular rating category.

	•		The R-1 (low) rating is assigned to short term debt of satisfactory credit quality. The overall strength and outlook for key liquidity, debt and profitability ratios is not normally as favorable as with higher rating categories, but these considerations are still considered by DBRS to be respectable. Any qualifying negative factors which exist are considered by DBRS to be manageable, and the entity is normally of sufficient size to have some influence in its industry.


(a)		Represents securitizations of automotive finance receivables and mortgage loans accounted for as sales under SFAS No. 140, as further described in Note 8 in the Company’s 2002 Annual Report on Form 10-K.

(a)		Exhibits – The exhibits listed on the accompanying Index of Exhibits are filed or incorporated by reference as a part of this report and such Index is incorporated herein by reference.

(b)		Reports on Form 8-K – The Company filed the following Current Reports on Form 8-K during the three-month period ended March 31, 2003:

	•		On January 16, 2003, under Item 5, Other Events, summarizing the Company’s financial results for the year ended December 31, 2002.

	•		On March 7, 2003, under Item 5, Other Events, discussing the possible sale of all or a portion of the Company’s commercial mortgage business.

	•		On April 10, 2003, under Item 5, Other Events, the Company filed a Current Report on Form 8-K relating to credit rating agency actions by Standard & Poor’s occurring on April 9, 2003.

	•		On April 15, 2003, under Item 9, Regulation FD Disclosure, the Company filed a Current Report on Form 8-K summarizing financial results for the quarter ended March 31, 2003.

	•		On April 23, 2003, under Item 5, Other Events, the Company filed a Current Report on Form 8-K relating to credit rating agency actions by Dominion Bond Rating Service occurring on April 22, 2003.

1.		I have reviewed this quarterly report on Form 10-Q of GMAC;

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 officer 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;

	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