Press Release
GM Announces Third-Quarter Income for 1996
10/17/96
GM Reports Third-Quarter-1996 Income From Continuing Operations of
$1.3 Billion
DETROIT, Oct. 15 -- General Motors Corporation
reported today that consolidated income from continuing operations for
the third quarter of 1996 totaled $1.3 billion, or $1.57 per share of
GM $1-2/3 par value common stock, compared with $396 million, or $0.39
per share, in the year-ago period.
"The third-quarter results from continuing operations clearly show
momentum as we continue to rebuild our strength in North America and
grow our business in key international markets throughout the world,"
GM Chairman and Chief Executive Officer John F. Smith, Jr., said.
"We're pleased that our North American assembly plants are on track
with their launch of 15 new cars and vans in this milestone model year
for our North American operations," he said.
The third-quarter-1996 results include a nonrecurring favorable
adjustment of $409 million pretax, which is $253 million after taxes,
or $0.34 per share of GM $1-2/3 par value common stock, reflecting a
previously announced reduction to the corporation's plant closing
reserve. The reduction was required based on the decision to utilize
GM's Wilmington, Del., facility for the assembly of a new generation
Saturn vehicle. There were no special items in the year-ago period.
As previously announced, GM completed the split-off of Electronic Data
Systems Corporation (EDS) on June 7, 1996, and accordingly, the
third-quarter financial results exclude EDS. In the 1995 third
quarter, income from the discontinued operations of EDS totaled $246
million.
Significant highlights of third-quarter-1996 results from the
automotive sectors included the following:
-- The combined net income for GM North American Operations (GM- NAO)
and Delphi Automotive Systems totaled $515 million in the third
quarter of 1996, including the favorable impact of the previously
mentioned adjustment to the plant closing reserve. That compares with
a combined net loss of $93 million for the third quarter of 1995. This
is the first profitable third quarter for GM-NAO/Delphi since 1986.
-- GM International Operations (GMIO) reported net income of $323
million for the third quarter of 1996, versus net income of $111
million in the year-ago period.
Highlights of the third-quarter-1996 results for GM's major
subsidiaries included the following:
-- General Motors Acceptance Corporation (GMAC) reported net income of
$307 million in the third quarter of 1996, compared with $254 million
in the year-ago period. This represents GMAC's most profitable third
quarter since 1991.
-- Hughes Electronics Corporation reported third-quarter earnings in
1996 of $252 million, compared with $256 million in the third quarter
last year. (See additional information in sections detailing
individual sector results, and "Highlights," including restated
results for 1995.)
GM CONSOLIDATED FINANCIAL DATA (with GMAC on an equity basis)
The corporation's pretax income from continuing operations was $949
million in the third quarter of 1996, compared with a pretax net loss
from continuing operations of $70 million in the third quarter of
1995.
The corporation's effective income-tax rate in the third quarter of
1996 was 2.8 percent. The low effective income-tax rate resulted
mainly from the favorable resolution of items related to GM's tax
returns for prior years, overall foreign tax rates that were lower
than the U.S. statutory rate, and reinstatement of
research-and-experimentation credits for the last half of 1996.
The corporation's net-profit margin -- income from continuing
operations as a percent of net sales and revenues -- was 3.7 percent
in the third quarter of 1996, compared with 1.3 percent in the
comparable 1995 period.
The corporation's cash position improved by $1.5 billion over the June
30, 1996, balance with cash and marketable securities totaling $14.5
billion at Sept. 30, 1996. That compares with $8.2 billion at
Sept. 30, 1995, and $13.0 billion at June 30, 1996.
Fully consolidated net sales and revenues from continuing operations
(including GMAC) in the third quarter of 1996 totaled $39.1 billion --
an increase of 10.7 percent compared with the year-ago period.
During the third quarter of 1996, GM dealers delivered 2,085,000 cars
and trucks worldwide, resulting in a 16.1-percent worldwide market
share. That compares with deliveries totaling 2,060,000 and a
worldwide market share of 16.9 percent in the 1995 third quarter.
Following is a summary of financial performance for GM's automotive
business sectors (see "Highlights" for additional information):
GM NORTH AMERICAN OPERATIONS (GM-NAO)/DELPHI
GM North American Operations, including GM's Delphi Automotive
Systems, reported net income of $515 million in the third quarter of
1996, an improvement of $608 million, compared with a net loss of $93
million in the year-ago period. This represents the first profitable
third quarter since 1986. GM-NAO/Delphi's net-profit margin was 2.1
percent in the third quarter of 1996, compared with a net-loss margin
of 0.4 percent in the same period in 1995.
"We still have our work cut out to improve our margin performance,"
Smith said. "Although we're pleased that the margin did improve year
over year, it's still well short of our goal of achieving an average
annual net-profit margin of 5 percent over the automotive business
cycle."
"The success we've achieved in strengthening our North American
operations is a result of our continuing efforts to reduce costs and
improve our competitive position," Smith said. "The success of our
products in the marketplace is a reflection of our intense focus on
the customer. Meeting and exceeding the expectations of consumers in
this key market is critical as our North American plants are currently
launching 15 new cars and vans for sale here and overseas. This
affects nine of our North American assembly plants, including the
Lansing, Mich., Craft Centre where GM's first production electric
vehicle, the EV1, is being produced," he explained.
Production of GM's new full-size vans at the Wentzville, Mo., assembly
plant, and the new Saturn coupe in Spring Hill, Tenn., have reached
full line speed. Production acceleration is on schedule at the
remaining plants that are launching new vehicles.
"We're bringing to the market more new vehicles in the 1997 model year
than any other manufacturer, and more than during any year in our
recent history. We're pleased that the launches are on track,
especially considering the challenges of our tough
vehicle-introduction schedule."
"As we aggressively move into the market with these new cars and
trucks," Smith said, "we are demonstrating that our turnaround in
North America is real and it's based on business fundamentals --
providing consumers with exciting new products and improving product
quality, while making good headway in reducing our costs and taking
all necessary steps to become more competitive."
"Delphi continues to move into new markets to serve its customers
worldwide," Smith said. In the first nine months of 1996, Delphi
undertook 20 new business initiatives, including 10 joint ventures,
four all-new operations, and six acquisitions.
GM vehicle deliveries in the United States in the third quarter of
1996 totaled 1,182,000 units, resulting in a 30.4-percent share of the
U.S. vehicle market, down from 1,235,000 units and a 32.2-percent
share in the third quarter of 1995. (See additional information in
"Highlights.")
GM INTERNATIONAL OPERATIONS (GMIO)
GM International Operations reported net income totaling $323 million
in the third quarter of 1996 compared with $111 million in the third
quarter of 1995. The net-profit margin for GMIO was 3.9 percent for
the third quarter of 1996, compared with 1.6 percent in the comparable
prior-year period.
"The higher net income for the quarter was primarily due to increased
volume, and favorable year-over-year currency exchange," Smith said.
"Our International Operations continued to expand and gain access to
the fastest-growing world markets," Smith said. "Our initiatives in
important expanding markets such as China, Thailand, Poland, Argentina
and India reflect our conviction that the potential in these markets
provides a significant opportunity to leverage GM's global resources
and enhance our competitive position throughout the world."
Volume totaling 792,000 deliveries in the third quarter of 1996
resulted in a 9.1-percent market share, compared with
third-quarter-1995 deliveries totaling 718,000 and a market share of
8.9 percent.
GM's automotive operations in Europe reported net income of $75
million in the third quarter of 1996, an improvement of $173 million,
compared with a net loss of $98 million in the third quarter last
year.
Net income for the remainder of GMIO, including Latin American
Operations and Asian and Pacific Operations, totaled $248 million,
compared with net income of $209 million in the prior-year period.
HIGHLIGHTS - Q3 Financial Results
(Dollars in Millions Except
Per Share Amounts) Three Months Ended
September 30,
----------------------
1996 1995
---------------------------- --------- ----------
Sales and Revenues
GM sales $34,607.1 $31,241.8
GMAC financing revenues 3,163.8 2,959.6
Other income 1,443.8 1,207.2
Intersegment transactions (106.2) (92.3)
-------- --------
Total $39,108.5 $35,316.3
-------- --------
Gross Profit Margin Percentage(1) 14.4% 12.2%
.....................................................
Income (Loss) from continuing
operations before income
taxes(1,2) $948.8 ($69.9)
Effective Income Tax (Benefit)
Rate (1,3) 2.8% (192.6%)
.....................................................
Income from Continuing
Operations $1,270.8 $396.7
Income from Discontinued
Operations - 245.7
-------- --------
Consolidated Net Income (2) $1,270.8 $642.4
======== ========
Net Profit Margin on Income
from Continuing Operations (1) 3.7% 1.3%
======== ========
....................................................
Earnings Attributable to Common Stocks
$1-2/3 par value(2,4) $1,188.3 $316.7
Class E $ - $222.9
Class H $ 62.3 $ 61.4
.....................................................
Earnings Per Share Attributable to Common Stocks
$1-2/3 par value(2,4) $1.57 $0.42
Class E $ - $0.51
Class H $0.63 $0.64
.....................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $0.40 $0.30
Class E $ - $0.13
Class H $0.24 $0.23
.....................................................
Book Value Per Share of Common Stocks
Sept. 30 Dec. 31 Sept. 30
1996 1995 1995
-------- ------- --------
$1-2/3 par value $25.95 $24.37 $23.84
Class E $ - $ 3.11 $ 3.04
Class H $12.98 $12.20 $11.94
....................................................
See footnotes.
HIGHLIGHTS - Q3 Financial Results
(Dollars in Millions Except Three Months Ended
Per Share Amounts) September 30,
----------------------
1996 1995
---------------------------- --------- ----------
Major Business Sector Results
GM-NAO/Delphi:
Sales $24,101 $22,322
====== ======
Pre-tax income (loss) $430 ($185)
Income tax benefit 69 92
Equity income 16 -
------ ------
GM-NAO/Delphi Net Income
(Loss) (2) $515 ($93)
------ ------
GMIO:
Sales $8,260 $6,777
====== ======
Pre-tax income (loss) $265 ($117)
Income tax benefit 35 151
Equity income 23 77
------ ------
GMIO Net Income (5) $323 $111
------ ------
GMAC Net Income 307 254
Hughes Earnings 252 256
Other (6) (126) (132)
------ ------
Income from continuing
operations 1,271 396
------ ------
Income from discontinued
operations - 246
------ ------
Consolidated Net Income $1,271 $642
====== ======
.....................................................
See footnotes.
HIGHLIGHTS - Q3 Operating Information
Three Months Ended
September 30,
----------------------
1996 1995
--------- ----------
Worldwide Wholesale Sales (Units in 000s)
United States: Cars 661 649
Trucks 487 446
------- -------
Total United States 1,148 1,095
Canada and Mexico 105 73
------- -------
Total North America 1,253 1,168
International 752 680
------- -------
Total Worldwide 2,005 1,848
======= =======
....................................................
Vehicle Unit Deliveries (Units in 000s)
United States
Chevrolet - Cars 258 264
- Trucks 361 338
Pontiac 134 150
GMC 110 111
Buick 109 133
Oldsmobile 86 103
Saturn 76 78
Cadillac 39 51
SAAB 9 7
----- -----
Total United States 1,182 1,235
Canada and Mexico 111 107
------ ------
Total North America 1,293 1,342
------ ------
International
Europe 425 391
Latin America, Africa and the
Middle East (LAAMO) 182 162
Asian/Pacific 185 165
------ ------
Total International 792 718
------ ------
Total Worldwide 2,085 2,060
====== ======
....................................................
Market Share
United States
Cars 32.1% 34.6%
Trucks 28.3% 28.9%
Total 30.4% 32.2%
Western Europe 11.2% 11.7%
Latin America 19.3% 18.2%
Asian/Pacific 5.4% 4.9%
....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 23.3% 17.1%
% Fleet Sales - Trucks 7.5% 10.5%
Total Vehicles 16.8% 14.6%
....................................................
Days Supply of Inventory -- U.S.
Gross Landed Stock
Cars 77 79
Trucks 99 97
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 88.5% 78.6%
....................................................
Retail Incentives (7)($ per unit)
GM-NAO $764 $530
GM Europe $586 $656
....................................................
See footnotes.
HIGHLIGHTS - Q3 Operating Information
Three Months Ended
September 30,
----------------------
1996 1995
--------- ----------
Worldwide Employment at September 30 (in 000s)
GM-NAO/Delphi 425 431
GMIO 110 105
GMAC 17 17
Hughes 84 82
Other 11 12
--- ---
Employees associated with
continuing operations 647 647
--- ---
....................................................
Worldwide Payrolls-Continuing
Operations ($ Millions) $7,490.1 $7,221.7
....................................................
(1) Calculated with financing and insurance operations on an
equity basis.
(2) The third quarter 1996 results include a nonrecurring
favorable adjustment of $409 million pretax, which is $253
million after-tax, or $0.34 per share of GM $1-2/3 par
value common stock, reflecting a previously announced
reduction to the corporation's plant closing reserve. The
reduction was required based on the decision to utilize
GM's Wilmington, Delaware facility for the assembly of a
new generation Saturn vehicle.
(3) The low third quarter 1996 effective income tax rate
resulted mainly from the favorable resolution of items
related to GM's tax returns for prior years, overall
foreign tax rates that were lower than the U.S. statutory
rate, and reinstatement of research and experimentation
credits for the last half of 1996. The effective income
tax rate in the third quarter of 1995 includes tax benefits
from the mix of foreign income and foreign income taxes.
(4) Three Months Ended
September 30,
-------------------
1996 1995
---- ----
$1-2/3 par value includes:
Earnings attributable to:
Continuing operations $1,188.3 $293.9
Discontinued operations - 22.8
------- -------
Net earnings $1,188.3 $316.7
======= =======
$1-2/3 par value includes:
Earnings per share attributable to:
Continuing operations $1.57 $0.39
Discontinued operations - 0.03
------ -------
Net earnings per share $1.57 $0.42
====== =======
(5) GMIO Includes: Three Months Ended
September 30,
------------------
1996 1995
---- ----
GM Europe $75 ($98)
Other GMIO $248 $209
(6) Includes Allison Transmission Division, GM Locomotive Group,
and purchase accounting adjustments.
(7) Amounts reported for 1995 have been restated to reflect the
methodology used to calculate Retail Incentives for the 1996
period.
HIGHLIGHTS - 9 Months Financial Results
(Dollars in Millions Except
Per Share Amounts)
Nine Months Ended
September 30,
----------------------
1996 1995
---------------------------- --------- ----------
Sales and Revenues
GM sales $109,461.4 $106,862.9
GMAC financing revenues 9,467.3 8,594.6
Other income 4,489.9 3,788.1
Intersegment transactions (297.8) (324.7)
--------- -----------
Total $123,120.8 $118,920.9
--------- -----------
Gross Profit Margin Percentage(1) 15.1% 16.1%
.....................................................
Income from continuing operations
before income taxes (1,2) $4,229.0 $5,016.5
Effective Income Tax Rate (1) 27.1% 30.5%
.....................................................
Income from Continuing Operations
before Cumulative Effect of
Accounting Change $4,167.0 $4,436.0
Income from Discontinued
Operations*(3) 10.0 630.5
Cumulative Effect of Accounting
Change (4) - (51.8)
-------- --------
Consolidated Net Income (2) $4,177.0 $5,014.7
======== ========
Net Profit Margin on
Continuing Operations (1) 3.8% 4.2%
======== ========
.....................................................
Earnings Attributable to Common Stocks
$1-2/3 par value(2,5,6) $3,887.4 $3,957.2
Class E $ 15.4 $ 551.1
Class H $ 213.5 $ 193.5
.....................................................
Earnings Per Share Attributable to Common Stocks
$1-2/3 par value(2,5,7) $5.14 $5.25
Class E $0.04 $1.40
Class H $2.18 $2.03
.....................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $1.20 $0.80
Class E $0.30 $0.39
Class H $0.72 $0.69
.....................................................
See footnotes.
HIGHLIGHTS - 9 Months Financial Results
(Dollars in Millions Except
Per Share Amounts) Nine Months Ended
September 30,
----------------------
1996 1995
---------------------------- --------- ----------
Major Business Sector Results
GM-NAO/Delphi:
Sales $76,615 $77,033
====== ======
Pre-tax income $1,624 $2,691
Income tax expense (323) (881)
Equity income 69 36
Cumulative effect of
accounting change - (52)
------ ------
GM-NAO/Delphi Net Income $1,370 $1,794
------ ------
GMIO:
Sales $26,358 $23,703
====== ======
Pre-tax income $1,468 $1,491
Income tax expense (344) (481)
Equity income 55 136
------ ------
GMIO Net Income (8) $1,179 $1,146
------ ------
GMAC Net Income 966 768
Hughes Earnings 870 813
Other (9) (218) (137)
------ ------
Income before discontinued
operations 4,167 4,384
------ ------
Income from discontinued
operations *(3) 10 631
------ ------
Consolidated Net Income $4,177 $5,015
====== ======
See footnotes.
HIGHLIGHTS - 9 Months Operating Information
Nine Months Ended
September 30,
----------------------
1996 1995
--------- ----------
Worldwide Wholesale Sales (Units in 000s)
United States: Cars 2,066 2,349
Trucks 1,522 1,515
------- -------
Total United States 3,588 3,864
Canada and Mexico 357 334
------- -------
Total North America 3,945 4,198
International 2,332 2,232
------- -------
Total Worldwide 6,277 6,430
======= =======
....................................................
Vehicle Unit Deliveries (Units in 000s)
United States
Chevrolet - Cars 858 793
- Trucks 1,127 1,070
Pontiac 422 457
GMC 346 348
Buick 334 357
Oldsmobile 256 299
Saturn 217 217
Cadillac 125 130
SAAB 23 20
----- -----
Total United States 3,708 3,691
Canada and Mexico 346 337
------ ------
Total North America 4,054 4,028
------ ------
International
Europe 1,405 1,341
Latin America, Africa and the
Middle East (LAAMO) 504 474
Asian/Pacific 495 458
------ ------
Total International 2,404 2,273
------ ------
Total Worldwide 6,458 6,301
====== ======
.....................................................
Market Share
United States
Cars 33.1% 33.7%
Trucks 28.9% 29.8%
Total 31.3% 32.0%
Western Europe 11.9% 12.3%
Latin America 19.6% 17.5%
Asian/Pacific 4.8% 4.6%
.....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 25.7% 22.6%
% Fleet Sales - Trucks 10.8% 12.8%
Total Vehicles 19.6% 18.8%
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 83.2% 87.4%
....................................................
Retail Incentives (10)($ per unit)
GM-NAO $688 $523
GM Europe $513 $566
....................................................
See footnotes.
HIGHLIGHTS - 9 Months Operating Information
Nine Months Ended
September 30,
----------------------
1996 1995
--------- ----------
Worldwide Payrolls-Continuing
Operations ($ Millions) $24,359.4 $22,327.7
...................................................
Footnotes:
(1) Calculated with financing and insurance operations on an
equity basis.
(2) The results for the nine months ended September 30, 1996
include a nonrecurring favorable adjustment of $409 million
pretax, which is $253 million after-tax, or $0.34 per share
of GM $1-2/3 par value common stock, reflecting a
previously announced reduction to the corporation's plant
closing reserve. The reduction was required based on the
decision to utilize GM's Wilmington, Delaware facility for
the assembly of a new generation Saturn vehicle.
(3) Income from discontinued operations includes the following
components: Nine Months Ended
September 30,
------------------
1996 1995
------ ------
EDS Earnings $25.0 $669.4
Effect of purchase
accounting adjustments - (38.9)
GM split-off costs (15.0) -
----- -----
Income from
discontinued operations $10.0 $630.5
===== =====
(4) Restated to reflect the retroactive adoption, as of
January 1, 1995, of the provisions of EITF Issue No. 95-1,
which resulted in an unfavorable cumulative effect of $51.8
million, or $0.07 per share of $1-2/3 par value common
stock.
(5) Nine Months Ended
September 30,
----------------------
1996 1995
-------- --------
$1-2/3 par value includes:
Earnings (Loss) attributable to:
Continuing operations before
cumulative effect of
accounting change $3,892.8 $3,929.6
Discontinued operations (5.4) 79.4
Cumulative effect of
accounting change - (51.8)
------- -------
Net earnings $3,887.4 $3,957.2
======= =======
$1-2/3 par value includes:
Earnings (Loss) per share attributable to:
Continuing operations before
cumulative effect of
accounting change $5.15 $5.21
Discontinued operations (0.01) 0.11
Cumulative effect of
accounting change - (0.07)
------ -------
Net earnings per share $5.14 $5.25
====== =======
(6) 1995 includes $162.6 million net income from the sale of the
net assets of NCRS, partially offset by $13.5 million in
preference stock buyback fees.
(7) 1995 includes $0.22 per share favorable impact from the sale
of the net assets of NCRS, offset by the unfavorable impact
of the Series B, D and G preference share buyback of $0.22
per share.
HIGHLIGHTS - 9 Months Operating Information
(8) GMIO Includes: Nine Months Ended
September 30,
------------------
1996 1995
------ ------
GM Europe $679 $548
Other GMIO $500 $598
(9) Includes Allison Transmission Division, GM Locomotive Group,
and purchase accounting adjustments.
(10) Amounts reported for 1995 have been restated to reflect the
methodology used to calculate Retail Incentives for the 1996
period.
* Through the June 7, 1996 split-off date.