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DETROIT - General Motors Corp. (NYSE: GM) today reported 2003 consolidated net income of $3.8 billion, or $7.14 per diluted share of common stock, compared with $1.7 billion, or $3.35 per share, in 2002. Revenue rose 4.6 percent to $185.5 billion from $177.3 billion in 2002, which is restated to exclude Hughes Electronics.

GM's adjusted income, which excludes special items and results from Hughes Electronics, totaled $3.2 billion, or $5.62 per share, in 2003, compared with $3.9 billion, or $6.98 per share in 2002.


In the fourth quarter of 2003, General Motors reported consolidated net income of $1.0 billion, or $2.13 per share, compared with $1.0 billion, or $1.71 per share, in the fourth quarter of 2002. Revenue rose 7.7 percent to $49.1 billion from $45.6 billion in the fourth quarter of 2002.

Excluding special items and Hughes, GM earned $838 million, or $1.47 per share, in the fourth quarter of 2003, compared with $934 million, or $1.67 per share, in the year ago period.

GM's fourth-quarter-2003 results reflect various special items with a net favorable effect of $339 million, or $0.72 per share. These special items include a net gain of $1.2 billion associated with the split-off of Hughes Electronics from GM and related sale of Hughes stock to News Corp., and a positive adjustment of $103 million to previous accruals for excess employees at certain North American facilities. These items were partially offset by a charge of $725 million for the cost of lump-sum payments and vehicle-discount vouchers to retirees as provided for in the 2003 United Auto Workers (UAW) labor contract, and additional restructuring actions at GM Europe totaling $218 million.

GM's 2003 results reflect increased dilution primarily attributable to the status of employee stock options, which reduced earnings per share by approximately $0.03 in the fourth quarter of 2003 and $0.08 in calendar year 2003. GM's 2003 results also include preliminary earnings from Hughes Electronics (NYSE: HS). Hughes, now an independent, publicly traded company, will report financial results at a later date. GM split off Hughes Electronics and retired the GM Class H common stock on Dec. 22, 2003.

GM financial results described throughout the remainder of this release exclude special items unless otherwise noted (see "Highlights").


"GM reported solid overall results in 2003, reflecting strong contributions from GMAC and our Asia Pacific automotive operations," GM Chairman and Chief Executive Officer Rick Wagoner said. "By leveraging our strengths as a global manufacturer with strong brands and great cars and trucks, we expect to improve our automotive profitability, increase revenue and build market share in 2004."

GM generated more than $32 billion in cash in 2003, about three times the company's original target, including more than $10 billion in cash from automotive operations, as well as proceeds from non-core asset sales and global debt offerings.

GM's strong cash performance enabled the company to contribute a total of $18.5 billion to its U.S. pension plans and $3.3 billion to the Voluntary Employees' Beneficiary Associated (VEBA) Trust for retiree health-care benefits in 2003. As previously disclosed, GM contributed an additional $2.4 billion to the VEBA Trust in January 2004."These moves considerably strengthened our balance sheet, and enabled us to end the year with our combined U.S. hourly and salaried pension plans fully funded," Wagoner said. "This was a remarkable accomplishment considering that these plans were nearly $18 billion underfunded at the start of 2003."

Cash, marketable securities, and assets of the VEBA trust invested in short-term fixed-income securities totaled $26.9 billion at Dec. 31, 2003, excluding GMAC and Hughes, compared with $17.3 billion the end of 2002.


GM's global automotive operations earned $396 million in the fourth quarter of 2003, compared with $574 million in the year-ago quarter, excluding special items. The fourth- quarter-2003 results reflected sharply higher profits in the company's Asia Pacific operations, reduced losses in Europe, lower income in North America, and increased losses in Latin America. For all of 2003, GM's automotive operations earned $1.1 billion, compared with $2.6 billion in 2002. The deterioration in profitability is partially attributable to higher pension and health-care costs in the U.S.

GM increased its global market share to 15.2 percent in the fourth quarter of 2003 from 15.1 percent the prior year. For the full year, three out of four automotive regions posted gains, although GM's global market share declined to 14.7 percent from 15.0 percent. The decline reflects primarily the mix effect of strong industry growth in Asia where GM's share is less than its global share.

GM North America (GMNA) earned $397 million in the fourth quarter of 2003, compared with $644 million in the year-ago period, as lower production volumes and higher pension and health-care costs were partially offset by strong cost performance and favorable mix. For 2003, GMNA earned $1.2 billion, down from $3.1 billion in 2002.

Despite strong gains in the second half of the year, GM's share of the U.S. market in 2003 was 28.0 percent compared with 28.3 percent in 2002.

"While overall market share was down, we were pleased with our sales momentum in the second half of 2003 when our market share was 28.7 percent," Wagoner said. "As we continue our aggressive new-product cadence, we are optimistic about increasing market share in 2004.

"Over the last few years, we have significantly improved the quality and competitive position of our vehicles," Wagoner said. "This trend continued in 2003 with Cadillac leading the way. There's still more to do, but we believe our cars and trucks are beginning to change consumer perceptions."

GM Europe (GME) reported a loss of $66 million in the fourth quarter of 2003, compared with a loss of $129 million a year ago as continued material and structural cost reductions were partially offset by foreign-exchange losses, continued price pressure and unfavorable mix. For 2003, GME had a loss of $286 million, an improvement from the $549 million loss in 2002.

"While we're disappointed that we fell short of our financial targets in Europe, we continue to make good progress on cost reduction," Wagoner said. "In 2004, we expect to improve our operating performance as we launch new models such as the Opel Astra, Vectra wagon and a new, small convertible."

GM Asia Pacific (GMAP) earned $177 million in the fourth quarter of 2003, a significant improvement from year-ago earnings of $66 million. Continued strong performance by Shanghai GM in China and Holden in Australia, together with improved results from GM's equity alliances, contributed to GMAP's performance. For all of 2003, GMAP earned $577 million, more than three times the net income of $188 million in 2002.

"GM's Asia Pacific operations delivered great results in 2003, led by China and Australia," Wagoner said. "In 2003, China became the world's third-largest market, and we expect sales to continue to grow this year. GM is well positioned to participate in this growth through its joint ventures in China."

GM Latin America/Africa/Mid-East (GMLAAM) reported a loss of $112 million in the fourth quarter of 2003, compared with a loss of $7 million in the year-ago period. For all of 2003, GMLAAM reported a loss of $331 million, up from a loss of $181 million in 2002. Results for 2003 in Latin America were negatively affected by weak economic conditions and an asset write-down in Brazil.


GMAC reported record fourth-quarter income of $630 million in 2003, up 20 percent from the $524 million earned in the fourth quarter of 2002. All three of GMAC's business units -- Financing, Insurance and Mortgage Operations -- reported improved results during the quarter.

For calendar year 2003, GMAC posted another record year with income of $2.8 billion, compared with $1.9 billion in 2002. Earnings from financing operations improved as lower credit provisions offset the negative impact of narrower net-interest margins. Insurance operations benefited from higher underwriting income and a reduction in capital losses related to its investment portfolio. Income from mortgage operations more than doubled, reflecting record originations in both the residential and commercial mortgage sectors.

"GMAC had an outstanding year in 2003," Wagoner said. "In addition to delivering its ninth-straight year of earnings growth, GMAC also did a terrific job of diversifying its funding sources and supporting GM's auto sales around the globe."


General Motors also announced that its approximately 125,000 hourly employees in the United States will receive a profit-sharing payment in 2004. A typical U.S. hourly employee, eligible under the profit-sharing program, would qualify for a payment of approximately $170.


GM expects global auto-industry sales to rise about 3 percent in 2004 to a record 60 million vehicles. In the United States, GM expects total U.S. industry vehicle sales of approximately 17.3 million. GM expects robust industry growth in Asia Pacific with moderate growth in Europe and the LAAM region.

GM expects to generate $5 billion in operating cash in 2004. In addition, GM estimates that earnings in the first quarter of 2004 will be approximately $1.75 per share, excluding any special items and at current dilution levels. For the 2004 calendar year, GM's earnings target is $6.00 to $6.50 per share, excluding any special items and at current dilution levels. (The dilution calculation may be affected by the Series C Convertible Senior Debentures issued by GM in July of 2003 and due in 2033.)

In this press release and related comments by General Motors management, our use of the words "expect," "anticipate," "estimate," "project," "forecast," "outlook," "target," "objective," "plan," "goal," "pursue" and similar expressions is intended to identify forward looking statements. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described in GM's most recent report on SEC Form 10-K (at page II-18) which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: changes in economic conditions; currency exchange rates or political stability; shortages of fuel, labor strikes or work stoppages; market acceptance of the corporation's new products; significant changes in the competitive environment; changes in laws, regulations and tax rates; and, the ability of the corporation to achieve reductions in cost and employment levels to realize production efficiencies and implement capital expenditures at levels and times planned by management.

Toni Simonetti
212-418-6380 (office)
917-822-3393 (mobile)
[email protected]

Jerry Dubrowski
212-418-6261 (office)
917-544-4885 (mobile)
[email protected]

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1,530 Posts
You know, I keep seeing this same story under very different headlines:

There's the positively spun headlines that focus GM's performance for the year, such as the one here, as well as...

"GM Earnings Beat Estimates, 2004 Outlook Strong"

"General Motors 2003 profit more than doubles"

...etc. At the same time, I see the very same story from other sources with headlines that focus on the last quarter, then go on to discuss the overall performance during the year, such as...

"General Motors profit stalls in fourth quarter"

"General Motors profit in fourth quarter flat"


I've seen at least ten different headlines, all of them very positive ("GM profit soars") or very negative ("GM profits fall flat"). Both are true, depending on whether you look at GM's performance last year as a whole, or consider its fourth quarter performance as an indicator of slowing momentum into '04; but this kind of thing really seems to separate the glass-half-full writers from the glass-half-empty writers. Or, if I wanted to be cynical, I could say that this separates GM critics from writers who actually report the facts. :rolleyes:

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12,770 Posts
Here's a "balanced" take I found: ;)

Quarterly profits at GM decline
But earnings aided by financing unit and the sale of its Hughes stake to News Corp.

By Danny Hakim
The New York Times
January 21, 2004

DETROIT -- General Motors Corp. reported on Tuesday that its fourth-quarter net income fell slightly as strength in its financial operations was offset by an continuing price war in North America that has failed to increase its market share.

That means the company's 125,000 production workers in the United States will receive an annual bonus of $170, down from $940 last year and the second-lowest bonus GM has paid to its hourly workers in the decade since its dire struggles of the early 1990s.

GM's fourth-quarter financial results handily beat Wall Street's estimates, though, and the company set targets for the first quarter of 2004 that were above analysts' projections, though below the results from the comparable quarter a year earlier.

The company also projected stronger results for the full year, forecasting operating earnings of $6 to $6.50 a share, up from operating earnings of $5.62 a share last year.

"While overall market share was down, we were pleased with our sales momentum in the second half of 2003," said Rick Wagoner, GM's chairman and chief executive, in a statement. Because of a wave of new product offerings, he said he is "optimistic about increasing market share in 2004."

For the fourth quarter, GM reported net income of about $1.01 billion, down about 1 percent from $1.02 billion a year earlier. But its earnings per share increased substantially, to $2.13 in the latest quarter from $1.71 a year earlier, because of changes in the way GM treated earnings from its now-former subsidiary, Hughes Electronics. The sale of GM's stake in Hughes to News Corp. was concluded in December.

The Hughes sales led to a net gain of $1.2 billion that was partly offset by special charges, principally stemming from the company's negotiation of a new four-year contract with the United Auto Workers. GM took a one-time charge of $725 million resulting from lump-sum payments to workers made in lieu of percentage wage increases and discounts for vehicle purchases.

Excluding Hughes and the special charges, GM earned $1.47 a share, about 25 cents more than Wall Street analysts had projected.

For the full year, GM reported its net income had more than doubled to $3.8 billion, or $7.14 a share. Revenue rose 4.6 percent, to $185.5 billion.

Much of GM's results reflected recent trends at the company, which has seen its financing operations bolster its bottom line while its core business, making cars and trucks, has struggled. Global automotive operations lost $167 million in the quarter, down from a $574 million profit a year earlier. For the year, market share in North America fell to 28.0 percent from 28.3 percent.

General Motors Acceptance Corp., the company's financing, insurance and mortgage business, saw its income rise to $630 million in the quarter, from $524 million.

"While GM's margins remain low for an auto company running 94 percent of capacity, and much of its earnings are generated through the financing of cars rather than the manufacturing of cars, the fact is that the company is growing earnings in a difficult pricing environment," said John Casesa, a Merrill Lynch analyst, in a research note.

"Management is running a tight ship by executing well, and it must do so, with interest expense we forecast to run at about $3.70 per share in 2004," he said.
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