10-K405
1
GMAC 1994 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1994, OR
TRANSITION REPORT PURSUANT TO SECTION 13 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)
New York 38-0572512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153
3044 West Grand Boulevard, Detroit, Michigan 48202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-556-1508
The registrant meets the conditions set forth in General Instruction
J(1) (a) and (b) of Form 10-K and is therefore filing this Form with
the reduced disclosure format.
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
__
8 3/8% Notes due May 1, 1997 |
6 % Debentures due April 1, 2011 |
10 % Deferred Interest Debentures > New York
due December 1, 2012 | Stock Exchange
10.30 % Deferred Interest Debentures |
due June 15, 2015 |
8 1/4% Debentures due April 1, 2016 __|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has
been subject to such filing requirements for the past 90 days.
Yes X . No ___.
As of December 31, 1994, there were outstanding 22,000,000 shares of
the issuer's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
None
2
CONTENTS
Page No.
PART I
Item 1. Business .................................... 3
Item 2. Properties .................................. 6
Item 3. Legal Proceedings ........................... 6
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters ............. 7
Item 6. Selected Financial Data ..................... 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 9
Item 8. Financial Statements and Supplementary
Data ........................................ 24
Management's Responsibilities for
Consolidated Financial Statements ........... 24
Independent Auditors' Report ................ 25
Consolidated Balance Sheet .................. 26
Consolidated Statement of Income and
Net Income Retained for Use in the
Business ................................... 27
Consolidated Statement of Cash Flows ........ 28
Notes to Financial Statements ............... 29
Supplementary Financial Data ................ 65
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K ..................... 70
Signatures .................................. 71
Exhibit Index ............................... 73
Ratio of Earnings ........................... 74
Independent Auditors' Consent ............... 75
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3
PART I
ITEM 1. BUSINESS
General Motors Acceptance Corporation (the "Company" or "GMAC"), a
wholly-owned subsidiary of General Motors Corporation ("General
Motors" or "GM"), was incorporated in 1919 under the New York
Banking Law relating to investment companies.
In conducting its primary form of business, GMAC and its affiliated
companies offer a wide variety of automotive financial services to
and through franchised General Motors dealers in many countries
throughout the world. GMAC also offers financial services to other
automobile dealerships and to the customers of those dealerships.
GMAC also provides commercial financing for real estate, equipment
and capital loans to automobile dealerships, GM suppliers and
customers of GM affiliates. GMAC's other financial services include
insurance, mortgage banking and investment services. The Company
had 17,246 and 18,322 employees worldwide, as of December 31, 1994
and 1993, respectively.
The Company operates directly and through its subsidiaries and
through affiliates in which the Company or GM has equity
investments. In its principal markets, GMAC offers automotive
financing and other services as described below. The Company
operates its automotive financing services similarly outside of the
U.S. and Canada, subject to local laws or other circumstances that
may modify procedures. The Company's policies and internal
accounting controls are designed to ensure compliance with
applicable laws and regulations.
The automotive financing industry is highly competitive. The
Company's principal competitors for retail financing and leasing are
affiliated finance subsidiaries of other major manufacturers as well
as a large number of banks, commercial finance companies, savings
and loan associations and credit unions. Wholesale and lease
financing competitors are primarily comprised of the manufacturer's
affiliated finance companies, independent commercial finance
companies and banks. Neither the Company nor any of its competitors
is considered to be a dominant force in the industry when analyzed
individually. The Company's ability to offer competitive financing
rates, the primary basis of competition, is directly affected by its
access to capital markets. The Company applies a strategy of
constantly reviewing funding alternatives to foster continued
success. The quality of service provided to automotive dealerships
and their customers contributes to the Company's competitive
advantages.
In the U.S. automotive business, there are seasonal retail sales
fluctuations that cause production levels to vary from month to
month. In addition, the changeover period related to the annual new
model introduction has traditionally occurred in the third quarter
of each year, causing an unfavorable impact on the operating results
of automobile manufacturers. These factors produce slight
fluctuations in financing volume with the second quarter of each
year generally experiencing the strongest activity. However,
seasonal variations in vehicle deliveries do not have a material
impact on the Company's interim results as quarterly financing
revenue remains relatively consistent throughout the year, primarily
attributable to the use of the interest method for recognition of
income from retail and lease financing as well as consistent dealer
inventory levels.
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ITEM 1. BUSINESS (continued)
RETAIL FINANCING
GMAC conducts its U.S. and Canadian retail automotive financing
business under the trade name GMAC Financial Services. The Company
provides financing services to customers through dealers who have
established relationships with GMAC. GMAC purchases retail
instalment obligations for new and used products directly from
dealers. These obligations must first meet GMAC's credit standards.
Thereafter, GMAC collects and administers the obligations.
Retail obligations are generally secured by lien notation on
vehicles and/or other forms of security interest in the products
financed. GMAC acquires the security interest when it purchases the
instalment obligations. After satisfying state requirements, GMAC
can generally repossess the product if the instalment buyer fails to
meet the obligations of the contract. The interests of both GMAC
and the retail buyer usually are protected by automobile physical
damage insurance.
WHOLESALE FINANCING
Using GMAC's wholesale financing, qualifying dealers can finance new
and used vehicles held in inventory pending sale or lease to retail
or fleet buyers. When a dealer uses GMAC's Wholesale Finance Plan
to acquire vehicles from a manufacturer or other vehicle sources,
GMAC is generally granted a security interest in those vehicles.
GMAC can generally repossess the product if the dealer does not pay
the amount advanced or fails to comply with other conditions
specified in the security agreement.
GMAC also makes term loans to dealers and their affiliates for
business acquisitions, facilities refurbishing, real estate
purchases and working capital. The Company generally secures the
loans with liens on real estate, other dealership assets and/or the
personal guarantee of the dealer.
LEASING
Operating Leases:
-----------------
GMAC offers leasing plans to retail customers as well as dealers or
other companies that rent or lease vehicles to others. GMAC's most
successful leasing program, called SmartLease in the U.S. and
Canada, is a plan in which dealers originate the leases and offer
them for purchase by GMAC. As GMAC assumes ownership of the
vehicle, these leases are accounted for as operating leases with the
capitalized cost of the vehicle recorded as a depreciable asset (net
investment in operating leases). Dealers are not responsible for
the customer's performance during the lease period nor for the value
of the vehicle at the time of lease maturity. The SmartLease
program encourages shorter customer trading cycles and allows
greater flexibility in dealers' retail lease transactions. Similar
operating lease programs are offered in Germany and eleven other
countries. On occasion, General Motors Corporation may elect to
sponsor retail leasing programs by supporting special lease rates
and/or guaranteeing residual values in excess of published residual
guide books used by GMAC.
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ITEM 1. BUSINESS (continued)
Finance Leases:
---------------
GMAC also offers other leasing plans directly to individual
customers and other entities. Under these plans, the leases are
accounted for as finance leases and the receivables from the
customers are recorded as finance receivables. GMAC does not assume
ownership of the vehicle. These leasing receivables essentially
represent instalment sales of vehicles, with the vehicle usually
being acquired by the customer at the end of the lease contract.
Lease Financing:
----------------
Dealers, their affiliates and other companies also may obtain GMAC
financing to buy vehicles that they lease or rent to others. These
leases, sometimes referred to as Fleet leases, are categorized as
finance receivables. GMAC generally has a security interest in
these products as well as rents payable under a lease or rental
agreement with a customer. However, competitive factors
occasionally result in a limited security interest in this
collateral. More than half of GMAC's inventory financing
receivables are covered by General Motors programs which provide a
limited payment guarantee to participating financing institutions as
consideration for extending credit to a fleet customer. Under this
program, General Motors will reimburse the financing institution,
subject to certain limitations, for losses on the sale of vehicles
which are repossessed and returned to the selling dealer.
INSURANCE
Motors Insurance Corporation and its subsidiaries ("MIC") conduct
insurance operations in the United States, Canada and Europe. MIC
insures and reinsures selected personal, mechanical, commercial and
credit insurance coverages.
Personal lines coverages, which include automobile, homeowners and
umbrella liability insurance, are offered primarily on a direct
response basis. MIC insures mechanical coverage for new and used
vehicles sold by GM dealers and others. In addition, MIC provides
credit life and disability coverage through dealerships to vehicle
purchasers. Commercial lines include insurance for dealer vehicle
inventories, and other dealer property and casualty coverages. MIC
also provides collateral protection coverage to GMAC on vehicles
securing GMAC retail instalment contracts. Additionally, MIC is a
reinsurer of diverse property and casualty risks, primarily in the
domestic market.
MORTGAGE BANKING
GMAC Mortgage Corporation ("GMACMC") and its subsidiaries,
collectively the GMAC Mortgage Group ("GMACMG"), conduct mortgage
banking operations in the United States. GMACMG originates and
markets single-family and commercial mortgage loans to investors and
services these loans on behalf of investors. During 1994, GMACMG
began retaining certain originated loans for investment purposes.
GMACMG also offers other consumer services including home equity
loans, insurance services and title and trustee services.
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ITEM 1. BUSINESS (concluded)
GMACMC, through its wholly-owned subsidiary, Residential Funding
Corporation ("RFC"), is engaged in the residential wholesale
mortgage conduit business. RFC purchases high balance, single-
family residential mortgages from mortgage lenders throughout the
United States, securitizes such mortgages into AA or AAA rated
mortgage pass-through certificates, sells the certificates to
investors and performs master servicing of these securities on
behalf of investors. In addition, RFC also provides warehouse
lending facilities to certain mortgage banking customers secured by
mortgage collateral as well as long-term secured lines of credit to
construction lending project managers.
SERVICING
GMAC services the retail instalment and wholesale obligations it has
sold to third parties through GMAC's asset-backed securities
program.
ITEM 2. PROPERTIES
The Company and its subsidiaries have 308 finance branches, 27
insurance offices and 140 mortgage offices. Of the number of
finance branches, 232 are in the United States and the Commonwealth
of Puerto Rico, 24 in Canada and 52 in other countries. There are
17 insurance offices in the United States, three in Canada and seven
in Europe. Mortgage offices are all located in the United States.
All premises are generally occupied under lease. Automobiles,
office equipment and real estate properties owned and in use by the
Company are not significant in relation to the total assets of the
Company.
ITEM 3. LEGAL PROCEEDINGS
There are various claims and actions pending against the Company and
its subsidiaries with respect to commercial and consumer financing
matters, taxes and other matters arising out of the conduct of the
business. Certain of these actions are or purport to be class
actions, seeking damages in very large amounts. The probability of
adverse verdicts from individual claims and actions is determined by
a periodic review conducted by management and the Company's General
Counsel which involves soliciting input from staff attorneys as well
as outside counsel. Based on these reviews and examinations, the
amounts of liability on these claims and actions at December 31,
1994, were not determinable but, in the opinion of management, the
ultimate liability resulting therefrom should not have a material
adverse effect on the Company's consolidated financial position or
results of operations.
-------------------
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company is a wholly-owned subsidiary of General Motors
Corporation and, accordingly, all shares of the Company's common
stock are owned by General Motors Corporation. There is no market
for the Company's common stock.
The Company paid cash dividends to General Motors Corporation of
$875 million in 1994, $1,250 million in 1993 and $1,100 million in
1992.
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ITEM 6. SELECTED FINANCIAL DATA
FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS
---------------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
INCOME AND NET (in millions of dollars)
INCOME RETAINED FOR
USE IN THE BUSINESS
Gross revenue and
other income ..... $ 12,145.0 $ 12,483.5 $ 13,739.3 $ 14,503.1 $ 14,815.8
---------- ---------- ---------- ---------- ----------
Interest and
discount ......... 4,230.9 4,721.2 5,828.6 6,844.7 7,965.8
Depreciation on
operating leases . 3,233.8 2,702.0 2,429.6 1,902.4 1,387.9
Operating expenses 1,986.8 1,949.0 1,900.1 1,907.1 1,677.9
Insurance losses and
loss adjustment
expenses ......... 1,030.9 1,096.6 987.9 1,061.6 1,014.1
Provision for
financing losses . 177.3 300.8 371.0 1,047.9 843.2
Amortization of
intangible assets 45.5 141.1 121.1 91.2 78.5
---------- ---------- ---------- ---------- ----------
Total expenses .... 10,705.2 10,910.7 11,638.3 12,854.9 12,967.4
---------- ---------- ---------- ---------- ----------
Income before
income taxes ..... 1,439.8 1,572.8 2,101.0 1,648.2 1,848.4
United States,
foreign and other
income taxes ..... 512.7 591.7 882.3 610.0 658.3
---------- ---------- ---------- ---------- ----------
Income before cumu-
lative effect of
accounting changes 927.1 981.1 1,218.7 1,038.2 1,190.1
Cumulative effect of
accounting changes (7.4) -- (282.6) 331.5 --
---------- ---------- ---------- ---------- ----------
Net income ........ 919.7 981.1 936.1 1,369.7 1,190.1
Cash dividends .... 875.0 1,250.0 1,100.0 850.0 1,000.0
---------- ---------- ---------- ---------- ----------
Net income retained
in the year ...... $ 44.7 $ (268.9) $ (163.9) $ 519.7 $ 190.1
========== ========== ========== ========== ==========
ASSETS
Cash and cash
equivalents ...... $ 1,339.5 $ 4,028.1 $ 3,871.1 $ 2,412.5 $ 205.1
Earning assets .... 82,074.6 74,783.8 87,198.7 98,614.3 103,407.9
Other assets ...... 2,123.3 1,938.9 1,738.4 1,607.7 1,477.9
---------- ---------- ---------- ---------- ----------
Total ............. $ 85,537.4 $ 80,750.8 $ 92,808.2 $102,634.5 $105,090.9
========== ========== ========== ========== ==========
NOTES, LOANS AND
DEBENTURES
Payable within
one year ......... $ 35,114.8 $ 35,084.4 $ 41,364.4 $ 51,018.6 $ 53,715.8
Payable after
one year ......... 31,539.6 27,688.8 33,174.2 34,480.9 34,185.4
---------- ---------- ---------- ---------- ----------
Total ............. $ 66,654.4 $ 62,773.2 $ 74,538.6 $ 85,499.5 $ 87,901.2
========== ========== ========== ========== ==========
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net income for General Motors Acceptance Corporation
(GMAC) and its subsidiaries totaled $919.7 million in 1994, or $61.4
million and $16.4 million below income reported in 1993 and 1992,
respectively. In this regard, 1994 income reflects an unfavorable
first quarter after-tax charge of $7.4 million related to the
cumulative effect on income resulting from the implementation of
Statement of Financial Accounting Standards (SFAS) No. 112,
Employers' Accounting for Postemployment Benefits. Also, 1992
income reflects a cumulative unfavorable adjustment of $282.6
million related to implementation of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions.
Net income from financing operations, including GMAC Mortgage Group
(GMACMG) results, totaled $809.0 million in 1994 (excluding the $6.8
million unfavorable impact due to the adoption of SFAS No. 112).
The 1994 results were favorable $18.4 million relative to the $790.6
million earned in 1993 and unfavorable $202.6 million relative to
the $1,011.6 million earned in 1992 (excluding the $232.8 million
unfavorable impact due to the adoption of SFAS No. 106). The $18.4
million increase from 1993 earnings reflects record earnings from
international operations as well as continued positive credit loss
experience, and a more favorable funding mix in the U.S., resulting
from greater investor confidence in General Motors and GMAC.
The $221.0 million decrease in earnings from 1992 to 1993 is
primarily attributable to lower asset levels and tighter net
interest rate margins in North America, partially offset by higher
earnings outside North America.
Net income from insurance operations totaled $118.1 million in 1994
(excluding the $0.6 million unfavorable impact due to the adoption
of SFAS No. 112). These results compare with $190.5 million in 1993
and $207.1 million in 1992 (excluding the $49.8 million unfavorable
impact due to the 1992 adoption of SFAS No. 106). Income earned in
1994, in comparison to 1993, reflects non-recurring capital gains
recognized in 1993, partially offset by improved underwriting
results in 1994. Insurance operations in 1993 compared unfavorably
to 1992 due to unfavorable underwriting results which were partially
offset by higher capital gains.
The following table summarizes the earnings of GMAC's financing and
insurance businesses on a reported and comparable year-to-year
basis:
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Income Cumulative
Before Effect of
Accounting Accounting Net
Changes Changes Income
----------- ---------- ----------
(in millions of dollars, after tax)
1994
Financing Operations $ 809.0 $ (6.8) $ 802.2
Insurance Operations* 118.1 (0.6) 117.5
---------- ---------- ----------
Total $ 927.1 $ (7.4) $ 919.7
========== ========== ==========
1993
Financing Operations $ 790.6 $ -- $ 790.6
Insurance Operations* 190.5 -- 190.5
---------- ---------- ----------
Total $ 981.1 $ -- $ 981.1
========== ========== ==========
1992
Financing Operations $ 1,011.6 $ (232.8) $ 778.8
Insurance Operations* 207.1 (49.8) 157.3
---------- ---------- ----------
Total $ 1,218.7 $ (282.6) $ 936.1
========== ========== ==========
* Motors Insurance Corporation
On a consolidated basis, GMAC's return on average equity capital was
11.6% in 1994, down from 11.9% reported in 1993 and up from 11.1% in
1992 (or down from 14.2% excluding the cumulative effect of the
accounting change). Total cash dividends paid to General Motors
Corporation in 1994 were $875 million, compared with $1,250 million
in 1993 and $1,100 million in 1992.
The Company has disclosed in the financial statements certain
amounts associated with estimated future retirement benefits other
than pensions and characterized such amounts as "accumulated
postretirement benefit obligations," "liabilities" or "obligations."
Notwithstanding the recording of such amounts and the use of these
terms, the Company does not admit or otherwise acknowledge that such
amounts or existing postretirement benefit plans of the Company
(other than pensions) represent legally enforceable liabilities of
the Company.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
FINANCING VOLUME
Industry deliveries of new passenger cars and trucks in the United
States in the 1994 calendar year increased to 15.4 million units
from 14.2 million units and 13.1 million units in 1993 and 1992,
respectively. Deliveries of new General Motors (GM) vehicles in the
U.S. increased to 5.0 million units in 1994 from 4.7 million units
in 1993 and 4.5 million units in 1992. GMAC financed 25% of new
General Motors products delivered in the U.S. during 1994, a three
percentage point decrease from 1993 and an eight percentage point
decrease from 1992. The decline in penetration of retail delivery
financing reflects continued intense competitive pressures within a
robust sales environment.
GMAC financed or leased worldwide 1,936,000 new passenger cars and
trucks during 1994, 2.0% above 1,898,000 units in 1993 and 12.4%
below 2,210,000 units in 1992. In the United States, GMAC financed
or leased 1,323,000 new vehicles during the year, 48,000 and 325,000
units fewer than in 1993 and 1992, respectively. Outside the United
States, GMAC financed or leased 613,000 new vehicles in 1994, up
86,000 units from 1993 and 52,000 units from 1992.
The average new passenger car contract purchased by GMAC in the
United States during 1994 was $17,800 up from $16,400 in 1993 and
$15,900 in 1992. The average term for new car contracts was 55
months in 1994, compared to 54 months in 1993 and 52 months in 1992,
while the average monthly payment on new passenger car contracts
increased to $325 in 1994, compared to $302 in 1993 and $305 in
1992.
The Company's worldwide retail leasing volume remained strong during
1994, with 628,000 units leased -- 81% above the prior year and 102%
above 1992. The increase can be attributed to continued growth in
the popularity of retail leasing, particularly in the United States
where 448,000 units were leased during 1994, 119% above the prior
year and 138% above 1992.
GMAC also provides wholesale financing for GM and other dealers' new
and used vehicle inventories. In the United States, inventory
financing was provided on 3.8 million, 3.6 million and 3.4 million
new GM vehicles, representing 76%, 77% and 78% of all GM sales to
dealers during 1994, 1993 and 1992, respectively.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
ASSETS
Total consolidated assets of the Company at December 31, 1994, were
$85.5 billion, $4.8 billion above the previous year. Consolidated
earning assets, which comprised $82.1 billion of the total
consolidated assets, increased $7.3 billion from 1993 year-end
levels. The year-to-year increase can be largely attributed to an
increase in operating lease assets due to the continued popularity
of the SmartLease program. Total consolidated assets at December
31, 1993, were $80.8 billion, $12.1 billion below year end 1992,
with the majority of the reduction in earning assets due to sales of
retail receivables as well as asset liquidations in excess of
acquisitions in the United States.
Cash and Cash Equivalents, primarily consisting of excess funds from
short term borrowings beyond current requirements which are invested
in short-term marketable securities, decreased by $2,688.6 million
in 1994 to $1,339.5 million from $4,028.1 million at the end of
1993. This portfolio, which is maintained primarily for liquidity
assurance purposes, was purposefully reduced as a direct result of
the Company's continued favorable access to the capital markets.
The consolidated investment portfolio, primarily attributable to
MIC, valued at market in accordance with SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities, totaled
$3,891.7 million at year-end 1994. The consolidated investment
portfolio balance at December 31, 1993 totaled $3,449.7 million with
equity securities valued at market and bonds, notes and other
securities at amortized cost. As of adoption at January 1, 1994,
the cumulative favorable effect on stockholder's equity was $127.5
million, net of tax.
Consolidated worldwide retail finance receivables, net of unearned
income, amounted to $28.0 billion at December 31, 1994, a $2.0
billion increase from the prior year-end. The Company continues to
utilize an asset securitization program as an alternative funding
source and as a result sold retail receivables with principal
aggregating $3.7 billion and $13.6 billion, respectively, during
1994 and 1993. With respect to sold receivables, GMAC continues to
service these receivables for a fee. The Company's servicing
portfolio reflected a principal balance of sold retail receivables
amounting to $9.9 billion at year-end 1994, down $5.0 billion from
$14.9 billion at year-end 1993. The decline in this portfolio
reflects fewer sales of retail receivables during 1994 and paydowns
of pools sold in prior years.
Wholesale receivables financed by GMAC, primarily dealer vehicle
inventories, totaled $19.9 billion at year-end 1994, down $0.8
billion from 1993. The level of wholesale receivables at December
31, 1994, as compared to the asset levels at December 31, 1993,
primarily reflects the sale of wholesale receivables through a
special purpose subsidiary during 1994. GMAC continues to service
these wholesale receivables which totaled $2.6 billion at December
31, 1994. (See Note 3.)
Consolidated worldwide capital leasing and lease financing
receivables, net of unearned income, at December 31, 1994 were
$3,186.6 million, down $592.3 million from December 31, 1993. This
reduction is primarily reflective of General Motors' reduction in
fleet sales and the resultant decrease in GMAC fleet financing
transactions.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Term loans to GM dealers and others were $4,237.8 million at the
close of 1994, compared to $4,372.3 million the prior year-end.
These loans provide dealers and their affiliates with a source of
funds to help finance dealership acquisitions, building improvements
and seasonal working capital requirements.
Receivables from General Motors Corporation decreased by $275.0
million to $1,080.5 million at the end of 1994, compared with
$1,355.5 million at year-end 1993.
Operating lease assets, net of depreciation, acquired principally
under the GMAC SmartLease program, totaled $17.8 billion at year-end
1994, an increase of $6.4 billion when compared to 1993. The
increase primarily reflects growth in the U.S. and Canadian markets,
driven by continued consumer acceptance of leasing and enhanced
manufacturers' sponsored programs. Retail leasing is expected to
continue to rise in all vehicle segments next year as customers seek
alternative financing for vehicle purchases. The SmartLease program
encourages shorter customer trading cycles and allows greater
flexibility in dealers' retail lease transactions.
Real estate mortgage inventory held for sale, including warehouse
advances, amounted to $1,244.0 million at December 31, 1994, down
$583.5 million from the prior year-end level. This decrease is
primarily due to reduced mortgage origination volume as a result of
increases in interest rates. During 1994, GMAC Mortgage Group
established a portfolio of loans to be retained for investment
purposes which totaled $920.6 million at December 31, 1994. The
Company's due and deferred from receivable sales (net) decreased
$293.0 million to $1,564.6 million at year-end 1994 compared to
$1,857.6 million at December 31, 1993, with the decrease primarily
attributable to the normal amortization of net assets on existing
sales of receivables and a reduction in the sales of receivables
during the year. (See Note 3.) Other earning assets totaled $938.9
million at December 31, 1994, $143.7 million higher than the prior
year, with the increase primarily attributable to a larger inventory
of vehicles acquired from fleet and rental customers of General
Motors.
Intangible assets included in other assets, primarily consisting of
purchased mortgage servicing rights and goodwill from MIC's
acquisition of NAVCO Corporation, totaled $377.4 million at the end
of 1994, compared with $360.9 million at the prior year end. Other
nonearning assets, essentially comprised of insurance premium
receivables, excess mortgage servicing fees, foreclosed mortgages or
mortgages otherwise classified as nonearning and repossessed
vehicles, increased $167.9 million to $1,745.9 million at December
31, 1994, compared to $1,578.0 million at year-end 1993. This
increase can be primarily attributed to increased excess mortgage
servicing rights.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
LIQUIDITY
The Company's liquidity, as well as its ability to profit from
ongoing acquisition activity, is in large part dependent upon its
timely access to capital and the costs associated with raising funds
in different segments of the capital markets. In this regard, GMAC
regularly accesses the short-, medium-, and long-term debt markets,
principally through commercial paper, medium-term notes and
underwritten transactions.
As of December 31, 1994, GMAC's total borrowings were $66.7 billion
compared with $62.8 billion at December 31, 1993. Approximately
78.7% represented funding for operations in the United States, with
the remaining 21.3% of borrowings for operations in Canada (6.0%),
Germany (7.0%), and other countries (8.3%). Total short-term notes
outstanding at December 31, 1994, amounted to $22.3 billion compared
with $17.7 billion at December 31, 1993.
Longer-term funding is provided through the sale of medium-term
notes, which are offered by prospectus worldwide on a continuous
basis, and the issuance of underwritten debt. GMAC sells medium-
term notes worldwide through dealer agents and directly to the
public in either book-entry or physical note form for any maturity
ranging from nine months to thirty years. In the U.S. and Euro
markets, sales of medium-term notes totaled $8.3 billion in 1994,
compared with $5.2 billion in 1993. Medium-term notes outstanding
in the U.S. and Euro markets totaled $20.7 billion at December 31,
1994, a decrease of $0.4 billion from the prior-year period. In the
U.S., underwritten debt issues totaling $0.7 billion were completed
during 1994, compared with $1.1 billion in 1993. Underwritten debt
issues outstanding in the U.S. at December 31, 1994 totaled $11.1
billion, a decrease of $1.3 billion from year-end 1993.
Outside the United States, funding needs are met primarily by a
combination of short- and medium-term loans from banks and other
financial institutions. The Company also issues commercial paper
and medium- and long-term debt, where cost-effective, to fund
certain non-U.S. operations.
GMAC maintains substantial bank lines of credit and sells finance
receivables in the public market. At December 31, 1994, GMAC
maintained or had access to approximately $25.7 billion of unused
credit lines with banks worldwide, an increase of $3.9 billion from
1993. Included in the unused credit lines are a committed bank
credit facility of $10 billion, and an $8.5 billion asset-backed
commercial paper liquidity and receivables credit facility to a non-
consolidated special purpose entity established to issue asset-
backed commercial paper. Effective January 25, 1995, the special
purpose entity's credit facility was increased by $2.0 billion to
$10.5 billion. In addition, GMAC has $4.8 billion in committed bank
credit facilities to support the funding needs of the Company's
international subsidiaries.
The $10 billion bank credit facility includes a covenant such that,
so long as the commitments remain in effect or any amount is owing
to any lender under such commitments, the ratio of consolidated debt
to total stockholder's equity as of the last day of any fiscal year
shall not exceed 11.0:1. With regard to such covenant, the year-end
ratio of total borrowings to equity capital was 8.4:1, compared with
8.0:1 at year-end 1993.
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15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
As discussed in Note 3 in the Notes to the Financial Statements,
retail receivables were sold through special purpose bankruptcy-
remote subsidiaries. Net proceeds from these sales totaled $3.5
billion, $13.1 billion and $11.2 billion during 1994, 1993 and 1992,
respectively. Sales of wholesale receivables, sold through a
special purpose bankruptcy-remote subsidiary, resulted in net
proceeds of $2.6 billion in 1994. GMAC continues to service sold
receivables for a fee and earns other related ongoing income. The
subsidiaries generally retain a subordinated or restricted cash
interest in the total receivable pools, which are included in other
earning assets as due and deferred from receivable sales. Such
subsidiaries also retain limited recourse for credit losses in the
underlying receivables to the extent of their investments. These
special purpose subsidiaries are consolidated for financial
reporting purposes, while the transfer of underlying assets to the
issuing trusts and subsequent sale of securities to investors
represents a sale for financial reporting purposes. New Center
Asset Trust (NCAT), a non-consolidated limited-purpose business
trust was established in 1993 to issue asset-backed commercial
paper. Pursuant to an administration agreement, GMAC acts as
administrator for NCAT. NCAT enables the Company to diversify
funding sources, establish incremental liquidity, and achieve cost
savings (relative to its other funding alternatives) by accessing
both the A-1+/P-1 and A-1/P-1 commercial paper markets. NCAT
purchases certain qualifying asset-backed securities from special
purpose subsidiaries of GMAC and finances the purchases through the
issuance of commercial paper and equity certificates, virtually all
of which have been sold to unrelated third parties.
The scope of GMAC's capability to tap the capital markets for
unsecured debt is linked to both its term debt and commercial paper
ratings. This is particularly true with respect to the Company's
commercial paper ratings. Security ratings are intended to provide
guidance to investors in determining the credit risk associated with
particular securities based on current information obtained by the
rating organizations from the Company or other sources that such
organizations consider to be reliable. Lower ratings generally
result in higher borrowing costs as well as reduced access to
capital markets. A security rating is not a recommendation to buy,
sell, or hold securities and is subject to revision or withdrawal at
any time by the assigning rating organization. Each rating should
be evaluated independently of any other rating.
Substantially all of the Company's short-, medium-, and long-term
debt has been rated by four nationally recognized statistical rating
organizations. As of March 14, 1995, all of the latest ratings
assigned were within the investment grade category.
Duff & Phelps Credit Rating Co. (D&P), has assigned a rating of A-
to the senior debt of the Company, the seventh highest among ten
investment grade ratings available, indicating adequate likelihood
of timely payment of principal and interest. The Company's
commercial paper has received a rating of D-1 from D&P, the second
highest of five investment grade ratings available, signifying a
very high certainty of timely payment based on excellent liquidity
factors and good fundamental protection factors.
Fitch Investors Service, Inc. (Fitch), has assigned ratings of A-
and F-1 to the Company's senior debt and commercial paper, the
seventh and second highest among ten and four investment grade
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17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
ratings available, respectively. The A- rating is assigned by Fitch
to bonds considered to be of high credit quality with the obligor's
ability to pay interest and repay principal considered to be strong.
The F-1 rating is assigned to short-term issues which possess a very
strong credit quality based primarily on the existence of liquidity
necessary to meet the obligation in a timely manner.
Moody's Investors Service, Inc. (Moody's), has rated the senior debt
of the Company as Baa1, eighth highest among ten investment grade
ratings available, reflecting adequate protection of present
interest payments and principal. Moody's has rated the Company's
commercial paper as Prime-2, the second highest of three such
ratings, indicating a strong ability for repayment based on sound
earnings trends and coverage ratios, appropriate capitalization
characteristics and adequate maintenance of alternative liquidity.
Standard & Poor's Corporation (S&P), rates the Company's senior debt
at BBB+, eighth highest of the ten investment grade ratings
available for long-term debt, based on a determination of adequate
capacity to pay interest and repay principal. The S&P rating for
the Company's commercial paper is A-2, third highest of the four
investment grade ratings available, indicating strong capacity for
timely payment determined by significant safety characteristics.
At this date, GMAC is not under review by any of the above agencies;
however, in January 1995, Standard & Poor's Corporation affirmed the
current rating of the Company and its parent, General Motors
Corporation (GM). In addition, Duff and Phelps Credit Rating Co.
affirmed the debt and commercial paper ratings of the Company and
GM on December 1, 1994.
The Company and its subsidiaries utilize a variety of interest rate
and currency derivative financial instruments in managing its
interest rate and foreign exchange exposures. GMAC is not a dealer
in derivative instruments, but is an end-user of such instruments in
the normal course of business. By employing derivative instruments
to manage the risks of a multinational finance company, GMAC is in a
better position to offer attractive, competitive financing rates to
its customers. The derivative instruments utilized by the Company
are relatively straightforward and involve little complexity --
centering on interest rate swaps and options (including swaptions
and interest rate caps) as well as currency swaps and futures.
In the context of the commercial and financial transactions arising
in the ordinary course of business, GMAC's policy is to primarily
employ derivative instruments which reduce the risks which result
from interest rate changes and exchange rate movements. Consistent
with this policy, GMAC addresses interest rate and currency risks by
using derivative instruments to offset a companion asset or funding
obligation as well as to adjust the fixed/floating nature of its
funding position.
The Company does not use any of these classes of instruments for
trading purposes. These instruments involve, to varying degrees,
elements of credit risk in the event a counterparty should default
and market risk as the instruments are subject to rate and price
fluctuations. Credit risk is managed through the periodic
monitoring and approval of financially sound counterparties and
limiting the potential exposure to individual counterparties to
predetermined notional limits. Market risk is inherently limited by
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17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
the fact that the Company holds offsetting asset or liability
positions. Market risk is also managed on an ongoing basis by
determining and monitoring the fair value of each agreement in the
portfolio. The aggregate fair value of GMAC s derivatives
portfolio has varied within a narrow range over time and represents
a very small percentage of the Company s $7.9 billion equity base.
GMAC employs a variety of internal swap and option models, using
mid-market rates, to calculate mark-to-market values of its
derivative positions. Periodically, the models are validated by
comparing valuations with counterparties.
The Company enters into interest rate swaps to achieve the desired
fixed/floating mix in its debt portfolio, similar to the way it
would enter into a fixed/floating rate debt issuance to achieve a
certain funding exposure. Floating rate swaps are typically used to
achieve a more cost efficient funding. Thus, any floating rate
swaps are exposed to rising interest rates, but would benefit from
declining rates. Conversely, any fixed rate debt issues or fixed
rate swaps provide GMAC with known fixed costs, but would not
provide the Company a benefit from a decline in interest rates.
The Company enters into currency swaps to hedge exposures related to
debt denominated in a currency other than the local currency of the
entity issuing the debt.
Currency and interest rate swaps correspond to specific fundings
with matching terms and maturities. Typical maturities range from
two to five years. Each swap contract incorporates one or a series
of payments to be made and one or a series of payments to be
received. The payments received in each rate swap mirror the
payments made on the underlying funding transactions, obligating
GMAC to make payments, either fixed or floating, under the swap.
The Company also has portfolio interest rate swaps which are tied to
the commercial paper portfolio and to the wholesale receivables
portfolio, converting a floating rate exposure to a fixed exposure.
Amounts due and payments relating to the portfolio swaps are offset
against commercial paper interest expense or wholesale financing
revenue.
The total notional amount of off-balance sheet instruments at
December 31, 1994 and 1993, including written options of $3.2
billion and $5.3 billion, respectively, was $11.6 billion and $8.6
billion, for the respective years. Summary schedules of outstanding
contracts by type and term as well as a reconciliation of the
Company's interest rate and currency swap activities for the years
ended December 31, 1994 and 1993, are included in Note 15 in the
Notes to Financial Statements.
17
18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
CASH FLOWS
Cash provided by operating and financing activities in 1994 totaled
$4,735.8 million and $3,382.5 million, respectively, excluding
dividend payments totaling $875.0 million. Such cash was used in
net investing activities totaling $9,933.4 million with a resultant
decrease in cash and cash equivalents amounting to $2,688.6 million.
The decrease in cash and cash equivalents reflects a planned
reduction in the liquidity portfolio, due to continued favorable
access to the capital markets, reduced net funding from sales of
finance receivables and increased net investments in operating
leases. In comparison, cash provided by operating and investing
activities in 1993 totaled $4,901.8 million and $7,824.9 million,
respectively. Such cash was utilized to reduce debt by $11,314.6
million and pay dividends to General Motors Corporation of $1,250.0
million, with the net increase in cash and cash equivalents totaling
$157.0 million. Also in comparison, cash provided by operating and
investing activities in 1992 amounted to $5,166.8 million and
$7,231.3 million, respectively. Such cash was also used to reduce
debt by $9,834.4 million, pay dividends of $1,100.0 million and
increased cash and cash equivalents by $1,458.6 million.
BORROWING COSTS
The U.S. bank prime rate, which began the year at 6.0%, climbed to
8.5% by year-end 1994. GMAC's cost of short-term debt in the United
States increased 80 basis points during 1994, averaging 4.55%,
compared to 3.75% in 1993 and 4.10% in 1992. United States medium-
and long-term money costs decreased to an average of 7.49% for 1994,
34 and 78 basis points below 1993 and 1992, respectively. The
composite cost of debt for United States operations averaged 6.48%
in 1994, down from 6.51% in 1993 and 6.75% in 1992.
The Company's worldwide cost of short-term debt averaged 5.09% in
1994, compared with 4.86% in 1993 and 5.31% in 1992. Worldwide
medium- and long-term money costs decreased 45 and 96 basis points
from 1993 and 1992, respectively, to average 7.60% in 1994, down
from 8.05% in 1993 and 8.56% in 1992. Overall cost of funds
averaged 6.69% in 1994, down 25 and 61 basis points from 6.94% and
7.30% in 1993 and 1992, respectively. The decline in 1994 borrowing
costs reflects a more favorable funding mix resulting from reduced
medium- and long-term cost of funds as well as an increasingly
positive perception of GMAC's financial position by the capital
markets.
COLLECTION RESULTS
Delinquency and repossession rates on retail and fleet leasing
accounts serviced worldwide were relatively unchanged during 1994.
Accounts past due over 30 days averaged 2.5% as a percent of
accounts outstanding during 1994, unchanged from 2.5% in 1993 and
slightly higher than 2.4% in 1992. Repossessions of new vehicles
averaged 1.7%, unchanged from 1.7% in 1993 and improved from 2.0% in
1992, while repossessions of used vehicles increased to 2.6% from
2.3% in 1993 and 2.5% in 1992. In total, the number of repossessed
vehicles decreased to 110,000 units in 1994, compared to 121,000
units in 1993 and 151,000 units in 1992.
18
19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Net retail losses were 0.54% of total average serviced assets in
1994, as compared to 0.63% and 0.89% for the prior year and 1992,
respectively. Retail losses as a percent of total serviced assets
liquidated decreased to 0.85% in 1994, down from 0.97% and 1.38% in
1993 and 1992, respectively. Allowance for financing losses,
including the allowance for off-balance sheet sold receivables,
amounted to $756.1 million at December 31, 1994, down $99.2 million
and $257.7 million from $855.3 million and $1,013.8 million at
December 31, 1993 and 1992, respectively. This reduction reflects a
decrease in the level of assets serviced, a net transfer to non-
earning assets and improved loss experience, primarily in the United
States. At this level, the loss allowance represented 1.1% of net
serviced assets, down from 1.2% in 1993 and from 1.3% in 1992.
INSURANCE OPERATIONS
Gross premiums written by Motors Insurance Corporation and its
subsidiaries (MIC) totaled $1,360.9 million in 1994, up slightly
from $1,343.0 million and $1,322.9 million in 1993 and 1992,
respectively, while net premiums written totaled $1,211.1 million in
1994, $6.3 million higher than in 1993 and $38.3 million lower than
1992. For the year, MIC contributed $118.1 million to consolidated
net income, excluding the cumulative effect of the 1994 charge for
SFAS No. 112, down $72.4 million from the comparable $190.5 million
reported in 1993, and down $89.0 million from the comparable $207.1
million reported in 1992, excluding the cumulative effect of the
1992 charge for SFAS No. 106. Earnings in 1994, as compared to
1993, reflect significant declines in recognized capital gains which
were partially offset by improved underwriting results. Income
earned in 1993, when compared to 1992, reflects unfavorable
underwriting results, partially offset by higher capital gains.
MORTGAGE OPERATIONS
GMAC Mortgage Group continued to be one of the largest mortgage
bankers in the United States. For the 1994 calendar year, loan
origination, purchased mortgage servicing and correspondent loan
volume totaled $16.9 billion, a decrease of $7.0 billion and $11.3
billion from 1993 and 1992, respectively, reflecting substantially
reduced industry origination volume as a result of increasing
interest rates.
At December 31, 1994, the combined mortgage servicing portfolio,
including $23.6 billion of loans master-serviced by Residential
Funding Corporation (RFC), was $58.7 billion, up $4.9 billion from
1993, reflecting a reduction in prepayment rates which move in the
opposite direction of interest rates.
FINANCING REVENUES
Consolidated financing revenue totaled $9,418.8 million in 1994, up
$666.8 million from 1993 but down $983.3 million from 1992. The
increase from 1993 to 1994 is primarily attributable to increases in
leasing revenues, resulting from continued growth in operating lease
activity and greater wholesale revenue due to GMAC's resumption of
dealer wholesale inventory financing formerly transacted by General
Motors. This increase was partially offset by reduced lease
financing revenues due to General Motors' reduction in fleet sales.
19
20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Retail and lease financing revenue, at $2,955.0 million for 1994,
was $718.4 million and $2,552.0 million lower than 1993 and 1992,
respectively. Contributing to these declines were lower asset
levels, primarily due to net asset liquidations through the sale of
retail finance receivables since December 1990. Leasing revenue
reached $4,855.7 million in 1994, compared to $3,870.9 million in
1993 and $3,527.9 million in 1992, as leasing continues to gain
consumer acceptance. In 1994, wholesale and term loan financing
revenue amounted to $1,608.1 million, compared with $1,207.7 million
in 1993 and $1,367.2 million in 1992, with the increase primarily
attributed to the aforementioned resumption of wholesale inventory
financing previously transacted by General Motors as well as greater
dealer inventory and higher floorplan financing rates, partially
offset by sales of wholesale receivables.
Interest and discount expense decreased to $4,230.9 million in 1994
from $4,721.2 million reported in 1993 and $5,828.6 million in 1992.
The $490.3 million decrease from 1993 is primarily due to a more
favorable medium- and long-term funding mix resulting from
increasing positive perception of GMAC's financial position by the
capital markets. The $1,107.4 million decrease from 1992 to 1993 is
due to the more favorable funding mix, a general decrease in U.S.
interest rates and a lower level of total borrowings.
Depreciation expense on operating leases, primarily GMAC's
SmartLease program, totaled $3,233.8 million in 1994, in comparison
to $2,702.0 million in 1993 and $2,429.6 million in 1992. The
continued increase was primarily attributable to successful
marketing of the SmartLease program in the United States and Canada.
Net pre-tax margin from financing operations after interest and
discount and depreciation expense totaled $1,954.1 million in 1994,
up $625.3 million from 1993, but down $189.8 million from 1992. The
year-to-year improvement from 1993 to 1994 primarily reflects
increased wholesale financing revenue and the continued acceptance
and popularity of retail leasing, partially offset by reduced retail
and lease financing revenue.
Net insurance premiums earned by MIC in 1994 were relatively stable
and amounted to $1,127.6 million, compared with $1,107.2 million in
1993 and $1,159.7 million in 1992.
Other income, including gains on receivable sales, as well as
servicing fees and other income related to sold finance receivables,
totaled $1,598.6 million for 1994, as compared to $2,624.3 million
and $2,177.5 million in 1993 and 1992, respectively. The decrease
since 1993 is largely due to lower interest and service fees of
$532.4 million from General Motors as a result of the termination of
the financing agreement whereby GM had previously assumed some
dealer wholesale inventory financing. This reduction is offset by
increased financing revenues on wholesale receivables. Capital
gains at MIC for 1994 decreased $139.5 million and $58.4 million
from 1993 and 1992, respectively, primarily reflecting non-recurring
capital gains recognized in 1993.
20
21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Pre-tax gains on sold retail receivables, excluding the related
limited recourse loss provision totaled $30.8 million during 1994
compared with $436.4 million for the previous year and $588.8
million in 1992. Retail receivables sales generally accelerate the
recognition of income on retail contracts, net of servicing fees and
other related deferrals, into the period the receivables are sold.
The amount of such gains is affected by a number of factors and may
create variability in quarterly earnings depending on the type and
amount of receivables sold, the structure used to effect the sale,
as well as the prevailing financial market conditions. This
acceleration results in the pre-tax gains reflected above, and can
create variability in annual earnings depending on the amount,
timing and the net margin between the average yield on and all-in-
cost of the sold receivables. The acceleration also reduces profit
potential in future periods. Although this acceleration can
significantly impact quarterly or year-to-year comparisons, it
should be noted that the Company historically recognizes
approximately 70% of interest and discount revenue in the first two
years of a retail contract (reflecting the term of the underlying
contracts, revenue recognition methods and historical prepayment
experience). As such, depending on the timing of receivables sales
in a given year, the net impact on annual earnings may be
substantially less than the gains indicated.
EXPENSES
Salaries and benefits declined in 1994 to $813.7 million from $825.8
million and $854.4 million in 1993 and 1992, respectively. The
lower salary costs in 1994, when compared to 1993, were a result of
a lower employee population, partially offset by increased benefit
costs primarily for retirement and post-retirement benefits.
Other operating expenses, excluding salaries and benefits and
insurance losses and loss adjustment expenses, totaled $1,173.1
million for 1994, $49.9 million and $127.4 million higher than the
respective comparable 1993 and 1992 periods. The increase is
primarily attributable to sales promotion expense and valuation
adjustments related to repossessed automobiles.
The Company's provisions for loan losses reflect continued favorable
loss experience related to its finance receivables. This experience
has been affected by both an improving economy (which reduces the
frequency of loss) and by a strong used car market (which reduces
the severity of loss). Although the performance of all asset
classes has been favorably influenced, the largest impact on loss
provisions and total loss allowances is related to GMAC's retail
receivables portfolio. In the United States, the Company's losses
as a percent of liquidations for new retail receivables serviced
dropped in 1994 to 0.78%, from 1.02% in 1993 and 1.55% in 1992.
21
22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Due to the selective criteria employed in forming pools for
receivable sales transactions, the loss performance related to sold
retail receivables is better than that related to on-balance sheet
receivables. The loss-to-liquidation levels for sold receivables in
the United States for 1994, 1993 and 1992 equate to 0.46%, 0.49% and
0.52%, respectively. In late 1993, the Company refined its
methodology for loss provisions to distinguish between the
performance of on-balance sheet and off-balance sheet receivables.
This resulted in a $155.1 million reclassification in the loss
allowance related to sold receivables.
On a total Company basis, charge-offs, net of recoveries, for the
1994 calendar year amounted to $276.5 million, including sold
receivables -- an improvement of $142.6 million versus 1993 and an
improvement of $307.6 million versus 1992. Based on these continued
improvements, the Company adjusted its allowances accordingly during
1994 which resulted in a provision for losses on financing
receivables of $177.3 million, including sold receivables, $123.5
million and $193.7 million lower than 1993 and 1992, respectively.
Gross charge-offs for 1994, excluding sold receivables, were $361.0
million, as compared to $437.9 million in 1993 and $695.6 million in
1992. As a result of this continued favorable loss experience, net
retail losses were 0.54% of total average serviced assets in 1994,
as compared to 0.63% and 0.89% for the prior year and 1992,
respectively.
Amortization of intangible assets totaled $45.5 million in 1994,
compared with $141.1 million and $121.1 million in 1993 and 1992,
respectively. The decrease is primarily attributable to reduced
amortization of purchased mortgage servicing rights.
United States, foreign and other income taxes amounted to $512.7
million for 1994, $79.0 million and $369.6 million less than 1993
and 1992, respectively. The decrease primarily reflects reduced
pre-tax income and a lower effective tax rate on a consolidated
basis. The two percentage point reduction in the effective tax rate
between 1993 (37.6%) and 1994 (35.6%) is attributable to reductions
in accruals from prior years based upon the periodic assessment of
the adequacy of such accruals, while the unusually high rate of
42.0% in 1992 included a non-recurring state and local deferred tax
adjustment.
ACCOUNTING STANDARDS
In November 1992, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 112,
Employers' Accounting for Postemployment Benefits, which established
a new accounting principle for the cost of benefits provided to
former or inactive employees after employment but before retirement.
The Statement is effective for fiscal years beginning after December
15, 1993. The Company adopted this standard effective January 1,
1994; the after-tax unfavorable cumulative effect of this change was
$7.4 million. The ongoing effect in subsequent periods is not
expected to be material.
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23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (concluded)
In May 1993, the FASB issued SFAS No. 114, Accounting by Creditors
for Impairment of a Loan, which requires a creditor to measure
impairment based on the fair value of the collateral when it is
determined that foreclosure is probable. It also clarifies that a
creditor should evaluate the collectibility of both contractual
interest and principal of all receivables when assessing the need
for a loss accrual. In October 1994, the FASB issued SFAS No. 118,
Accounting by Creditors for Impairment of a Loan--Income Recognition
and Disclosures, an amendment of FASB Statement No. 114. This
Statement amended SFAS No. 114 to allow a creditor to use existing
methods for recognizing interest income on an impaired loan. Both
Statements apply to financial statements for fiscal years beginning
after December 15, 1994. The Company adopted SFAS No. 114 effective
January 1, 1994 and SFAS No. 118 retroactive to January 1, 1994.
The Company's loans primarily consist of large groups of smaller-
balance homogeneous loans which are collectively evaluated for
impairment and to which these standards do not apply. The loans of
the Company that are affected by these Statements were previously,
and continue to be, carried at the lower of book value or the fair
value of the collateral. There was no material impact on the
consolidated financial position or results of operations as a result
of adoption.
In May 1993, the FASB also issued SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, which addresses
the accounting and reporting for investments in debt and equity
securities that have readily determinable fair values. The
Company's investments are predominantly categorized as "Available-
for-Sale", reported at fair value with unrealized gains or losses
reported separately (net of tax) in stockholder's equity. The two
other classifications in this Statement are "Held-to-Maturity
Securities", reported at amortized cost, and "Trading Securities",
reported at fair value with unrealized gains or losses reported in
earnings. Investments are categorized based upon the intent of the
Company for which the securities were purchased. This statement is
effective for fiscal years beginning after December 15, 1993. The
Company adopted this standard effective January 1, 1994. The
cumulative favorable effect to stockholder's equity at January 1,
1994, was $127.5 million, net of tax.
In October 1994, the FASB issued SFAS No. 119, Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments, which requires classification of derivative financial
instruments as either held or issued for trading purposes or
purposes other than trading. It also requires specific disclosures
about the notional amounts, nature and terms of derivative financial
instruments held or issued. SFAS No. 119 amends SFAS No. 107,
Disclosures about Fair Value of Financial Instruments, to require
disclosure of fair values within one footnote to the financial
statements. This Statement is effective for fiscal years ending
after December 15, 1994. The Company adopted this standard December
31, 1994 with the related disclosures reflected in Note 15 in the
Notes to the Financial Statements.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
RESPONSIBILITIES FOR CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of General Motors
Acceptance Corporation and subsidiaries were prepared by management,
which is responsible for their integrity and objectivity. The
statements have been prepared in conformity with generally accepted
accounting principles and, as such, include amounts based on
judgments of management. Financial information elsewhere in Part II
is consistent with that in the consolidated financial statements.
Management is further responsible for maintaining a system of
internal accounting controls, designed to provide reasonable
assurance that the books and records reflect the transactions of the
companies and that its established policies and procedures are
carefully followed. Perhaps the most important feature in the
system of control is that it is continually reviewed for its
effectiveness and is augmented by written policies and guidelines,
the careful selection and training of qualified personnel and a
strong program of internal audit.
Deloitte & Touche LLP, an independent auditing firm, is engaged to
audit the consolidated financial statements of General Motors
Acceptance Corporation and its subsidiaries and issue reports
thereon. The audit is conducted in accordance with generally
accepted auditing standards which comprehend the consideration of
internal accounting controls and tests of transactions to the extent
necessary to form an independent opinion on the financial statements
prepared by management. The Independent Auditors' Report appears on
the next page.
The Board of Directors, through its Audit Committee (the
"Committee"), is responsible for: (1) assuring that management
fulfills its responsibilities in the preparation of the consolidated
financial statements and (2) engaging the independent auditors. The
Committee reviews the scope of the audits and the accounting
principles being applied in financial reporting. The independent
auditors, representatives of management and the internal auditors
meet regularly (separately and jointly) with the Committee to review
the activities of each, to ensure that each is properly discharging
its responsibilities and to assess the effectiveness of the system
of internal accounting controls. It is management's conclusion that
the system of internal accounting controls at December 31, 1994,
provides reasonable assurance that the books and records reflect the
transactions of the companies and that its established policies and
procedures are complied with. To ensure complete independence,
Deloitte & Touche LLP has full and free access to meet with the
Committee, without management representatives present, to discuss
the results of the audit, the adequacy of internal accounting
controls and the quality of the financial reporting.
s/ J. M. Losh s/ J. D. Finnegan
--------------- -------------------------------------
J. Michael Losh John D. Finnegan, Executive Vice
Chairman President and Chief Financial Officer
24
25
INDEPENDENT AUDITORS' REPORT
General Motors Acceptance Corporation:
We have audited the Consolidated Balance Sheet of General Motors
Acceptance Corporation and subsidiaries as of December 31, 1994 and
1993 and the related Consolidated Statement of Income and Net Income
Retained for Use in the Business and Consolidated Statement of Cash
Flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of General Motors
Acceptance Corporation and subsidiaries at December 31, 1994 and
1993 and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in Notes 5 and 12 to the financial statements,
effective January 1, 1994 the Company changed its method of
accounting for certain investments in debt and equity securities
and postemployment benefits, respectively. Also, as discussed in
Note 12 to the financial statements, effective January 1, 1992 the
Company changed its method of accounting for postretirement benefits
other than pensions.
s\ DELOITTE & TOUCHE LLP
------------------------
DELOITTE & TOUCHE LLP
600 Renaissance Center
Detroit, Michigan 48243-1704
January 30, 1995
25
26
GENERAL MOTORS ACCEPTANCE CORPORATION
CONSOLIDATED BALANCE SHEET
December 31
--------------------
1994 1993
--------- ---------
(in millions of dollars)
Cash and Cash Equivalents (Note 1) ............................ $ 1,339.5 $ 4,028.1
--------- ---------
EARNING ASSETS
Investments in securities (Note 5) ............................ 3,891.7 3,449.7
Finance receivables, net (Notes 2 and 3) ...................... 54,625.1 54,134.8
Net investment in operating leases (Note 4) ................... 17,809.2 11,363.5
Receivables from General Motors Corporation (Note 13) ......... 1,080.5 1,355.5
Real estate mortgages - including mortgages held for resale
of $1,244.0 and $1,827.5...................................... 2,164.6 1,827.5
Due and deferred from receivable sales, net (Note 3) .......... 1,564.6 1,857.6
Other (Note 13) ............................................... 938.9 795.2
--------- ---------
Total earning assets .......................................... 82,074.6 74,783.8
--------- ---------
OTHER ASSETS
Intangible assets, at cost less amortization (Note 1) ......... 377.4 360.9
Other nonearning assets (Note 6) .............................. 1,745.9 1,578.0
--------- ---------
Total other assets ............................................ 2,123.3 1,938.9
--------- ---------
TOTAL ASSETS .................................................. $85,537.4 $80,750.8
========= =========
Notes, loans and debentures payable within
one year (Notes 7 and 8) ..................................... $35,114.8 $35,084.4
--------- ---------
ACCOUNTS PAYABLE AND OTHER LIABILITIES
General Motors Corporation and affiliated companies (Note 13) . 1,867.3 2,487.5
Interest ...................................................... 957.1 1,006.6
Unpaid insurance losses and loss adjustments .................. 1,563.6 1,569.4
Unearned insurance premiums ................................... 1,422.0 1,337.4
Deferred income taxes (Note 10) ............................... 1,704.5 1,193.2
United States and foreign income and other taxes payable ...... 20.3 35.5
Other postretirement benefits (Note 12) ....................... 574.5 524.9
Other ......................................................... 2,880.0 1,970.8
--------- ---------
Total accounts payable and other liabilities .................. 10,989.3 10,125.3
--------- ---------
Notes, loans and debentures payable after one year (Note 9) ... 31,539.6 27,688.8
--------- ---------
Common stock, $100 par value (outstanding 22,000,000 shares in
1994 and 21,650,000 in 1993) (Note 19) ....................... 2,200.0 2,165.0
Net income retained for use in the business ................... 5,653.7 5,609.0
Net unrealized gains on securities ............................ 52.4 164.3
Unrealized accumulated foreign currency translation adjustment (12.4) (86.0)
--------- ---------
Total stockholder's equity .................................... 7,893.7 7,852.3
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY .................... $85,537.4 $80,750.8
========= =========
Reference should be made to the Notes to Financial Statements.
26
27
GENERAL MOTORS ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND
NET INCOME RETAINED FOR USE IN THE BUSINESS
For the Years Ended December 31
----------------------------------
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
FINANCING REVENUE (Note 1)
Retail and lease financing ................ $ 2,955.0 $ 3,673.4 $ 5,507.0
Leasing ................................... 4,855.7 3,870.9 3,527.9
Wholesale and term loans .................. 1,608.1 1,207.7 1,367.2
---------- ---------- ----------
Total financing revenue ................... 9,418.8 8,752.0 10,402.1
Interest and discount ..................... (4,230.9) (4,721.2) (5,828.6)
Depreciation on operating leases .......... (3,233.8) (2,702.0) (2,429.6)
---------- ---------- ----------
Net financing revenue ..................... 1,954.1 1,328.8 2,143.9
Insurance premiums earned ................. 1,127.6 1,107.2 1,159.7
Other income (Notes 3 and 13) ............. 1,598.6 2,624.3 2,177.5
---------- ---------- ----------
NET FINANCING REVENUE AND OTHER ........... 4,680.3 5,060.3 5,481.1
EXPENSES
Salaries and benefits ..................... 813.7 825.8 854.4
Other operating expenses .................. 1,173.1 1,123.2 1,045.7
Insurance losses and loss adjustment
expenses ................................. 1,030.9 1,096.6 987.9
Provision for financing losses (Note 2) ... 177.3 300.8 371.0
Amortization of intangible assets (Note 1) 45.5 141.1 121.1
---------- ---------- ----------
Total expenses ............................ 3,240.5 3,487.5 3,380.1
---------- ---------- ----------
Income before income taxes ................ 1,439.8 1,572.8 2,101.0
United States, foreign and other income
taxes (Note 10) .......................... 512.7 591.7 882.3
---------- ---------- ----------
Income before cumulative effect of
accounting changes ....................... 927.1 981.1 1,218.7
Cumulative effect of accounting changes ... (7.4) -- (282.6)
---------- ---------- ----------
NET INCOME ................................ 919.7 981.1 936.1
Net income retained for use in the business
at beginning of the year ................. 5,609.0 5,877.9 6,041.8
---------- ---------- ----------
Total ..................................... 6,528.7 6,859.0 6,977.9
Cash dividends ............................ 875.0 1,250.0 1,100.0
---------- ---------- ----------
NET INCOME RETAINED FOR USE IN THE BUSINESS
AT END OF THE YEAR ....................... $ 5,653.7 $ 5,609.0 $ 5,877.9
========== ========== ==========
Reference should be made to the Notes to Financial Statements.
27
28
GENERAL MOTORS ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31
----------------------------------
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before cumulative effect of accounting
changes ....................................... $ 927.1 $ 981.1 $ 1,218.7
Depreciation ................................... 3,267.2 2,751.5 2,474.4
Provision for financing losses ................. 177.3 300.8 371.0
Mortgage loans-originations/purchases .......... (10,135.7) (21,583.7) (17,232.9)
-proceeds on sale .............. 10,719.2 22,309.5 16,859.0
Changes in the following items
Due to General Motors Corporation and
affiliated companies ........................ (618.1) (333.9) 812.6
Taxes payable and deferred ................... 542.8 123.4 337.1
Interest payable ............................. (50.2) (180.7) (106.4)
Other assets ................................. (598.4) (97.0) 100.4
Other liabilities ............................ 467.7 222.0 187.3
Other .......................................... 36.9 408.8 145.6
---------- ---------- ----------
Net cash provided by operating activities ...... 4,735.8 4,901.8 5,166.8
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Finance receivables-acquisitions ............... (156,579.8) (103,396.3) (120,829.8)
-liquidations ............... 137,598.4 92,808.6 119,453.1
Notes receivable General Motors Corporation 275.0 10,207.7 2,303.0
Operating leases-acquisitions .................. (13,086.8) (6,971.3) (6,182.8)
-liquidations .................. 3,569.5 2,572.7 1,912.7
Investments in securities-acquisitions ......... (11,715.3) (10,976.1) (9,714.8)
-liquidations ......... 11,495.2 10,676.7 9,717.7
Proceeds from sales of receivables ............. 18,800.0 13,072.2 11,201.8
Due and deferred from receivable sales ......... 322.9 (618.4) (854.3)
Other .......................................... (612.5) 449.1 224.7
---------- ---------- ----------
Net cash (used in)/provided by investing
activities .................................... (9,933.4) 7,824.9 7,231.3
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Debt with original maturities 90 days and over
-proceeds ................................. 46,348.0 38,577.4 50,507.6
-liquidations ............................. (46,541.3) (45,148.0) (54,475.9)
Debt with original maturities less than 90 days
-net change ............................... 3,540.8 (4,744.0) (5,866.1)
Dividends paid ................................. (875.0) (1,250.0) (1,100.0)
Proceeds from issuance of stock ................ 35.0 -- --
---------- ---------- ----------
Net cash provided by/(used in) financing
activities .................................... 2,507.5 (12,564.6) (10,934.4)
---------- ---------- ----------
Effect of exchange rate changes on cash and cash
equivalents ................................... 1.5 (5.1) (5.1)
---------- ---------- ----------
Net (decrease)/increase in cash and cash
equivalents ................................... (2,688.6) 157.0 1,458.6
Cash and cash equivalents at the beginning of
the year ...................................... 4,028.1 3,871.1 2,412.5
---------- ---------- ----------
Cash and cash equivalents at the end of the year $ 1,339.5 $ 4,028.1 $ 3,871.1
========== ========== ==========
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid ................................. $ 4,223.7 $ 4,819.1 $ 5,824.0
Income taxes paid/(recovered) ................. $ (16.0) $ 430.5 $ 541.8
Reference should be made to the Notes to Financial Statements.
28
29
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
General Motors Acceptance Corporation and its domestic and foreign
subsidiaries (the Company).
The Company, a wholly-owned subsidiary of General Motors
Corporation, was incorporated in 1919 under the New York Banking Law
relating to investment companies.
Revenue Recognition
-------------------
In the case of finance receivables in which the face amount includes
the finance charge (principally retail financing), earnings are
recorded in income over the terms of the receivables using the
interest method. On finance receivables in which the face amount
represents the principal (principally wholesale, interest-bearing
financing and fleet leasing), the interest is taken into income as
earned. Certain loan origination costs are deferred and amortized
to financing revenue over the life of the related loans using the
interest method.
Income from operating leases, included in leasing revenues, is
recognized as scheduled payments become due.
Sales of Receivables
--------------------
The Company sells retail and wholesale receivables through special
purpose subsidiaries which absorb all losses related to sold
receivables to the extent of their subordinated investments, as well
as certain segregated restricted cash flows. Appropriate limited
recourse loss allowances associated with sold receivables are
transferred from the allowance for financing losses and are included
in "Due and deferred from receivable sales, net". Normal servicing
fees on sold receivables are earned over time on a level yield
basis.
Pre-tax gains on sold receivables are recorded in other income. In
determining the gain or loss for each qualifying sale of retail
receivables, the investment in the sold receivable pool is allocated
between the portion sold and the portion retained based on their
relative fair values on the date of sale. The receivables sold are
removed from the balance sheet caption "Finance receivable, net",
and the Company's retained interests in such receivables are
included in "Due and deferred from receivable sales, net".
Allowance for Financing Losses
------------------------------
An allowance for credit losses is generally established during the
period in which receivables are acquired and is maintained in
amounts considered by management to be appropriate in relation to
receivables outstanding.
Losses arising from repossession of the collateral supporting
doubtful accounts are recognized upon repossession of the
collateral. Repossessed collateral is recorded at estimated
realizable value in other nonearning assets and adjustments to the
related valuation allowance are included in operating expense.
Where repossession has not been effected, losses are charged off as
soon as it is determined that the collateral cannot be repossessed,
generally not more than 150 days after default.
29
30
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Nonretail finance receivables are reduced to the estimated fair
value of collateral when determined to be impaired or uncollectible.
Cash Equivalents
----------------
Cash equivalents are defined as short-term, highly liquid
investments with original maturities of 90 days or less.
Insurance Operations
--------------------
Insurance premiums are earned on a basis related to coverage
provided over the terms of the policies. Commission costs and
premium taxes incurred in acquiring new business are deferred and
amortized over the terms of the related policies on the same basis
as premiums are earned. Acquisition costs associated with direct
mail programs are amortized over a three year period. The liability
for losses includes a provision for unreported losses, based on past
experience, net of the estimated salvage and subrogation
recoverable.
Intangible Assets
-----------------
Intangible assets representing purchased mortgage servicing rights
are being amortized over periods that generally match future net
mortgage servicing revenues, while goodwill is being amortized on a
straight-line basis over 40 years. Amortization is applied directly
to the asset account.
Depreciation
------------
The Company and its subsidiaries provide for depreciation of
vehicles and other equipment on operating leases or in company use
generally on a straight-line basis. The difference between the net
book value and the proceeds of sale or salvage on items disposed of
is included in income as a charge against or credit to the provision
for depreciation.
30
31
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (concluded)
Financial Instruments
---------------------
The Company is party to a variety of interest rate and foreign
exchange swap agreements and options.
The Company accounts for interest rate swap agreements using
settlement accounting as they alter the characteristics of assets or
liabilities to which they are matched. The cash flows from interest
rate swaps are accounted for as adjustments to interest income or
expense depending on the underlying exposure. Gains and losses from
terminated contracts are deferred and amortized over the remaining
period of the original swap or the remaining term of the underlying
instrument whichever is shorter. Open swap positions are reviewed
regularly to ensure that they remain effective in managing interest
rate risk. Written options (including swaptions and interest rate
caps) and related premiums as well as interest rate basis swaps are
marked-to-market on a current basis with the related income or
expense included in other income. Portfolio swaps are identified
with specific portfolios of assets or liabilities with any amounts
due or payable, and amounts paid or received, offset against the
related interest income or expense.
Foreign exchange swap agreements are entered into in connection with
the Company's management of its foreign currency exposures and are
accounted for using settlement accounting as it relates to periodic
interest payments. The foreign currency gains and losses associated
with these contracts offset the correlating foreign currency gains
and losses related to the designated liabilities.
31
32
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. FINANCE RECEIVABLES
The composition of finance receivables outstanding at December 31,
1994 and 1993 is summarized as follows:
December 31
----------------------
1994 1993
---------- ----------
(in millions of dollars)
United States
Retail ..................................... $ 23,486.8 $ 22,322.2
Wholesale .................................. 14,560.9 16,290.3
Leasing and lease financing ................ 1,613.4 2,372.1
Term loans to dealers and others ........... 3,753.6 3,984.4
---------- ----------
Total United States ......................... 43,414.7 44,969.0
---------- ----------
Canada
Retail ..................................... 1,101.1 1,644.5
Wholesale .................................. 1,335.1 1,163.0
Leasing and lease financing ................ 671.4 673.6
Term loans to dealers and others ........... 128.0 123.1
---------- ----------
Total Canada ................. .............. 3,235.6 3,604.2
---------- ----------
Europe
Retail ..................................... 5,340.5 4,294.1
Wholesale .................................. 3,413.8 2,942.5
Leasing and lease financing ................ 547.8 520.1
Term loans to dealers and others ........... 249.3 165.1
---------- ----------
Total Europe ................. .............. 9,551.4 7,921.8
---------- ----------
Other Countries
Retail ..................................... 1,306.3 907.8
Wholesale .................................. 565.9 277.8
Leasing and lease financing ................ 447.5 297.6
Term loans to dealers and others ........... 106.9 99.7
---------- ----------
Total Other Countries......... .............. 2,426.6 1,582.9
---------- ----------
Total finance receivables ................... 58,628.3 58,077.9
---------- ----------
Deductions
Unearned income ............................ 3,309.9 3,195.1
Allowance for financing losses ............. 693.3 748.0
---------- ----------
Total deductions ............................ 4,003.2 3,943.1
---------- ----------
Finance receivables, net .................... $ 54,625.1 $ 54,134.8
========== ==========
32
33
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. FINANCE RECEIVABLES (continued)
Retail, lease financing and leasing receivable installments past due
over 30 days amounted to $55.5 million and $79.2 million at
December 31, 1994 and 1993, respectively. Installments on term
loans to dealers and others past due over 30 days aggregated $70.7
million at December 31, 1994 and $82.0 million at December 31, 1993.
The aggregate amount of total finance receivables maturing in each
of the five years following December 31, 1994, is as follows: 1995 -
$34,927.5 million; 1996 - $10,672.1 million; 1997 - $7,362.8
million; 1998 - $3,875.5 million; 1999 $1,533.2 million; 2000 and
thereafter - $257.2 million.
The following table presents an analysis of the allowance for
financing losses:
December 31
----------------------
1994 1993 1992
----------------------
(in millions of dollars)
Allowance for financing losses at
beginning of the year ................. $ 748.0 $ 817.0 $1,261.0
Charge-offs ------- ------- --------
United States ......................... (310.7) (365.3) (573.6)
Other Countries ....................... (50.3) (72.6) (122.0)
------- ------- --------
Total charge-offs ...................... (361.0) (437.9) (695.6)
Recoveries and other ................... 116.0 74.5 139.6
Transfers to other nonearning assets ... -- (40.2) (135.0)
Transfers from/(to) sold receivables
allowance ............................. 13.0 33.8 (124.0)
Provisions charged to income ........... 177.3 300.8 371.0
------- ------- --------
Allowance for financing losses
at end of the year .................... $ 693.3 $ 748.0 $ 817.0
======= ======= ========
In May 1993, the FASB issued SFAS No. 114, Accounting by Creditors
for Impairment of a Loan, which requires a creditor to measure
impairment based on the fair value of the collateral when it is
determined that foreclosure is probable. It also clarifies that a
creditor should evaluate the collectibility of both contractual
interest and principal of all receivables when assessing the need
for a loss accrual. In October 1994, the FASB issued SFAS No. 118,
Accounting by Creditors for Impairment of a Loan--Income Recognition
and Disclosures, an amendment of FASB Statement No. 114. This
Statement amended SFAS No. 114 to allow a creditor to use existing
methods for recognizing interest income on an impaired loan. Both
Statements apply to financial statements for fiscal years beginning
after December 15, 1994. The Company adopted SFAS No. 114 effective
January 1, 1994 and SFAS No. 118 retroactive to January 1, 1994.
The Company's loans primarily consist of large groups of smaller-
balance homogeneous loans which are collectively evaluated for
impairment and to which these standards do not apply. The loans of
the Company that are affected by this Statement were previously, and
continue to be, carried at the lower of book value or the fair value
of the collateral. There was no material impact on the consolidated
financial position or results of operations as a result of adoption.
33
34
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 2. FINANCE RECEIVABLES (concluded)
The following table presents an analysis of the allowance for
financing losses on impaired loans for 1994:
December 31, 1994
----------------------
(in millions of dollars)
Allowance for Financing Losses at
beginning of year .......................... $ 173.9
Additions ............................... 30.1
Charge-offs ............................. (69.2)
----------
Allowance for Financing Losses at
end of year ................................. $ 134.8
==========
The total investment in these loans was $277.8 million at December
31, 1994. The average recorded investment during 1994 was $326.0
million. The Company's policy is to recognize interest income
related to impaired loans on a cash-basis.
NOTE 3. SALE OF FINANCE RECEIVABLES
The Company participates in various sales of receivables programs
and sold retail finance receivables through special purpose
subsidiaries with principal aggregating $3.7 billion in 1994, $13.6
billion in 1993 and $12.0 billion in 1992. These subsidiaries
generally retain a subordinated investment of no greater than 9% of
the total receivables pool and market the remaining portion. These
subordinated investments absorb losses related to sold receivables
to the extent that such losses are greater than the excess cash
flows from those receivables and cash reserves related to the sale
transaction. Pre-tax gains relating to such sales recorded in
"Other income" (excluding limited recourse loss provisions which
generally have been provided at the time the contracts were
originally acquired) amounted to $30.8 million in 1994, $436.4
million in 1993 and $588.8 million in 1992. The Company continues
to service these receivables for a fee. The Company's retail
finance receivable servicing portfolio amounted to $9.9 billion and
$14.9 billion at December 31, 1994 and 1993, respectively.
During 1994, the Company completed its first wholesale receivable
sale which included floating rate term notes sold to the public and
floating rate subordinated certificates and a floating rate
revolving note, privately placed. Wholesale receivable sales
resulted in a decrease in outstandings of $2.6 billion which
comprised the Company's wholesale finance servicing portfolio at
December 31, 1994. The certificates, when taken together with the
reserve fund, provide credit support for the notes.
34
35
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 3. SALE OF FINANCE RECEIVABLES (concluded)
The Company's interest in excess servicing cash flows, subordinated
interest in trusts, cash deposits and other related amounts are
generally restricted assets and subject to limited recourse
provisions. The following is a summary of amounts included in "Due
and deferred from receivable sales, net."
December 31
----------------------
1994 1993
---------- ----------
(in millions of dollars)
Excess servicing ............................ $ 392.3 $ 745.5
Other restricted amounts:
Subordinated interest in trusts ............ 526.6 726.8
Cash deposits held by trusts ............... 710.8 557.5
Deferred servicing and other ................ (2.3) (64.9)
Allowance for estimated credit losses on sold
receivables ................................ (62.8) (107.3)
---------- ----------
Total ....................................... $ 1,564.6 $ 1,857.6
========== ==========
The following table presents an analysis of the allowance for
estimated credit losses on sold receivables:
December 31
----------------------------
1994 1993 1992
----------------------------
(in millions of dollars)
Allowance for estimated credit
losses at beginning of the year ...... $ 107.3 $ 196.8 $ 100.9
Transfers (to)/from allowance for
financing losses ..................... (13.0) (33.8) 124.0
Charge-offs ........................... (31.5) (55.7) (28.1)
-------- -------- --------
Allowance for estimated credit losses
at end of the year ................... $ 62.8 $ 107.3 $ 196.8
======== ======== ========
NOTE 4. INVESTMENT IN OPERATING LEASES
Operating leases at year-end were as follows:
December 31
----------------------
1994 1993
---------- ----------
(in millions of dollars)
Investment in operating leases
Vehicles and other equipment, at cost..... $ 22,876.1 $ 15,727.9
Less: Accumulated depreciation.......... 5,066.9 4,364.4
---------- ----------
Net investment in operating leases........... $ 17,809.2 $ 11,363.5
========== ==========
35
36
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 4. INVESTMENT IN OPERATING LEASES (concluded)
The lease payments applicable to equipment on operating leases
maturing in each of the five years following December 31, 1994, are
as follows: 1995 - $4,864.8 million; 1996 - $3,146.2 million; 1997 -
$1,309.4 million; 1998 - $130.8 million and 1999 - $5.2 million.
NOTE 5. INVESTMENTS IN SECURITIES
As of January 1, 1994, the Company adopted SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities. As a result,
bonds, notes, certificates of deposit, other investments and
preferred stocks with mandatory redemption terms are carried at
market value. In prior years, these investments were carried at
amortized cost. Equity securities are carried at market (fair)
value for both years. The aggregate excess of market value over
cost, net of related income taxes, is included as a separate
component of stockholder's equity. The Company determines cost on
the specific identification basis. The fair value of the financial
instruments presented herein is based on quoted market prices.
December 31, 1994
----------------------------------------------
Fair Unrealized Unrealized
Type of Security Cost Value Gains Losses
--------------------- ---------- ---------- ---------- ----------
(in millions of dollars)
Bonds, notes and
other securities
United States
government and
governmental
agencies and
authorities ....... $ 298.5 $ 285.0 $ 0.3 $ (13.8)
States, municipalities
and political
subdivisions ...... 1,813.3 1,747.4 38.0 (103.9)
Other .............. 1,417.0 1,387.3 4.2 (33.9)
---------- ---------- ---------- ----------
Total debt
securities ......... $ 3,528.8 $ 3,419.7 $ 42.5 $ (151.6)
---------- ---------- ---------- ----------
Equity securities ... $ 280.9 $ 472.0 $ 203.2 $ (12.1)
---------- ---------- ---------- ----------
Total investment in
securities ......... $ 3,809.7 $ 3,891.7 $ 245.7 $ (163.7)
========== ========== ========== ==========
36
37
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 5. INVESTMENTS IN SECURITIES (continued)
December 31, 1993
----------------------------------------------
Fair Unrealized Unrealized
Type of Security Cost Value Gains Losses
--------------------- ---------- ---------- ---------- ----------
(in millions of dollars)
Bonds, notes and
other securities
United States
government and
governmental
agencies and
authorities ....... $ 195.1 $ 206.3 $ 11.4 $ (0.2)
States, municipalities
and political
subdivisions ...... 1,997.7 2,137.6 146.2 (6.3)
Other .............. 735.9 781.0 48.3 (3.2)
---------- ---------- ---------- ----------
Total debt
securities ......... $ 2,928.7 $ 3,124.9 $ 205.9 $ (9.7)
---------- ---------- ---------- ----------
Equity securities ... $ 266.2 $ 521.0 $ 270.9 $ (16.1)
---------- ---------- ---------- ----------
Total investment in
securities ......... $ 3,194.9 $ 3,645.9 $ 476.8 $ (25.8)
========== ========== ========== ==========
The distribution of maturities of debt securities outstanding at
December 31, 1994 and 1993 is summarized as follows:
December 31, 1994 December 31, 1993
---------------------- ----------------------
Fair Fair
Maturity Cost Value Cost Value
--------------------- ---------- ---------- ---------- ----------
(in millions of dollars)
Due in one year or
less ............... $ 177.6 $ 179.0 $ 168.0 $ 173.5
Due after one year
through five years . 637.9 631.5 621.6 663.7
Due after five years
through ten years .. 997.9 968.8 876.6 931.8
Due after ten years . 1,094.3 1,027.4 1,080.0 1,162.2
Mortgage-backed
securities ......... 621.1 613.0 182.5 193.7
---------- ---------- ---------- ----------
Total debt securities $ 3,528.8 $ 3,419.7 $ 2,928.7 $ 3,124.9
========== ========== ========== ==========
Proceeds from the sale of debt securities amounted to $ 1,036.4
million in 1994, $2,093.4 million in 1993 and $1,690.3 million in
1992. Gross realized gains amounted to $15.0 million in 1994, $58.6
million in 1993 and $54.7 million in 1992. Gross realized losses
amounted to $18.9 million in 1994, $13.3 million in 1993 and $5.4
million in 1992.
37
38
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 5. INVESTMENTS IN SECURITIES (concluded)
Proceeds from the sale of equity securities amounted to $185.1
million in 1994, $258.6 million in 1993 and $232.4 million in 1992.
Gross realized gains amounted to $80.5 million in 1994, $160.5
million in 1993 and $79.3 million in 1992. Gross realized losses
amounted to $11.9 million in 1994, $2.3 million in 1993 and $6.3
million in 1992.
NOTE 6. OTHER NONEARNING ASSETS
Other nonearning assets consist of:
December 31
----------------------
1994 1993
---------- ----------
(in millions of dollars)
Property and equipment at cost............... $ 257.6 $ 249.5
Accumulated depreciation .................... ( 127.8) ( 120.2)
---------- ----------
Net property ................................ $ 129.8 $ 129.3
Nonperforming assets (net of valuation
reserves) .................................. 304.8 319.5
Insurance premiums receivable ............... 209.4 224.3
Residential servicing advances and excess
servicing fees ............................. 217.7 137.8
Deferred policy acquisition cost ............ 200.3 182.5
Other assets ................................ 683.9 584.6
---------- ----------
Total ....................................... $ 1,745.9 $ 1,578.0
========== ==========
38
39
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 7. LINES OF CREDIT WITH BANKS
The Company maintains four syndicated bank credit facilities in the
U.S. and Europe.
As of December 31, 1994, syndicated bank credit facilities in the U.S.
included a four year, $10.0 billion revolving credit facility, as well
as an $8.5 billion 364-day asset-backed commercial paper liquidity and
receivables credit facility to a non-consolidated special purpose
entity established to issue asset-backed commercial paper. On January
25, 1995, the credit facility for the special purpose entity was
increased by $2.0 billion to $10.5 billion. These facilities serve
primarily as back-up for GMAC's unsecured and asset-backed commercial
paper programs, respectively.
In Europe, the syndicated facilities will be used as needed to fund
GMAC's financing operations in line with the Company's historical
reliance on bank debt outside the U.S. and Canada. In this regard, the
syndicated facilities include a four year, $500 million revolving
credit facility to GMAC International Finance in the Netherlands and a
400 million pound sterling revolving credit facility to GMAC (UK) plc.
With respect to the $10 billion revolving credit facility, GMAC has
agreed to a covenant such that, so long as the commitments remain in
effect or any amount is owing to any lender under such commitments, the
ratio of consolidated debt to total stockholder's equity at the last
day of any fiscal quarter shall not exceed 11.0:1. At December 31,
1994 and 1993, this ratio amounted to 8.4:1 and 8.0:1, respectively.
Inclusive of these syndicated agreements, credit facilities maintained
worldwide totaled $34,007.6 million at December 31, 1994, compared to
$29,203.2 million at December 31, 1993. Facilities available for use
as commercial paper back-up in the United States amounted to $18,505.0
million and $15,000.0 million at December 31, 1994 and 1993,
respectively, all of which were unused. GMAC Mortgage had $965.0
million of bank lines of credit at December 31, 1994, compared with
$1,255.0 million at December 31, 1993, which are utilized in the normal
course of business. Of these lines, $465.0 million and $480.0 million
were unused at December 31, 1994 and 1993, respectively.
Credit facilities supporting operations in Canada, Europe, Latin
America and Asia Pacific totaled $14,537.6 million at December 31, 1994
and $12,948.2 million at December 31, 1993, of which $6,682.1 million
and $6,314.3 million were unused at December 31, 1994 and 1993,
respectively. As of December 31, 1994, the committed and uncommitted
portion of such credit facilities totaled $4,812.1 million and $9,725.5
million, respectively. As of December 31, 1993, the committed and
uncommitted portion of such credit facilities totaled $4,350.2 million
and $8,598.0 million, respectively.
39
40
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 8. NOTES, LOANS AND DEBENTURES PAYABLE WITHIN ONE YEAR
December 31
----------------------
1994 1993
---------- ----------
(in millions of dollars)
Short-term notes
Commercial paper ........................... $ 18,644.4 $ 14,521.1
Master notes ............................... 500.9 467.8
Demand notes ............................... 2,542.6 2,161.0
Other ...................................... 742.2 645.5
---------- ----------
Total principal amount ...................... 22,430.1 17,795.4
Unamortized discount ........................ (131.5) (61.6)
---------- ----------
Total ....................................... 22,298.6 17,733.8
---------- ----------
Bank loans and overdrafts
United States .............................. 552.0 823.0
Other Countries ............................ 5,271.4 4,893.6
---------- ----------
Total ....................................... 5,823.4 5,716.6
---------- ----------
Other notes, loans and debentures
payable within one year
United States:
Medium-term notes ....................... 5,072.0 8,569.0
Other (net) ............................. 1,164.6 1,791.9
Other countries ........................... 756.2 1,273.1
---------- ----------
Total ....................................... 6,992.8 11,634.0
---------- ----------
Total payable within one year ............... $ 35,114.8 $ 35,084.4
========== ==========
Commercial paper is offered in the United States and Europe in
varying terms ranging up to 270 days. The weighted average interest
rates on commercial paper at December 31, 1994, 1993 and 1992 were
6.04%, 3.56% and 4.47%, respectively.
Master notes represent borrowings on a demand basis arranged
generally under agreements with trust departments of certain banks.
The weighted average interest rates on master notes at December 31,
1994, 1993 and 1992 were 6.06%, 3.30% and 4.18%, respectively.
GMAC's Variable Rate Demand Note Program is made available to
employees and retirees of General Motors Corporation and their
participating subsidiaries and affiliates, and their immediate
family members, GM dealers and their employees and affiliates, and
stockholders of General Motors Corporation.
Bank loans are generally made on a demand basis. Medium-term notes
are offered in the United States, Canada, Europe and Asia in varying
terms ranging from more than nine months to thirty years.
40
41
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 8. NOTES, LOANS AND DEBENTURES PAYABLE WITHIN ONE YEAR
(concluded)
The above maturities denominated in currencies other than the U.S.
Dollar primarily consist of Canadian Dollar ($2,173.2 million),
German Mark ($2,678.2 million), Australian Dollar ($720.9 million)
and United Kingdom Pound Sterling ($1,331.3 million). The Company
and its subsidiaries have entered into foreign currency swap
agreements to hedge exposures related to notes and loans payable in
currencies other than the local currency of the debt issuing entity.
To achieve its desired balance between fixed and variable rate debt,
the Company has entered into interest rate swap, interest rate cap
and swaption agreements. The breakdown between the fixed and
variable (predominately based on London Interbank Offering Rate or
LIBOR) interest rate amounts based on contractual terms and after
the effect of interest rate derivatives is as follows:
December 31
1994 1993
------ ------
(in millions of dollars)
Debt balances based on
contractual terms:
----------------------
Fixed amount .......................... $31,676.9 $32,139.3
Variable amount ....................... 3,569.4 3,006.7
Debt balances after effect of
derivatives:
-----------------------------
Fixed amount .......................... $31,696.7 $31,890.7
Variable amount ....................... 3,549.6 3,255.3
On a consolidated basis, short-term borrowing amounts during the
prior three years were as follows:
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
Maximum amount outstanding at
any month-end .................. $ 27,547.8 $ 28,439.4 $ 36,914.0
Average borrowings outstanding
during the year ................ $ 22,989.3 $ 23,462.9 $ 30,731.1
Weighted average short-term
interest rates* ................ 5.09% 4.86% 5.31%
Weighted average commercial
paper rates*
Worldwide ..................... 4.46% 3.67% 4.33%
United States ................. 4.37% 3.44% 4.01%
* Rates have been determined by relating short-term interest costs
for each year to the daily average dollar amounts outstanding.
Derivative activities resulted in interest expense increases of $5.8
million, $2.2 million and $1.2 million for the years ended December
31, 1994, 1993 and 1992, respectively. The effect of these
transactions is not included in the above weighted average borrowing
rates and were basis point increases of two and one for 1994 and
1993, respectively, and less than one basis point for 1992.
41
42
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 9. NOTES, LOANS AND DEBENTURES PAYABLE AFTER ONE YEAR
Weighted average
interest rates at December 31
Maturity December 31, 1994 1994 1993
--------------------------- ----------------- ---------- ----------
NOTES, LOANS AND DEBENTURES (in millions of dollars)
United States currency
1995 ..................... -- $ -- $ 6,040.1
1996 ..................... 7.0% 8,588.5 5,173.1
1997 ..................... 7.0% 6,539.7 4,391.6
1998 ..................... 6.7% 2,048.3 1,455.7
1999 ..................... 7.1% 3,209.1 1,600.0
2000 ..................... 8.0% 1,443.1 1,050.1
2001 - 2005 .............. 8.5% 2,703.3 2,399.0
2005 - 2010 .............. 8.9% 500.0 500.0
2011 - 2015 .............. 11.0% 1,077.2 1,077.2
2016 - 2049 .............. 7.8% 375.0 375.0
---------- ----------
Total United States currency 26,484.2 24,061.8
Other currencies
1995 - 2004 .............. 7.2% 5,844.9 4,442.4
---------- ----------
Total notes, loans and
debentures ............... 32,329.1 28,504.2
Unamortized discount ...... (789.5) (815.4)
---------- ----------
Total notes, loans and
debentures payable after
one year ................. $ 31,539.6 $ 27,688.8
========== ==========
The aggregate principal amounts of notes, loans and debentures with
terms of more than one year from dates of issue, maturing in each of
the five years following December 31, 1994, are as follows: 1996 -
$11,186.7 million; 1997 - $8,403.3 million; 1998 - $3,075.9 million;
1999 - $3,840.4 million; and 2000 - $1,454.4 million.
The above maturities which are denominated in currencies other than
the U.S. Dollar, primarily consist of the Canadian Dollar ($1,830.7
million), German Mark ($1,985.4 million), Australian Dollar ($703.8
million), Japanese Yen ($475.0 million) and United Kingdom Pound
Sterling ($269.1 million). The Company and its subsidiaries have
entered into foreign currency swap agreements to hedge exposures
related to notes and loans payable in currencies other than the
local currency of the debt issuing entity.
The Company has issued warrants to subscribe for up to $75 million
aggregate principal amount of 7.00% Notes due August 15, 2001. The
warrants are exercisable up to and including August 15, 2000.
The Company has issued warrants to subscribe for up to $300 million
aggregate principal amount of 6.50% Notes due October 15, 2009. The
warrants are exercisable up to and including October 15, 2007.
Debt issues totaling $1,847.2 million are redeemable, at par or
slightly above, at the Company's option. The debt issues are
redeemable anytime until prior to their maturity dates -- the latest
date being April 2016.
42
43
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 9. NOTES, LOANS AND DEBENTURES PAYABLE AFTER ONE YEAR
(concluded)
The above maturities include $1,000.0 million in notes with fixed
rates and $850.0 million in notes with variable rates which provide
investors the option to cause GMAC to repurchase them at specific
dates through June 2005. Generally, the probability of exercising an
option would increase in the event of a reduction in one or more of
the Company's security ratings or, where the notes are subject to
fixed interest rates, an increase in market interest rates. For
purposes of the above maturities, it is assumed that no repurchase
will occur.
To achieve its desired balance between fixed and variable rate debt,
the Company has entered into interest rate swap, interest rate cap
and swaption agreements. The breakdown between the fixed and
variable (predominately based on London Interbank Offering Rate or
LIBOR) interest rate amounts based on contractual terms and after
the effect of interest rate instruments is as follows:
December 31
1994 1993
---------- ----------
(in millions of dollars)
Debt balances based on
contractual terms:
----------------------
Fixed amount .......................... $27,372.6 $26,730.1
Variable amount ....................... 4,956.5 1,774.1
Debt balances after effect of
derivatives:
-----------------------------
Fixed amount .......................... 27,255.7 26,744.2
Variable amount ....................... $ 5,073.4 $ 1,760.0
Derivative activities resulted in interest expense decreases of
$11.0 million, $18.8 million and $11.8 million for the years ended
December 31, 1994, 1993 and 1992, respectively. The effect of these
transactions on the Company's weighted average borrowing rates were
basis point decreases of three, seven and three for 1994, 1993 and
1992, respectively.
NOTE 10. UNITED STATES, FOREIGN AND OTHER INCOME TAXES
The Company and its domestic subsidiaries join with General Motors
Corporation in filing a consolidated United States Federal income
tax return. The portion of the consolidated tax recorded by the
Company and its subsidiaries included in the consolidated tax return
generally is equivalent to the liability that would have been
incurred on a separate return basis. Provisions are made for
estimated United States and foreign income taxes, less available tax
credits and deductions, which may be incurred on remittance of the
Company's share of subsidiaries' undistributed earnings less those
deemed to be indefinitely reinvested.
Deferred income taxes reflect the impact of "temporary differences"
between values recorded for assets and liabilities for financial
reporting purposes and values utilized for measurement in accordance
with tax laws.
43
44
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 10. UNITED STATES, FOREIGN AND OTHER INCOME TAXES (continued)
The tax effects of the primary temporary differences giving rise to
the Company's deferred tax assets and liabilities for 1994 and 1993
are as follows:
December 31, 1994
----------------------
Asset Liability
---------- ----------
(in millions of dollars)
Lease transactions .......................... $ -- $ 1,707.2
Provision for financing losses .............. 250.0 --
Debt transactions ........................... -- 298.1
Recognition of income on non-recourse
receivables ................................ -- 92.5
Unrealized gain on securities ............... -- 17.0
Sales of finance receivables ................ -- 57.0
State and local taxes ....................... -- 145.5
Insurance loss reserve discount ............. 89.8 --
Unearned insurance premiums ................. 90.0 --
Other postretirement benefits ............... 201.5 --
Alternative minimum tax ..................... 180.3 --
Other ....................................... 76.1 274.9
---------- ----------
Total deferred income taxes ................. $ 887.7 $ 2,592.2
========== ==========
December 31, 1993
----------------------
Asset Liability
---------- ----------
(in millions of dollars)
Lease transactions .......................... $ -- $ 1,100.5
Provision for financing losses .............. 330.6 --
Debt transactions ........................... -- 332.2
Recognition of income on non-recourse
receivables ................................ -- 179.5
Unrealized gain on securities ............... 88.5
Sales of finance receivables ................ 29.1 --
State and local taxes ....................... -- 126.5
Insurance loss reserve discount ............. 85.6 --
Unearned insurance premiums ................. 82.1 --
Other postretirement benefits ............... 182.4 --
Other ....................................... 150.1 225.9
---------- ----------
Total deferred income taxes ................. $ 859.9 $ 2,053.1
========== ==========
44
45
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 10. UNITED STATES, FOREIGN AND OTHER INCOME TAXES (concluded)
The significant components of income tax expense are as follows:
For the Years Ended December 31
----------------------------------
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
Income taxes estimated to be
currently payable/(refundable)
United States Federal .......... $ (129.5) $ 32.9 $ 535.9
Foreign ........................ 147.3 162.8 125.8
United States state and local .. (31.3) 28.9 63.8
---------- ---------- ----------
Total income taxes payable/
recoverable currently .......... (13.5) 224.6 725.5
---------- ---------- ----------
Deferred income taxes:
United States Federal .......... 352.9 343.7 10.7
Foreign ........................ 104.1 (3.0) 55.1
United States state and local .. 69.2 26.4 91.0
---------- ---------- ----------
Total deferred income taxes
(credits) ...................... 526.2 367.1 156.8
---------- ---------- ----------
Income tax expense .............. $ 512.7* $ 591.7 $ 882.3*
========== ========== ==========
Income tax provisions recorded by the Company differ from the
computed amounts developed by applying the statutory United States
Federal income tax rate to income before income taxes. The
following schedule reconciles the U.S. statutory income tax rate to
the actual income tax rate recorded by the Company:
For the Years Ended December 31
----------------------------------
1994 1993 1992
---------- ---------- ----------
United States Federal statutory
income tax rate.................. 35.0% 35.0% 34.0%
Effect of (in percentage points)
State and local income taxes .... 1.7 2.8 6.3
Tax exempt interest and
dividends received which are not
fully taxable .................. (2.5) (1.9) (1.2)
Adjustment to U.S. taxes on
foreign income ................. 0.9 3.4 0.4
Foreign income tax rate
differential .................. 2.3 (.4) 1.9
Other ........................... (1.8) (1.3) 0.6
---------- ---------- ----------
Effective tax rate ............... 35.6%* 37.6% 42.0%*
========== ========== ==========
----------
* Excludes cumulative effects of changes in accounting principles.
45
46
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 11. PENSION PROGRAM
The Company and certain of its subsidiaries participate in various
pension plans of General Motors Corporation and its domestic and
foreign subsidiaries, which cover substantially all of their
employees. Benefits under the plans are generally related to an
employee's length of service, salary and, where applicable,
contributions. GMAC Mortgage Corporation and NAVCO Corp., two
wholly-owned subsidiaries, have separate retirement plans which
provide for pension payments to their eligible employees upon
retirement. Pension expense of the Company and its subsidiaries
amounted to $17.6 million in 1994, $38.9 million in 1993 and $3.4
million in 1992.
During 1992, the Company offered voluntary early retirement to
certain employees. Under the provision of SFAS No. 88, Employers'
Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits, this early retirement
opportunity resulted in a 1992 expense of $51.5 million.
NOTE 12. OTHER POSTRETIREMENT BENEFITS
The Company and certain of its subsidiaries participate in various
postretirement medical, dental, vision and life insurance plans of
General Motors Corporation. These benefits are funded as incurred
from the general assets of the Company.
In November 1992, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 112,
Employers' Accounting for Postemployment Benefits, which established
a new accounting principle for the cost of benefits provided to
former or inactive employees after employment but before retirement.
The Statement is effective for fiscal years beginning after December
15, 1993. The Company adopted this standard effective January 1,
1994; the after-tax unfavorable cumulative effect of this change was
$7.4 million.
In December 1990, the FASB issued SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, which
requires the accrual of future retiree benefit costs over the active
service period of employees to the date of full eligibility for such
benefits. The Company elected to adopt this standard effective
January 1, 1992. The unfavorable cumulative effect of this
accounting change as of January 1, 1992, was $282.6 million (net-of-
tax). Prior years financial statements have not been restated.
The Company accrues postretirement benefit costs over the active
service period of employees to the date of full eligibility for such
benefits. The Company has provided for certain amounts associated
with estimated future postretirement benefits other than pensions
and characterized such amounts as "accumulated postretirement
benefit obligations," "liabilities" or "obligations."
Notwithstanding the recording of such amounts and the use of these
terms, the Company does not admit or otherwise acknowledge that such
amounts or existing postretirement benefit plans of the Company
(other than pensions) represent legally enforceable liabilities of
the Company.
46
47
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 12. OTHER POSTRETIREMENT BENEFITS (concluded)
The total non-pension postretirement benefits expense of the Company
amounted to $70.7 million, $65.8 million and $51.4 million in 1994,
1993, and 1992 respectively, and included the components set forth
below:
December 31
----------------------------------
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
Benefits attributed to
the current year .............. $ 19.9 $ 14.7 $ 10.8
Interest accrued on
benefits attributed to
prior years ................... 50.8 51.1 40.6
---------- ---------- ----------
Total non-pension
postretirement
benefits expense .............. $ 70.7 $ 65.8 $ 51.4
========== ========== ==========
NOTE 13. TRANSACTIONS WITH AFFILIATES
Under special rate programs sponsored by General Motors, an interest
rate differential is provided as reimbursement for amounts advanced
to dealers on behalf of GM. These amounts are recognized over the
life of the related contracts. The earned portion of such amounts
constituted 7.1% of gross revenue in 1994, compared with 6.1% in
1993 and 5.1% in 1992.
The Company extends loans to GM subsidiaries and affiliates. Over
the periods ended November 30, 1993 and December 31, 1992, these
loans included amounts provided to GM related to its dealer
inventory financing. The Company serviced such GM wholesale
receivables for a fee. As of December 1, 1993, the Company resumed
the financing of wholesale receivables previously owned by GM. At
December 31, 1994 and 1993, $1,080.5 million and $1,355.5 million,
respectively, of loans to GM and affiliates were outstanding. Total
interest and service fee income from these loans and receivables
amounted to $117.3 million in 1994, $649.7 million in 1993 and
$758.5 million in 1992.
The amounts due General Motors Corporation and affiliated companies
at the balance sheet dates relate principally to current wholesale
financing of sales of General Motors products. To the extent that
wholesale settlements with General Motors are made in advance of
transit time (which may occur from time-to-time due to seasonal or
other factors), interest is received from General Motors.
The Company purchases certain vehicles which General Motors acquired
from its fleet and rental customers. The cost of these vehicles
held for resale, which is included in other earning assets, was
$938.9 million at December 31, 1994, compared with $607.7 million at
December 31, 1993.
47
48
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 13. TRANSACTIONS WITH AFFILIATES (concluded)
The Company and certain of its subsidiaries lease capital equipment
to various units of General Motors in the ordinary course of
business. At December 31, 1994 and 1993, leasing receivables
relating to such leases amounted to $12.2 million and $5.4 million,
respectively.
The Company purchases data processing and communications services
from Electronic Data Systems Corporation, a subsidiary of General
Motors Corporation. Such purchases, which are included in operating
expenses, amounted to $268.8 million in 1994, compared with $272.5
million in 1993 and $266.6 million in 1992.
Insurance premiums earned in 1994, 1993 and 1992 include $278.3
million, $322.1 million and $390.8 million, respectively, earned by
Motors Insurance Corporation on certain insurance coverages provided
to General Motors.
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has developed the following fair value estimates by
utilization of available market information or other appropriate
valuation methodologies. However, considerable judgment is required
in interpreting market data to develop estimates of fair value, so
the estimates are not necessarily indicative of the amounts that
could be realized or would be paid in a current market exchange.
The effect of using different market assumptions and/or estimation
methodologies may be material to the estimated fair value amounts.
Fair value information presented herein is based on information
available at December 31, 1994 and 1993. Although management is not
aware of any factors that would significantly affect the estimated
fair value amounts, such amounts have not been updated since those
dates and, therefore, the current estimates of fair value at dates
subsequent to December 31, 1994 and 1993 may differ significantly
from these amounts. The estimated fair value of financial
instruments held by the Company, for which it is practicable to
estimate that value, were as follows:
48
49
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Balance sheet financial instruments:
1994 1993
---------------------- ----------------------
Estimated Estimated
Book Fair Book Fair
Value Value Value Value
---------- ---------- ---------- ----------
(in millions of dollars)
Assets
Cash and cash
equivalents ....... $ 1,339.5 $ 1,339.5 $ 4,028.1 $ 4,028.1
Investments in
securities ........ 3,891.7 3,891.7 3,449.7 3,645.9
Finance receivables.. 54,625.1 54,446.5 54,134.8 54,906.4
Other earning assets. 1,080.5 1,091.3 1,355.5 1,382.8
Real estate mortgages
held for resale ... 1,244.0 1,244.0 1,827.5 1,827.5
held as investing . 920.6 920.6 -- --
excess servicing .. 156.1 156.1 89.9 89.9
Due and deferred from
receivable sales... 1,564.6 1,730.9 1,857.6 2,046.1
Liabilities
Debt ................ $ 66,654.4 $ 67,199.7 $ 62,773.2 $ 64,379.3
Off-balance sheet financial instruments:
------------------------------------------------
December 31, 1994 December 31, 1993
Contract/ Contract/
Notional Unrealized Notional Unrealized
Amount Gain/(Loss) Amount Gain/(Loss)
---------- ----------- ---------- ----------
(in millions of dollars)
Commitments to
originate/purchase
mortgages ......... $ 689.5 $ (2.4) $ 1,795.6 $ (7.6)
Commitments to sell
mortgages ......... 694.1 (4.2) 2,139.0 9.6
Mortgage-related
Futures ........... 4,399.0 2.5 -- --
Unused revolving
credit lines
to dealers ........ 400.0 -- 301.1 --
Interest rate
instruments ....... 9,829.5 (68.3) 7,059.0 35.0
Foreign currency
instruments (1) ... $ 1,757.1 $ 88.2 $ 1,564.9 $ (3.3)
(1) Includes $907.0 million and $1,182.5 million in cross currency
interest rate swaps with unrealized gains of $65.8 million and $1.6
million at December 31, 1994 and 1993, respectively.
Cash and Cash Equivalents
-------------------------
The book value approximates fair value because of the short maturity
of these instruments.
49
50
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Investments in Securities
-------------------------
As of January 1, 1994, the Company adopted SFAS No. 115. As a
result, certificates of deposit, bonds, notes, and other temporary
investments are carried at market value. In prior years, these
investments were carried at amortized cost. Equity securities are
carried at fair value for both years. The aggregate excess of fair
value over, net of related income taxes, is included as a cost
component of stockholder s equity. The fair value of the financial
instruments reflected above is based on quoted market prices.
Finance Receivables
-------------------
The fair value is estimated by discounting the future cash flows
using applicable spreads to approximate current rates applicable to
each category of finance receivables. The carrying value of
wholesale receivables and other receivables whose interest rates
adjust on a short-term basis with applicable market indices
(generally the prime rate) are assumed to approximate fair value
either due to their short maturities or due to the interest rate
adjustment feature.
Other Earning Assets
--------------------
The fair value is estimated by discounting the future cash flows
using applicable spreads to approximate current rates applicable to
certain categories of other earning assets.
Real Estate Mortgages and Excess Servicing Fees
-----------------------------------------------
The fair values of real estate mortgages held for sale (including
warehouse lines) and loans held for investment approximated their
carrying values. The fair value of excess servicing fees was
determined by discounting net future cash flows at current market
rates.
Due and Deferred from Receivable Sales
--------------------------------------
The fair values of retained subordinated interests in trusts and
excess servicing assets (net of deferred costs) are derived by
discounting expected cash flows using current market rates.
Debt
----
The fair value of the debt payable within one year is determined by
using quoted market prices, if available, or calculating the
estimated value of each bank loan, note or debenture in the
portfolio at the applicable rate in effect. Commercial paper,
master notes, and demand notes have an original term of less than 90
days and, therefore, the carrying amount of these liabilities is
considered fair value. Debt payable beyond one year has an
estimated fair value based on quoted market prices for the same or
similar issues or based on the current rates offered to the Company
for debt with similar remaining maturities.
50
51
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS (concluded)
Commitments to Originate/Purchase Mortgages
-------------------------------------------
The fair value of commitments is estimated using quoted market
prices associated with commitments to sell similar mortgages in
estimated future periods.
Commitments to Sell Mortgages
-----------------------------
The fair value of commitments is estimated using quoted market
prices associated with similar commitments.
Mortgage-Related Futures
------------------------
The fair value of these exchange traded Eurodollar futures contracts
is determined using quoted market prices.
Unused Revolving Credit Lines
-----------------------------
The contractual value of the unused portion of inventory floorplan
lines of credit extended to dealers will approximate market value
since they reprice at prevailing market rates.
Interest Rate Instruments
-------------------------
The fair value of the existing interest rate swaps is estimated by
discounting expected cash flows using quoted market interest rates.
The fair value of the written options is estimated using quoted
market prices.
Foreign Currency Instruments
----------------------------
The estimated fair value of the foreign currency swaps is derived by
discounting expected cash flows using market exchange rates over the
remaining term of the agreement.
51
52
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company is a party to derivative financial instruments with off-
balance-sheet risk which it uses in the normal course of business to
reduce its exposure to fluctuations in interest and foreign exchange
rates. The objectives of the derivative financial instruments
portfolio are to manage interest rate and currency risks by
offsetting a companion asset or funding obligation; adjusting fixed
and floating rate funding levels. The primary classes of
derivatives used by the Company are interest rate and foreign
exchange swaps and options (including swaptions and interest rate
caps). Those instruments involve, to varying degrees, elements of
credit risk in the event a counterparty should default and market
risk as the instruments are subject to rate and price fluctuations.
Credit risk is managed through the periodic monitoring and approval
of financially sound counterparties. Market risk is mitigated
because the derivatives are generally used to hedge underlying
transactions. The financial instrument transactions include some
embedded options and structured interest rate swaps of which all are
either marked-to-market or specifically matched, respectively. Cash
receipts or payments on these agreements normally occur at periodic
contractually defined intervals. The Company does not use any of
these classes of derivatives for trading purposes, except for
limited mortgage-related transactions entered into by its wholly-
owned mortgage subsidiaries.
Interest Rate Instruments
-------------------------
The Company s financing and cash management activities subject it to
market risk from exposure to changes in interest rates. To manage
these exposures, the Company has entered into various financial
instrument transactions. The Company s objective of entering into
these transactions is to minimize interest expense while maintaining
the desired level of exposure to the risk of interest rate
fluctuations. Interest rate swaps are contractual agreements
between the Company and another party to exchange the net difference
between a fixed and floating interest rate periodically over the
life of the contract without the exchange of the underlying
principal amount. The Company will at times use written options
(including swaptions and interest rate caps). Interest rate options
such as swaptions generally permit but do not require the purchaser
of the option to exchange interest payments in the future. Interest
rate cap agreements provide the holder protection against interest
rate movements above the established rate. In exchange for assuming
this risk, the writer receives a premium at the outset of the
agreement.
The Company uses swaps to alter its fixed and floating interest rate
exposures. As such, the majority of swaps are executed as an
integral element of a specific financing transaction. In a limited
number of cases, swaps, matched to specific portfolios of wholesale
assets or debt, are executed on a portfolio basis to achieve
specific interest rate management objectives. The differential paid
or received on such swaps is recorded as an adjustment to interest
expense or income over the term of the underlying debt agreement or
matched portfolio. Written interest rate caps, swaptions and basis
swaps are marked to market with related gains and losses recognized
in other income on a current basis.
Summaries of the Company s interest rate swaps and written options
by maturity and weighted average rate (predominately based on London
Interbank Offering Rate or LIBOR) at December 31, 1994 and 1993, are
as follows:
52
53
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(continued)
Interest Rate Swaps
December 31, 1994
---------------------------------------------------------------
Notional GMAC GMAC
Year Amount Receives Pays
Due (in millions) Floating(2) Fixed
-------- ------------- ----------- -----------
1995 $ 207.8 6.59% 8.03%
1996 157.9 7.93% 4.57%
1997 33.9 8.09% 7.68%
1998 43.3 11.44% 10.50%
1999 152.0 8.77% 7.51%
-------------
Subtotal $ 594.9
-------------
GMAC GMAC
Pays Receives
Floating(2) Fixed
----------- -----------
1995 $ 968.0 7.94% 7.19%
1996 651.3 8.52% 7.37%
1997 626.2 8.42% 7.32%
1998 205.7 8.56% 7.34%
1999 245.9 8.85% 8.72%
2002 500.0 8.17% 6.67%
-------------
Subtotal $ 3,197.1(3)
-------------
GMAC GMAC
Pays Receives
Floating(2) Floating(2)
----------- -----------
1996 $ 250.0 8.53% 8.33%
1999 2,578.0 8.13% 8.75%
------------
Subtotal $ 2,828.0
------------
Total $ 6,620.0(1)
============
(1) Excludes GMAC Mortgage Corporation derivatives that are
discussed under Mortgage Contracts.
(2) An implied forward yield curve as of December 31, 1994 was
utilized as a basis to estimate the weighted average variable rate
of the swap over the remaining term of the swap.
(3) Includes notional amounts for swaps with amortizing balances.
The swap balances amortize in relation to expected prepayments on
the principal balances of the matched assets.
53
54
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(continued)
Interest Rate Swaps
December 31, 1993
------------------------------------------------------------------
Notional GMAC GMAC
Year Amount Receives Pays
Due (in millions) Floating(2) Fixed
-------- ------------- ----------- -----------
1995 $ 207.4 3.96% 8.04%
1996 152.8 4.60% 4.48%
-------------
Subtotal $ 360.2
-------------
GMAC GMAC
Pays Receives
Floating(2) Fixed
----------- -----------
1994 $ 550.0 3.81% 6.41%
1995 100.0 4.30% 5.38%
2002 500.0 6.27% 6.67%
-------------
Subtotal $ 1,150.0
-------------
GMAC GMAC
Receives Pays
Floating(2) Floating(2)
----------- -----------
1996 $ 250.0 3.88% 5.27%
-------------
Subtotal $ 250.0
-------------
Total $ 1,760.2(1)
=============
(1) Excludes GMAC Mortgage Corporation derivatives that are
discussed under Mortgage Contracts.
(2) An implied forward yield curve as of December 31, 1993 was
utilized as a basis to estimate the weighted average variable rate
of the swap over the remaining term of the swap.
54
55
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(continued)
Written Options
-----------------------------------------------------------------
December 31
Year Due 1994 1993
-------- ---------- ----------
Notional Amounts
(in millions of dollars)
Interest Rate Caps:
1995 $ 133.8 $ 956.1
1996 300.0 300.0
1998 2,475.7 3,492.8
2000 -- 250.0
---------- ----------
Subtotal $ 2,909.5 $ 4,998.9
---------- ----------
Swaptions:
2000 $ 300.0 $ 300.0
---------- ----------
Total $ 3,209.5 $ 5,298.9
========== ==========
Foreign Currency Instruments
----------------------------
The Company s financing activities subject it to market risk from
exposure to changes in foreign exchange rates. Currency swaps are
used to hedge foreign exchange exposure on foreign currency
denominated debt by converting the funding currency to the currency
of the assets being financed. Foreign exchange swaps are legal
agreements between two parties to purchase and sell a foreign
currency, for a price specified at the contract date, with delivery
and settlement in the future.
The notional maturities of currency swaps as of December 31, 1994
and 1993 are as follows:
Currency Swaps
-------------------------------------------
December 31
1994 1993
---------- ----------
(in millions of dollars)
Year Due:
1994 $ -- $ 441.2
1995 310.0 34.9
1996 329.2 201.3
1997 660.5 488.8
1998 234.7 177.9
1999 222.7 220.8
---------- ----------
Total $ 1,757.1 $ 1,564.9
========== ==========
55
56
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(continued)
A reconciliation of the Company and its subsidiaries' interest rate
and currency swaps activities for the years ended December 31, 1994
and 1993, is as follows:
Interest Rate Swaps Currency Swaps
------------------- --------------------
December 31 December 31
1994 1993 1994 1993
--------- --------- --------- ---------
(in millions of dollars)
Beginning notional amount $ 1,760.2 $ 2,056.8 $ 1,564.9 $ 957.5
Add:
New contracts 5,408.9 160.2 561.3 940.2
Less:
Terminated contracts -- -- -- --
Expired contracts 549.1 456.8 369.1 332.7
--------- --------- --------- ---------
Ending notional amount $ 6,620.0 $ 1,760.2 $ 1,757.1 $ 1,564.9
========= ========= ========= =========
The following table summarizes the notional amounts of the Company and
its subsidiaries currency and interest rate swaps by major currency:
December 31
1994 1993
---------- ----------
(in millions of dollars)
Currency Swaps (by currency paid):
Australian dollars $ 510.4 $ 260.3
Canadian dollars 393.2 445.2
United Kingdom pounds sterling 464.9 401.0
United States dollars 258.9 278.9
Other 129.7 179.5
---------- ----------
Total currency swaps $ 1,757.1 $ 1,564.9
---------- ----------
Interest Rate Swaps:
Canada $ 206.5 $ 150.0
United States 6,363.9 1,600.0
Other 49.6 10.2
---------- ----------
Total interest rate swaps $ 6,620.0 $ 1,760.2
---------- ----------
Total currency and interest rate swaps $ 8,377.1 $ 3,325.1
========== ==========
56
57
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(continued)
Mortgage Contracts
------------------
The Company's mortgage subsidiaries, collectively, the GMAC Mortgage
Group ("GMACMG"), hold certain financial derivative instruments for
trading purposes in accordance with approved policies. These
instruments are generally mandatory and optional forward mortgage
backed securities contracts and the purchase and sale of futures
contracts. At December 31, 1994, the notional amounts of the purchase
and sale positions on these instruments were $37.7 million and $35.0
million, respectively. The average net fair value of these instruments
for 1994 and at December 31, 1994 was insignificant. The net trading
gain for 1994 was $1.6 million.
GMACMG also holds and issues various financial instruments to manage
interest rate risk associated with loans held for sale and investment,
mortgage-backed securities held for sale, loan commitments and
prepayment risk associated with purchased mortgage servicing rights.
These instruments include various mandatory and optional forward
commitments, futures contracts, interest rate caps and floors, options
and individually tailored swap products.
In an effort to manage interest rate risk, GMACMG enters into various
mandatory and optional forward commitments to sell its originated and
purchased first mortgage loan inventory to investment bankers, private
mortgage investors, FNMA, FHLMC and GNMA, and also buys and sells
futures. At December 31, 1994 and 1993, the notional amount of the
forward commitments totaled $694.1 million and $2,139.0 million,
respectively. Realized and unrealized amounts related to these forward
commitments are considered in the lower of cost or market
determination. Changes in market value related to instruments used to
hedge mortgage-backed securities held for trading and interest only and
principal only securities held for trading are recognized in the
current period.
In order to reduce exposure to interest rate risk associated with the
GMACMG adjustable rate mortgage loan and mortgage backed securities
inventory, GMACMG entered into exchange-traded Eurodollar future
contracts, which are used to hedge the funding of adjustable rate
mortgage loan and mortgage backed securities inventory, and will mature
in the first three quarters of 1995 in notional amounts of
approximately $1.2 billion, $2.1 billion, and $1.1 billion,
respectively. The contracts require the future delivery or receipt of
cash based upon a specific three month LIBOR rate. The contracts'
values fluctuate, with a high degree of correlation, in the opposite
direction of the values of the related adjustable rate mortgage loan
inventory. Gains and losses on the contracts used to reduce interest
rate exposure on GMACMG's mortgage loan inventory are considered in
GMACMG's lower of cost or market determination for the mortgage loan
inventory. Deferred gains amounted to $2.5 million as of December 31,
1994. Gains and losses on contracts used to reduce interest rate
exposure on mortgage backed securities are recognized in the current
period.
57
58
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(continued)
GMACMG enters into various commitments to purchase or close first
mortgage loans in the normal course of its operations. In addition,
GMACMG also has outstanding commitments to lend on closed lines,
primarily home equity lines of credit. Commitments to purchase or
close first mortgage loans totaled $689.5 million and $1,795.6 million
at December 31, 1994 and 1993, respectively. These commitment
obligations are considered in conjunction with GMACMG's lower of cost
or market valuation of its mortgage inventory held for sale.
Warehouse lending involves the extension of short-term secured lines of
credit to mortgage originators to finance mortgage loans until such
loans are purchased by a permanent investor. Advances under the lines
of credit are fully secured by the underlying mortgages and bear
interest at a rate which is tied to a short-term index. At December
31, 1994 and 1993, GMACMG had unused warehouse lending commitments of
$1,418.8 million and $1,072.0 million, respectively.
GMACMG has purchased and written interest rate caps, with maturities of
four to five years, in an effort to hedge short-term borrowing costs
and maintain a minimum profit margin associated with certain adjustable
rate loans held for investment. The notional amounts of the caps were
$461.0 million and $0.0 as of December 31, 1994 and 1993, respectively.
Proceeds derived from the purchased caps are recorded as an offset to
interest expense in the period in which they are received. The written
caps are marked to market on a current basis. As of December 31, 1994
and 1993, the market value of interest rate caps owned was $7.7 million
and $0.0, respectively.
In an effort to minimize the effect of increased potential prepayment
activity associated with purchased mortgage servicing rights GMACMG has
bought interest rate floors and caps, options and individually tailored
cap products. The notional amount of these instruments was $482.0
million and $0.2 million at December 31, 1994 and 1993, respectively,
with maturities of one to five years. Proceeds derived from these
instruments are recorded as an offset to amortization expense in the
period in which they are received. As of December 31, 1994 and 1993,
the market values of these instruments were $1.1 million and $ 0.2
million, respectively.
Unused Lines of Credit
----------------------
The Company has granted revolving lines of credit to dealers with
unused amounts of $400.0 million and $301.1 million at December 31,
1994 and 1993, respectively. Commitments supported by collateral,
generally dealer inventories and real estate, were approximately 52%
and 44% of the contract amounts at December 31, 1994 and 1993,
respectively.
58
59
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(concluded)
Credit Risk
-----------
These aforementioned instruments contain an element of risk in the
event the counterparties are unable to meet the terms of the
agreements. However, the Company minimizes the risk exposure by
limiting the counterparties to those major banks and financial
institutions who meet established credit guidelines. Management also
reduces its credit risk for unused lines of credit by applying the same
credit policies in making commitments as it does for extending loans.
Management does not expect any counterparty to default on its
obligations and, therefore, does not expect to incur any cost due to
counterparty default. The Company does not require or place collateral
for these financial instruments, except for the lines of credit.
Concentrations of Credit Risk
-----------------------------
The Company's primary business is to provide vehicle financing for GM
products and GM dealers. Wholesale and dealer loan financing relates
primarily to GM dealers, with collateral primarily GM vehicles (for
wholesale) and GM dealership property (for loans). In wholesale
financing, GMAC is also provided further protection by GM factory
repurchase programs. Retail contracts and operating lease assets
relate primarily to the secured sale and lease, respectively, of
vehicles (primarily GM).
In terms of geographic concentrations as of December 31, 1994, 75.5% of
GMAC's consolidated financing assets were U.S. based; 6.4% were in
Canada; 15.0% were in Europe (of which 56.8% reside in Germany); 0.6%
were in Latin America; and 2.5% were in Asia Pacific (of which
Australia represents 81.8%). Reflecting general U.S. population
patterns and GM sales activities, GMAC's five largest U.S. state
concentrations, which in aggregate total 38.4% of U.S. financing
assets, are as follows: 9.5% in Texas; 8.7% in California; 7.2% in
Florida; 6.5% in New York; and 6.5% in Michigan.
59
60
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 16. MORTGAGE BANKING
The Company's mortgage subsidiaries, collectively the GMAC Mortgage
Group (GMACMG), performs mortgage banking activities which generally
consist of the origination or acquisition of mortgage loans, the sale
of such loans to investors and the continual long-term servicing of the
loans. In addition, GMACMG provides short-term secured lines of credit
to mortgage originators to finance mortgage loans until such loans are
purchased by permanent investors (warehouse lines). The right to
service loans is contracted under primary or master servicing
agreements. Under primary servicing agreements, GMACMG collects the
monthly principal, interest and escrow payments from individual
mortgagors and performs certain accounting and reporting functions on
behalf of the mortgage investors. As master servicer, GMACMG collects
monthly payments from various sub-servicers and performs certain
accounting and reporting functions on behalf of the mortgage investors.
The servicing portfolio and its related escrow balances are not
reflected in the Company's financial statements, since GMACMG does not
own the mortgages or the related escrow balances. As compensation for
such servicing activities, GMACMG earns a servicing fee.
In 1994, GMACMG began originating certain loans, primarily certain
adjustable rate products, to be held for investment. In connection
with this program, GMACMG utilizes various financial instruments to
hedge its associated borrowing costs.
The cost of purchased mortgage servicing rights acquired is capitalized
and amortized in proportion to and over the period of the projected net
servicing income. Similarly, GMACMG capitalizes excess servicing fees
on the sale of certain mortgage loans to permanent investors. Excess
servicing fees represent the present value of the difference between
the estimated future servicing revenues and normal servicing revenues.
The deferred charge is amortized over the expected life of the
servicing rights in proportion to projected servicing revenues, which
approximates a level yield. Purchased mortgage servicing rights and
excess servicing fee values are highly sensitive to accelerated
prepayments caused by declines in interest rates. As such, GMACMG
utilizes financial instruments, primarily floors and caps, options and
individually tailored swap products, which increase in value during
periods of declining rates. As part of its conduit mortgage banking
activities, GMACMG retains subordinated and stripped mortgage-backed
securities in the amount of $377.6 million and $158.3 million at
December 31, 1994 and 1993, respectively, which are held at market
value. On certain transactions, GMACMG will retain full or limited
recourse for credit or other losses incurred by the purchaser of the
loans sold. GMACMG establishes allowances for estimated future losses
related to the outstanding recourse obligations which management
considers adequate. In addition, GMACMG provides appropriate loss
allowances on warehouse lines and other loans held as investments.
60
61
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 16. MORTGAGE BANKING (concluded)
Following are selected financial and statistical information of GMACMG
as of December 31, 1994 and 1993:
For the Years Ended
----------------------
1994 1993
---------- ----------
(in millions of dollars)
Servicing portfolio
Residential ................................ $ 34,477.6 $ 30,676.4
Commercial ................................. 4,872.5 3,837.2
Master Servicing* .......................... 19,374.5 19,312.8
---------- ----------
Total ....................................... $ 58,724.6 $ 53,826.4
========== ==========
* Represents loans for which GMACMG performs solely a master servicing
function.
Purchased mortgage servicing rights
and excess servicing fees .................. $ 372.6 $ 281.0
---------- ----------
Loans sold with recourse .................... $ 6,811.6 $ 10,405.7
---------- ----------
Maximum exposure on loans sold
Full recourse .............................. $ 299.9 $ 324.8
Limited recourse ........................... 703.1 882.2
---------- ----------
Total ....................................... $ 1,003.0 $ 1,207.0
---------- ----------
Allowance for losses on loans sold
with recourse .............................. $ 18.3 $ 79.8
---------- ----------
The maximum recourse exposure shown above is net of amounts reinsured
with third parties which totaled $238.0 million and $215.0 million at
December 31, 1994 and 1993, respectively.
61
62
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 17. SEGMENT INFORMATION
Industry Segments
-----------------
The business of the Company and its subsidiaries is comprised
primarily of financing and insurance operations.
Gross revenue, income before income taxes and assets applicable to
financing and insurance operations are as follows:
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
Gross revenue
Financing operations ........... $ 10,638.5 $ 10,871.2 $ 12,248.0
Insurance operations ........... 1,536.2 1,651.2 1,540.2
Eliminations (a) ............... (29.7) (38.9) (48.9)
---------- ---------- ----------
Total ........................... $ 12,145.0 $ 12,483.5 $ 13,739.3
========== ========== ==========
Income before income taxes and
cumulative effect of accounting
changes
Financing operations ........... $ 1,298.6 $ 1,324.1 $ 1,798.2
Insurance operations ........... 141.2 248.7 302.8
---------- ---------- ----------
Total ........................... $ 1,439.8 $ 1,572.8 $ 2,101.0
========== ========== ==========
Assets at end of the year
Financing operations ........... $ 81,208.4 $ 76,394.6 $ 88,959.9
Insurance operations ........... 4,390.7 4,415.0 3,898.9
Eliminations (b) ............... (61.7) (58.8) (50.6)
---------- ---------- ----------
Total ........................... $ 85,537.4 $ 80,750.8 $ 92,808.2
========== ========== ==========
(a) Primarily intersegment insurance premiums earned.
(b) Intersegment insurance receivables.
62
63
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 17. SEGMENT INFORMATION (concluded)
Geographic Segments
-------------------
Although the majority of its business is done in the United States,
the Company also operates directly or through subsidiaries in many
other countries around the world.
Gross revenue, income before income taxes and assets applicable to
the Company's geographic areas of operations are as follows:
1994 1993 1992
---------- ---------- ----------
(in millions of dollars)
Gross revenue
United States .................. $ 9,069.6 $ 9,472.1 $ 10,516.7
Canada ......................... 835.3 730.8 921.9
Europe ......................... 1,973.1 2,020.6 2,030.1
Other countries ................ 278.6 264.3 271.6
Eliminations (a) ............... (11.6) (4.3) (1.0)
---------- ---------- ----------
Total ........................... $ 12,145.0 $ 12,483.5 $ 13,739.3
========== ========== ==========
Income before income taxes and
cumulative effect of accounting
changes
United States .................. $ 878.2 $ 1,166.5 $ 1,709.2
Canada ......................... 45.1 18.4 127.7
Europe ......................... 480.2 333.5 253.7
Other countries ................ 36.3 54.4 10.4
---------- ---------- ----------
Total ........................... $ 1,439.8 $ 1,572.8 $ 2,101.0
========== ========== ==========
Assets at end of the year
United States .................. $ 66,987.1 $ 64,755.2 $ 74,620.6
Canada ......................... 5,023.7 4,657.7 6,052.2
Europe ......................... 11,118.8 9,352.0 10,343.6
Other countries ................ 2,742.3 2,146.8 1,992.4
Eliminations (b) ............... (334.5) (160.9) (200.6)
---------- ---------- ----------
Total ........................... $ 85,537.4 $ 80,750.8 $ 92,808.2
========== ========== ==========
(a) Intersegment interest income.
(b) Intersegment finance receivables.
NOTE 18. COMMITMENTS AND CONTINGENT LIABILITIES
Minimum future commitments under operating leases having noncallable
lease terms in excess of one year, primarily for real property,
aggregating $121.4 million, are payable $46.9 million in 1995, $31.6
million in 1996, $17.7 million in 1997, $9.2 million in 1998, $4.9
million in 1999, and $11.1 million in 2000 and thereafter. Certain
of the leases contain escalation clauses and renewal or purchase
options. Rental expenses under operating leases were $57.6 million
in 1994, $55.4 million in 1993 and $56.3 million in 1992.
63
64
GENERAL MOTORS ACCEPTANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 18. COMMITMENTS AND CONTINGENT LIABILITIES (concluded)
There are various claims and pending actions against the Company and
its subsidiaries with respect to commercial and consumer financing
matters, taxes and other matters arising out of the conduct of the
business. Certain of these actions are or purport to be class
actions, seeking damages in very large amounts. The amounts of
liability on these claims and actions at December 31, 1994 were not
determinable but, in the opinion of management, the ultimate
liability resulting therefrom should not have a material adverse
effect on the Company's consolidated financial position or results
of operations..
NOTE 19. ISSUANCE OF COMMON STOCK
In July 1994, the State of New York approved an increase in the
amount of authorized capital stock to $2,500,000,000, consisting of
25,000,000 shares of common stock of the par value of $100. On July
29, 1994, General Motors Corporation, the Company's sole
stockholder, purchased an additional 350,000 shares of such common
stock at the par value of $100.
--------------------
64
65
SUPPLEMENTARY FINANCIAL DATA
SUMMARY OF CONSOLIDATED QUARTERLY EARNINGS
1994 QUARTERS
----------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
(in millions of dollars)
Total financing revenue ..... $ 2,163.0 $ 2,304.7 $ 2,351.5 $ 2,599.6
Interest and discount
expense .................... 1,010.0 1,045.3 1,041.6 1,134.0
Net financing revenue and
other income ............... 1,155.2 1,158.2 1,157.3 1,209.6
Provision for financing
losses ..................... 64.1 54.8 (8.5) 66.9
Income before cumulative
effect of accounting
change ..................... 224.9 216.1 244.6 241.5
Cumulative effect of accounting
change ..................... (7.4)* -- -- --
Net Income .................. $ 217.5 $ 216.1 $ 244.6 $ 241.5
------------------------------------------------------------------------------
* Effective January 1, 1994, the Company adopted SFAS No.112 - Employer's
Accounting for Postemployment Benefits.
1993 QUARTERS
----------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
(in millions of dollars)
Total financing revenue ..... $ 2,267.8 $ 2,219.8 $ 2,187.2 $ 2,077.2
Interest and discount
expense .................... 1,300.0 1,221.5 1,114.1 1,085.6
Net financing revenue and
other income ............... 1,267.0 1,378.9 1,313.3 1,101.1
Provision for financing
losses ..................... 57.0 118.9 116.7 8.2
Net income .................. $ 284.1 $ 285.4 $ 204.8 $ 206.8
-----------------------------------------------------------------------------
1992 QUARTERS
----------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
(in millions of dollars)
Total financing revenue ..... $ 2,552.7 $ 2,548.9 $ 2,816.0 $ 2,484.5
Interest and discount
expense .................... 1,581.6 1,470.0 1,406.3 1,370.7
Net financing revenue and
other income ............... 1,343.8 1,324.6 1,422.4 1,390.3
Provision for financing
losses ..................... 130.1 163.4 101.5 (24.0)
Income before cumulative effect
of accounting change ....... 349.1* 282.4* 296.9* 290.3
Cumulative effect of accounting
change ..................... (282.6)* -- -- --
Net income .................. $ 66.5* $ 282.4* $ 296.9* $ 290.3
-----------------------------------------------------------------------------
* Effective January 1, 1992, the Company adopted SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions. First quarter
income was restated for the cumulative effect of this change, and all
quarters have been restated to reflect the 1992 adoption of this statement.
65
66
SUPPLEMENTARY FINANCIAL DATA (continued)
FIVE YEAR SUMMARY OF FINANCING OPERATIONS*
For the Years Ended December 31
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(in millions of dollars)
INCOME
Financing revenue $ 9,421.3 $ 8,754.6 $ 10,404.2 $ 11,155.9 $ 11,787.8
Interest and
discount ....... (4,230.9) (4,721.2) (5,828.6) (6,844.7) (7,965.8)
Depreciation on
operating leases (3,233.8) (2,702.0) (2,429.6) (1,902.4) (1,387.9)
---------- ---------- ---------- ---------- ----------
Net financing
revenue ......... 1,956.6 1,331.4 2,146.0 2,408.8 2,434.1
Other income ..... 1,217.2 2,116.6 1,843.8 1,872.9 1,715.6
---------- ---------- ---------- ---------- ----------
Net financing
revenue and other 3,173.8 3,448.0 3,989.8 4,281.7 4,149.7
---------- ---------- ---------- ---------- ----------
Expenses
Salaries and
benefits ....... 679.3 697.2 749.0 674.6 632.7
Other operating
expenses ....... 983.2 994.9 960.4 1,066.6 907.0
Provision for
financing losses 177.3 300.8 371.0 1,047.9 843.2
Amortization of
intangible assets 35.4 131.0 111.2 81.5 78.4
---------- ---------- ---------- ---------- ----------
Total expenses ... 1,875.2 2,123.9 2,191.6 2,870.6 2,461.3
---------- ---------- ---------- ---------- ----------
Income before
income taxes .... 1,298.6 1,324.1 1,798.2 1,411.1 1,688.4
United States,
foreign and other
income taxes .... 489.6 533.5 786.6 545.2 643.7
---------- ---------- ---------- ---------- ----------
Income before
cumulative effect
of accounting
changes ......... 809.0 790.6 1,011.6 865.9 1,044.7
Cumulative effect
of accounting
changes ......... (6.8) -- (232.8) 299.1 --
---------- ---------- ---------- ---------- ----------
Income from
financing
operations ...... $ 802.2 $ 790.6 $ 778.8 $ 1,165.0 $ 1,044.7
========== ========== ========== ========== ==========
66
67
SUPPLEMENTARY FINANCIAL DATA (continued)
FIVE-YEAR SUMMARY OF FINANCING OPERATIONS* (concluded)
For the Years Ended December 31
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(in millions of dollars)
NET ASSETS
ASSETS
Cash and cash
equivalents ..... $ 1,305.7 $ 3,980.6 $ 3,834.8 $ 2,396.4 $ 193.5
---------- ---------- ---------- ---------- ----------
Earning Assets
Investments in
securities ..... 539.8 18.4 48.2 71.6 112.9
Finance receivables
(net) .......... 54,625.1 54,134.8 57,427.3 70,335.6 79,073.3
Receivable General
Motors
Corporation .... 1,080.5 1,355.5 11,563.2 12,358.0 13,018.0
Other earning
assets ......... 22,477.3 15,843.8 14,933.7 12,599.5 8,308.5
---------- ---------- ---------- ---------- ----------
Total earning
assets........... 78,722.7 71,352.5 83,972.4 95,364.7 100,512.7
---------- ---------- ---------- ---------- ----------
Other assets ..... 1,180.0 1,061.5 1,152.7 1,062.9 928.6
---------- ---------- ---------- ---------- ----------
Total assets ..... $ 81,208.4 $ 76,394.6 $ 88,959.9 $ 98,824.0 $101,634.8
---------- ---------- ---------- ---------- ----------
LIABILITIES
Notes, loans and
debentures payable
within one year . $ 35,114.8 $ 35,084.4 $ 41,364.4 $ 51,018.6 $ 53,715.8
---------- ---------- ---------- ---------- ----------
Accounts payable and
other liabilities
General Motors
Corporation and
affiliated
companies ...... 1,894.0 2,514.0 2,860.1 2,032.4 2,870.1
Other postretirement
benefits ....... 476.8 436.9 405.8 -- --
Other ........... 5,405.6 3,991.9 3,993.0 3,873.6 3,780.6
---------- ---------- ---------- ---------- ----------
Total accounts
payable and other
liabilities ..... 7,776.4 6,942.8 7,258.9 5,906.0 6,650.7
---------- ---------- ---------- ---------- ----------
Notes, loans and
debentures payable
after one year .. 31,539.6 27,688.8 33,174.2 34,480.9 34,185.4
---------- ---------- ---------- ---------- ----------
Total
liabilities ..... $ 74,430.8 $ 69,716.0 $ 81,797.5 $ 91,405.5 $ 94,551.9
---------- ---------- ---------- ---------- ----------
Net assets of
financing
operations ...... $ 6,777.6 $ 6,678.6 $ 7,162.4 $ 7,418.5 $ 7,082.9
========== ========== ========== ========== ==========
* Before elimination of intercompany amounts.
67
68
SUPPLEMENTARY FINANCIAL DATA (continued)
FIVE YEAR SUMMARY OF INSURANCE OPERATIONS*
For the Years Ended December 31
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(in millions of dollars)
INCOME
Net premiums written
Personal lines . $ 483.8 $ 458.7 $ 405.4 $ 364.0 $ 177.8
Mechanical ..... 312.7 323.2 342.0 308.2 342.1
Life and
disability .... 70.7 85.7 66.0 50.1 49.2
Commercial lines,
reinsurance and
miscellaneous . 343.9 337.2 436.0 577.2 501.0
---------- ---------- ---------- ---------- ----------
Net premiums
written ........ 1,211.1 1,204.8 1,249.4 1,299.5 1,070.1
Changes in unearned
premiums ....... (56.3) (61.3) (43.6) (72.4) (5.1)
---------- ---------- ---------- ---------- ----------
Premiums earned . 1,154.8 1,143.5 1,205.8 1,227.1 1,065.0
Investments and
other income ... 381.4 507.7 334.4 291.2 272.4
---------- ---------- ---------- ---------- ----------
Total ........... 1,536.2 1,651.2 1,540.2 1,518.3 1,337.4
Expenses
Salaries and
benefits ...... 134.4 128.6 105.4 98.3 84.6
Other operating
expenses ...... 282.5 203.8 134.2 111.6 78.6
Losses and loss
adjustment
expenses ...... 968.0 1,060.0 987.9 1,061.6 1,014.1
Amortization of
intangible
assets ........ 10.1 10.1 9.9 9.7 0.1
---------- ---------- ---------- ---------- ----------
Total expenses .. 1,395.0 1,402.5 1,237.4 1,281.2 1,177.4
---------- ---------- ---------- ---------- ----------
Income before
income taxes ... 141.2 248.7 302.8 237.1 160.0
Income taxes .... 23.1 58.2 95.7 64.8 14.6
---------- ---------- ---------- ---------- ----------
Income before
cumulative effect
of accounting
changes ........ 118.1 190.5 207.1 172.3 145.4
Cumulative effect
of accounting
changes ........ (0.6) -- (49.8) 32.4 --
---------- ---------- ---------- ---------- ----------
Income from
insurance
operations ..... $ 117.5 $ 190.5 $ 157.3 $ 204.7 $ 145.4
========== ========== ========== ========== ==========
68
69
SUPPLEMENTARY FINANCIAL DATA (concluded)
FIVE-YEAR SUMMARY OF INSURANCE OPERATIONS* (concluded)
For the Years Ended December 31
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(in millions of dollars)
NET ASSETS
ASSETS
Cash ............ $ 33.8 $ 47.5 $ 36.3 $ 16.1 $ 11.6
Investments in
securities ..... 3,351.9 3,431.3 3,227.7 3,263.9 2,895.2
Premiums and other
receivables .... 271.1 262.5 291.4 261.7 300.2
Deferred policy
acquisition
cost ........... 74.5 77.0 65.5 48.5 35.9
Prepaid reinsurance
premiums ....... 125.8 105.5 -- -- --
Reinsurance
recoverable on
unpaid insurance
losses and loss
adjustment
expense ........ 240.2 220.3 -- -- --
Other assets .... 293.4 270.9 278.0 269.6 271.2
---------- ---------- ---------- ---------- ----------
Total assets .... $ 4,390.7 $ 4,415.0 $ 3,898.9 $ 3,859.8 $ 3,514.1
---------- ---------- ---------- ---------- ----------
LIABILITIES
Unpaid insurance
losses and loss
adjustment
expenses ....... $ 1,563.6 $ 1,569.4 $ 1,265.8 $ 1,263.4 $ 1,235.7
Unearned insurance
premiums ....... 1,422.0 1,337.4 1,174.9 1,130.5 1,054.7
Deferred federal
income taxes ... (85.9) (11.3) 30.7 54.6 27.9
Other postretirement
benefits ....... 97.7 88.0 80.4 -- --
Other ........... 277.2 257.8 259.5 245.0 276.5
---------- ---------- ---------- ---------- ----------
Total
liabilities .... $ 3,274.6 $ 3,241.3 $ 2,811.3 $ 2,693.5 $ 2,594.8
---------- ---------- ---------- ---------- ----------
Net assets of
insurance
operations ..... $ 1,116.1 $ 1,173.7 $ 1,087.6 $ 1,166.3 $ 919.3
========== ========== ========== ========== ==========
* Before elimination of intercompany amounts.
69
70
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
(a) (1) FINANCIAL STATEMENTS.
Included in Part II, Item 8 of Form 10-K.
(a) (2) FINANCIAL STATEMENT SCHEDULES.
All schedules have been omitted because they are
inapplicable or because the information called for is shown
in the financial statements or notes thereto.
(a) (3) EXHIBITS (Included in Part IV of this report). Page
----
12 -- Statement of Ratio of Earnings to Fixed 75
Charges for the years 1994, 1993, 1992,
1991 and 1990.
23.1 -- Consent of Independent Auditors. 76
27 -- Financial Data Schedule (for SEC electronic --
filing information only).
(b) REPORTS ON FORM 8-K.
No current reports on Form 8-K have been filed by the
Company during the fourth quarter of 1994.
ITEMS 4, 9, 10, 11, 12 and 13 are inapplicable and have been omitted.
--------------------
70
71
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GENERAL MOTORS ACCEPTANCE CORPORATION
-------------------------------------
(Registrant)
By
s/ J. M. Losh
----------------------------------------
Date: March 14, 1995 (J. Michael Losh, Chairman of the Board)
-------------
Pursuant to the Requirements of the Securities Exchange Act of
1934, this report has been signed below on the 14th day of March, 1995,
by the following persons on behalf of the Registrant and in the
capacities indicated.
Signature Title
--------- -----
s/ J. M. Losh
-------------------------
(J. Michael Losh) Chairman of the
Board of Directors
s/ J. R. Rines
-------------------------
(John R. Rines) President and (Signing as
Director Chief
Executive
Officer)
s/ J. D. Finnegan
-------------------------
(John D. Finnegan) Executive Vice (Chief
President and Director Financial
Officer)
s/ G. E. Gross
------------------------
(Gerald E. Gross) Comptroller (Chief
Accounting
Officer)
s/ R. J. S. Clout
-------------------------
(Richard J. S. Clout) Executive Vice
President and Director
s/ J. E. Gibson
-------------------------
(John E. Gibson) Executive Vice
President and Director
s/ M. L. Korell
-------------------------
(Mark L. Korell) Director
71
72
SIGNATURES (concluded)
Signature Title
--------- -----
s/ L. J. Krain
-------------------------
(Leon J. Krain) Director
s/ H. Kunz
-------------------------
(Heidi Kunz) Director
s/ H. J. Pearce
-------------------------
(Harry J. Pearce) Director
s/ W. A. Reed
-------------------------
(W. Allen Reed) Director
s/ J. F. Smith, Jr.
-------------------------
(John F. Smith, Jr.) Director
s/ R. L. Zarrella
-------------------------
(Ronald L. Zarrella) Director
72
73
EXHIBIT INDEX
Exhibit
Number Exhibit Name
------- ------------------------------------
12 Ratio of Earnings to Fixed Charges
23.1 Consent of Independent Auditors,
Deloitte & Touche LLP
27 Financial Data Schedule (for SEC
electronic filing information only)
73
74
EXHIBIT 12
GENERAL MOTORS ACCEPTANCE CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
For the Years ended December 31
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(in millions of dollars)
Consolidated net
income* .......... $ 927.1 $ 981.1 $ 1,218.7 $ 1,038.2 $ 1,190.1
Provision for
income taxes ..... 512.7 591.7 882.3 610.0 658.3
---------- ---------- ---------- ---------- ----------
Consolidated income
before income
taxes ............ 1,439.8 1,572.8 2,101.0 1,648.2 1,848.4
---------- ---------- ---------- ---------- ----------
Fixed charges
Interest, debt
discount and
expense ......... 4,230.9 4,721.2 5,828.6 6,844.7 7,965.8
Portion of rentals
representative of
the interest
factor .......... 51.2 43.6 31.7 30.3 29.5
---------- ---------- ---------- ---------- ----------
Total fixed charges 4,282.1 4,764.8 5,860.3 6,875.0 7,995.3
---------- ---------- ---------- ---------- ----------
Earnings available
for fixed charges $ 5,721.9 $ 6,337.6 $ 7,961.3 $ 8,523.2 $ 9,843.7
========== ========== ========== ========== ==========
Ratio of earnings
to fixed charges 1.33 1.33 1.35 1.23 1.23
==== ==== ==== ==== ====
----------
* Before cumulative effect of accounting change of ($7.4) million in 1994,
($282.6) million in 1992 and $331.5 million in 1991.
74
75
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
GENERAL MOTORS ACCEPTANCE CORPORATION:
We consent to the incorporation by reference of our report dated
January 30, 1995, appearing in this Annual Report on Form 10-K of
General Motors Acceptance Corporation for the year ended December 31,
1994, in the following Registration Statements:
Registration
Form Statement No. Description
---- ------------- ------------------------------
S-3 33-12059, $5,000,000,000 General Motors
33-26057 and Acceptance Corporation GMAC
33-31596 Variable Denomination
Adjustable Rate Demand Notes
S-3 33-45308 and $5,000,000,000 General Motors
33-49133 Acceptance Corporation Debt
Securities
S-3 33-51381 and $10,000,000,000 General Motors
33-55799 Acceptance Corporation
Medium-Term Notes
s/ DELOITTE & TOUCHE LLP
------------------------
DELOITTE & TOUCHE LLP
600 Renaissance Center
Detroit, Michigan 48243-1704
March 13, 1995
75
EX-27
2
9
1000000
YEAR
DEC-31-1994
DEC-31-1994
1340
0
0
0
3892
0
0
58628
693
85537
0
35115
10989
31540
2200
0
0
5694
85537
4563
0
4856
9419
0
7465
1954
177
65
3063
1440
927
0
(7)
920
0
0
0
278
0
0
278
855
393
116
756
0
0
756