================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF - --- 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001, 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) Delaware 38-0572512 - ------------------------------------ --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 200 Renaissance Center P.O. Box 200 Detroit, Michigan 48265-2000 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 313-556-5000 ------------ The registrant meets the conditions set forth in General Instruction H(1) (a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format. 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 June 30, 2001, there were outstanding 10 shares of the issuer's common stock. Documents incorporated by reference. None. ----- ================================================================================
This quarterly report, filed pursuant to Rule 13a-13 of the General Rules and Regulations under the Securities Exchange Act of 1934, consists of the following information as specified in Form 10-Q: PART 1. FINANCIAL INFORMATION The required information is given as to the registrant, General Motors Acceptance Corporation and subsidiaries (the Company or GMAC). ITEM 1. FINANCIAL STATEMENTS In the opinion of management, the interim financial statements reflect all adjustments, consisting of only normal recurring items which are necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are unaudited and are not necessarily indicative of results which may be expected for any other interim period or for the full year. These financial statements should be read in conjunction with the consolidated financial statements, the significant accounting policies, and the other notes to the consolidated financial statements included in the Company's 2000 Annual Report filed with the Securities and Exchange Commission on Form 10-K. The financial statements described below are submitted herein as Exhibit 20. 1. Consolidated Balance Sheet, June 30, 2001 and December 31, 2000. 2. Consolidated Statement of Income, Net Income Retained for Use in the Business and Comprehensive Income for the Second Quarter and Six Months Ended June 30, 2001 and 2000. 3. Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2001 and 2000. 4. Notes to Consolidated Financial Statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW General Motors Acceptance Corporation (the "Company" or "GMAC"), a wholly-owned subsidiary of General Motors Corporation ("General Motors" or "GM"), was incorporated in 1997 under the Delaware General Corporation Law. On January 1, 1998, the Company merged with its predecessor, which was originally incorporated in New York in 1919. The Company is a financial services corporation that principally provides consumer and dealer vehicle financing. GMAC also provides commercial financing to the apparel, textile, automotive supplier and numerous other industries. The principal markets for the Company's automotive financial products and services are North America, Europe, Latin America and Asia-Pacific. The principal markets for the commercial financing products are North America and Europe. The Company conducts insurance operations primarily in the United States, Canada and Europe. In addition, the Company's mortgage banking subsidiaries operate principally in the U.S. and have operations in Mexico, Japan, Europe and Canada. BUSINESS SEGMENT EARNINGS GMAC earned consolidated net income of $449.4 million, up 13.7% from the $395.1 million earned in the second quarter of 2000. These earnings represent a record second quarter for GMAC. Net income for the first six months of 2001 was $914.4 million, up 15.4% from the $792.4 million reported in the same period a year ago. <TABLE> <CAPTION> Period Ended June 30, ---------------------------------------------------- Second Quarter Six Months ------------------------ --------------------- 2001 2000 2001 2000 ----------- ---------- ---------- ---------- (in millions of dollars) <S> <C> <C> <C> <C> Automotive and other financing operations $ 360.3 $ 278.0 $ 694.4 $ 540.1 Insurance operations * 40.9 57.2 75.4 119.6 Mortgage operations** 48.2 59.9 144.6 132.7 ----------- ---------- ---------- ---------- Consolidated net income $ 449.4 $ 395.1 $ 914.4 $ 792.4 =========== ========== ========== ========== * GMAC Insurance Holdings, Inc. (GMACI) ** GMAC Mortgage Group, Inc. (GMACMG) </TABLE> For the quarter, net income from automotive and other financing operations totaled $360.3 million, up 29.6% from the $278.0 million earned in the same period of 2000. The strong results can be attributed to higher asset levels, increased securitization activity, and the positive impact of lower short-term interest rates, which were only partially offset by higher credit losses and lower off-lease residual values. Insurance operations generated net income of $40.9 million in the second quarter of 2001, down 28.5% from the $57.2 million earned in the second quarter of 2000. The decrease was primarily due to lower capital gains. Mortgage operations earned $48.2 million in the second quarter of 2001, down 19.5% from the $59.9 million earned for the same period last year. The lower interest rate environment led to an acceleration of loan prepayments as more customers refinanced their mortgages requiring a write-down of mortgage servicing rights. Absent this write-down, mortgage operations remained strong with a significant increase in mortgage originations and record earnings from GMAC Commercial Mortgage and Residential Funding Corporation (GMAC's residential mortgage conduit operation). <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) AUTOMOTIVE AND OTHER FINANCING OPERATIONS Financing revenue totaled $3,758.4 million and $7,659.8 million in the second quarter and first six months of 2001, respectively, compared to $3,827.9 million and $7,607.3 million for the comparable periods in 2000. The year-to-year growth was mainly due to higher average retail and commercial and other loan receivable balances, partially offset by a decrease in wholesale receivable balances. Retail receivable balances increased due to continued retail financing incentives sponsored by GM. Commercial Credit LLC's acquisitions of the factoring businesses of Finova Capital Corporation and Banc of America during the third and fourth quarters of 2000, respectively, continued growth at GMAC Business Credit LLC and increases in secured notes contributed to the increase in commercial and other loan receivable balances. The decrease in wholesale receivables was due to reduced dealer inventory levels. Annualized net retail losses were 0.68% and 0.71% of total average serviced automotive receivables during the second quarter and first six months of 2001, respectively, compared to 0.53% and 0.56% for the same periods last year. The provision for credit losses, most of which relates to automotive finance receivables, totaled $275.3 million and $535.7 million for the second quarter and six months ended June 30, 2001, respectively, compared to $130.3 million and $237.7 million for the second quarter and six months ended June 30, 2000, respectively. Higher outstanding finance receivables, increased commercial loan loss reserves, along with increased net losses due to the deterioration in economic conditions contributed to the increase in the provision for credit losses. United States New Passenger Car and Truck Deliveries U.S. deliveries of new General Motors (GM) vehicles during the second quarter and the first six months of 2001 were lower compared to the comparable periods in 2000. The decline in financing penetration in the second quarter and six months of 2001 was primarily the result of a reduction in GM-sponsored leasing incentives. <TABLE> <CAPTION> Period Ended June 30, ----------------------------------- Second Quarter Six Months ----------------------------------- 2001 2000 2001 2000 ------- ------- ------ ------- (In millions of units sold) <S> <C> <C> <C> <C> Industry 4.7 4.9 8.9 9.4 General Motors 1.3 1.4 2.5 2.6 New GM vehicle deliveries financed by GMAC Retail (installment sale contracts and operating leases) 40.8% 44.7% 41.5% 45.2% Fleet transactions (lease financing) 1.8% 1.7% 2.1% 1.7% Total 33.0% 35.3% 32.9% 35.6% </TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Financing Volume The number of new vehicle deliveries financed for GM and other dealers are summarized below: <TABLE> <CAPTION> Period Ended June 30, ------------------------------------------------- Second Quarter Six Months ----------------------- ---------------------- <S> <C> <C> <C> <C> 2001 2000 2001 2000 --------- ----------- --------- --------- (in thousands of units) United States Retail installment sale contracts 281 270 541 497 Operating leases 133 200 256 429 Leasing 6 7 14 13 --------- ----------- --------- --------- New deliveries financed 420 477 811 939 ========= =========== ========= ========= Other Countries Retail installment sale contracts 115 118 226 239 Operating leases 80 76 138 140 Leasing 14 16 25 32 --------- ----------- --------- --------- New deliveries financed 209 210 389 411 ========= =========== ========= ========= Worldwide Retail installment sale contracts 396 388 767 736 Operating leases 213 276 394 569 Leasing 20 23 39 45 --------- ----------- --------- --------- New deliveries financed 629 687 1,200 1,350 ========= =========== ========= ========= </TABLE> The number of new vehicles financed in the U.S. during the second quarter and first six months of 2001 was lower than the comparable periods in 2000, primarily as a result of a decline in the number of vehicles produced in the industry. Additionally, the decrease in operating lease units can be attributed to a shift from lease incentive programs to special rate retail finance and other programs sponsored by GM. GMAC also provides wholesale financing for GM and other dealers' new and used vehicle inventories. In the United States, inventory financing was provided for 876,000 and 1,666,000 new GM vehicles during the second quarter and first six months of 2001, respectively, compared with 1,004,000 and 1,870,000 new GM vehicles during the respective periods in 2000. GMAC's wholesale financing represented 74.9% of all GM vehicle sales to U.S. dealers during the first six months of 2001, up from 70.5% for the comparable period a year ago. The increase in wholesale penetration levels was attributable to continued marketing initiatives and competitive pricing strategies offered by the Company. CONSOLIDATED INCOME AND EXPENSES The Company's worldwide cost of borrowing, including the effects of derivatives, for the second quarter and first six months of 2001 averaged 5.93% and 6.20%, respectively, compared to 6.39% and 6.30% for the same periods in 2000. Total borrowing costs for U.S. operations averaged 5.90% and 6.23% for the second quarter and first six months of 2001, respectively, compared to 6.56% and 6.45% for the second quarter and first six months of 2000, respectively. The decrease in average borrowing costs was mainly a result of lower short-term market rates in the second quarter. <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) CONSOLIDATED INCOME AND EXPENSES (concluded) Other income totaled $777.4 million and $1,558.4 million for the second quarter and six months ended June 30, 2001, respectively, compared to $584.5 million and $1,104.1 million during the comparable 2000 periods. The change from the comparable periods in 2000 was mainly attributable to increased sales of retail and wholesale receivables. Consolidated salaries and benefits totaled $512.2 million and $1,019.0 million for the second quarter and first six months of 2001, respectively, compared to $452.9 million and $922.6 million for the comparable periods last year. The increase was mainly attributable to continued growth and acquisitions at GMAC and GMACMG during 2000 and 2001. Consolidated amortization of intangibles totaled $321.8 million and $525.9 million for the second quarter and first six months of 2001, respectively, compared to $150.7 million and $304.8 million for the comparable periods last year. The increase was mainly a result of increases in the amortization of mortgage servicing rights as well as an increase in the amortization of goodwill. Increased mortgage servicing rights amortization resulted from impairment charges recorded related to the interest rate environment and the corresponding refinance activity in the marketplace. The increase in the amortization of goodwill was due to continued acquisitions at GMAC and GMACMG during 2000 and 2001. Other operating expenses totaled $1,009.1 million and $1,922.5 million for the second quarter and first six months of 2001, respectively, compared to $715.1 million and $1,373.1 million for the comparable periods last year. The increase was primarily due to continued growth and acquisitions at GMAC and GMACMG. The effective income tax rate for the second quarter and six months ended June 30, 2001 was 34.3% and 36.2%, respectively, compared to 37.0% for both the second quarter and six months ended June 30, 2000. The lower effective tax rate for the second quarter and six months ended June 30, 2001 was primarily a result of reductions in Canadian federal and provincial income tax rates. INSURANCE OPERATIONS Net premiums earned by GMACI and its subsidiaries totaled $500.9 million and $1,004.7 million for the second quarter and six months ended June 30, 2001, respectively, compared to $466.0 million and $928.1 million for the same periods during 2000. This increase was a result of strong volume in mechanical and reinsurance lines of business. Pre-tax capital gains and investment and other income at GMACI totaled $145.3 million and $290.8 million for the second quarter and first six months of 2001, compared to $159.6 million and $305.3 million for the same periods in 2000. Fluctuations in realized capital gains are primarily due to the timing of sales of individual securities. Insurance losses and loss adjustment expenses totaled $473.2 million and $873.9 million during the second quarter and six months of 2001, respectively, compared to $369.7 and $730.1 million for the comparable periods in 2000. The increase in 2001 was due to increased premiums written in reinsurance and mechanical lines, continued severity losses in personal lines, and severe weather negatively impacting wholesale lines. <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) INSURANCE OPERATIONS (concluded) Net income was $40.9 million and $75.4 million for the second quarter and six months ended June 30, 2001, respectively, compared to $57.2 million and $119.6 million for the same periods in 2000. Earnings for the six months ended June 30, 2001 declined due to an increase in insurance losses and loss adjustment expenses and lower capital gains. MORTGAGE OPERATIONS Mortgage revenue totaled $1,381.2 million and $2,571.5 million for the second quarter and first six months of 2001, respectively, compared to $877.0 million and $1,736.8 million for the comparable periods in 2000. The growth in revenue was primarily attributable to significantly stronger lending volumes due to the declining interest rate environment. In addition, multiple acquisitions, including GMACMG's acquisition of Nippon Asset Management in Japan in the second quarter of 2000, have increased revenues from other lines of business. During the second quarter and first six months of 2001, GMACMG loan origination, mortgage servicing acquisitions and correspondent loan volume totaled $38.7 billion and $67.9 billion, respectively, compared to $17.5 billion and $30.6 billion for the same periods in 2000. The increases were attributed to higher levels of origination and securitization activity due to the declining interest rate environment during the first half of 2001. The combined GMACMG servicing portfolio, excluding GMAC term loans to dealers, totaled $360.4 billion at June 30, 2001, compared with $336.2 billion serviced at December 31, 2000. The increase over year-end was primarily due to increased loan production in the current lending environment. Net income was $48.2 million and $144.6 million for the second quarter and six months ended June 30, 2001, respectively, compared to $59.9 million and $132.7 million for the same periods in 2000. The decrease in net income for the second quarter ended June 30, 2001 compared to the same period in 2000 was attributed to impairment charges taken on mortgage servicing rights and hedge ineffectiveness associated with the Company's risk management activities related to its mortgage servicing rights which arose due to changes in market conditions and the interest rate environment. The increase in net income for the six month period ended June 30, 2001 compared to the same period in 2000 was attributed to higher originations and increased sales and securitization activity offset by impairment of mortgage servicing rights and revaluation of mortgage related residuals and retained interests. During the first quarter of 2001, interest rates, including those on originated loans for fifteen and thirty-year residential mortgages declined substantially. This activity increased mortgage refinancing activity resulting in a reduction in the expected future cash flows that support the carrying value of the mortgage servicing rights. During the second quarter, spreads between mortgage rates, which drive changes in the value of the Company's mortgage related assets, and the interest rates, which drive changes in the value of the Company's hedge instruments that are used in risk management activities, have significantly tightened while prepayments have continued to accelerate. For the second quarter and six months ended June 30, 2001, the Company recorded after-tax impairment charges of $51.1 million and $70.8 million, respectively. Subsequent to June 30, 2001, mortgage rates continue to stay at low levels and prepayment activity continues at a pace similar to the second quarter. In the event that the hedge positions prove to be not fully effective, the Company may experience further impairment losses in the future. <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) MORTGAGE OPERATIONS (concluded) The Company estimates the fair value of its mortgage servicing rights based upon assumptions that market participants would use. Typically, those assumptions are derived from similar transactions which occur in the marketplace. Continued industry consolidation and other factors have led to a substantial decline in relevant market transactions, particularly since April 2001. In order to improve the Company's estimation process for assessing the fair value of its mortgage servicing rights, during the second quarter, the Company increased its reliance on its own mortgage servicing rights cash flow history for certain assumptions and continued to use market driven earning rates, discounting factors and prepayment models. FINANCIAL CONDITION AND LIQUIDITY At June 30, 2001, the Company owned assets and serviced automotive receivables totaling $193.0 billion, $7.3 billion above December 31, 2000. The increase over year-end was principally the result of increases in serviced retail receivables, other assets, real estate mortgages held for sale, commercial and other loan receivables, investments in securities, due and deferred from receivables sales, mortgage servicing rights and mortgage lending receivables. These increases were partially offset by a decline in net operating lease assets, serviced wholesale receivables, mortgage loans held for investment and factored receivables. Finance receivables serviced by the Company, including sold receivables, totaled $116.8 billion at June 30, 2001, $4.3 billion above December 31, 2000 levels. The increase was primarily a result of a $4.8 billion increase in serviced retail receivables, a $1.3 billion increase in commercial and other loan receivables, partially offset by a $2.0 billion decline in serviced wholesale receivables. GM-sponsored retail financing incentives contributed to the growth in serviced retail receivables. The change in commercial and other loan receivables was primarily attributable to increases in secured notes as well as continued growth at Commercial Credit LLC and GMAC Business Credit LLC. The growth at Commercial Credit LLC was partially attributable to the acquisitions of the factoring businesses of Finova Capital Corporation and Banc of America during the third and fourth quarters of 2000, respectively. The decrease in serviced wholesale receivables was due to reduced dealer inventory levels at June 30, 2001 compared to December 31, 2000. Other assets at June 30, 2001 totaled $14.7 billion, compared with $12.0 billion at December 31, 2000. Of the total increase, $1.0 billion was attributable to the adoption of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which requires GMAC to reflect the fair market value of its derivatives on the balance sheet. In addition, GMAC's off-lease vehicles that have not been sold totaled $1.3 billion at June 30, 2001, $0.7 billion above December 31, 2000, primarily due to an increased level of scheduled off-lease vehicles and a special early termination promotion sponsored by GM. Additionally, other mortgage-related assets totaled $4.4 billion at June 30, 2001, $0.9 billion above December 31, 2000. The increase in other mortgage-related assets was primarily due to an increase in broker/dealer receivables and an increase in subordinate loan participations. The real estate mortgage inventory held for sale amounted to $7.5 billion at June 30, 2001, $1.8 billion above December 31, 2000. The increase was due to a higher volume of loan originations in the declining interest rate environment, net of sales and securitization activity. Additionally, maturing construction loans were transferred from held to maturity to held for sale. <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) FINANCIAL CONDITION AND LIQUIDITY (continued) Investment in securities totaled $10.5 billion and $9.5 billion at June 30, 2001 and December 31, 2000, respectively. The change was primarily due to the increase in residual interests for mortgage-related securities generated from the high volume of securitizations in the first half of 2001. The Company's due and deferred from receivable sales (net) totaled $1.7 billion at June 30, 2001, compared with $1.2 million at December 31, 2000. The increase over year-end was mainly due to an increase in cash deposits held for trusts and interest-only strip receivables due to three new sales of retail receivables and two new sales of wholesale receivables. Mortgage servicing rights (net) totaled $4.3 billion and $4.0 billion at June 30, 2001 and December 31, 2000, respectively. The increase was primarily attributable to higher loan origination volume through the second quarter, net of reductions in the carrying value of mortgage servicing rights as previously discussed. Mortgage lending receivables totaled $3.3 billion and $3.0 billion at June 30, 2001 and December 31, 2000, respectively. The increase was due to a low interest rate environment, which contributed to growth in warehouse and construction lending positions. Consolidated operating lease assets, net of depreciation, totaled $26.9 billion at June 30, 2001, reflecting a decrease of $2.5 billion from December 31, 2000. The decrease was primarily attributable to a shift from lease incentive programs to special rate retail finance programs sponsored by GM. Mortgage loans held for investment totaled $1.4 billion and $1.9 billion at June 30, 2001 and December 31, 2000, respectively. The decline was primarily attributed to maturing construction loans, which were transferred from held to maturity to held for sale. Factored receivables totaled $1.9 billion and $2.3 billion at June 30, 2001 and December 31, 2000, respectively. The decrease was a result of offsetting disputed factored accounts receivables related to the Banc of America factoring portfolio acquired as of December 31, 2000 against related client balances included in other liabilities. Additionally, the decline in factored receivables was a result of client terminations and the conversion of factored clients to asset based clients, included in net finance receivables. As of June 30, 2001, GMAC's total borrowings were $131.4 billion, compared with $133.4 billion at December 31, 2000. GMAC's ratio of consolidated debt to total stockholder's equity at June 30, 2001 was 8.9:1, compared to 9.5:1 at December 31, 2000. The Company and its subsidiaries maintain substantial bank lines of credit, which totaled $49.0 billion at June 30, 2001, compared to $48.1 billion at year-end 2000. The unused portion of these credit lines decreased by $0.8 billion from December 31, 2000 to $37.6 billion at June 30, 2001. Included in the unused credit lines at June 30, 2001 is a $14.7 billion syndicated multi-currency global credit facility available for use in the U.S. by GMAC and in Europe by GMAC International Finance B.V. and GMAC (UK) plc. The entire $14.7 billion is available to GMAC in the U.S., $1.0 billion is available to GMAC (UK) plc and $0.9 billion is available to GMAC International Finance B.V. The syndicated credit facility serves primarily as back up for the Company's unsecured commercial paper programs. Also included in the unused credit lines is a $12.3 billion U.S. asset-backed commercial paper liquidity and receivables facility for New Center Asset Trust ("NCAT"), a non-consolidated limited purpose business trust established to issue asset-backed commercial paper. <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) FINANCIAL CONDITION AND LIQUIDITY (concluded) In June 2001, GMAC renewed the syndicated multi-currency global facility, which includes terms of five years on one-half of the facility (due to expire in June 2006) and a 364-day term. It was modified to permit the Company, at its discretion, to transfer up to approximately $6 billion of the banks' commitments to the liquidity and receivables facility for NCAT. Additionally, there is a leverage covenant restricting the ratio of consolidated debt to total stockholder's equity to no greater than 11.0:1. This covenant is only applicable under certain conditions. Those conditions are not in effect now and were not in effect during the quarter ended June 30, 2001. On April 6, 2001, Moody's Investors Service, while affirming its rating on GMAC, revised its outlook from stable to negative. Fitch affirmed its stable rating on GMAC on April 20, 2001. Net unrealized losses on derivatives for the six months ended June 30, 2001, of $111.0 million (including $52.6 million transition adjustment) was due to the adoption of SFAS No. 133 by the Company on January 1, 2001. This amount represents the effective portion of changes in the fair value of the Company's derivatives that are designated as cash flow hedges as well as unrealized losses on terminated cash flow hedges. ACCOUNTING STANDARDS In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which superceded similarly titled SFAS No. 125. GMAC adopted the disclosure provisions of the standard, related to securitization of financial assets on December 31, 2000. The Company adopted the accounting provisions of this standard, related to transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, on April 1, 2001, consistent with the provisions of the standard. The effect of adopting the accounting provisions of this new standard was not material to the Company's financial statements. Consistent with the provisions of the standard, prior year financial statements have not been restated. In July 2001, the FASB issued SFAS No. 141, Business Combinations, which requires that the purchase method of accounting be used for all business combinations completed after June 30, 2001. SFAS No. 141 specifies that certain acquired intangible assets in a business combination be recognized as assets separately from goodwill. Additionally, it requires the Company to evaluate its existing intangible assets and goodwill and to make any necessary reclassifications in order to conform with the new separation requirements at the date of adoption. Goodwill and intangible assets determined to have indefinite useful lives that are acquired in a business combination completed after June 30, 2001 will not be amortized. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized until December 31, 2001. With the exception of the immediate requirement to use the purchase method of accounting for all future business combinations completed after June 30, 2001, the Company is required to adopt the provisions of SFAS No. 141 on January 1, 2002. In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill no longer be amortized but instead be tested for impairment at least annually, and that intangible assets other than goodwill should be amortized over their useful lives. The Company is required to adopt the provisions on January 1, 2002. Upon adoption, the Company will be required to reassess the useful lives and residual values of all intangible assets and make any necessary amortization period adjustments by March 31, 2002. <page> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (concluded) ACCOUNTING STANDARDS (concluded) In connection with the transitional impairment evaluation, SFAS No. 142 requires the Company to perform an assessment of whether there is an indication that goodwill is impaired as of January 1, 2002. Any transitional impairment loss resulting from the adoption will be recognized as the effect of a change in accounting principle in the Company's statement of income. Because of the extensiveness of the efforts needed to comply, it is not practicable to reasonably estimate the impact the adoption of these Statements is expected to have on the Company's financial statements. EURO CONVERSION On January 1, 1999, eleven of fifteen member countries of the European Monetary Union established fixed conversion rates between their existing currencies and adopted the euro as their new common currency. Additionally, on December 31, 2000, Greece also established a fixed conversion rate between the drachma and the euro. The euro trades on currency exchanges and the legacy currencies remain legal tender in the participating countries for a transition period until January 1, 2002. Beginning on January 1, 2002, euro denominated bills and coins will be issued and legacy currencies will be withdrawn from circulation. The Company has established plans to assess and address the potential impact to GMAC that may result from the euro conversion. These issues include, but are not limited to: 1) the technical challenges to adapt information systems to accommodate euro transactions; 2) the competitive impact of cross-border price transparency; 3) the impact on currency exchange rate risks; 4) the impact on existing contracts; and 5) tax and accounting implications. The Company expects that the euro conversion will not have a material adverse impact on its financial condition or results of operations. Certain aspects of the operations impacted by the conversion have already been converted to euro. The remaining aspects will be converted throughout the year 2001. FORWARD-LOOKING STATEMENTS The foregoing Management's Discussion and Analysis of Financial Condition and Results of Operations contains various forward-looking statements within the meaning of applicable federal securities laws and is based upon GMAC's current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. <page> PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company did not become a party to any material pending legal proceedings during the second quarter ended June 30, 2001, or prior to the filing of this report. ITEM 5. OTHER INFORMATION RATIO OF EARNINGS TO FIXED CHARGES Six Months Ended June 30, ----------------------------------- 2001 2000 ---- ---- 1.35 1.32 The ratio of earnings to fixed charges has been computed by dividing earnings before income taxes and fixed charges by the fixed charges. This ratio includes the earnings and fixed charges of the Company and its consolidated subsidiaries. Fixed charges consist of interest, debt discount and expense and the portion of rentals for real and personal properties in an amount deemed to be representative of the interest factor. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 20 General Motors Acceptance Corporation and Subsidiaries Consolidated Financial Statements for the Six Months Ended June 30, 2001. (b) REPORTS ON FORM 8-K. The Company filed Forms 8-K on April 9, 2001, April 20, 2001, April 24, 2001 and July 17, 2001 reporting matters under Item 5, Other Events. <page> SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL MOTORS ACCEPTANCE CORPORATION ------------------------------------- (Registrant) s/ WILLIAM F. MUIR Dated: August 8, 2001 --------------------------------------------------- -------------- William F. Muir, Executive Vice President and Chief Financial Officer and Director s/ GERALD E. GROSS Dated: August 8, 2001 ---------------------------------------------------- -------------- Gerald E. Gross, Controller and Principal Accounting Officer
<TABLE> <CAPTION> Exhibit 20 Page 1 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED BALANCE SHEET June 30, December 31, 2001 2000 ------------ -------------- Assets (in millions of dollars) - ------ <S> <C> <C> Cash and cash equivalents $ 1,106.5 $ 1,147.8 Investments in securities 10,472.6 9,485.0 Finance receivables, net (Note 1) 90,103.3 93,024.8 Investment in operating leases, net 26,852.7 29,311.1 Notes receivable from General Motors Corporation 5,495.8 5,434.0 Real estate mortgages - held for sale 7,515.5 5,758.5 - held for investment 1,428.3 1,895.1 - lending receivables 3,257.8 2,960.0 Factored receivables 1,851.1 2,291.1 Due and deferred from receivable sales, net 1,703.2 1,159.3 Mortgage servicing rights, net 4,342.5 3,984.5 Other 14,721.1 12,021.0 ----------- ------------ Total Assets $ 168,850.4 $ 168,472.2 =========== ============ Liabilities and Stockholder's Equity Liabilities General Motors Corporation and affiliated companies, net $ 533.4 $ 199.4 Interest 2,122.1 1,765.9 Insurance losses and loss reserves 1,736.7 1,718.7 Unearned insurance premiums 2,390.7 2,151.1 Deferred income taxes 3,645.8 3,574.3 United States and foreign income and other taxes payable 894.1 805.5 Other postretirement benefits 742.0 744.3 Other 10,661.9 10,100.7 Debt (Note 2) 131,393.8 133,372.2 ------------ ----------- Total liabilities 154,120.5 154,432.1 ------------ ----------- Commitments and contingencies Stockholder's Equity Common stock, $.10 par value (authorized 10,000 shares, outstanding 10 shares) and paid-in capital 5,127.9 5,127.9 Retained earnings 9,942.9 9,028.5 Net unrealized loss on derivatives (111.0) -- Net unrealized gains on securities 178.1 231.7 Unrealized accumulated foreign currency translation adjustment (408.0) (348.0) ----------- ----------- Accumulated other comprehensive income (340.9) (116.3) ----------- ----------- Total stockholder's equity 14,729.9 14,040.1 ----------- ----------- Total Liabilities And Stockholder's Equity $ 168,850.4 $ 168,472.2 =========== =========== </TABLE> Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements.
<TABLE> <CAPTION> Exhibit 20 Page 2 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF INCOME, NET INCOME RETAINED FOR USE IN THE BUSINESS AND COMPREHENSIVE INCOME Period Ended June 30, ------------------------------------------ Second Quarter Six Months -------------------- -------------------- 2001 2000 2001 2000 --------- --------- --------- --------- (in millions of dollars) Financing Revenue <S> <C> <C> <C> <C> Retail and lease financing $ 1,276.4 $ 1,127.4 $ 2,504.5 $ 2,271.8 Operating leases 1,857.4 1,996.3 3,778.1 4,008.2 Wholesale, commercial and other loans 624.6 704.2 1,377.2 1,327.3 --------- --------- --------- --------- Total financing revenue 3,758.4 3,827.9 7,659.8 7,607.3 Interest and discount 1,945.3 2,027.3 4,065.4 3,936.9 Depreciation on operating leases 1,197.3 1,282.3 2,473.1 2,612.7 --------- --------- --------- --------- Net financing revenue 615.8 518.3 1,121.3 1,057.7 Insurance premiums earned 500.9 466.0 1,004.7 928.1 Mortgage revenue 1,381.2 877.0 2,571.5 1,736.8 Other income 777.4 584.5 1,558.4 1,104.1 --------- --------- --------- --------- Net financing revenue and other 3,275.3 2,445.8 6,255.9 4,826.7 --------- --------- --------- --------- Expenses Salaries and benefits 512.2 452.9 1,019.0 922.6 Amortization of intangibles 321.8 150.7 525.9 304.8 Other operating expenses 1,009.1 715.1 1,922.5 1,373.1 Insurance losses and loss adjustment expenses 473.2 369.7 873.9 730.1 Provision for credit losses 275.3 130.3 535.7 237.7 --------- --------- --------- --------- Total expenses 2,490.5 1,818.7 4,775.9 3,568.3 --------- --------- --------- --------- Income before income taxes 683.7 627.1 1,378.9 1,258.4 United States, foreign and other income taxes 234.3 232.0 498.8 466.0 --------- --------- --------- --------- Income before cumulative effect of accounting change 449.4 395.1 880.1 792.4 Cumulative effect of accounting change -- -- 34.3 -- --------- --------- --------- --------- Net Income 449.4 395.1 914.4 792.4 Retained earnings at beginning of the period 9,028.5 9,201.2 9,028.5 8,803.9 --------- --------- --------- --------- Total 9,477.9 9,596.3 9,942.9 9,596.3 Cash dividends -- -- -- -- --------- --------- --------- --------- Retained Earnings At End Of The Period 9,477.9 9,596.3 9,942.9 9,596.3 ========= ========= ========= ========= Total Comprehensive Income $ 447.2 $ 300.6 $ 689.9 $ 657.5 ========= ========= ========= ========= </TABLE> Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements.
<TABLE> <CAPTION> Exhibit 20 Page 3 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended June 30, --------------------------- 2001 2000 ------------ ------------ (in millions of dollars) Cash Flows From Operating Activities <S> <C> <C> Net income $ 914.4 $ 792.4 Cumulative effect of accounting change, net of tax (34.3) -- Depreciation and amortization 3,117.8 3,012.9 Provision for credit losses 535.7 237.7 Gains on sales of finance receivables (134.6) (4.6) Gains on sales of available-for-sale investment securities (53.6) (96.5) Mortgage loans - originations/purchases (46,001.3) (20,647.2) - proceeds on sale 44,236.2 21,259.8 Mortgage-related securities held for trading - acquisitions (850.4) (646.7) - liquidations 623.8 314.7 Changes in the following items: Due to General Motors Corporation and affiliated companies 408.7 44.6 Taxes payable and deferred 244.4 257.2 Interest payable 370.8 115.7 Other assets (1,408.9) (1,184.6) Other liabilities (863.0) 364.8 Other 253.7 (1.0) ----------- ----------- Net cash provided by operating activities 1,359.4 3,819.2 ----------- ----------- Cash Flows From Investing Activities Finance receivables - acquisitions (107,883.2) (108,779.9) - liquidations 68,560.3 73,834.5 Notes receivable from General Motors Corporation (109.7) (253.0) Operating leases - acquisitions (6,447.2) (8,882.9) - liquidations 5,526.7 4,695.9 Investments in available-for-sale securities: - acquisitions (14,516.2) (11,620.8) - maturities 10,947.2 10,088.5 - proceeds from sales 2,856.4 1,558.0 Investments in held to maturity securities: - acquisitions (189.6) (13.4) - maturities 62.0 -- Mortgage servicing rights - acquisitions (812.6) (398.0) - proceeds from sales 18.4 -- Proceeds from sales of receivables - wholesale 35,998.8 26,388.2 - retail 5,157.0 2,517.7 Net increase in short-term factored receivables 432.4 43.4 Due and deferred from receivable sales (499.7) (352.3) Acquisitions of subsidiaries, net of cash acquired (119.4) (28.7) Other 278.4 (348.4) ------------ ----------- Net cash used in investing activities (740.0) (11,551.2) ------------ ----------- Cash Flows From Financing Activities Proceeds from issuance of long-term debt 28,903.5 12,619.3 Principal payments on long-term debt (7,342.4) (8,097.5) Change in short-term debt, net (22,222.8) 2,180.0 Capital contribution from GM -- 1,000.0 ------------ ----------- Net cash (used in)/provided by financing activities (661.7) 7,701.8 ------------ ----------- Effect of exchange rate changes on cash and cash equivalents 1.0 (1.1) ------------ ----------- Net decrease in cash and cash equivalents (41.3) (31.3) Cash and cash equivalents at the beginning of the period 1,147.8 704.3 ------------ ----------- Cash and cash equivalents at the end of the period $ 1,106.5 $ 673.0 ============ =========== Non-Cash Financing Activity Capital contribution of property from GM $ -- $ 479.1 Supplementary Cash Flows Information Interest paid $ 3,588.7 $ 3,770.5 Income taxes paid 332.1 260.5 </TABLE> Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements.
Exhibit 20 Page 4 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (concluded) Supplementary Cash Flows Information (concluded) During the six months ended June 30, 2001 and 2000, assets acquired, liabilities assumed and consideration paid for the acquisitions of businesses were as follows: Six Months Ended June 30, ------------------------ 2001 2000 ---------- --------- (in millions of dollars) Fair value of assets acquired $ 148.9 $ 31.4 Cash acquired (1.2) (1.4) Liabilities assumed (28.3) (1.3) ---------- --------- Net cash paid for acquisitions $ 119.4 $ 28.7 ========== ========= Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements.
Exhibit 20 Page 5 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. FINANCE RECEIVABLES The composition of finance receivables outstanding is summarized as follows: June 30, December 31, 2001 2000 ---------- ------------ (in millions of dollars) United States Retail $ 41,650.3 $ 40,474.9 Wholesale 16,459.3 20,454.9 Commercial 4,683.2 3,970.8 Leasing and lease financing 676.6 632.9 Other 12,447.0 11,712.8 ---------- ---------- Total United States 75,916.4 77,246.3 ---------- ---------- Europe Retail 5,027.2 5,500.2 Wholesale 2,992.2 3,552.2 Commercial 1,184.3 1,267.4 Leasing and lease financing 347.6 431.7 Other 461.8 469.2 ----------- ---------- Total Europe 10,013.1 11,220.7 ---------- ---------- Canada Retail 3,069.1 2,970.2 Wholesale 2,055.5 2,438.1 Commercial 320.3 307.1 Leasing and lease financing 659.7 660.2 Other 228.3 218.5 ---------- ---------- Total Canada 6,332.9 6,594.1 ---------- ---------- Other Countries Retail 2,557.8 2,393.6 Wholesale 844.3 1,092.2 Leasing and lease financing 332.1 452.9 Other 151.2 228.9 ---------- ---------- Total Other Countries 3,885.4 4,167.6 ---------- ---------- Total finance receivables 96,147.8 99,228.7 ---------- ---------- Deductions Unearned income 4,544.9 4,872.1 Allowance for credit losses 1,499.6 1,331.8 ---------- ---------- Total deductions 6,044.5 6,203.9 ---------- ---------- Finance receivables, net $ 90,103.3 $ 93,024.8 ========== ==========
<TABLE> <CAPTION> Exhibit 20 Page 6 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2. DEBT Weighted Average June 30, December 31, Interest Rate 2001 2000 ----------------- ---------- ------------ (in millions of dollars) Short-Term Debt <S> <C> <C> <C> Commercial paper $ 12,915.0 $ 43,633.5 Demand notes 4,942.5 4,663.9 Master notes and other 8,843.2 2,223.6 Bank loans and overdrafts 9,453.8 6,613.3 ---------- ----------- Total principal amount 36,154.5 57,134.3 Unamortized discount (60.5) (220.7) ---------- ----------- Total short-term debt 36,094.0 56,913.6 ---------- ----------- Long-Term Debt Current portion of long-term debt 20,767.8 18,603.1 United States 2002 5.4% 6,956.6 15,451.2 2003 5.5% 14,437.4 11,351.6 2004 5.4% 12,443.7 5,840.5 2005 6.5% 5,270.7 4,502.3 2006 to 2050 6.8% 24,616.0 11,478.1 ---------- ----------- Total United States 63,724.4 48,623.7 Other countries 2000 - 2008 5.6% 10,867.5 9,815.4 ---------- ----------- Total United States and other countries 95,359.7 77,042.2 Unamortized discount (600.9) (583.6) ---------- ----------- Total long-term debt 94,758.8 76,458.6 ---------- ----------- Mark to market adjustment * 541.0 -- ---------- ----------- Total debt $131,393.8 $ 133,372.2 ========== ============ </TABLE> * To adjust hedged debt to fair value
<TABLE> <CAPTION> Exhibit 20 Page 7 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3. SEGMENT INFORMATION GMAC's reportable operating segments include GMAC North American Financing Operations (GMAC-NAO), GMAC International Financing Operations (GMAC-IO), Insurance Operations (GMACI) and Mortgage Operations (GMACMG). GMAC-NAO consists of the United States and Canada, and GMAC-IO consists of all other countries and Puerto Rico. Financial results of GMAC's operating segments for the quarters and six months ended June 30, 2001 and 2000 are summarized below: (in millions of dollars) Eliminations/ GMAC-NAO GMAC-IO GMACI GMACMG Reclassifications Total ----------- ---------- --------- ----------- ----------------- ----------- For the Quarters Ended: June 30, 2001 - ----------------------- <S> <C> <C> <C> <C> <C> <C> Total assets $ 139,253.6 $ 16,030.1 $ 7,212.2 $ 26,502.5 $(20,148.0) $ 168,850.4 Net financing revenue 416.9 233.7 -- -- (34.8) 615.8 Other revenue 796.8 84.7 647.9 1,105.7 24.4 2,659.5 Net income 302.2 58.1 40.9 48.2 -- 449.4 June 30, 2000 Total assets $ 133,128.8 $ 17,283.7 $ 7,148.9 $ 19,616.2 $(19,640.1) $ 157,537.5 Net financing revenue 255.6 250.6 -- -- 12.1 518.3 Other revenue 646.5 29.9 623.5 645.6 (18.0) 1,927.5 Net income 220.2 57.8 57.2 59.9 -- 395.1 For the Six Months Ended: June 30, 2001 Total assets $ 139,253.6 $ 16,030.1 $ 7,212.2 $ 26,502.5 $(20,148.0) $ 168,850.4 Net financing revenue 713.1 472.9 -- -- (64.7) 1,121.3 Other revenue 1,590.4 176.7 1,296.5 2,023.9 47.1 5,134.6 Net income before cumulative effect of accounting change 531.2 119.5 83.6 145.8 -- 880.1 Net income 580.0 114.4 75.4 144.6 -- 914.4 June 30, 2000 Total assets $ 133,128.8 $ 17,283.7 $7,148.9 $ 19,616.2 $ (19,640.1) $ 157,537.5 Net financing revenue 530.9 515.8 -- -- 11.0 1,057.7 Other revenue 1,193.1 62.3 1,228.3 1,307.0 (21.7) 3,769.0 Net income 420.5 119.6 119.6 132.7 -- 792.4 </TABLE> <page> Exhibit 20 Page 8 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS Effective January 1, 2001, GMAC adopted the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138. Under these standards, GMAC records derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The after-tax cumulative effect of this accounting change as of January 1, 2001, was $34.3 million favorable to income and $52.6 million unfavorable to equity. The amount of the transition adjustment expected to be reclassified into earnings from other comprehensive income during 2001 is immaterial. GMAC Automotive Operations Interest Rate Instruments Net after-tax gains of $12.2 million and $2.3 million (excluding $2.1 million transition adjustment) were recorded in other operating expenses, representing the ineffectiveness of fair value hedges for the second quarter and the six months ended June 30, 2001, respectively. For the second quarter and six months ended June 30, 2001, there was no measured ineffectiveness in the Company's cash flow hedges. GMAC Mortgage Operations Fair Value Hedges For the second quarter and six months ended June 30, 2001, GMACMG recognized a net after-tax loss of approximately $72.4 million and $100.5 million, respectively. These amounts were reported as a component of other operating expenses and represented the ineffective portion of all fair-value hedges. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness.