================================================================================ 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 SEPTEMBER 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 September 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, September 30, 2001 and December 31, 2000. 2. Consolidated Statement of Income, Net Income Retained for Use in the Business and Comprehensive Income for the Third Quarter and Nine Months Ended September 30, 2001 and 2000. 3. Consolidated Statement of Cash Flows for the Nine Months Ended September 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 $437.0 million, up 9.0% from the $401.0 million earned in the third quarter of 2000. These earnings represent a record third quarter for GMAC. Net income for the first nine months of 2001 was $1,351.4 million, up 13.2% from the $1,193.4 million reported in the same period a year ago. <TABLE> <CAPTION> Period Ended September 30, ---------------------------------------------- Third Quarter Nine Months ------------------- -------------------- 2001 2000 2001 2000 -------- -------- -------- -------- (in millions of dollars) <S> <C> <C> <C> <C> Automotive and other financing operations $ 310.0 $ 272.4 $1,004.4 $ 812.5 Insurance operations * 48.6 50.3 124.0 169.9 Mortgage operations** 78.4 78.3 223.0 211.0 --------- -------- -------- --------- Consolidated net income $ 437.0 $ 401.0 $1,351.4 $1,193.4 ======== ======== ======== ========= * GMAC Insurance Holdings, Inc. (GMACI) ** GMAC Mortgage Group, Inc. (GMACMG) </TABLE> For the quarter, net income from automotive and other financing operations totaled $310.0 million, up 13.8% from the $272.4 million earned in the same period of 2000. The strong results can be attributed to higher asset levels 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 $48.6 million in the third quarter of 2001, down 3.4% from the $50.3 million earned in the third quarter of 2000. Improved underwriting results were offset by lower investment income and capital gains reflecting general weakness in the equity markets. Mortgage operations earned $78.4 million in the third quarter of 2001, virtually unchanged from the same period last year. Origination volume in the residential mortgage sector grew at a record pace but the related increase in earnings was largely offset by the impairment charges recorded on mortgage servicing rights due to higher levels of mortgage prepayments and the revaluation of retained interest securities from securitizations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) AUTOMOTIVE AND OTHER FINANCING OPERATIONS Financing revenue totaled $3,658.4 million and $11,318.2 million in the third quarter and first nine months of 2001, respectively, compared to $3,906.7 million and $11,514.0 million for the comparable periods in 2000. The decreases were mainly due to a decline in asset earning rates during 2001. Annualized net retail losses were 0.69% and 0.70% of total average serviced automotive receivables during the third quarter and first nine months of 2001, respectively, compared to 0.60% and 0.58% for the same periods last year. The increase was primarily due to the deterioration in economic conditions in North America. The provision for credit losses, most of which relates to automotive finance receivables, totaled $280.0 million and $815.7 million for the third quarter and nine months ended September 30, 2001, respectively, compared to $135.3 million and $373.0 million for the third quarter and nine months ended September 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 GM vehicles during the third quarter and the first nine months of 2001 were lower compared to the comparable periods in 2000. The decrease in financing penetration in the third quarter and nine months of 2001 was primarily the result of a reduction in GM-sponsored leasing incentives. <TABLE> <CAPTION> Period Ended September 30, ---------------------------------------- Third Quarter Nine Months ---------------------------------------- 2001 2000 2001 2000 ------- -------- ------- -------- (In millions of units sold) <S> <C> <C> <C> <C> Industry 4.2 4.6 13.0 13.9 General Motors 1.2 1.2 3.6 3.9 New GM vehicle deliveries financed by GMAC Retail (installment sale contracts and operating leases) 40.1% 40.6% 41.1% 43.7% Fleet transactions (lease financing) 1.2% 1.4% 1.8% 1.6% Total 32.2% 32.2% 32.7% 34.5% </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: Period Ended September 30, -------------------------------------- Third Quarter Nine Months --------------- ------------------ 2001 2000 2001 2000 ------ ------ ------- ------- (in thousands of units) United States Retail installment sale contracts 269 242 810 739 Operating leases 99 153 355 582 Leasing 4 5 18 18 ------ ------ ------- ------- New deliveries financed 372 400 1,183 1,339 ====== ====== ======= ======= Other Countries Retail installment sale contracts 136 135 362 374 Operating leases 67 62 205 202 Leasing 12 11 37 43 ------ ------ ------- ------- New deliveries financed 215 208 604 619 ====== ====== ======= ======= Worldwide Retail installment sale contracts 405 377 1,172 1,113 Operating leases 166 215 560 784 Leasing 16 16 55 61 ------ ------ ------- ------- New deliveries financed 587 608 1,787 1,958 ====== ====== ======= ======= The number of new vehicles financed in the U.S. during the third quarter and first nine 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 increase in retail units and 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 850,000 and 2,516,000 new GM vehicles during the third quarter and first nine months of 2001, respectively, compared with 826,000 and 2,696,000 new GM vehicles during the respective periods in 2000. GMAC's wholesale financing represented 75.9% of all GM vehicle sales to U.S. dealers during the first nine months of 2001, up from 70.3% 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 third quarter and first nine months of 2001 averaged 5.19% and 5.84%, respectively, compared to 6.71% and 6.43% for the same periods in 2000. Total borrowing costs for U.S. operations averaged 5.04% and 5.80% for the third quarter and first nine months of 2001, respectively, compared to 6.84% and 6.57% for the third quarter and first nine months of 2000, respectively. The decrease in average borrowing costs was mainly a result of a continued reduction in short-term market rates during the year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) CONSOLIDATED INCOME AND EXPENSES (concluded) Other income totaled $659.5 million and $2,217.9 million for the third quarter and nine months ended September 30, 2001, respectively, compared to $635.4 million and $1,739.5 million during the comparable 2000 periods. The year-to-year increase was mainly attributable to increased securitization of retail and wholesale receivables. Consolidated salaries and benefits totaled $522.1 million and $1,541.1 million for the third quarter and first nine months of 2001, respectively, compared to $474.4 million and $1,397.0 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 $322.1 million and $848.0 million for the third quarter and first nine months of 2001, respectively, compared to $163.2 million and $468.0 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 declining 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 $926.6 million and $2,849.1 million for the third quarter and first nine months of 2001, respectively, compared to $833.5 million and $2,206.6 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 third quarter and nine months ended September 30, 2001 was 37.8% and 36.7%, respectively, compared to 38.0% and 37.4% for the third quarter and nine months ended September 30, 2000. The lower effective tax rate for the third quarter and nine months ended September 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 $492.5 million and $1,497.2 million for the third quarter and nine months ended September 30, 2001, respectively, compared to $486.2 million and $1,414.3 million for the same periods during 2000. The increase for the quarter was a result of strong extended service contract revenue growth in both the U.S. and Canada. On a year-to-date basis, the increase was primarily a result of expanding customer relationships in assumed reinsurance and commercial auto coverages. Pre-tax capital gains and investment and other income at GMACI totaled $150.4 million and $441.2 million for the third quarter and first nine months of 2001, compared to $135.3 million and $440.6 million for the same periods in 2000. On a year-to-date basis, higher other income, comprised mostly of service contract earned revenue, was partially offset by lower capital gains, reflecting general weakness in the equity markets. Insurance losses and loss adjustment expenses totaled $430.8 million and $1,304.7 million during the third quarter and nine months of 2001, respectively, compared to $392.0 and $1,122.1 million for the comparable periods in 2000. The increase in 2001 was due to higher personal lines losses across all products and adverse weather-related losses in the wholesale program.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) INSURANCE OPERATIONS (concluded) Net income was $48.6 million and $124.0 million for the third quarter and nine months ended September 30, 2001, respectively, compared to $50.3 million and $169.9 million for the same periods in 2000. Net income for the third quarter 2001 reflected an improvement in underwriting offset by lower investment income and capital gains. Earnings for the nine months ended September 30, 2001 declined due primarily to lower capital gains. MORTGAGE OPERATIONS Mortgage revenue totaled $1,305.4 million and $3,876.9 million for the third quarter and first nine months of 2001, respectively, compared to $1,038.6 million and $2,775.4 million for the comparable periods in 2000. The growth in revenue was primarily attributable to significantly stronger lending volumes, loan originations and an increase in the servicing portfolio. Revenue growth was due to significant re-financing activity, which was a result of the decline in interest rates observed during the first nine months of 2001. 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 third quarter and first nine months of 2001, GMACMG loan originations, mortgage servicing acquisitions and correspondent loan volume totaled $47.7 billion and $115.6 billion, respectively, compared to $18.5 billion and $49.1 billion for the same periods in 2000. The increases were attributed to higher levels of loan production and securitizations. The combined GMACMG servicing portfolio, excluding GMAC term loans to dealers, totaled $383.3 billion at September 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 declining interest rate environment. Net income was $78.4 million and $223.0 million for the third quarter and nine months ended September 30, 2001, respectively, compared to $78.3 million and $211.0 million for the same periods in 2000. Origination volume in the residential mortgage sector grew at a record pace but the related increase in earnings was largely offset by the impairment charges recorded on mortgage servicing rights due to higher levels of mortgage prepayments and the revaluation of retained interest securities from securitizations. As a result, net income for the third quarters of 2001 and 2000 was virtually unchanged. The increase in net income for the nine months ended September 30, 2001 compared to the same period in 2000 was attributed to higher loan originations and increased sales and securitization activity. Continuing from the first quarter of 2001, interest rates, including those on originated loans for fifteen and thirty-year residential mortgages declined. This activity increased actual and potential mortgage refinancing activity resulting in a reduction in the expected future cash flows that support the carrying value of the mortgage servicing rights. As a result, for the third quarter and nine months ended September 30, 2001, the Company recorded after-tax impairment charges of $90.3 million and $161.2 million, respectively. Subsequent to September 30, 2001, mortgage rates continue to remain at historically low levels and prepayment activity continues at a pace similar to the third quarter. In the event that the hedge positions prove to be not fully effective, the Company may experience further impairment losses.
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 for certain residential mortgage products, particularly since April 2001. In assessing the fair value of its mortgage servicing rights, the Company relies in part on its own mortgage servicing rights cash flow history for certain assumptions and continues to use market driven earning rates, discounting factors and prepayment models. On August 22, 2001, GMAC Residential Holding Corp., a wholly-owned subsidiary of GMAC Mortgage Group, announced that its wholly-owned subsidiary, GMAC Bank, a federal savings bank, received its charter from the Office of Thrift Supervision. GMAC Bank will offer or make available a variety of banking and personal financial services products. Along with deposit offerings, GMAC Bank intends to originate and purchase mortgage loans, as well as home equity loans and lines of credit. As of the date of this filing, GMAC Bank has met all regulatory capital requirements. In the third quarter, GMAC Commercial Holding Corporation, a wholly-owned subsidiary of the GMAC Mortgage Group, provided a $563 million first mortgage loan secured by a leasehold interest in four properties in the World Trade Center complex (the Twin Towers and Four and Five World Trade Center). The mortgage loan was securitized, and $483 million of the bonds were sold to investors. GMAC Commercial Holding Corporation retained $80 million of the bonds. The insurance, as required in connection with GMAC's financing, does not exclude coverage for acts of terrorism. The insurance is from a consortium of 22 large and well-rated insurers. As a result, the Company believes that its exposure will be recoverable under the insurance policy. FINANCIAL CONDITION AND LIQUIDITY At September 30, 2001, the Company owned assets and serviced automotive receivables totaling $205.5 billion, $19.8 billion above December 31, 2000. The increase over year-end was principally the result of increases in cash and cash equivalents, serviced retail receivables, real estate mortgages held for sale, other assets, commercial and other loan receivables, mortgage lending receivables and due and deferred from receivable sales. These increases were partially offset by a decline in serviced wholesale receivables, operating lease assets, receivables due from GM, mortgage loans held for investment and factored receivables. Finance receivables serviced by the Company, including sold receivables, totaled $117.7 billion at September 30, 2001, $5.2 billion above December 31, 2000 levels. The increase was primarily a result of a $7.5 billion increase in serviced retail receivables and a $1.3 billion increase in commercial and other loan receivables, partially offset by a $3.4 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 GMAC Commercial Credit LLC and GMAC Business Credit LLC. The decrease in serviced wholesale receivables was due to reduced dealer inventory levels at September 30, 2001 compared to December 31, 2000. However, the on-balance sheet finance receivables decreased from $93.0 billion at December 31, 2000 to $90.6 billion at September 30, 2001 primarily due to an increase in securitization activity. Cash and cash equivalents at September 30, 2001 totaled $10.5 billion, compared with $1.1 billion at December 31, 2000. The increase was primarily attributable to increased term funding activity during the period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) FINANCIAL CONDITION AND LIQUIDITY (continued) The real estate mortgage inventory held for sale amounted to $10.1 billion at September 30, 2001, $4.3 billion above December 31, 2000. The increase was due to higher loan originations throughout 2001 in the declining interest rate environment. Other assets at September 30, 2001 totaled $16.3 billion, compared with $12.0 billion at December 31, 2000. Of the total increase, $2.5 billion was attributable to the adoption of Statement of Financial Accounting Standards (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. Additionally, other mortgage-related assets, which are included in other assets, totaled $4.7 billion at September 30, 2001, $1.1 billion above December 31, 2000. The increase in other mortgage-related assets was primarily due to acquisitions at GMACMG, increased broker-dealer receivables and mortgage related subordinate loan participations. Mortgage lending receivables totaled $3.4 billion and $3.0 billion at September 30, 2001 and December 31, 2000, respectively. The increase was due to the acquisition of the warehouse lending operations of GE Capital Mortgage Services, Inc. in August 2001. The Company's due and deferred from receivable sales (net) totaled $1.6 billion and $1.2 billion at September 30, 2001 and December 31, 2000, respectively. 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 retail receivable and two wholesale receivable securitization transactions. Consolidated operating lease assets, net of depreciation, totaled $26.3 billion at September 30, 2001, reflecting a decrease of $3.0 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. Notes receivable from GM totaled $4.8 billion and $5.4 billion at September 30, 2001 and December 31, 2000, respectively. The decrease was mainly a result of a $0.5 billion decrease in a $2.0 billion revolving line of credit that GM has available with GMAC. Mortgage loans held for investment totaled $1.4 billion and $1.9 billion at September 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 $1.8 billion and $2.3 billion at September 30, 2001 and December 31, 2000, respectively. The decrease was a result of a decline in client factored sales volume during 2001. As of September 30, 2001, GMAC's total borrowings were $143.2 billion, compared with $133.4 billion at December 31, 2000. The increased borrowings were used to fund higher asset levels. GMAC's ratio of consolidated debt to total stockholder's equity at both September 30, 2001 and December 31, 2000 was 9.5:1. Net unrealized losses on derivatives for the nine months ended September 30, 2001, of $218.6 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) FINANCIAL CONDITION AND LIQUIDITY (continued) The Company and its subsidiaries maintain substantial bank lines of credit, which totaled $50.3 billion at September 30, 2001, compared to $48.1 billion at year-end 2000. The unused portion of these credit lines increased by $0.5 billion from December 31, 2000 to $38.9 billion at September 30, 2001. Included in the unused credit lines at September 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. 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 with a one year term-out option. It was modified to permit the Company, at its discretion, to transfer up to approximately $6 billion of the banks' 364-day 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 under certain conditions. This covenant is only applicable on the last day of any fiscal quarter (other than the fiscal quarter during which a change in rating occurs) during such times as the Company has senior unsecured long-term debt outstanding, without third-party enhancement, which is rated BBB+ or less by S&P or Baa1 or less by Moody's. Those conditions are in effect now but were not in effect during the quarter ended September 30, 2001. GMAC's ability to access 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. These 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-term, medium-term and long-term debt has been rated by three nationally recognized statistical rating organizations. As of November 8, 2001, all of the ratings assigned were within the investment grade category. Senior Commercial Rating Agency Debt Paper - ------------- --------- ---------- Fitch, Inc. A- F-2 Moody's Investor's Service, Inc. A2 Prime-1 Standard & Poor's Ratings Services BBB+ A-2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) FINANCIAL CONDITION AND LIQUIDITY (concluded) Fitch, Inc. ("Fitch") has assigned ratings of A- and F-2 to the Company's senior debt and commercial paper, respectively. The A- rating is assigned by Fitch to bonds considered to be very good credit quality with the obligor's ability to pay interest and repay principal considered to be very good. The F-2 rating is assigned to short-term issues which possess a good credit quality based primarily on the existence of liquidity necessary to meet the obligations in a timely manner. In October 2001, Fitch downgraded the senior debt rating from A to A- and downgraded the commercial paper rating to F-2. The rating watch negative was removed and the rating outlook was revised to negative. Moody's Investors Service, Inc. ("Moody's") has assigned a rating of A2 to the Company's senior debt, indicating favorable investment attributes and strong ability to repay principal plus interest. The Company's commercial paper has received a rating of Prime-1 from Moody's, reflecting superior ability for repayment of senior short-term debt obligations and assured ability to access alternative sources of liquidity. Additional repayment characteristics of commercial paper issues receiving this premium rating include leading market position in a well-established industry, high rates of return on funds employed, and broad margins in earnings coverage of fixed financial charges. The senior debt rating was upgraded from A3 to A2 in April 1998, whereas the commercial paper rating was assigned by Moody's in May 1995. On April 6, 2001, Moody's Investors Service, while affirming its ratings on GMAC, revised its outlook on the rating from stable to negative. Standard & Poor's Ratings Services, a division of McGraw-Hill Companies, Inc. ("S&P") has assigned a rating of BBB+ to the Company's senior debt. The BBB+ rating is assigned to bonds considered to have adequate capacity to pay interest and repay principal. The Company's commercial paper has received a rating of A-2, indicating an adequate capacity for timely payment. In October 2001, S&P downgraded these senior debt and commercial paper ratings from A and A-1, respectively. All ratings were removed from credit watch and the rating outlook is now stable. As of November 8, 2001, GMAC is not under review by any of the above rating agencies. ACCOUNTING STANDARDS In September 2000, the Financial Accounting Standards Board (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. On April 1, 2001, 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. 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) ACCOUNTING STANDARDS (concluded) 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. 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. The Company has not determined the impact, if any, that this statement will have on its financial statements. In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This Statement supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-lived Assets to Be Disposed Of. This Statement retains the requirements of SFAS No. 121 regarding impairment loss recognition and measurement. In addition, it requires that one accounting model be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. This Statement is effective for fiscal years beginning after December 15, 2001. The Company has not determined the impact, if any, that this statement will have on its 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (concluded) EURO CONVERSION (concluded) 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.
PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company did not become a party to any material pending legal proceedings during the third quarter ended September 30, 2001, or prior to the filing of this report. ITEM 5. OTHER INFORMATION RATIO OF EARNINGS TO FIXED CHARGES Nine Months Ended September 30, ------------------------------------ 2001 2000 ---- ---- 1.37 1.31 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 Nine Months Ended September 30, 2001. (b) REPORTS ON FORM 8-K. The Company filed Forms 8-K on July 17, 2001, August 27, 2001, September 28, 2001, October 3, 2001, October 16, 2001, October 18, 2001, October 22, 2001 and October 24, 2001 reporting matters under Item 5, Other Events. In addition, the Company also filed a Form 8-K on October 24, 2001 reporting matters under Item 5, Other Events and Item 7, Financial Statements, Pro Forma Financial Information and Exhbits.
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: November 8, 2001 William F. Muir, Executive Vice ---------------- President and Chief Financial Officer and Director s/ GERALD E. GROSS -------------------------------------------------- Dated: November 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 September 30, December 31, 2001 2000 ------------- ------------ Assets (in millions of dollars) - ------ <S> <C> <C> Cash and cash equivalents $ 10,483.3 $ 1,147.8 Investments in securities 9,492.2 9,485.0 Finance receivables, net (Note 1) 90,550.5 93,024.8 Investment in operating leases, net 26,304.6 29,311.1 Notes receivable from General Motors Corporation 4,849.6 5,434.0 Real estate mortgages - held for sale 10,059.0 5,758.5 - held for investment 1,394.1 1,895.1 - lending receivables 3,418.8 2,960.0 Factored receivables 1,803.9 2,291.1 Due and deferred from receivable sales, net 1,604.9 1,159.3 Mortgage servicing rights, net 4,142.8 3,984.5 Other 16,280.0 12,021.0 ------------ ------------ Total Assets $ 180,383.7 $ 168,472.2 ============ ============ Liabilities and Stockholder's Equity - ------------------------------------ Liabilities General Motors Corporation and affiliated companies, net $ 373.1 $ 199.4 Interest 2,085.4 1,765.9 Insurance losses and loss reserves 1,769.1 1,718.7 Unearned insurance premiums 2,488.2 2,151.1 Deferred income taxes 3,823.2 3,574.3 United States and foreign income and other taxes payable 783.1 805.5 Other postretirement benefits 745.6 744.3 Other 10,056.7 10,100.7 Debt (Note 2) 143,239.7 133,372.2 ------------ ----------- Total liabilities 165,364.1 154,432.1 ------------ ----------- 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 10,379.9 9,028.5 Net unrealized loss on derivatives (218.6) -- Net unrealized gains on securities 88.2 231.7 Unrealized accumulated foreign currency translation adjustment (357.8) (348.0) ------------ ----------- Accumulated other comprehensive loss (488.2) (116.3) ------------ ----------- Total stockholder's equity 15,019.6 14,040.1 ------------ ----------- Total Liabilities and Stockholder's Equity $ 180,383.7 $ 168,472.2 ============ =========== Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements. </TABLE>
<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 September 30, ------------------------------------------------ Third Quarter Nine Months ----------------------- --------------------- 2001 2000 2001 2000 --------- --------- --------- --------- (in millions of dollars) Financing Revenue <S> <C> <C> <C> <C> Retail and lease financing $ 1,335.0 $ 1,237.0 $ 3,839.5 $ 3,508.8 Operating leases 1,778.2 1,967.5 5,556.3 5,975.7 Wholesale, commercial and other loans 545.2 702.2 1,922.4 2,029.5 --------- --------- --------- --------- Total financing revenue 3,658.4 3,906.7 11,318.2 11,514.0 Interest and discount 1,719.8 2,158.5 5,785.2 6,095.4 Depreciation on operating leases 1,211.7 1,262.9 3,684.8 3,875.6 --------- --------- --------- --------- Net financing revenue 726.9 485.3 1,848.2 1,543.0 Insurance premiums earned 492.5 486.2 1,497.2 1,414.3 Mortgage revenue 1,305.4 1,038.6 3,876.9 2,775.4 Other income 659.5 635.4 2,217.9 1,739.5 --------- --------- --------- --------- Net financing revenue and other 3,184.3 2,645.5 9,440.2 7,472.2 --------- --------- --------- --------- Expenses Salaries and benefits 522.1 474.4 1,541.1 1,397.0 Amortization of intangibles 322.1 163.2 848.0 468.0 Other operating expenses 926.6 833.5 2,849.1 2,206.6 Insurance losses and loss adjustment expenses 430.8 392.0 1,304.7 1,122.1 Provision for credit losses 280.0 135.3 815.7 373.0 --------- --------- --------- --------- Total expenses 2,481.6 1,998.4 7,358.6 5,566.7 --------- --------- --------- --------- Income before income taxes 702.7 647.1 2,081.6 1,905.5 United States, foreign and other income taxes 265.7 246.1 764.5 712.1 --------- --------- --------- --------- Income before cumulative effect of accounting change 437.0 401.0 1,317.1 1,193.4 Cumulative effect of accounting change -- -- 34.3 -- --------- --------- --------- --------- Net Income 437.0 401.0 1,351.4 1,193.4 Retained earnings at beginning of the period 9,028.5 9,201.2 9,028.5 8,803.9 --------- --------- --------- --------- Total 9,465.5 9,602.2 10,379.9 9,997.3 Cash dividends -- -- -- -- --------- --------- --------- --------- Retained Earnings at End of the Period 9,465.5 9,602.2 10,379.9 9,997.3 ========= ========= ========= ========= Total Comprehensive Income $ 289.6 $ 325.0 $ 979.5 $ 982.5 ========= ========= ========= ========= Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements. </TABLE>
<TABLE> <CAPTION> Exhibit 20 Page 3 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended September 30, ---------------------------- 2001 2000 ------------ ------------ (in millions of dollars) Cash Flows From Operating Activities <S> <C> <C> Net income $ 1,351.4 $ 1,193.4 Cumulative effect of accounting change, net of tax (34.3) -- Depreciation and amortization 4,721.0 4,483.0 Provision for credit losses 815.7 373.0 Gains on sales of finance receivables (134.5) (4.6) Gains on sales of available-for-sale investment securities (82.9) (125.9) Mortgage loans - originations/purchases (77,870.2) (33,502.2) - proceeds on sale 73,561.5 34,028.3 Mortgage-related securities held for trading: - acquisitions (1,288.0) (942.0) - liquidations 1,008.5 677.7 Changes in the following items: Due to General Motors Corporation and affiliated companies 194.1 (0.5) Taxes payable and deferred 404.1 450.9 Interest payable 332.4 272.8 Other assets (1,690.4) (1,074.0) Other liabilities (594.3) 801.6 Other 219.1 35.3 ------------ ------------ Net cash provided by operating activities 913.2 6,666.8 ------------ ------------ Cash Flows From Investing Activities Finance receivables - acquisitions (166,597.2) (140,265.2) - liquidations 103,918.6 88,559.8 Notes receivable from General Motors Corporation 425.4 (882.7) Operating leases - acquisitions (10,586.2) (12,146.4) - liquidations 9,722.9 7,811.9 Investments in available-for-sale securities: - acquisitions (23,349.1) (16,994.7) - maturities 18,946.6 14,693.0 - proceeds from sales 4,617.7 2,411.4 Investments in held to maturity securities: - acquisitions (261.9) (13.9) - maturities 136.3 -- Mortgage servicing rights - acquisitions (883.5) (698.3) - proceeds from sales 17.3 -- Proceeds from sales of receivables - wholesale 58,641.9 41,242.9 - retail 5,156.0 2,163.7 Net increase in short-term factored receivables 484.9 (64.6) Due and deferred from receivable sales (408.8) (287.2) Acquisitions of subsidiaries, net of cash acquired (446.2) (406.0) Other (250.5) (1,181.0) ------------- ------------- Net cash used in investing activities (715.8) (16,057.3) ------------- ------------- Cash Flows From Financing Activities Proceeds from issuance of long-term debt 42,791.4 19,450.3 Principal payments on long-term debt (13,816.6) (11,482.3) Change in short-term debt, net (19,832.2) 609.6 Capital contribution from General Motors -- 1,000.0 ------------ ------------- Net cash provided by financing activities 9,142.6 9,577.6 ------------ ------------- Effect of exchange rate changes on cash and cash equivalents (4.5) 3.3 ------------ ------------- Net increase in cash and cash equivalents 9,335.5 190.4 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 $ 10,483.3 $ 894.7 ============ ============= Non-Cash Financing Activity Capital contribution of property from General Motors $ -- $ 479.1 Supplementary Cash Flows Information Interest paid $ 5,305.5 $ 5,753.8 Income taxes paid 507.7 340.4 Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements. </TABLE>
Exhibit 20 Page 4 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (concluded) Supplementary Cash Flows Information (concluded) During the nine months ended September 30, 2001 and 2000, assets acquired, liabilities assumed and consideration paid for the acquisitions of businesses were as follows: <TABLE> <CAPTION> Nine Months Ended September 30, ----------------------- 2001 2000 ---------- ---------- (in millions of dollars) <S> <C> <C> Fair value of assets acquired $ 476.0 $ 1,209.7 Cash acquired (1.2) (8.2) Liabilities assumed (28.6) (795.5) ---------- ---------- Net cash paid for acquisitions $ 446.2 $ 406.0 ========== ========== Certain amounts for 2000 have been reclassified to conform with 2001 classifications. Reference should be made to the Notes to Consolidated Financial Statements. </TABLE>
<TABLE> <CAPTION> 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: September 30, December 31, 2001 2000 ------------- ------------ (in millions of dollars) United States <S> <C> <C> Retail $ 44,895.3 $ 40,474.9 Wholesale 13,823.4 20,454.9 Commercial 4,775.1 3,970.8 Leasing and lease financing 626.5 632.9 Other 12,269.3 11,712.8 ---------- ---------- Total United States 76,389.6 77,246.3 ---------- ---------- Europe Retail 5,390.6 5,500.2 Wholesale 2,935.6 3,552.2 Commercial 1,218.3 1,267.4 Leasing and lease financing 357.0 431.7 Other 485.3 469.2 ---------- ---------- Total Europe 10,386.8 11,220.7 ---------- ---------- Canada Retail 3,516.4 2,970.2 Wholesale 1,559.3 2,438.1 Commercial 354.8 307.1 Leasing and lease financing 636.8 660.2 Other 230.7 218.5 ---------- ---------- Total Canada 6,298.0 6,594.1 ---------- ---------- Other Countries Retail 2,580.9 2,393.6 Wholesale 823.6 1,092.2 Leasing and lease financing 292.2 452.9 Other 141.4 228.9 ---------- ---------- Total Other Countries 3,838.1 4,167.6 ---------- ---------- Total finance receivables 96,912.5 99,228.7 ---------- ---------- Deductions Unearned income 4,764.4 4,872.1 Allowance for credit losses 1,597.6 1,331.8 ---------- ---------- Total deductions 6,362.0 6,203.9 ---------- ---------- Finance receivables, net $ 90,550.5 $93,024.8 ========== ========== </TABLE>
<TABLE> <CAPTION> Exhibit 20 Page 6 of 8 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2. DEBT Weighted Average September 30, December 31, Interest Rate 2001 2000 -------------------- ------------- ------------- (in millions of dollars) Short-Term Debt <S> <C> <C> Commercial paper $ 18,744.5 $ 43,633.5 Demand notes 5,003.5 4,663.9 Master notes and other 3,318.8 2,223.6 Bank loans and overdrafts 9,968.3 6,613.3 -------------- --------------- Total principal amount 37,035.1 57,134.3 Unamortized discount (52.2) (220.7) -------------- --------------- Total short-term debt 36,982.9 56,913.6 -------------- --------------- Long-Term Debt Current portion of long-term debt 21,865.0 18,603.1 United States 2002 5.3% 3,553.0 15,451.2 2003 5.0% 16,948.1 11,351.6 2004 4.8% 13,910.4 5,840.5 2005 6.4% 5,407.9 4,502.3 2006 to 2050 6.7% 32,277.2 11,478.1 --------------- -------------- Total United States 72,096.6 48,623.7 Other countries 2000 - 2008 5.3% 11,341.4 9,815.4 -------------- --------------- Total United States and other countries 105,303.0 77,042.2 Unamortized discount (599.0) (583.6) -------------- --------------- Total long-term debt 104,704.0 76,458.6 -------------- --------------- Mark to market adjustment * 1,552.8 -- -------------- --------------- Total debt $143,239.7 $ 133,372.2 ============== =============== * To adjust hedged debt to fair value </TABLE>
<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 nine months ended September 30, 2001 and 2000 are summarized below: (in millions of dollars) Eliminations/ GMAC-NAO GMAC-IO GMACI GMACMG Reclassifications Total ------------ ----------- ---------- ---------- ----------------- ----------- For the Quarters Ended: September 30, 2001 <S> <C> <C> <C> <C> <C> <C> Total assets $ 149,742.5 $ 17,260.1 $ 7,199.7 $ 29,542.5 $(23,361.1) $180,383.7 Net financing revenue 462.4 236.4 -- -- 28.1 726.9 Other revenue 639.2 95.8 643.6 1,117.5 (38.7) 2,457.4 Net income 272.2 37.8 48.6 78.4 -- 437.0 September 30, 2000 Total assets $135,600.6 $ 16,534.6 $ 7,238.8 $ 20,838.3 $(19,911.5) $160,300.8 Net financing revenue 262.6 235.3 -- -- (12.6) 485.3 Other revenue 666.3 93.3 621.3 774.5 4.8 2,160.2 Net income 221.3 51.1 50.3 78.3 -- 401.0 For the Nine Months Ended: September 30, 2001 Total assets $ 149,742.5 $ 17,260.1 $ 7,199.7 $ 29,542.5 $(23,361.1) $180,383.7 Net financing revenue 1,175.5 709.3 -- -- (36.6) 1,848.2 Other revenue 2,229.6 272.5 1,940.1 3,141.4 8.4 7,592.0 Net income before cumulative effect of accounting change 803.4 157.3 132.2 224.2 -- 1,317.1 Net income 852.2 152.2 124.0 223.0 -- 1,351.4 September 30, 2000 Total assets $ 135,600.6 $ 16,534.6 $ 7,238.8 $ 20,838.3 $(19,911.5) $160,300.8 Net financing revenue 793.5 751.1 -- -- (1.6) 1,543.0 Other revenue 1,859.4 155.6 1,849.5 2,081.6 (16.9) 5,929.2 Net income 641.8 170.7 169.9 211.0 -- 1,193.4 </TABLE>
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 $9.1 million and $11.4 million (excluding $2.1 million transition adjustment) were recorded in other operating expenses, representing the ineffectiveness of fair value hedges for the third quarter and the nine months ended September 30, 2001, respectively. For the third quarter and nine months ended September 30, 2001, there was no measured ineffectiveness in the Company's cash flow hedges. GMAC Mortgage Operations Fair Value Hedges For the third quarter and nine months ended September 30, 2001, GMACMG recognized a net after-tax loss of approximately $21.3 million and $121.7 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. NOTE 5. TRANSACTIONS WITH AFFILIATES On October 29, 2001, GMAC received a cash contribution from GM totaling $500.0 million.