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GM HUGHES ELECTRONICS CORP. REPORTS SECOND QUARTER RESULTS

    LOS ANGELES, July 28 /PRNewswire/ -- GM Hughes Electronics Corp. (GMHE) today reported second quarter earnings, before the effect of purchase accounting adjustments related to General Motors' acquisition of Hughes Aircraft Co., of $232.0 million, or $0.58 per share of GM Class H common stock.
    Revenues for the period were $3,315.4 million, an 11.4 percent increase over the $2,974.8 million recorded in 1992's second quarter.
    Earnings for the second quarter of 1993 compared with a loss of $596.9 million, or $1.49 per share, in the second quarter of 1992, which included a $749.4 million, or $1.87 per share, special restructuring charge.
    Operating profit before the Hughes purchase accounting adjustments was $377.8 million for the second quarter, compared with an operating loss of $1,008.9 million for the second quarter of 1992, including the special restructuring charge recorded in that period.
    Excluding the special charge recorded in 1992's second quarter, earnings for the second quarter of 1993 increased 52.1 percent from $152.5 million in the second quarter of 1992.  Earnings per share on a comparable basis increased 52.6 percent from $0.38 per share for the similar quarter in 1992.  Similarly, operating profit increased 65.6 percent from $228.1 million in the second quarter of 1992.  The operating profit margin on the same basis improved to 11.4 percent for 1993's second quarter from 7.7 percent in 1992's second quarter.
    C. Michael Armstrong, GMHE chairman and chief executive officer, said second quarter results reflected the success of efforts to improve operating performance in all business segments.  Armstrong attributed earnings and revenue increases principally to continued growth in GMHE- supplied automotive electronics and contributions from the missile business acquired from General Dynamics in 1992.  He noted that the improved profitability also resulted from successful efforts to improve GMHE's Hughes' competitiveness and reduce costs.
    "GMHE's improving operating profit margins reflect the excellent progress being made in achieving the goals of the strategies to increase our competitiveness that we implemented one year ago," Armstrong said. "We believe our resulting lower cost structure will enhance our competitive position and enable us to continue progress with our plans for renewing growth."
    For the first six months of 1993, earnings were $421.3 million, compared with a loss of $1,299.6 million recorded in the first six months of 1992.  The results for 1992 included the special restructuring charge and the unfavorable effects of accounting changes related to accounting for retiree health-care benefits ($832.1 million) and revenue recognition for certain commercial businesses ($40.0 million).  Earnings per share were $1.05, compared to a loss of $3.26 per share in the similar period of 1992.  Revenues increased to $6,496.6 million, a 9.1 percent increase from $5,952.5 million in 1992's first half. Operating profit for the first six months of 1993 was $691.1 million, representing an operating profit margin of 10.6 percent.
    Excluding the special charge and accounting changes recorded in the first half of 1992, earnings for the first six months of 1993 increased 30.9 percent from $321.9 million in 1992's first half, and earnings per share increased 32.9 percent from $0.79 per share.  On a comparable basis, operating profit increased 51.3 percent from $456.8 million in the first half of 1992, and the operating profit margin increased 2.9 margin points from 7.7 percent.
                     GMHE Segments: Second Quarter
                         AUTOMOTIVE ELECTRONICS
    Financial Review:
    Revenues for the quarter were $1,154.7 million, an increase of 4.7 percent from revenues of $1,103.2 million for the same period of 1992.  The increase reflects a 61.3 percent increase in sales of automotive electronics to international and non-GM customers, and a slight increase in GM vehicles produced in the United States and Canada. These increases offset a decrease in GMHE-supplied electronics content in GM's vehicles produced in North America, to $708 per vehicle from $730, due to the continuing effects of price reductions to GM, reflecting GMHE's efforts to offer more value to its customers, and an adverse shift in the truck/car mix of vehicles produced.  Operating profit of $165.3 million increased 22.3 percent from $135.2 million in the comparable period last year, reflecting continued cost reductions and the increased production volume.  As a result, the operating profit margin improved to 14.3 percent from 12.3 percent.
    Second Quarter Business Highlights:
    -- A significant step in GMHE's efforts to become a leading developer and supplier of advanced components for electric vehicles was achieved with a contract to supply alternating current drive systems to a unit of Solar Electric Engineering Inc., the nation's largest converter of electric vehicles, for installation in light trucks and g?er cars.
    -- In a separate development related to electric vehicles, the company entered into an agreement with Boston Edison to market GMHE's unique battery charging system throughout New England, New York, New Jersey and Pennsylvania.  Boston Edison will install the chargers at such sites as shopping malls and corporate parking lots, enabling drivers to "refuel" their vehicles as conveniently as owners of gasoline-powered cars do today at neighborhood service stations.
    -- GMHE's Delco Electronics unit increased its focus on international markets during the quarter when it formed business units that will be based in Europe and Asia/Pacific.  The company also won two contracts to supply a Japanese vehicle manufacturer with air bag electronics.
    -- In a program to apply aerospace technology to law enforcement vehicles, GMHE entered into an agreement with 14 firms to market Data Vision Head-Up Display (HUD) technology to public safety agencies around the world.  Data Vision HUD uses head-up display technology developed for fighter aircraft to project information that is vital to law enforcement officers.  The system projects information from the vehicle's computer, mobile data terminal, radar, surveillance camera or other sensors onto a transparent combiner mounted on the windshield where a driver can read it without taking his eyes off the road or a suspect who is being pursued.
                      TELECOMMUNICATIONS AND SPACE
    Financial Review:
    Revenues for the quarter were $440.4 million, about level with revenues of $444.6 million for the same period of 1992.  Operating profit increased significantly to $60.1 million from $27.7 million for the 1992 second quarter, excluding the special charge for restructuring. The operating profit increase reflects improved operating performance in satellite manufacturing due to lower costs, the absence of costs related to a delayed HS 601 launch in 1992, and increased sales of Galaxy fleet transponders and telecommunications equipment and services.  As a result, the operating profit margin increased to 13.6 percent from 6.2 percent.
    Second Quarter Business Highlights:
    -- Two GMHE-built communications satellites were launched successfully during the quarter, an HS 601 for Societe Europeenne des Satellites of Luxembourg, which will be used to provide direct-to-home broadcasting throughout Europe, and an HS 601 for Hughes Communications Inc., that will be used for radio and television program distribution and for business television and distance learning networks in the United States.
    -- Continuing a business relationship that spans two decades, GMHE reached an agreement to build a third generation of communications satellites for Indonesia.  The agreement calls for the delivery of two HS 601s to PT, SATELINDO, a newly formed private communications company.
    -- Contracts for ground-based telecommunications services included a high capacity digital cellular fixed and mobile telephone service for the city of Chengdu, capital of China's Sichuan Province; an agreement to build China's largest very small aperture terminal (VSAT) satellite network for China's central bank, the People's Bank of China; and a contract with a Moscow-based telecommunications service to provide satellite networking equipment for customers throughout the Commonwealth of Independent States.
    -- During the quarter, GMHE continued the development of DirecTv, which in 1994 will become North America's first high power direct-to- home entertainment distribution system.  Agreements were signed for pay- per-view programming with Sony Pictures and the MGM film library. Distribution agreements were reached that increased the number of cable networks committed to DirecTv to 16, and the first international programming distribution agreement was reached with the Canadian Broadcasting Corp.
    -- Subsequent to quarter-end, GMHE's Hughes Communications Inc. (HCI) subsidiary, which played a major role in the founding, development and operation of Japan Communications Satellite Co. (JCSAT), sold its 30 percent interest in the Tokyo-based company.  Sale of the HCI ownership interest will enable JCSAT to merge with a newly licensed operator, Satellite Japan Inc.
                          DEFENSE ELECTRONICS
    Financial Review:
    Revenues for the quarter were $1,552.3 million, an increase of 23.0 percent from revenues of $1,261.9 million for the same period of 1992.  Operating profit of $159.1 million increased 44.4 percent from $110.2 million in the 1992 second quarter, excluding the special charge for restructuring.  The increases were primarily due to the contributions of the missile business acquired during 1992 and the Peace Shield program, as well as cost reductions and productivity improvements throughout the segment.  As a result, the operating profit margin improved to 10.2 percent from 8.7 percent.
    Second Quarter Business Highlights:
    -- The first live missile firing test of a new generation surface- to-air missile system involving GMHE's Advanced Medium-Range Air-to-Air Missile (AMRAAM) was successfully completed by the Royal Norwegian Air Force.  The system also uses a GMHE three-dimensional radar to detect attacking aircraft.
    -- The company delivered the first Ground-Based Sensor for the U.S. Army's new Forward Area Air Defense System ahead of schedule, and also delivered the first Second Generation Tank Sight, which is demonstrating advanced infrared imagery that represents a major step forward in the Army's program to apply the new technology to a variety of existing and future airborne and vehicle systems.
    -- The first overseas operational use of GMHE's Enhanced Position Location Reporting System (EPLRS) proved successful during a joint exercise involving U.S. Army and Kuwaiti forces.  The radio system is an improved version of an earlier GMHE model that proved invaluable to U.S. troops during the liberation of Kuwait in determining position and maintaining communications with other forces and command centers.  EPLRS can be carried on a soldier's back or mounted in a vehicle.
                        COMMERCIAL TECHNOLOGIES
    Financial Review:
    Revenues for the quarter were $168.0 million, slightly above revenues of $165.1 million during 1992.  The operating loss of $7.5 million was an improvement from a loss of $39.7 million in the prior-year's second quarter, excluding the special charge for restructuring.  The reduced operating loss reflected actions taken during 1992 to downsize and improve the profitability of the commercial components and commercial airline simulator businesses.
    Second Quarter Business Highlights:
    -- GMHE received a contract from Taiwan-based EVA Airways for the 1994 delivery of a Concept 90 flight simulator for training of the airline's McDonnell Douglas MD-11 cockpit crews.  The simulator will be installed in the airline's training center in Taiwan.
    -- GMHE's Hughes Training Inc. subsidiary received a contract from the Federal Aviation Administration to upgrade the agency's Boeing 727- 200 simulator and enhance air carrier inspector training, airport operational test and evaluation and critical human factors studies.
                         GM HUGHES ELECTRONICS
                Statement of Consolidated Operations and
           Available Separate Consolidated Net Income (Loss)
             (Dollars in Millions Except Per Share Amounts)
                                                Six Months Ended
                              Second Quarter         June 30,
                              1993      1992      1993     1992
    Revenues
    Net sales
     Outside customers     $2,188.1  $1,864.4  $4,298.0  $3,825.3
     General Motors and
      affiliates            1,121.3   1,091.6   2,181.0   2,051.8
    Other income - net          6.0      18.8      17.6      75.4(a)
    Total revenues          3,315.4   2,974.8   6,496.6   5,952.5
    Costs and expenses
    Cost of sales and
     other operating
     charges exclusive
     of items listed
     below                  2,622.2   2,340.8   5,112.3   4,682.5
    Selling, general
     and administrative
     expenses                 214.4     255.8     444.3     484.0
    Depreciation and
     amortization              95.0     131.3     231.3     253.8
    Amortization of GM
     purchase accounting
     adjustments related
     to Hughes                 30.9      30.9      61.9      61.9
    Interest expense            4.5      15.2      19.0      25.0
    Special provision for
     restructuring (b)          ---   1,237.0       ---   1,237.0
    Total costs and
     expenses               2,967.0   4,011.0   5,868.8   6,744.2
    Income (loss) before
     income taxes             348.4  (1,036.2)    627.8    (791.7)
    Income taxes (credit)     147.3    (408.4)    268.4    (302.3)
    Income (loss) before
     cumulative effect of
     accounting changes       201.1    (627.8)    359.4    (489.4)
    Cumulative effect of
     accounting changes         ---       ---       ---    (872.1)(c)
    Net income (loss)         201.1    (627.8)    359.4  (1,361.5)
    Adjustments to exclude
     the effect of GM purchase
     accounting adjustments
     related to Hughes         30.9      30.9      61.9      61.9
    Earnings (loss) used for
     computation of available
     separate consolidated
     net income (loss)       $232.0   ($596.9)   $421.3 ($1,299.6)
    Available separate
     consolidated
     net income (loss)        $50.0    ($95.5)    $94.4   ($223.4)
    Earnings (loss)
     attributable to
     General Motors
     Class H Common Stock
     on a per share basis
      Before cumulative effect
       of accounting changes  $0.58    ($1.49)    $1.05    ($1.08)
      Cumulative effect of
       accounting changes       ---       ---       ---     (2.18)
    Net earnings (loss)
     attributable to
     General Motors
     Class H Common Stock     $0.58    ($1.49)    $1.05    ($3.26)
    Certain amounts for 1992 were restated to recognize the incremental ongoing effect of SFAS No. 106 or reclassified to conform with 1993 classifications:
    (a) Includes $35.0 million pre-tax income from a patent infringement settlement.
    (b) The one-time after-tax restructuring charge of $749.4 million, or $1.87 per share of GM Class H common stock, is primarily attributable to redundant facilities and related employment costs at Hughes.
    (c) Effective Jan. 1, 1992, GMHE adopted Statement of Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions ($832.1 million), and Hughes changed its revenue recognition policy for certain commercial businesses from the percentage-of-completion (cost-to-cost) method to the units-of- delivery method ($40.0 million).
                         GM HUGHES ELECTRONICS
                       Consolidated Balance Sheet
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Date:Jul 28, 1993
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