GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, ———————–2003 2002 2001 ———(dollars in millions except per share amounts) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Total net sales and revenues (Notes 1 and 24) $185,524 $177,324 $169,051 ——- ——- ——Cost of sales and other expenses (Note 5) 152,071 146,793 138,847 Selling, general, and administrative expenses 21,008 20,690 19,433 Interest expense (Note 16) 9,464 7,503 8,317 ——- ——- ——Total costs and expenses 182,543 174,986 166,597 ——- ——- ——Income from continuing operations before income taxes, equity income and minority interests 2,981 2,338 2,454 Income tax expense (Note 11) 731 644 1,094 Equity income (loss) and minority interests 612 281 (138) —– ——–Income from continuing operations 2,862 1,975 1,222 Loss from discontinued operations (Note 2) (219) (239) (621) Gain on sale of discontinued operations 1,179 —– ——–Net income 3,822 1,736 601 Dividends on preference stocks (46) (99) —– ——–Earnings attributable to common stocks (Note 20) $3,822 $1,690 $502 ===== ===== === Basic earnings (loss) per share attributable to common stocks $1-2/3 par value Continuing operations $5.10 $3.53 $2.21 Discontinued operations $2.14 $(0.16) $(0.42) ———Earnings per share attributable to $1-2/3 par value $7.24 $3.37 $1.79 ==== ==== ==== Losses per share from discontinued operations attributable to Class H $(0.22) $(0.21) $(0.55) ==== ==== ==== Earnings (loss) per share attributable to common stocks assuming dilution $1-2/3 par value Continuing operations $5.03 $3.51 $2.20 Discontinued operations $2.11 $(0.16) $(0.43) ———Earnings per share attributable to $1-2/3 par value $7.14 $3.35 $1.77 ==== ==== ==== Losses per share from discontinued operations attributable to Class H $(0.22) $(0.21) $(0.55) ==== ==== ==== Reference should be made to the notes to consolidated financial statements. GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31, ———–2003 2002 (dollars in millions) Cash and cash equivalents (Note 1) Other marketable securities (Note 6) $32,554 $20,320 22,215 16,825 —— —–Total cash and marketable securities 54,769 37,145 Finance receivables – net (Note 8) 173,137 134,643 Loans held for sale 19,609 15,720 Accounts and notes receivable (less allowances) 20,532 16,337 Inventories (less allowances) (Note 9) 10,960 9,737 Assets of discontinued operations – 18,653 Deferred income taxes (Note 11) 27,190 39,767 Net equipment on operating leases (less accumulated depreciation) (Note 10) 34,383 31,026 Equity in net assets of nonconsolidated affiliates 6,032 5,097 Property – net (Note 12) 38,211 35,956 Intangible assets – net (Notes 1 and 13) 4,760 10,796 Other assets (Note 14) 58,924 14,176 ——- ——Total assets $448,507 $369,053 ======= ======= LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable (principally trade) $25,422 $21,138 Notes and loans payable (Note 16) 271,756 200,168 Liabilities of discontinued operations 7,956 Postretirement benefits other than pensions (Note 17) 36,292 38,152 Pensions (Note 17) 8,024 22,679 Deferred income taxes (Notes 11 and 15) 7,508 6,523 Accrued expenses and other liabilities (Note 15) 73,930 65,344 ——- ——Total liabilities 422,932 361,960 Minority interests 307 279 Stockholders’ equity (Note 19) $1-2/3 par value common stock (outstanding, 561,997,725 and 560,447,797 shares) 937 936 Class H common stock (outstanding, 958,284,272 shares in 2002) 96 Capital surplus (principally additional paid-in capital) 15,185 21,583 Retained earnings 12,752 10,031 —— —–Subtotal 28,874 32,646 Accumulated foreign currency translation adjustments (1,815) (2,784) Net unrealized gains (losses) on derivatives 51 (205) Net unrealized gains on securities 618 372 Minimum pension liability adjustment (2,460) (23,215) —– —–Accumulated other comprehensive loss (3,606) (25,832) —– —–Total stockholders’ equity 25,268 6,814 ——- ——Total liabilities and stockholders’ equity $448,507 $369,053 ======= ======= Reference should be made to the notes to consolidated financial statements. Volkswagen and GM (questions 1-7) 1. If you were to make a tender offer for Volkswagen, how would you decide much to offer? What accounting differences between the U.S. and Germany should be taken into account? 2. If Volkswagen were to sell bonds on the U.S. market, do you think its interest rate would be greater or lesser than GM? Why? 4. 5. 6. 7. 3. Compute the following ratios for both companies in 2003. What are some possible reasons for the differences in ratios? Which of the statements do you prefer? Why? Which of the statements is more transparent? What differences should you look for when adjusting Volkswagen’s results to GAAP reporting standards? In other words, what are some of the major accounting differences between Germany and the U.S. that are relevant to this industry? If you were a bank, to whom would you rather lend money? Why? If you were an equity investor, in whom would you rather invest? Why?