Statement re GM Pension Plans
GM Provides Update on U.S. Pension Plans
- U.S. Hourly And Salaried Plans To Be Nearly Fully Funded By End 2003
- Pension Assets Earned in Excess of 18 Percent Through November
- Favorable Earnings Impact Expected From Lower Pension Expense
DETROIT, Dec. 12 -- General Motors Corp. (NYSE: GM, GMH)
today said it expects its U.S. hourly and salaried pension plans to be nearly
fully funded by the end of 2003, reflecting strong asset returns and
substantial cash contributions.
GM also said the company plans to contribute an additional $4.1 billion in
cash to its U.S. pension plans by the end of 2003 if GM is able to complete
the Hughes transactions by year end. This would bring GM's total
contributions in calendar year 2003 to $18.5 billion. Based on these
contributions and normal asset returns, GM does not expect to be required to
make additional cash contributions to the pension plans until at least 2010.
'GM has moved aggressively to address its pension funding deficit in
2003,' GM Vice Chairman and Chief Financial Officer John Devine said. 'These
actions provide GM with significantly improved financial flexibility going
forward to continue to execute our business strategy.'
By the end of 2003, GM expects the U.S. hourly and salaried pension plans
to be nearly fully funded, a significant improvement from the end of 2002.
GM's forecast is based on 2003 asset returns of 18 percent and a discount rate
of 6.25 percent. This asset return is consistent with results achieved
through Nov. 30, 2003.
GM expects pretax pension expense to decline by approximately $1.1 billion
in 2004 to $1.5 billion. However, interest costs associated with GM's recent
global debt offering are expected to offset some of the decrease in pension
expense, resulting in an overall net reduction in pension and related interest
expense of approximately $550 million before tax, or about $0.70 per share of
GM $1-2/3 par value common stock.
'GM's contributions to its pension plans in 2003 provide an opportunity to
further reduce the volatility of the GM pension plan's assets,' Devine said.
GM said it plans to expand its current investment strategy to include
increased allocation to asset classes such as emerging market debt, high-yield
bonds, real estate and other asset classes, which further enhances the
diversification of its pension portfolio while reducing global equity
allocation to less than 50 percent. Taken together, GM believes that these
actions will reduce the volatility of annual asset returns while still
achieving its targeted return of 9 percent.
General Motors, the world's largest vehicle manufacturer, designs, builds
and markets cars and trucks worldwide, and has been the global automotive
sales leader since 1931. More information on GM can be found at www.gm.com .
In this press release and related comments by General Motors management,
our use of the words 'expect,' 'anticipate,' 'estimate,' 'forecast,'
'objective,' 'plan,' 'goal,' 'target,' and similar expressions is intended to
identify forward looking statements. While these statements represent our
current judgment on what the future may hold, and we believe these judgments
are reasonable, actual results may differ materially due to numerous important
factors that are described in GM's most recent report on SEC Form 10-K (at
page II-18) which may be revised or supplemented in subsequent reports on SEC
Forms 10-Q and 8-K. Such factors include, among others, the following:
changes in economic conditions, currency exchange rates or political
stability; shortages of fuel, labor strikes or work stoppages; market
acceptance of the corporation's new products; significant changes in the
competitive environment; changes in laws, regulations and tax rates; and, the
ability of the corporation to achieve reductions in cost and employment levels
to realize production efficiencies and implement capital expenditures at
levels and times planned by management.
In connection with the proposed transactions, on Aug. 21, 2003, General
Motors Corporation ('GM'), Hughes Electronics Corporation ('Hughes') and The
News Corporation Limited ('News Corporation') filed definitive materials with
the Securities and Exchange Commission ('SEC'), including a Definitive Consent
Solicitation Statement of GM on Schedule 14A, a Registration Statement of
Hughes on Form S-4 and a Registration Statement of News Corporation on Form
F-4 that contain a consent solicitation statement of GM, a prospectus of
Hughes and a prospectus of News Corporation. Investors and security holders
are urged to read these materials, as well as any other relevant documents
filed or that will be filed with the SEC, as they become available, because
these documents contain or will contain important information. These
materials and other relevant materials (when they become available) and any
other documents filed by GM, Hughes or News Corporation with the SEC, may be
obtained for free at the SEC's website, www.sec.gov . In addition, the
definitive materials contain information about how to obtain transaction-
related documents for free from GM.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Materials included in this document contain 'forward-looking statements'
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that could cause actual results to be materially different
from historical results or from any future results expressed or implied by
such forward-looking statements. The factors that could cause actual results
of GM, Hughes and/or News Corporation to differ materially, many of which are
beyond the control of GM, Hughes or News Corporation include, but are not
limited to, the following: (1) the effects of legislative and regulatory
changes and (2) other risks described from time to time in periodic reports
filed by GM, Hughes or News Corporation with the SEC. Those other risks
relating to Hughes include, but are not limited to the performance of Hughes
satellites. You are urged to consider statements that include the words
'will,' 'expects,' or the negative of those words or other comparable words to
be uncertain and forward-looking. This cautionary statement applies to all
forward-looking statements included in this document.
SOURCE General Motors Corporation
-0- 12/12/2003 P
/NOTE TO EDITORS: For additional media information, visit
http://media.gm.com ./
/CONTACT: Toni Simonetti, +1-212-418-6380, toni.simonetti@gm.com , or
Jerry Dubrowski, +1-212-418-6261, jerry.dubrowski@gm.com , both of General
Motors Corp./
/Web site: http://media.gm.com
http://www.gm.com /
(GM GMH)
-END-
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