--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 22, 2003
(Date of report; date of
earliest event reported)
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)
(313) 556-5000
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
ITEM 5. OTHER EVENTS
On April 22, 2003, Dominion Bond Rating Service Limited (DBRS) announced in a
press release that it lowered its long-term ratings on GM and GMAC to A (low)
from A, and the trends are changed from negative to stable. Concurrently, DBRS
is confirming the commercial paper ratings at R-1 (low) on GM and GMAC with a
continuing stable trend. The body of the press release made by Dominion Bond
Rating Service Limited follows:
ACTION BY RATING AGENCY
DBRS.COM, April 22, 2003 -- DBRS is downgrading the long-term ratings of General
Motors group of companies, and the trends are changed from Negative to Stable.
Concurrently, DBRS is confirming the commercial paper ratings of the group all
with a continuing Stable trend. The downgrades reflect the
slower-than-anticipated improvement in General Motors Corporation's ("GM" or the
"Company") recovery. With market conditions in North America and Europe expected
to deteriorate in the near term, characterized by softening demand and rising
sales incentives, GM's profitability will be under increasing pressure, which
further slows down GM's effort in restoring its financial profile. Ongoing
structural factors affecting GMs include: (1) Although overall North American
market share has stabilized on gains made in trucks, market share in cars
continues to erode and the outlook remains challenging. The recent decline in
sales despite higher sales incentives adds to the concern. (2) Although GM
appears to have the strongest lineup of pickup trucks and SUVs, foreign rivals
are entering these segments with new models. In addition, new models from GM's
domestic rivals during 2003 in these segments further add to competitive
pressure. This could hurt GM's profitability and stall its recovery efforts. (3)
GM continues to be plagued by excess capacities and a restrictive union contract
has impeded GM's efforts to address the issue. The union contract is expiring in
September 2003 and securing an agreement from the union to rationalize its
capacity will be critical to GM's efforts to realign its cost structure to the
increasing competitive environment. (The current rating reflects a satisfactory
outcome with minimal disruption to operations in the upcoming union contracts
negotiation.) (4) GM's international operations continue to underperform,
operating near breakeven, and will likely take an extended period before profits
improve. (5) Although the balance sheet is currently strong and the Company is
well positioned for a short downturn, a longer downturn could see debt levels
rise significantly. Pension and OPEB funding remains manageable, but a long-term
challenge. Nevertheless, GM's ratings are still well supported by the following
factors: (1) The Company's leading position in the global automotive industry.
GM's size and critical mass create economies of scale and efficiencies; (2) A
strong balance sheet and liquidity position in the automotive business (net
cash, including short term VEBA) of $5.6 billion at the end of March 2003 giving
it financial flexibility to weather the downturn in the auto industry; and (3)
Highly profitable captive finance operations in GMAC, which help stabilize
earnings.
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 hereunto duly authorized.
GENERAL MOTORS ACCEPTANCE CORPORATION
-------------------------------------
(Registrant)
Dated: April 23, 2003 /s/ William F. Muir
---------------- -------------------------------------
William F. Muir
Executive Vice President,
Chief Financial Officer and Director
Dated: April 23, 2003 /s/ Linda K. Zukauckas
---------------- -------------------------------------
Linda K. Zukauckas
Controller and Principal Accounting Officer