Edgar Filing: HEC HOLDINGS INC

e425

Filed by HEC Holdings, Inc.
Subject Company – General Motors Corporation
and Hughes Electronics Corporation
and EchoStar Communications Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission file No.: 333-84472

GM LETTERHEAD

GENERAL MOTORS EARNS $1.5 BILLION OR $2.63 PER SHARE IN
SECOND QUARTER, EXCLUDING SPECIAL ITEMS AND HUGHES

			— REPORTED NET INCOME TOTALS $1.3 BILLION OR $2.43 PER SHARE

			— AUTOMOTIVE OPERATIONS GENERATE $3.5 BILLION IN CASH

			— U.S. MARKET SHARE RISES TO 28.1 PERCENT

DETROIT — General Motors Corp. (NYSE: GM, GMH) today reported earnings nearly doubled in the second quarter of 2002 compared with the prior-year period, reflecting improved retail sales performance, increased production in North America, and a continued focus on cost reduction.

GM earned $1.5 billion, or $2.63 per diluted share of GM $1-2/3 par value common stock, in the second quarter of 2002, excluding Hughes and an after-tax charge of $55 million, or $0.10 per share, for costs associated with end-of-life vehicle recycling in Europe (see Highlights). That compares with $766 million, or $1.37 per share, in the year-ago period, excluding Hughes and a charge of $133 million, or $0.23 per share, related to the write-down of Isuzu Motors Ltd. Revenue in the second quarter of 2002 increased to $46.0 billion from $44.2 billion in the same period last year.

Including Hughes and the end-of-life vehicle charge, GM’s second-quarter-2002 net income totaled $1.3 billion, or $2.43 per share, on revenue of $48.3 billion. That compares with net income of $477 million, or $1.03 per share, including Hughes and the Isuzu write-down. Revenue in the second quarter of 2001 totaled $46.2 billion.

GM financial results described throughout the remainder of this release exclude special items unless otherwise noted (see Highlights).

“We are pleased by the strong performance of GM’s North American operations in the second-quarter and the solid results at GMAC,” said GM Chairman Jack Smith. “We are determined to maintain our momentum in the second half of the year.”

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TABLE OF CONTENTS


GM AUTOMOTIVE OPERATIONS
GMAC
HUGHES
LOOKING AHEAD
LIST OF SPECIAL ITEMS — AFTER TAX
ADJUSTED CORPORATE FINANCIAL RESULTS
ADJUSTED SEGMENT FINANCIAL RESULTS
SUPPLEMENTARY ADJUSTED SEGMENT FINANCIAL RESULTS
OPERATING STATISTICS
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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“The second-quarter results show that our strategy of bringing out great products, being aggressive in the marketplace, and intensely focusing on reducing costs and improving quality is working,” said GM President and Chief Executive Officer Rick Wagoner. “Because of our improved cost base, we are able to be competitive with our pricing and improve our financial performance at the same time.

“GM’s automotive operations generated $3.5 billion of cash flow during the quarter, allowing us to improve net liquidity even as we took additional steps to strengthen the balance sheet,” Wagoner added.

GM’s net liquidity position improved by $300 million during the quarter to $2.6 billion even after taking into account cash contributions of $3.2 billion during the quarter to fund pensions and other post-retirement benefits. GM previously announced a $2.2 billion cash contribution to its U.S. hourly pension plan in April. In June, GM made a $1 billion cash contribution to the long-term Voluntary Employees’ Beneficiary Association (VEBA) Trust.

Cash, marketable securities, and assets of the VEBA trust invested in short-term fixed-income securities, excluding Hughes, increased to $17.6 billion at June 30, 2002, from $17.3 billion at March 31, 2002. Debt, excluding Hughes, remained unchanged at $15.0 billion at the end of the second quarter of 2002.

Earlier this year, GM set a goal of raising $10 billion in cash in 2002. As of June 30, 2002, GM has nearly achieved this annual objective by generating $4.8 billion in cash from automotive operations and by executing $4.6 billion in retail and convertible debt offerings.

GM AUTOMOTIVE OPERATIONS

GM’s global automotive operations earned $1.1 billion in the second quarter of 2002, compared with $410 million in the prior-year period. Global production increased nearly 7 percent in the second quarter, compared with the same period in 2001. Strong performance in North America was partially offset by losses in Europe and Latin America.

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Income at GM North America (GMNA) more than doubled in the second quarter of 2002 to more than $1.2 billion from $521 million in the year-ago period. Production volume increased nearly 14 percent.

GM’s overall U.S. market share increased to 28.1 percent in the second quarter of 2002, driven by gains in both passenger cars and trucks. That compares with 27.3 percent in the year-ago period. GM’s quality of share continued to improve in the second quarter of 2002 with retail share rising to 27.4 percent from 26.7 percent in the year-ago quarter. Trucks as a percentage of total sales increased to 54 percent in the second quarter, up from 52.2 percent in the same period last year.

Wagoner attributed the market share gains to the successful introduction of new products such as the Cadillac CTS, Chevrolet TrailBlazer, GMC Envoy, Saturn VUE, and the Pontiac Vibe, as well as continued strong performance of GM’s full-sized trucks and sport utility vehicles.

“We continue to introduce a steady stream of new products, which are key to our success in the marketplace,” Wagoner said. “Right now, extended versions of our popular Chevy TrailBlazer and GMC Envoy are on their way to dealers, along with the all-new HUMMER H2.”

Other key products on their way to showrooms later this year and in 2003 include the Saturn ION sedan and coupe, the Chevy SSR, all-new versions of the Saab 9-3 convertible, the Pontiac Grand Prix, the Chevy Malibu, the Cadillac XLR luxury high-performance roadster, the Cadillac SRX crossover vehicle, the Buick Rainier sport utility vehicle, the Opel Vectra Wagon, and new Meriva monocab in Europe and Brazil. In addition, there are enhanced versions of the Chevrolet Cavalier and Pontiac Sunfire, the Saturn L series, and restyled full-size Chevy and GMC pickup and utility models.

In addition to the momentum generated by these new products, GM continues to make important strides in quality and efficiency. In the just-released J.D. Power and Associates 2002 initial quality survey, GM was the best performing domestic automaker, becoming the first U.S.-based manufacturer ever to achieve a top-three ranking.

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GM was also recognized during the quarter for substantial improvements in productivity. According to an independent study by Harbour and Associates, GM outpaced all manufacturers with an overall productivity improvement of 4.5 percent in 2001. GM’s Oshawa 1 car plant in Ontario, Canada, was rated the most efficient assembly plant in North America, the first time a GM plant has earned that distinction, and GM plants led in six of 13 assembly plant segments.

“Our continued progress in quality and productivity shows our commitment to ongoing improvement in the fundamentals of our business,” Wagoner said.

GM Europe (GME) reported a smaller loss in the second quarter of 2002 than the year-ago period, as the continued reduction in structural costs helped to partially offset a nearly 7-percent decline in production volume. GME had a loss of $115 million in the second quarter of 2002, versus a loss of $154 million in the prior-year period.

“GM Europe’s restructuring plan, Project Olympia, is showing results although the European market continues to weaken,” Wagoner said. “We are moving aggressively to cut costs and better manage capacity utilization. Our joint ventures with Fiat Auto have produced meaningful savings, especially in material costs.”

GM Asia-Pacific reported a profit of $39 million in the second quarter of 2002 compared with a profit of $12 million a year ago, led by a strong performance from Shanghai GM. GM Latin America/Africa/Mid-East (GMLAAM) reported a loss of $73 million in the second quarter of 2002 compared with a profit of $31 million a year ago. Results were negatively affected by unfavorable economic conditions in Brazil, Venezuela and Argentina.

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GMAC

General Motors Acceptance Corporation (GMAC) earned $431 million in the second quarter of 2002, down slightly from the record second-quarter earnings of $449 million of a year ago. Income from Financing Operations was down slightly as higher credit losses and unfavorable borrowing spreads offset the positive effect of higher retail asset levels. Insurance Operations also reported lower earnings as the absence of capital gains more than offset continued improvements in underwriting results. Earnings from Mortgage Operations were higher, reflecting increased origination volumes in both the residential and commercial mortgage sectors. Overall, GMAC remains on track to achieve near-record earnings in 2002.

HUGHES

Hughes lost $156 million in the second quarter of 2002, unchanged from the loss of $156 million in the prior-year quarter. Revenue rose 11 percent to $2.2 billion in the second quarter of 2002 from $2.0 billion in the year-ago quarter, led by the growing subscriber base of DirecTV. Total DirecTV subscriptions increased approximately 202,000 from the first quarter of 2002 to 10.7 million. Regarding GM’s plan to split off Hughes and merge the company with EchoStar Communications Corp., GM recently received a favorable private-letter ruling from the U.S. Internal Revenue Service confirming the transaction would be tax-free to GM and its stockholders for U.S. federal income-tax purposes.

Regulatory reviews with the U.S. Department of Justice and the Federal Communications Commission are progressing and GM expects to complete the transaction before the end of the year.

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LOOKING AHEAD

General Motors expects total U.S. industry vehicle sales for 2002 will be in the mid-to-high 16 million unit range. For 2003, GM expects total U.S. industry sales about the same as 2002, in line with trend volume. GM’s forecast for North American production remains unchanged at about 1,245,000 vehicles in the third quarter of 2002 and more than 5.5 million vehicles in calendar year 2002.

General Motors is currently reviewing the appropriate carrying value of its investment in Fiat Auto Holdings, B.V. (FAH). FAH is the sole shareholder of Fiat Auto, S.p.A. GM acquired 20 percent of the common stock of FAH in July 2000 for $2.4 billion. Following the acquisition, the European automotive market has experienced a continued decrease in sales volume and manufacturers have experienced increased pricing and general competitive pressures. Those market conditions and other factors have led to deterioration in the performance of Fiat Auto S.p.A. GM now believes that it is probable a significant write-down of its investment in FAH will be required in the third quarter of 2002, upon completion of the review.

For the third quarter of 2002, GM estimates its earnings, excluding Hughes and any special items, will be approximately $0.90 per share, reflecting solid results in North America, partially offset by continued losses in Europe and Latin America.

GM continues to expect calendar-year-2002 earnings will be $6.00 per share, excluding special items and Hughes. Including Hughes, but excluding special items, GM expects to earn about $0.80 per share in the third quarter of 2002 and $5.60 per share for the calendar year.

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In this press release and related comments by General Motors management, our use of the words “outlook,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “likely,” “objective,” “plan,” “designed,” “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-15, 16) 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 or interruptions in transportation systems, 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, General Motors Corporation (“GM”), HEC Holdings, Inc. (“Hughes Holdings”) and EchoStar Communications Corporation (“EchoStar”) have filed amended preliminary materials with the Securities and Exchange Commission (“SEC”), including a Registration Statement of Hughes Holdings on Form S-4 that contains a consent solicitation statement/information statement/prospectus. These materials are not yet final and will be further amended. Holders of GM $1-2/3 and GM Class H common stock are urged to read the definitive versions of 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. The preliminary materials, the definitive versions of these materials and other relevant materials (when they become available), and any other documents filed by GM, Hughes Electronics Corporation (“Hughes”), Hughes Holdings or EchoStar with the SEC may be obtained for free at the SEC’s website, www.sec.gov, and GM stockholders will receive information at an appropriate time on how to obtain transaction-related documents for free from GM.

GM and its directors and executive officers, Hughes and certain of its officers, and EchoStar and certain of its executive officers may be deemed to be participants in GM’s solicitation of consents from the holders of GM $1-2/3 common stock and GM Class H common stock in connection with the proposed transactions. Information regarding the participants and their interests in the solicitation was filed pursuant to Rule 425 with the SEC by EchoStar on November 1, 2001 and by each of GM and Hughes on November 16, 2001. Investors may obtain additional information regarding the interests of the participants by reading the amended preliminary consent solicitation statement/information statement/prospectus filed with the SEC and the definitive consent solicitation statement/information statement/prospectus when it becomes available.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy, 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.

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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 our 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, EchoStar, Hughes, or a combined EchoStar and Hughes, to differ materially, many of which are beyond the control of EchoStar, Hughes, Hughes Holdings or GM include, but are not limited to, the following: (1) the businesses of EchoStar and Hughes may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected benefits and synergies from the combination may not be realized within the expected time frame or at all; (3) revenues following the transaction may be lower than expected; (4) operating costs, customer loss and business disruption including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the transaction; (5) generating the incremental growth in the subscriber base of the combined company may be more costly or difficult than expected; (6) the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; (7) the effects of legislative and regulatory changes; (8) an inability to obtain certain retransmission consents; (9) an inability to retain necessary authorizations from the FCC; (10) an increase in competition from cable as a result of digital cable or otherwise, direct broadcast satellite, other satellite system operators, and other providers of subscription television services; (11) the introduction of new technologies and competitors into the subscription television business; (12) changes in labor, programming, equipment and capital costs; (13) future acquisitions, strategic partnership and divestitures; (14) general business and economic conditions; and (15) other risks described from time to time in periodic reports filed by EchoStar, Hughes or GM with the Securities and Exchange Commission. You are urged to consider statements that include the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “anticipates,” “intends,” “continues,” “forecast,” “designed,” “goal,” 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.

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General Motors Corporation
List of Special Items — After Tax
(dollars in millions except per share amounts)


		Three Months Ended				Year to Date
		June 30, 2002				June 30, 2002

		Net				Net
		Income		EPS		Income			EPS

Reported		$	1,292	$	2.43	$	1,520		$	3.02
GME End of Life
	Vehicle Charge (A)		55		0.10		55			0.10
GME Restructuring Charge (B)			—		—		407			0.72
Hughes Space Shuttle
	Settlement (C)		—		—		(59	)		(0.04	)
Hughes GECC Contractual
	Dispute (D)		—		—		51			0.03
Hughes Loan Guarantee
	Charge (E)		—		—		18			0.01

Adjusted		$	1,347	$	2.53	$	1,992		$	3.84

(A)		During September 2000, the European Union adopted a directive requiring member states to enact legislation regarding end-of-life vehicles and the responsibility of manufacturers for dismantling and recycling vehicles they have sold. European Union member states were required to transform the concepts detailed in the directive into national law by April 2002. Under the directive, manufacturers are financially responsible for at least a portion of the cost of the take-back of vehicles placed into service after July 2002 and all vehicles placed in service prior to July 2002 that are still in operation in January 2007. The laws to be developed in the individual country legislatures throughout Europe will have a significant impact on the amount ultimately paid by the manufacturers. The after-tax charge of $55 million relates to those member states that have passed national laws by June 30, 2002.

(B)		The GME Restructuring Charge relates to the previously announced restructuring to improve the competitiveness of GM’s automotive operations in Europe.

(C)		The Space Shuttle Settlement relates to the favorable resolution of a lawsuit that was filed against the U.S. government on March 22, 1991, based upon the National Aeronautics and Space Administration’s (NASA) breach of contract to launch ten satellites on the Space Shuttle.

(D)		The GECC Contractual Dispute relates to an expected loss associated with a contractual dispute with General Electric Capital Corporation.

(E)		The Loan Guarantee Charge relates to a loan guarantee for a Hughes Network Systems’ affiliate in India.

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General Motors Corporation
List of Special Items — After Tax
(dollars in millions except per share amounts)


	Three Months Ended				Year to Date
	June 30, 2001				June 30, 2001

	Net				Net
	Income		EPS		Income			EPS

Reported	$	477	$	1.03	$	714		$	1.56
Adoption of SFAS 133 (F)		—		—		(12	)		(0.03	)
Isuzu Restructuring (G)		133		0.23		133			0.24

Adjusted	$	610	$	1.26	$	835		$	1.77

(F)		The SFAS 133 adjustment represents the net income impact from initially adopting SFAS No. 133, Accounting for Derivatives and Hedging Activities as follows ($Mil’s): GMNA $(14); GME $2; GMLAAM $(1); GMAP $(1); Hughes $(8); and GMAC $34.

(G)		The Isuzu restructuring charge includes General Motors’ portion of severance payments and asset impairments that were part of the second quarter restructuring of its affiliate Isuzu Motors Ltd.

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General Motors Corporation
Adjusted Corporate Financial Results


			Second Quarter						Year to Date

			2002 (1)			2001(1)			2002 (1)			2001(1)

Total net sales and revenues ($Mil’s) (2)			$	48,265		$	46,220		$	94,558		$	88,843
	Excluding Hughes		$	46,024		$	44,217		$	90,276		$	84,923
Consolidated net income ($Mil’s)			$	1,347		$	610		$	1,992		$	835
	Excluding Hughes		$	1,503		$	766		$	2,294		$	1,087
Net margin from consolidated net income				2.8	%		1.3	%		2.1	%		0.9	%
	Excluding Hughes			3.3	%		1.7	%		2.5	%		1.3	%
GM $1-2/3 par value earnings per share
	Basic EPS		$	2.58		$	1.29		$	3.90		$	1.80
	Diluted EPS		$	2.53		$	1.26		$	3.84		$	1.77
	Diluted EPS excluding Hughes		$	2.63		$	1.37		$	4.04		$	1.94
GM Class H earnings per share
	Basic EPS		$	(0.14	)	$	(0.14	)	$	(0.27	)	$	(0.23	)
	Diluted EPS		$	(0.14	)	$	(0.14	)	$	(0.27	)	$	(0.23	)
Earnings attributable to GM $1-2/3 par value ($Mil’s)
	Consolidated net income		$	1,347		$	610		$	1,992		$	835
	Preferred dividends			(23	)		(23	)		(47	)		(51	)
	Losses attributable to GM Class H			120			120			235			201

		Total earnings attributable to GM $1-2/3 par value	$	1,444		$	707		$	2,180		$	985

GM $1-2/3 par value average shares outstanding (Mil’s)
	Basic shares			560			549			560			549
	Diluted shares			572			559			568			559
Cash dividends per share of common stocks
	GM $1-2/3 par value		$	0.50		$	0.50		$	1.00		$	1.00
	GM Class H			—			—			—			—
Book value per share of common stocks at June 30
	GM $1-2/3 par value		$	27.48		$	38.85
	GM Class H		$	5.50		$	7.77
Total cash at June 30
	Excluding Hughes ($Bil’s) (3)		$	17.6		$	11.1
Automotive, Communications Services, and Other Operations ($Mil’s)
	Depreciation		$	1,140		$	1,137		$	2,185		$	2,168
	Amortization of special tools			622			573			1,214			1,138
	Amortization of intangible assets			3			85			12			158

		Total	$	1,765		$	1,795		$	3,411		$	3,464

See footnotes on page 15.

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General Motors Corporation
Adjusted Segment Financial Results


				Second Quarter						Year to Date

				2002 (1)			2001(1)			2002 (1)			2001(1)

(dollars in millions)
Total net sales and revenues
	GMNA			$	30,208		$	28,117		$	59,225		$	53,223
	GME				6,001			6,231			11,585			12,499
	GMLAAM				1,306			1,739			2,607			3,134
	GMAP				1,129			1,128			2,186			2,138

		Total GMA			38,644			37,215			75,603			70,994
	Hughes				2,241			2,003			4,282			3,920
	Other				833			513			1,635			981

		Total ACO			41,718			39,731			81,520			75,895
	GMAC				6,525			6,422			12,928			12,799
	Other Financing				22			67			110			149

		Total FIO			6,547			6,489			13,038			12,948

			Consolidated net sales and revenues	$	48,265		$	46,220		$	94,558		$	88,843

Pre-tax income (loss)
	GMNA			$	1,735		$	666		$	2,626		$	882
	GME				(159	)		(194	)		(316	)		(347	)
	GMLAAM				(97	)		74			(138	)		82
	GMAP				(31	)		35			(44	)		35

		Total GMA			1,448			581			2,128			652
	Hughes (4)				(230	)		(248	)		(444	)		(400	)
	Other				(42	)		(113	)		(230	)		(259	)

		Total ACO			1,176			220			1,454			(7	)
	GMAC				698			714			1,434			1,432
	Other Financing				(8	)		(9	)		(10	)		(23	)

		Total FIO			690			705			1,424			1,409

		Consolidated pre-tax income		$	1,866		$	925		$	2,878		$	1,402

Net income (loss)
	GMNA			$	1,248		$	521		$	1,873		$	641
	GME				(115	)		(154	)		(240	)		(240	)
	GMLAAM				(73	)		31			(113	)		37
	GMAP				39			12			46			(8	)

		Total GMA			1,099			410			1,566			430
	Hughes (4)(5)				(156	)		(156	)		(302	)		(252	)
	Other				(28	)		(82	)		(141	)		(201	)

		Total ACO			915			172			1,123			(23	)
	GMAC				431			449			870			880
	Other Financing				1			(11	)		(1	)		(22	)

		Total FIO			432			438			869			858

			Consolidated net income	$	1,347		$	610		$	1,992		$	835

See footnotes on page 15.

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General Motors Corporation
Supplementary Adjusted Segment Financial Results


			Second Quarter						Year to Date

			2002 (1)			2001(1)			2002 (1)			2001(1)

(dollars in millions)
Income tax expense (benefit)
	GMNA		$	501		$	143		$	755		$	208
	GME			(21	)		(36	)		(47	)		(100	)
	GMLAAM			(31	)		27			(32	)		29
	GMAP			(9	)		21			(9	)		19

		Total GMA	$	440		$	155		$	667		$	156

Equity income (loss) and minority interests
	GMNA		$	14		$	(2	)	$	2		$	(33	)
	GME			23			4			29			7
	GMLAAM			(7	)		(16	)		(7	)		(16	)
	GMAP			61			(2	)		81			(24	)

		Total GMA	$	91		$	(16	)	$	105		$	(66	)

Effective income tax rate
	GMNA			28.9	%		21.5	%		28.8	%		23.6	%
	GME			13.2	%		18.6	%		14.9	%		28.8	%
	GMLAAM			32.0	%		36.5	%		23.2	%		35.4	%
	GMAP			29.0	%		60.0	%		20.5	%		54.3	%
	Total ACO			29.0	%		31.0	%		29.0	%		—
Net margins
	GMNA			4.1	%		1.9	%		3.2	%		1.2	%
	GME			(1.9	%)		(2.5	%)		(2.1	%)		(1.9	%)
	GMLAAM			(5.6	%)		1.8	%		(4.3	%)		1.2	%
	GMAP			3.5	%		1.1	%		2.1	%		(0.4	%)
	Total GMA			2.8	%		1.1	%		2.1	%		0.6	%
	Hughes			(7.0	%)		(7.8	%)		(7.1	%)		(6.4	%)
	Total ACO			2.2	%		0.4	%		1.4	%		(0.0	%)
	GMAC			6.6	%		7.0	%		6.7	%		6.9	%
	Consolidated net income			2.8	%		1.3	%		2.1	%		0.9	%

See footnotes on page 15.

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General Motors Corporation
Operating Statistics


				Second Quarter						Year to Date

				2002			2001			2002			2001

	(units in thousands)
	Worldwide Wholesale Sales
		United States — Cars			574			550			1,073			1,059
		United States — Trucks			750			647			1,417			1,218

			Total United States		1,324			1,197			2,490			2,277
		Canada, Mexico, and Other			233			186			429			336

			Total GMNA		1,557			1,383			2,919			2,613
		GME			437			495			861			963
		GMLAAM			159			187			314			346
		GMAP			86			100			194			239

			Total Worldwide		2,239			2,165			4,288			4,161

	Vehicle Unit Deliveries
		Chevrolet — Cars			213			227			399			459
		Chevrolet — Trucks			481			466			945			888
		Pontiac			151			144			269			281
		GMC			137			144			264			269
		Buick			107			95			189			182
		Oldsmobile			42			60			85			136
		Saturn			88			85			146			151
		Cadillac			50			41			90			79
		Other			15			14			28			26

			Total United States		1,284			1,276			2,415			2,471
		Canada, Mexico, and Other			209			186			389			348

			Total GMNA		1,493			1,462			2,804			2,819
		GME			443			504			878			1,002
		GMLAAM			156			175			309			339
		GMAP			138			130			279			250

			Total Worldwide		2,230			2,271			4,270			4,410

	Market Share
		United States — Cars			26.3	%		26.2	%		25.6	%		27.5	%
		United States — Trucks			29.7	%		28.5	%		30.5	%		28.2	%
			Total United States		28.1	%		27.3	%		28.2	%		27.9	%
		Total North America			27.7	%		27.0	%		27.8	%		27.5	%
		Total Europe			8.7	%		9.4	%		8.7	%		9.4	%
		Latin America (6)			23.6	%		22.7	%		23.4	%		22.0	%
		Asia and Pacific			4.0	%		4.0	%		4.0	%		3.7	%
			Total Worldwide		15.1	%		15.1	%		14.7	%		14.9	%
	U.S. Retail/Fleet Mix
		% Fleet Sales — Cars			29.3	%		24.5	%		27.4	%		28.7	%
		% Fleet Sales — Trucks			13.7	%		15.8	%		12.0	%		15.0	%
			Total Vehicles		20.9	%		20.0	%		18.8	%		21.7	%
Retail Lease as % of Retail Sales
	Total Smartlease and Smartbuy				15.3	%		16.0	%
Days Supply of Inventory at June 30
	United States — Cars				57			57
	United States — Trucks				78			84
GMNA Capacity Utilization
	(2 shift rated)				89.3	%		81.0	%		85.1	%		75.9	%
GMNA Net Price					(1.9	%)		(0.8	%)

See footnotes on page 15.

-15-

General Motors Corporation
Operating Statistics


			Second Quarter						Year to Date

			2002			2001			2002		2001

GMAC’s U.S. Cost of Borrowing				4.30	%		5.90	%
Current Debt Spreads Over U.S. Treasuries
	2 Year		165 bp			105 bp
	5 Year		185 bp			150 bp
	10 Year		230 bp			178 bp
Worldwide Employment at June 30 (in 000’s)
	United States Hourly			124			130
	United States Salary			40			43

		Total United States		164			173
	Canada, Mexico, and Other			33			34

	GMNA			197			207
	GME			69			76
	GMLAAM			23			25
	GMAP			11			11
	Hughes			12			11
	GMAC			31			29
	Other			12			13

		Total		355			372

Worldwide Payrolls ($Mil’s)			$	5,385		$	5,164		$	10,418	$	10,166

		Footnotes: ________________



(1)		Adjusted amounts for all periods represent the reported amounts excluding the effects of special items as detailed on pages 9 and 10.

(2)		The reported total net sales and revenues totaled ($Mil’s): Q2 2002 — $48,265, Year-to-Date 2002 — $94,529, Q2 2001 — $46,220, and Year-to-Date 2001 $88,835.

(3)		Represents total cash for Automotive, Communications Services, and Other Operations, excluding Hughes, which includes cash and marketable securities, as well as $3.0 billion invested in short-term fixed income securities of the Corporation’s Voluntary Employees’ Beneficiary Association Trust.

(4)		The Q2 2001 and Year-to-Date 2001 amounts exclude the effects of purchase accounting adjustments related to General Motors’ acquisition of Hughes in 1985. This purchase accounting adjustment is not recorded in 2002 because the related goodwill is no longer being amortized effective January 1, 2002 in accordance with SFAS No. 142, Goodwill and Other Intangible Assets.

(5)		Excludes Hughes Series A Preferred Stock dividends paid to General Motors.

(6)		Latin America excludes the Middle East and Africa.

-16-

GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2002			2001			2002			2001

		(dollars in millions except per share amounts)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Total net sales and revenues		$	48,265		$	46,220		$	94,529		$	88,835

Cost of sales and other expenses			38,567			37,181			76,893			71,691
Selling, general, and administrative expenses			6,150			5,855			11,771			11,245
Interest expense			1,767			2,259			3,730			4,470

	Total costs and expenses		46,484			45,295			92,394			87,406

Income before income taxes and minority interests			1,781			925			2,135			1,429
Income tax expense			563			304			688			512
Equity income/(loss) and minority interests			74			(144	)		73			(203	)

	Net income		1,292			477			1,520			714
Dividends on preference stocks			(23	)		(23	)		(47	)		(51	)

	Earnings attributable to common stocks	$	1,269		$	454		$	1,473		$	663

Basic earnings (losses) per share attributable to common stocks
Earnings per share attributable to $1-2/3 par value		$	2.48		$	1.05		$	3.06		$	1.59

Earnings per share attributable to Class H		$	(0.14	)	$	(0.14	)	$	(0.27	)	$	(0.24	)

Earnings (losses) per share attributable to common stocks assuming dilution
Earnings per share attributable to $1-2/3 par value		$	2.43		$	1.03		$	3.02		$	1.56

Earnings per share attributable to Class H		$	(0.14	)	$	(0.14	)	$	(0.27	)	$	(0.24	)

-17-

CONSOLIDATED STATEMENTS OF INCOME — concluded
(Unaudited)


		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2002			2001			2002			2001

		(dollars in millions)
AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS
Total net sales and revenues		$	41,718		$	39,731		$	81,491		$	75,895

Cost of sales and other expenses			36,461			35,182			72,672			67,676
Selling, general, and administrative expenses			3,818			4,091			7,508			7,730

	Total costs and expenses		40,279			39,273			80,180			75,406

Interest expense			302			151			464			313
Net expense from transactions with Financing and Insurance Operations			46			87			136			218

Income (loss) before income taxes and minority interests			1,091			220			711			(42	)
Income tax expense (benefit)			311			68			151			(13	)
Equity income/(loss) and minority interests			80			(113	)		91			(149	)

	Net income (loss) — Automotive, Communications Services, and Other Operations	$	860		$	39		$	651		$	(178	)

FINANCING AND INSURANCE OPERATIONS
Total revenues		$	6,547		$	6,489		$	13,038		$	12,940

Interest expense			1,465			2,108			3,266			4,157
Depreciation and amortization expense			1,353			1,443			2,714			2,952
Operating and other expenses			2,244			1,729			4,114			3,446
Provision for financing and insurance losses			841			591			1,656			1,132

	Total costs and expenses		5,903			5,871			11,750			11,687

Net income from transactions with Automotive, Communications Services, and Other Operations			(46	)		(87	)		(136	)		(218	)

Income before income taxes and minority interests			690			705			1,424			1,471
Income tax expense			252			236			537			525
Equity income/(loss) and minority interests			(6	)		(31	)		(18	)		(54	)

	Net income — Financing and Insurance Operations	$	432		$	438		$	869		$	892

-18-

CONSOLIDATED BALANCE SHEETS


					June 30, 2002			Dec. 31,			June 30, 2001
					(Unaudited)			2001			(Unaudited)

					(dollars in millions)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
				ASSETS
Automotive, Communications Services, and Other Operations
Cash and cash equivalents					$	14,421		$	8,432		$	8,370
Marketable securities						1,014			790			795

	Total cash and marketable securities					15,435			9,222			9,165
Accounts and notes receivable (less allowances)						5,586			5,406			6,533
Inventories (less allowances)						9,757			10,034			11,072
Equipment on operating leases — net						4,390			4,524			5,084
Deferred income taxes and other current assets						8,730			7,877			8,499

	Total current assets					43,898			37,063			40,353
Equity in net assets of nonconsolidated associates						5,115			4,950			4,934
Property — net						35,248			34,908			33,922
Intangible assets — net						13,763			13,721			7,743
Deferred income taxes						22,138			22,294			15,560
Other assets						16,797			17,274			31,226

	Total Automotive, Communications Services, and Other Operations assets					136,959			130,210			133,738
Financing and Insurance Operations
Cash and cash equivalents						3,942			10,123			1,139
Investments in securities						12,575			10,669			10,614
Finance receivables — net						106,838			99,813			89,608
Investment in leases and other receivables						35,477			34,618			35,701
Other assets						40,438			36,979			31,281
Net receivable from Automotive, Communications Services, and Other Operations						638			1,557			1,582

	Total Financing and Insurance Operations assets					199,908			193,759			169,925

Total assets					$	336,867		$	323,969		$	303,663

				LIABILITIES AND STOCKHOLDERS’ EQUITY
Automotive, Communications Services, and Other Operations
Accounts payable (principally trade)					$	19,459		$	18,297		$	19,177
Loans payable						1,545			2,402			2,430
Accrued expenses						36,413			34,090			34,512
Net payable to Financing and Insurance Operations						638			1,557			1,582

	Total current liabilities					58,055			56,346			57,701
Long-term debt						16,831			10,726			8,662
Postretirement benefits other than pensions						33,990			34,515			34,109
Pensions						9,410			10,790			3,111
Other liabilities and deferred income taxes						14,506			13,794			14,791

	Total Automotive, Communications Services, and Other Operations liabilities					132,792			126,171			118,374
Financing and Insurance Operations
Accounts payable						8,236			7,900			6,348
Debt						158,659			153,186			133,088
Other liabilities and deferred income taxes						15,701			16,259			15,494

	Total Financing and Insurance Operations liabilities					182,596			177,345			154,930

		Total liabilities				315,388			303,516			273,304
Minority interests						788			746			699
Stockholders’ equity
$1-2/3 par value common stock (issued, 561,337,257; 559,044,427; and 549,606,968 shares)						936			932			916
Class H common stock (issued, 958,024,533; 877,505,382 and 876,465,865 shares)						96			88			88
Capital surplus (principally additional paid-in capital)						21,557			21,519			21,114
Retained earnings						10,376			9,463			10,233

		Subtotal				32,965			32,002			32,351
Accumulated foreign currency translation adjustments						(2,770	)		(2,919	)		(2,814	)
Net unrealized loss on derivatives						(188	)		(307	)		(187	)
Net unrealized gains on securities						268			512			355
Minimum pension liability adjustment						(9,584	)		(9,581	)		(45	)

		Accumulated other comprehensive loss				(12,274	)		(12,295	)		(2,691	)

			Total stockholders’ equity			20,691			19,707			29,660

Total liabilities and stockholders’ equity					$	336,867		$	323,969		$	303,663

-19-

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


	Six Months Ended June 30

	2002						2001

	Automotive,			Financing			Automotive,			Financing
	Comm.Serv.			and			Comm.Serv.			and
	and Other			Insurance			and Other			Insurance

	(dollars in millions)
Net cash provided by operating activities	$	5,196		$	3,030		$	3,455		$	1,278
Cash flows from investing activities
Expenditures for property		(3,494	)		(46	)		(4,220	)		(42	)
Investments in marketable securities — acquisitions		(802	)		(20,311	)		(773	)		(15,691	)
Investments in marketable securities — liquidations		578			18,455			1,139			14,734
Mortgage servicing rights — acquisitions		—			(634	)		—			(813	)
Mortgage servicing rights — liquidations		—			1			—			18
Finance receivables — acquisitions		—			(122,714	)		—			(107,883	)
Finance receivables — liquidations		—			58,793			—			68,560
Proceeds from sales of finance receivables		—			57,034			—			41,156
Operating leases — acquisitions		(2,748	)		(9,205	)		(3,182	)		(6,448	)
Operating leases — liquidations		2,898			7,168			3,576			5,138
Investments in companies, net of cash acquired		(124	)		(150	)		(612	)		(119	)
Other		744			(567	)		(351	)		129

Net cash (used in) investing activities		(2,948	)		(12,176	)		(4,423	)		(1,261	)

Cash flows from financing activities
Net (decrease) increase in loans payable		(857	)		970			222			(21,634	)
Long-term debt — borrowings		9,821			12,306			3,451			28,904
Long-term debt — repayments		(3,818	)		(11,243	)		(2,225	)		(7,703	)
Repurchases of common and preference stocks		(97	)		—			(264	)		—
Proceeds from issuing common stocks		69			—			71			—
Proceeds from sales of treasury stocks		19			—			—			—
Cash dividends paid to stockholders		(607	)		—			(600	)		—

Net cash provided by (used in) financing activities		4,530			2,033			655			(433	)

Effect of exchange rate changes on cash and cash equivalents		130			13			(47	)		1
Net transactions with Automotive/Financing Operations		(919	)		919			(389	)		389

Net increase (decrease) in cash and cash equivalents		5,989			(6,181	)		(749	)		(26	)
Cash and cash equivalents at beginning of the period		8,432			10,123			9,119			1,165

Cash and cash equivalents at end of the period	$	14,421		$	3,942		$	8,370		$	1,139

The following charts were discussed with Wall Street analysts and media on Tuesday, July 16, 2002:

2002 Second Quarter Results

In the presentation that follows and in related comments by General Motors management, our use of the words “expect”, “anticipate”, “estimate”, “forecast”, “objective”, “plan”, “goal”, “project” 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 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. GM is recording the remarks and visuals presented today which are copyrighted by GM and may not be reproduced, transcribed, or distributed in any way without the express written consent of General Motors. Therefore, this conference may not be recorded by attendees. We consider your participation to constitute your consent to being recorded today.

Second Quarter Highlights Financial performance $2.63 EPS (excluding Hughes), adjusted for special items $2.43 EPS including Hughes and special charge Charge taken for "end-of-life" vehicles in Europe ($0.10 EPS / $55M) Revenue of $46.0 billion & adjusted Net Income of $1,503 million Strong automotive cash flow supported pension / VEBA contributions of $3.2B and improved net liquidity position Market share / sales North America market share improved; global share stable Improved U.S. retail & truck market share Productivity / Quality Outpaced all manufacturers with a 4.5% overall productivity improvement as measured in the North America Harbour Report Best performing domestic and #3 overall manufacturer in JD Power Initial Quality Study 2 * * Revenue & net income exclude Hughes

Second Quarter Adjustments 3

Net Income / (Loss) By Segment Second Quarter Adjusted Results 4

North America Second Quarter Adjusted Results 5

2001 Q2 Revenue Per Unit Daily Rental Refleeting Net Price SPO Dilution 2002 Q2 Revenue Per Unit $20,400 ($450) ($725) ($250) 425 $19,400 Despite favorable mix offsetting net price, revenue per unit decreased because of daily rental and SPO GMNA Revenue Per Unit Mix 6 Memo: Revenue / Unit: 1998CY 1999CY 2000CY 2001CY excl. Daily Rent & SPO 16,947 17,946 18,364 19,019

North America Continuing the Momentum 7 * * Based on Factory Sale Volume

Europe Second Quarter Adjusted Results 8

9 Latin America, Africa & Middle East Second Quarter Adjusted Results

Asia Pacific Second Quarter Adjusted Results 10

GMAC Second Quarter Adjusted Results 11 Net Income

GM Net Liquidity (excluding GMAC & Hughes) Net liquidity improved by $0.3B in Q2, and GM contributed $2.2B to U.S. pension fund and $1.0B to VEBA $ Billions 12 Cash 11.5 17.3 17.6 Debt 10.5 15.0 15.0 Net Liquidity 1.0 2.3 2.6

$10B Cash Initiative in 2002 Current Status Achieved To-Date $ Billions_ Convertible Offering 3.7 Debt Offering 0.9 Automotive Cash Flow 4.8 Total-to-date 9.4 Further Opportunities Continued operating cash flow Hughes monetization Dividends from GMAC Asset sales 13

Fiat Update Fiat Auto announced a restructuring plan to address considerable revenue and cost challenges GM is achieving meaningful cost savings from its present relationship with Fiat Auto Potential full combination of GME and Fiat Auto has some near-term challenges and presents opportunity for longer-term value GM has no current plans to acquire all of Fiat Auto outside of Fiat's possible exercise of the put (timing of put period from Jan 2004 - 2009) 14

Fiat Update (cont.) If Fiat exercises the put: It would likely require 9 to 12 months to close GM plans to be ready financially and operationally GM will pay no more than fair market value GM has commenced a review to determine the appropriate carrying value of GM's $2.4 billion investment in Fiat Auto Management believes it is probable that a significant write-down of GM's investment in Fiat Auto will be required in Q3 of 2002 15

Hughes-EchoStar Merger DTV continues to meet its revenue and EBITDA guidance Merger regulatory process Tax-free ruling secured from IRS GM/Hughes/EchoStar preparing materials for distribution to stockholders Revised draft S-4 filed last week SEC review process on track with no major issues Recent meetings with the DOJ and FCC have been constructive Regulators focused on merits of the case Anticipate regulatory approval and transaction closure before the end of the year 16

Hughes-EchoStar Merger (cont.) At current Class H stock price, GM's economic interest in Hughes is about $4.2 billion Merger exchange ratio implies a further 20-25% premium over present price based on recent EchoStar stock trading range Merger also is expected to create significant cost savings and revenue synergies and strengthen the combined companies competitive position 17

U.S. Pension Fund Status Pension asset portfolio has been adversely affected by weakness in the equity markets over the last two years GM's U.S. pension asset returns through the first half of this year amounted to -3%, far better than the broad equity market returns If asset values at Y-E 2002 remain roughly unchanged from mid-year levels, interest/ dividend income earned on pension assets for the remainder of 2002 would bring full year returns close to breakeven 18

U.S. Pension Fund Status Zero percent return on plan assets this year with no further pension contributions would result in (all else being equal): $12.7B under-funded position (versus $9.1B at 12/31/01) 2003 pension expense increase of about $500M after-tax versus 2002 Actual year-over-year expense expected to be mitigated by additional contributions between now and Y-E 2003 Any net increase in pension expense next year expected to be offset by other structural cost reductions 19

Pension Funding Requirements In April 2002, GM contributed $2.2B into pension fund Existing unfunded pension liability will likely require GM to make significant contributions to the funds over the long-term Assuming the pension funds' asset returns revert to 10% p.a. (following 0% in 2002), PBGC funding obligations through 2007 would amount to about $6B in present value terms Assuming the pension fund generates asset returns of only 8% p.a. in 2003 and beyond (following 0% in 2002), PBGC funding obligations through Y-E 2007 would amount to about $9B in present value terms In either case, GM expects that no more than $2.5B of contributions would be necessary by mid-2004 to meet ERISA or PBGC funding requirements 20

Pension Expense GM's pension expense over the coming years will be sensitive to the pension funds' asset returns and the resulting unfunded liability GM plans to manage pension expense with significant contributions to its pension plans funded by: Continued strong operating cash flows Hughes monetization GMAC dividend Other asset sales To the extent net increases in pension expense are incurred over the coming years, GM plans to offset such expense with other cost reductions Despite current adverse trend in pension expense, GM remains committed to: Reducing GMNA structural cost base overall Achieving $10 EPS target by mid-decade 21

2002 Outlook 22 * * Represents U.S. SAAR ** Consistent with First Call consensus ** **

U.S. Industry Total Vehicle Sales 2003 CY Industry Outlook: Mid to High 16M 23

Priorities $3.00 EPS excluding Hughes $6.00 Profitable Automotive Operations Positive operating cash flow Grow share in all regions Regional / Sector Income Targets North America: $750M Europe: ($350M) LAAM & AP: Positive GMAC: $1,650M Other Metrics Improved structural cost Capital spending of $7.1B Net material cost reductions of + 3.5% 24 G G Y R Y G G Status to 2002 Priorities / Targets * * EPS excluding any special items R G G G

SEC Legend

In connection with the proposed transactions, General Motors Corporation (“GM”), HEC Holdings, Inc. (“Hughes Holdings”) and EchoStar Communications Corporation (“EchoStar”) have filed amended preliminary materials with the Securities and Exchange Commission (“SEC”), including a Registration Statement of Hughes Holdings on Form S-4 that contains a consent solicitation statement/information statement/prospectus. These materials are not yet final and will be further amended. Holders of GM $1-2/3 and GM Class H common stock are urged to read the definitive versions of 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. The preliminary materials, the definitive versions of these materials and other relevant materials (when they become available), and any other documents filed by GM, Hughes Electronics Corporation (“Hughes”), Hughes Holdings or EchoStar with the SEC may be obtained for free at the SEC's website, www.sec.gov, and GM stockholders will receive information at an appropriate time on how to obtain transaction-related documents for free from GM.

GM and its directors and executive officers, Hughes and certain of its officers, and EchoStar and certain of its executive officers may be deemed to be participants in GM's solicitation of consents from the holders of GM $1-2/3 common stock and GM Class H common stock in connection with the proposed transactions. Information regarding the participants and their interests in the solicitation was filed pursuant to Rule 425 with the SEC by EchoStar on November 1, 2001 and by each of GM and Hughes on November 16, 2001. Investors may obtain additional information regarding the interests of the participants by reading the amended preliminary consent solicitation statement/information statement/prospectus filed with the SEC and the definitive consent solicitation statement/information statement/prospectus when it becomes available.

* * *