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GM says it lost $4.3B in 2009 after exiting bankruptcy

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GM says it lost $4.3B in 2009 after exiting bankruptcy

Chrissie Thompson

Automotive News -- April 7, 2010 - 10:12 am ET

DETROIT -- General Motors Co. said it lost $4.3 billion after it emerged from bankruptcy last year, as the automaker released official financial results that bring it one step closer to a stock offering.

GM said it burned through $1.9 billion in operating cash in the last three months of the year, partially because of repayments to governments that propped it up during its restructuring. Including third-quarter results, GM generated $1 billion in 2009 cash after its bankruptcy.

“There is still significant work to be done,” CFO Chris Liddell said in a statement. “However, I continue to believe we have a chance of achieving profitability in 2010.”

GM exited its U.S.-sponsored bankruptcy on July 10 and has since worked toward establishing so-called fresh-start accounting for "New GM" that meets regulatory requirements. Today's release is the first official look at post-bankruptcy GM's financial condition.

The fresh-start accounting, used when companies exit bankruptcy, is necessary to help the U.S. government reach its goal of recouping the $50 billion it poured into GM's restructuring. For the government to start selling its 61 percent equity stake, GM needs to have an initial public offering, which executives have said could come as early as this year.

Last week, GM made a second round of cash payments to Canada and the U.S. Treasury, on its way to repaying its $8.1 billion in loans to those countries. GM plans to pay off the loans by June.

The 2009 loss marked the automaker's fifth straight year without a profit.

Read more: http://www.autonews.com/article/20100407/OEM/100409912/1424#ixzz0kQT6zZ53

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They wait until April to announce a loss from last year? Slow.

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GM posts $4.3 billion loss in July-December period

Robert Snell and David Shepardson / The Detroit News

Detroit -- General Motors Co. posted a $4.3 billion net loss last year, according to a financial report released this morning that offers the first comprehensive look at the company's finances since it emerged from bankruptcy court in July.

The automaker also posted global revenue of $57.5 billion at the end of December and had generated $1 billion in net cash.

The bulk of GM's $4 billion in fourth-quarter losses were in North America, where GM lost $3.4 billion.

Chris Liddell, GM's vice chairman and CFO, said GM must return to profitability. He said the fourth quarter loss "gives you some sense of the financial hill we intend to climb."

GM had $36.2 billion in cash on hand at the end of last year. GM revalued its physical assets, valuing them at $19 billion -- an $18 billion reduction over what they worth before GM's bankruptcy filing.

The $4.3 billion net loss included a $2.6 billion pre-tax settlement loss related to the United Auto Workers retiree medical plan and a $1.3 billion foreign currency re-measurement loss, GM said today.

The financial report, which was delayed a week, represents a significant milestone for GM and reveals a new balance sheet for the company with new values attached to assets and liabilities.

The valuation process, called fresh-start accounting, is a first step toward GM selling shares of the company to the public.

"As the results for 2009 show there is still significant work to be done. However, I continue to believe we have a chance of achieving profitability in 2010," Liddell said.

The financial report covers the period from July 10 -- when GM was created as a new company out of bankruptcy court -- through December. GM said comparisons to prior quarterly reports are almost impossible because the old GM that filed bankruptcy, now known as Motors Liquidation Co., is an entirely different company.

Liddell, along with Controller and Chief Accounting Officer Nick Cyprus, are discussing the results during a 10 a.m. conference call with media and analysts.

Liddell said last month GM has a reasonable chance of being profitable in 2010, and might start selling public shares in the company this year.

"We still have a long way to go," before going public, Liddell said today.

The annual report provides a detailed financial roadmap of GM's first few months after emerging from bankruptcy in July with the help of about $50 billion in federal aid.

The balance of the $50 billion in federal aid is tied up in equity stakes split among the U.S. and Canadian governments, a union-run trust for retiree health care and creditors.

GM disclosed third-quarter 2009 results in November that showed the company lost $1.15 billion between July 10 and Sept. 30, better-than-expected results that executives said reflected greater operational stability and progress.

But those results did not reflect fresh-start accounting, so GM today also will release updated third-quarter results.

The old GM lost about $88 billion from the end of 2004 through early last year.

From The Detroit News: http://www.detnews.com/article/20100407/AUTO01/4070391/1148/GM-posts-$4.3-billion-loss-in-July-December-period#ixzz0kRDOfLtP

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GM lost $4.3 billion in 2nd half of 2009

BY TIM HIGGINS

FREE PRESS BUSINESS WRITER

General Motors, the nation’s largest automaker, today posted a $4.3-billion loss for the nearly six-month period following its emergence from bankruptcy last summer as a new company largely owned by the U.S. government.

The Detroit automaker said it generated $1 billion in cash on operations from July 10 until Dec. 31. The company said it generated $57.5 billion in revenue during that period.

The net loss of $4.3 billion includes the pretax impact of a $2.6-billion payment to the UAW retiree health care trust fund.

“As the results for 2009 show, there is still significant work to be done. However, I continue to believe we have a chance of achieving profitability in 2010,” GM Chief Financial Officer Chris Liddell said in a statement.

Today’s release marks an important milestone for the new GM as it releases its fresh-start accounting. It’s a major step that needed to occur before the company can go public again. GM executives have said an initial public offering could occur as soon as the second half of 2010.

“We are building the foundation that will allow us to return to public ownership,” Liddell said. “Completing fresh-start accounting is an important step in that process.”

Liddell recently told reporters that the automaker faces a reasonable chance at turning a profit this year.

In 2008, GM lost $30.9 billion. During that year’s third and fourth quarters, GM lost $12.1 billion.

The losses came as GM was marching on a path that ultimately led to a government-backed bankruptcy reorganization that lasted 40 days last summer.

The automaker has been working since then to implement a turnaround plan that is supposed to allow the company to break even in a U.S. sales market of just 10 million vehicles.

Through the first quarter of 2010, GM’s sales have increased by 16.8%. But the gains come after GM’s sales dropped 29.9% in 2009.

The industry’s seasonally adjusted annualized selling rate in March was 11.78 million vehicles.

link:

http://www.freep.com/article/20100407/BUSINESS01/100407028/1210/GM-lost-4.3-billion-during-2nd-half-of-2009

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GM's $4.3 billion loss shows 'financial hill' lies before profits

Chrissie Thompson

Automotive News -- April 7, 2010 - 10:12 am ET

UPDATED: 4/7/10 4:02 p.m. ET

DETROIT -- General Motors Co.'s $4.3 billion loss after bankruptcy last year highlights the "financial hill" the automaker must climb to pay back its government investor.

The loss in the second half of 2009, reported under post-bankruptcy GM's restarted accounting, provides the first official look at the automaker's financial condition after its U.S.-steered rescue.

Despite the loss, CFO Chris Liddell echoed executives' past statements that GM may become profitable this year. At the same time, the loss gives "some sense of the financial hill we intend to climb," he said. "General Motors should never again be in the financial position it found itself in last year."

GM said it burned through $1.9 billion in operating cash in the last three months of the year, partially because of repayments to governments that propped it up during its restructuring. Including third-quarter results, GM generated $1 billion in 2009 cash after its bankruptcy.

After exiting U.S.-sponsored bankruptcy on July 10, GM established so-called fresh-start accounting that meets regulatory requirements. The process, used when companies leave bankruptcy, involved adjusting more than 1 million records, said Nick Cyprus, GM's chief accounting officer.

Proper accounting also is needed to help the company go public, a required step for the U.S. government to start recouping the $50 billion it poured into GM's restructuring. The U.S. Treasury owns 61 percent of GM. Executives have said an initial public offering could come this year.

'Special' items

GM's net loss reflected a $2.6 billion cost related to a UAW retiree medical plan and $1.3 billion tied to remeasuring foreign currency values.

Much of GM's cost cutting is complete, Liddell said. And improving U.S. light-vehicle sales, which reached a seasonally adjusted annual rate of 11.7 million in March, can only help GM's efforts. In 2009, U.S. sales totaled 10.4 million.

Increased U.S. demand for some GM products will soon have six of GM's 16 plants in North America working at more than two 40-hour shifts weekly.

"We don't need the industry to be significantly better to achieve profitability," Liddell said. "Having said that, in the way the year is shaking out, the industry is looking better, and that's certainly helping."

Only modest improvements are needed for GM to post profits, Liddell said. Without "items which you might deem to be special," he said, GM's fourth-quarter loss before interest and taxes was $600 million.

GM's guilt

GM's first-quarter results bolster expectations that a profit is possible this year, Liddell said, although he stopped short of saying he was confident."This company has been guilty of overpromising and underdelivering," Liddell said. "I would like to turn that around. I would rather underpromise and hopefully overdeliver."

The 2009 loss marked the automaker's fifth straight year without a profit. But automotive consultant Maryann Keller, a former Wall Street analyst, predicted GM will break that trend this year.

"If they didn't make money this year, I don't know how they will make money," she said.

GM said its 2009 worldwide market share was 11.6 percent, down from 12.4 percent in 2008. That includes a 2009 U.S. share that fell to 19.6 percent, from 22.1 percent. Liddell declined to give a market share target, saying he views share as a result, not a cause, of GM's financial performance.

Last week GM made a second round of cash payments to Canada and the U.S. Treasury, on its way to repaying its $8.1 billion in loans to those countries. GM plans to pay off the loans by June.

Read more: http://www.autonews.com/article/20100407/OEM/100409912/1179#ixzz0kRzCTQjf

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"New" GM loses money a lot like "Old" GM. I know there are some one time write offs in here, but even without those they would have lost money. And that had "one time writeoffs" in the past, this is just same old, same old.

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"New" GM loses money a lot like "Old" GM. I know there are some one time write offs in here, but even without those they would have lost money. And that had "one time writeoffs" in the past, this is just same old, same old.

Yeah, they still have significant problems.

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GM generated 1.0 billion from operations from July 10th to Dec 31st 2009, not bad. Pensions and OPEB are still issues (significant ones), but those two are issues for many other US companies.

We will only get a full picture of how the company is doing as the year progresses and then at the end of the year. Too early to cry victory or defeat.

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GM lost $4.3B but 2010 looks hopeful

But company could turn profit this year as car market brightens

Robert Snell and David Shepardson / The Detroit News

General Motors Co. lost $4.3 billion last year in the months after it emerged from bankruptcy, but the bulk of the red ink was the result of one-time charges. Strip those away, and GM nearly broke even.

The results, released Wednesday, offered the first comprehensive look at GM's finances since it emerged from bankruptcy in July. And coming amid signs of growing strength in the U.S. auto market, even analysts who have been sharply critical of the automaker expect GM to post strong results soon.

"I would think the second quarter should be a very good quarter for them," said industry consultant Maryann Keller, head of Maryann Keller & Associates in Stamford, Conn. "If they didn't make a profit this year, after having so much of their debt eradicated, so much of their structural costs removed and turned over to us, the taxpayers, I think we'd be wondering why."

Still, GM faces challenges and unfinished business that could complicate a recovery:

• Its global market share fell to 11.6 percent in the fourth quarter of last year from 12 percent a year earlier.

• GM must complete the costly wind down of the castoff Saturn, Pontiac and Hummer brands. GM also needs more assistance from Europe as it restructures its Opel unit.

• GM faces looming U.S. pension obligations, which it said are now underfunded by $17.1 billion -- up $3.5 billion from 2008. GM has said it needs to pay $12.3 billion by 2014.

• Its global pensions are underfunded by $27 billion.

• The Detroit automaker faces two Toyota-related sudden acceleration lawsuits because its Pontiac Vibe was also recalled as part of the sudden acceleration recalls. But GM noted that most of the liability for Vibe vehicles was left behind in the "old GM," which remains in bankruptcy court. GM also is facing a new lawsuit filed by the UAW, which wants $450 million that the union says the automaker owes under a 2007 agreement.

• GM also must make payments of $1.4 billion to the UAW retiree health trust in 2013, 2015 and 2017.

• And in a frank disclosure, GM said Wednesday it is important new executives -- including Chairman and Chief Executive Edward Whitacre Jr. and Chief Financial Officer Chris Liddell -- "quickly understand the automotive industry and that our senior officers quickly adapt and excel in their new senior management roles. If they are unable to do so, and as a result are unable to provide effective guidance and leadership, our business and financial results could be materially adversely affected."

The Treasury Department declined to comment about the financial report Wednesday, saying GM's numbers speak for themselves. But privately, an administration official said GM is making "slow and steady progress."

The financial results showed GM was sitting on a stockpile of cash at the end of last year, $36.2 billion, which will help GM repay the balance of U.S. and Canadian government loans, and fund vehicle development and marketing efforts aimed at boosting sales and market share.

The $4.3 billion net loss included a $2.6 billion pre-tax settlement loss related to the United Auto Workers retiree medical plan and a $1.3 billion foreign currency re-measurement loss.

Aside from those one-time charges, Liddell said GM is close to breaking even and has a "good chance" of posting a profit this year -- his strongest comments to date.

"There is a danger -- and this company possibly has been guilty of this in the past -- of over-promising and under-delivering," he said. "I would rather under-promise and over-deliver. I don't want to sit here and predict profitability and disappoint.

But he did say there is a "good chance" GM will be profitable in 2010.

The annual report provides a detailed financial roadmap of GM's first few months after emerging from bankruptcy in July with the help of about $50 billion in federal aid.

The balance of the $50 billion in federal aid is tied up in equity stakes split among the U.S. and Canadian governments, a union-run trust for retiree health care and creditors. Those stakes can't be sold until GM starts selling shares in the company again, which could happen later this year or next.

GM has repaid $2.4 billion to the U.S. government and $400 million to Canada toward the combined $8.4 billion in aid that helped the automaker emerge from bankruptcy.

"They're going to be an extremely profitable company, relatively quickly, because they've taken so much of the cost out of the business," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "They've taken $5,000 to $6,000 out of the cost of an average vehicle. In terms of earning, that's amazing."

From The Detroit News: http://detnews.com/article/20100408/AUTO01/4080347/1148/auto01/GM-lost-$4.3B-but-2010-looks-hopeful#ixzz0kVqGtaNt

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