4gm

GM REVISES 1ST QUARTER 2006 EARNINGS

22 posts in this topic

And ends up making a profit! Those crazy accountants!!

DETROIT, United States (AFP) - The world's biggest automaker, General Motors Corp., announced a revision to its first-quarter results, saying it had posted a net profit of 445 million dollars.

GM said it had finalized its first-quarter profits to 78 cents per share following a "final determination" of its accounting for a recently approved retiree health-care settlement agreement and other adjustments.

The automaker had said on April 20 that it had shrunk its losses during the first quarter to 323 million dollars, or 57 cents per share, from 1.3 billion in the same period a year ago.

"The difference between the preliminary and final results primarily reflects a change in the way GM will account for the health-care settlement agreement between GM and the United Auto Workers union," GM said in a statement.

GM said it had made the revision following talks with the US Securities and Exchange Commission.

As part of the accord with the UAW, GM will make contributions to a new independent Voluntary Employees' Beneficiary Association trust (VEBA) of one billion dollars in 2006, 2007 and 2011.

GM will recognize the impact of the contributions over seven years, beginning in the third quarter of 2006 when the health care changes are scheduled to take effect.

http://news.yahoo.com/s/afp/20060508/bs_af...to_060508225617

Edited by 4gm

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So what does this mean? Is this real money or money that shows up because of accounting tricks?

This isn't an accounting trick from what I can tell. It's just a matter of how/when GM has to write off and pay the amount. Instead of taking the hit in one lump sum, GM gets to pay it out in three different installments. I'll go ahead and assume GM will have a loss when it reports 3rd Quarter earnings.

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In other words, it is somewhat of an accounting trick.

No... The costs from the agreement are not coming out of 1st quarter earnings. The entire costs are not even coming out of 2006 earnings:

As part of the accord with the UAW, GM will make contributions to a new independent Voluntary Employees' Beneficiary Association trust (VEBA) of one billion dollars in 2006, 2007 and 2011.

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those crazy accountants!

--hahaha.

its not really a trick, its more creative book keeping. lets just hope 10 years from now they dont go back and say wooops again.

interesting to see how wall street reacts to this tuesday.

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This is excellent news for GM, now hopefully this causes the market cap to rise.

With the T900 Silverado and Sierra, GM will be making a lot of money in the 3rd and 4th quarters potentially.

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Saturn would play a big role in GM's comeback attempt. I think the AURA looks very competitive with the Camcords in the powertrain department although I still think OHV engines don't belong in a Saturn. I also think the next Gen. Malibu should get the 3.6L engine as an option. That could really help retail sales figure.

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VenSeattle:

In terms of cash flow, there will be 3 outflows: 2006, 2007 and 2011. In terms of earnings/results, the impact will be felt starting in Q3 2006 and for 7 years after that (until Q3 2013).

Edited by ZL-1

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one more quarter like this and the bond rating will probably go up.

if gas drops by seventy five cents per gallon, by september, like cbs radio reported today, then watch the profitable trucks roll off the line. this is all great news. keep the quality up, get some good press and good interviews about the FFV's and look out. we need a win here, folks.

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No doubt after re-reporting 2005's losses, Wagoner and Co. are going to be a little more cautious in their reportings this year.

I understand why they did what they did, but it doesn't play well to the non-accountant crowd who only understand the headlines and not the meat behind it. This just furthers my opinion that all of this - the losses in 2005, the bankruptcy of Delphi, the posturing with the UAW, the smokescreens with the Camaro, etc., is just part of a plan that will play out in 2006.

Unlike some of the hangers on this board, I still have a little faith in the General.

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anyone notice the date on the release tho its april 20th you know 420. A stoner holiday so you know there was going to be mess up.

but its good news i guess.

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lets just hope 10 years from now they dont go back and say wooops again. 

seeing as it was done after discussions with teh SEC, they should be fine *crossing fingers JIC*

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seeing as it was done after discussions with teh SEC, they should be fine *crossing fingers JIC*

good enough for me, makes it sound all official and legit.

so, where do you want it--in the head or in the chest?

at some point though the losses will be taken out --either now or later.

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It ain't over yet!

GM says Delphi deal could mean more costs

Reuters / May 10, 2006 - 11:00 am

DETROIT -- General Motors on Wednesday said a deal with former subsidiary Delphi Corp. could lead to additional costs for the automaker.

The world's largest automaker is liable for former employees who now work for bankrupt Delphi Corp. GM expects it could be on the hook for $5.5 billion and $12 billion for those liabilities.

But in a filing with the Securities and Exchange Commission, GM said there could be more costs as the automaker makes progress in three-way talks with Delphi and the United Auto Workers union.

"A consensual agreement to resolve the Delphi matter may cause GM to incur additional costs in exchange for benefits that would accrue to GM over time," GM said in the filing.

The automaker also said it will remeasure its U.S. salaried pension plans, adding that the effect of this remeasurement will be reflected in the second quarter of 2006 and subsequent periods.

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It ain't over yet!

GM says Delphi deal could mean more costs

Reuters / May 10, 2006 - 11:00 am

DETROIT -- General Motors on Wednesday said a deal with former subsidiary Delphi Corp. could lead to additional costs for the automaker.

The world's largest automaker is liable for former employees who now work for bankrupt Delphi Corp. GM expects it could be on the hook for $5.5 billion and $12 billion for those liabilities.

But in a filing with the Securities and Exchange Commission, GM said there could be more costs as the automaker makes progress in three-way talks with Delphi and the United Auto Workers union.

"A consensual agreement to resolve the Delphi matter may cause GM to incur additional costs in exchange for benefits that would accrue to GM over time," GM said in the filing.

The automaker also said it will remeasure its U.S. salaried pension plans, adding that the effect of this remeasurement will be reflected in the second quarter of 2006 and subsequent periods.

Bad news, but hopefully they can reach some type of agreement between the three companies. 5.5 billion would be a huge blow to the company

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The key to accounting is recognize the need to account for costs in the period (quarter) in which they are incurred. The problem with the recent agreement for healthcare is the payment schedule is sporadic. In the end the actual payment schedule is immaterial and the more important decision is when the costs are actually being incurred.

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