• Apr 7, 2010
General Motors has just announced it has completed fresh-start accounting as part of its quest to return to public ownership, and the numbers don't exactly look good. GM says that it will announce a $4.3 billion loss for the fourth-quarter of 2009.
Despite relatively strong sales last year, the company had to pay out two large lumps of cash. First, $2.6 billion went to a UAW retiree medical plan. Another $1.6 billion went out the door thanks to "foreign currency re-measurement loss." Despite the daunting figures, GM still says it's confident the company can get back on its feet and start operating at a profit by the end of this year. Given the fact that the company is still aiming to return the large majority of its US Treasury and Export Development Canada loans, getting The General back on its feet may be easier said than done. Official press release after the jump.

[Source: General Motors]
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GM Completes Fresh-Start Accounting

2010-04-07

DETROIT, Mich. – General Motors Company announced that it had completed fresh-start accounting, and would be filing its third quarter 2009 Form 10-Q and 2009 Form 10-K with the SEC today.

"We are building the foundation that will allow us to return to public ownership," said Chris Liddell, GM vice chairman and CFO. "Completing fresh-start accounting is an important step in that process."

The new company, which was formed on July 10, 2009 through the acquisition of substantially all the assets and certain liabilities of Motors Liquidation Company (formerly General Motors Corporation), had to complete the process of adopting fresh-start accounting to record the acquisition and establishment of the new GM as well as determine the fair value of assets and liabilities and implement new accounting policies.

The following table provides a summary of GM's financial results for the period ended December 31, 2009 under fresh-start accounting.


July 10-Dec. 31, '09

($ bils)
Global revenue

$57.5

Net income/(loss) attributed to stockholders

$(4.3)

Net cash provided by operating activities

$1.0



The $4.3 billion net loss includes the pre-tax impact of a $2.6 billion settlement loss related to the UAW retiree medical plan and a $1.3 billion foreign currency re-measurement loss.

Going public will enable the company to invest in designing, building and selling the world's best vehicles, attract the best people and access the capital markets. One of the most important measures in establishing the foundation for going public is the company's ability to return to sustainable profitability.

"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," said Liddell. "We are also dedicated to delivering on our commitments to our stakeholders. For example we remain committed to repaying the outstanding balance of the U.S. Treasury and Export Development Canada loans by June 2010 at the latest."

# # #

Forward-Looking Statements: In this press release and in related comments by our management, our use of the words "expect," "anticipate," "possible," "potential," "target," "believe," "commit," "intend," "continue," "may," "would," "could," "should," "project," "projected," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Among other items, such factors might include: our ability to comply with the requirements of our credit agreements with the U.S. Treasury and EDC and to repay those agreements as planned; our ability to realize production efficiencies and to achieve reductions in costs as a result of our restructuring initiatives and labor modifications; our ability to maintain quality control over our vehicles and avoid material vehicle recalls; our ability to maintain adequate liquidity and financing sources and an appropriate level of debt, including as required to fund our planning significant investment in new technology and our ability to realize successful vehicle applications of new technology.

GM's most recent annual report on Form 10-K will provide information about these and other factors, which we may revise or supplement in future reports to the SEC.




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    • 1 Second Ago
  • 39 Comments
      • 4 Years Ago
      what is with all the union bashing? i'm sure most don't have a problem with union workers taxes going to help fund schools, safety forces, roads.

      and that's just local. there's state and federal taxes.

      there is also the tax dollars going to forgein companies. how would you like some of your tax dollars going to competing companies; let alone forgein ones?
        • 4 Years Ago
        Do we not pay taxes?
      • 4 Years Ago
      GM is robbing Peter to pay Paul. In this case Peter is the taxpaying American public and Paul is the UAW.
        • 4 Years Ago
        sweet, when is my check coming?
        • 4 Years Ago
        People may vote this down but he's right. I don't have any issue with GM getting government money but the taxpayer got a raw deal out of it. The UAW which under bankruptcy law would get virtually nothing came out the winner and bond holders which under bankruptcy law should get everything got nothing. All of it eventually though financed by uncle sam.
        • 4 Years Ago
        The bulk of the loss, $2.6 billion is due to the fact that in this country we do not have a decent medical care insurance system and companies are saddled with outrageous expenses for the care of their retirees, the highest such expenses in the industrialized world. A lot of the retirees are not eligible for Medicare and the UAW pays the premiums to private medical insurance providers, which are outrageous.
      • 4 Years Ago
      Compare and contrast this article about GM making a VEBA payment with this one about Ford making one.

      http://www.autoblog.com/2010/01/04/ford-completes-transfer-of-retiree-healthcare-to-veba-makes-ext/

      For some reason this article emphasis the cost to the company of making a VEBA payment, but the Ford one emphasizes how great it is that Ford is making a VEBA payment.

      What's with the inequitable treatment?
        • 4 Years Ago
        GM sucks.
        Ford doesn't.
        • 4 Years Ago
        The same could be said for every single comment you make in a Ford post. Hypocrite
      • 4 Years Ago
      sea urchin,

      my point is: if one is against union people, and want them to go away, why is it ok for them to help fund local, state and federal services?
      • 4 Years Ago
      GM needs to get profitable so they can inject the $12.3 billion needed for their underfunded pensions.

      http://www.nytimes.com/2010/04/07/business/07cars.html?ref=business
      GMbandits
      • 4 Years Ago
      How much money is GM going to burn through in arbitration? They claimed to be closing dealerships to be more profitable. However, most of these dealerships will soon open back up with new ownership. A small percentage deserved to closed but most did not.

      Watch what happens over the next 6 months. You will see the local family dealer replaced. The people you have done business for generations will be replaced by a corporation with a revolving door. The familiar faces at the local GM dealership will be history.

      GM has forgotten about the people element of the business. It's a numbers game now.
      • 4 Years Ago
      Why does GM have exposure to foreign currencies??? This is why God killed his son and invented futures!
      • 4 Years Ago
      They still have a long road ahead. Hopefully they will pull through fine.
        • 4 Years Ago
        That's not entirely true on Autoblog's part. GM isn't "confident the company can get back on its feet and start operating at a profit by the end of this year."

        Chris Liddell, the new CFO who came over from Microsoft said that continues to "believe we have a chance of achieving profitability in 2010." There's a difference between being confident and believing.

        But here's something you can be confident in - GM's new 8-speed gearbox!
        http://gmauthority.com/blog/2010/04/transmission-questions-remain-around-gms-alpha-platform/
        • 4 Years Ago
        They're actually doing quite well...... for a govt. agency (only loosing $4.3B).
      • 4 Years Ago
      Instead of a normal bankruptcy GM instead went through a political one. The UAW is a big political organization whose party is in charge of our federal government.

      As a result their "Cadillac Healthplans" and pensions remained intact while virtually everyone else involved in GM's business from suppliers to franchisees to bondholders got completely screwed.

      What the government did was completely the opposite of what would have and should have happened with GM. GM's massive labor and pension costs remain and will remain a massive massive monkey on the automaker's back, in addition to having the spectre of the spectre of federal government control over it, even if Chairman Barack isn't personally calling the shots on every decision GM makes.

      As long as the government remains in left-wing control and a major holder in GM it's labor and pensions costs will ensure that it can't be profitable, even with their products as good as they are.
        • 4 Years Ago
        I am no UAW fan, but:

        "The UAW is a big political organization whose party is in charge of our federal government."

        Lowest membership since WWII? Are you sure they are running the govt.?

        http://www.autoblog.com/2010/04/02/report-2009-uaw-membership-fell-to-lowest-figure-since-wwii/
        • 4 Years Ago
        UAW may not be running the government but labor is. I read article today that Labor department wants to force employers to pay interns at least minimum wage. Every time Solis (Head of Labor Dept) opens her mouth she threatens some business with unionization or something of the sort. This is what happens when people who have never worked in the "Real World" hold important positions.

        As far as big labor, IESU owns this administration.
      • 4 Years Ago
      "a $4.3 billion loss for the fourth-quarter of 2009. "

      "July 10-Dec. 31, '09"

      Isn't that half a year?
      • 4 Years Ago
      More than half of the $4.3 billion loss is a payout to the UAW. Yup... Unions are a winning proposition!
      • 4 Years Ago
      I didn't say the UAW was running the government. The UAW is a solid base of Democrat support and it's one of many groups that they cater to during elections. The bailout of Chrysler and GM was a big payoff from Democrats to the union for their support more than anything else. They don't tell Barack what to do but they do have favor with the party.
        • 4 Years Ago
        Yes you did. Did you even read your own post?
        • 4 Years Ago
        Yeah Bush initiated those bailouts as a big payoff from the Democrats to the union.
        Please try to think before you type.
        Those companies were bailed out for the same reason the banks were - ultimately it would have been more expensive for this notion NOT to bail them out...
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