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General Motors Company Posts $1.2 Billion Loss

It will pay back first $1.2 billion to taxpayers next month.

by on Nov.16, 2009

The full costs of health care have not yet been accounted for.

The full costs of health care have not yet been accounted for, or the value of the stock.

General Motors Company (GM) released today preliminary results for its first 83 days of operation, providing an initial look at its still tenuous financial health.

GM’s earnings before taxes for the July 10-Sept. 30 period resulted in a loss of $1.0 billion since it began operations as a reorganized company on July 10.

GM recorded special items for the same period of $505 million, attributed primarily to dealer restructuring, attrition-related charges and Delphi.

For the July 10-Sept. 30 period GM posted a loss after taxes of $1.2 billion.

The results did not conform to Generally Accepted Accounting Procedures (GAAP), which are required of publicly traded companies in the U.S. , since GM is privately held, largely by taxpayers.

In spite of its restructuring, the company is not yet at a break even point, according to Fritz Henderson, CEO, primarily because of costs, including the enormous cost of  health care in the U.S.

Henderson characterized the results as “not satisfactory.”

General Motors Company Q3 2009 Unaudited Non-GAAP Results

“Old GM”July 1-July 9, 2009 GM July 10-Sept. 30, 2009
($mils)
Net revenue $1,637 $26,352
Earnings before interest and taxes (before special items) $(627) $(261)
Net interest $(209) $(250)
Special items (1) $79,672 $(505)
Earnings before taxes $78,836 $(1,016)
Taxes $522 $(135)
Total managerial income/(loss) $79,358 $(1,151)
Managerial operating cash flow (before special items)($bils) $(3.6) $3.3
Global cash and cash-related balance ($bils) $37.6 $42.6
(1) Special items for July 1-July 9, 2009 includes a reorganization gain of $80.7 billion.
Dollars and Sense!

Dollars and Sense!

The revenue, cost and cash flow numbers are indicators of GM’s actual health. These and subsequent results are needed to gauge the effectiveness of the reorganization imposed on it by the U.S. Treasury Department, and to assess the likelihood of how much U.S. and Canadian taxpayers will be paid back of  the $50 billion in loans advanced via their ownership stake of 61% of the company.

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GM Will Release Third-Quarter 2009 Results

Data needed to gauge the effectiveness of the reorganization.

by on Nov.12, 2009

The chairman actually works for the taxpayers, who need results to have their loans paid back.

The chairman actually works for the taxpayers, who need results to have their loans paid back.

General Motors Company plans to release its third quarter 2009 preliminary results on Monday morning, November 16, 2009.

The newly restructured company has not published financial results since it entered the bankruptcy process earlier this year in May. The results will cover the period from July 10, when it emerged from bankruptcy, through September 30 of this year.

In its bankruptcy filing, GM said it lost $88 billion between the end 2004 and the first quarter of this year. Analysts expect the company to again lose money but are uncertain as to the amount.

The company also will release figures starting in January 2009 and ending July 9 for the old General Motors Corporation, which remains in bankruptcy and is being liquidated.

The privately held company will not provide numbers that adhere to generally accepted accounting principles as required by the Securities and Exchange Commission for publicly held U.S. firms.

Results!

Results!

Still, revenue, cost and cash flow numbers would be indicators of its actual health. The results are needed to gauge the effectiveness of the reorganization imposed on it by the U.S. Treasury Department, and to assess the likelihood that U.S. and Canadian taxpayers will be paid back, some if not all of, the $50 billion in loans advanced via their ownership stake of 61% of the company.

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Taxpayers Will Take Big Losses on Auto Bailouts

Oversight Panel says $81 billion committed is largely at risk.

by on Sep.09, 2009

Click on chart to enlarge.

Click on chart to enlarge.

Taxpayers are not going to recover anywhere near the money they have invested in automakers and their subsidiaries, according to a report just released by the Congressional Oversight Panel.

The Panel, which is investigating  the U.S. Treasury Department’s Troubled Asset Relief Program (TARP), criticizes Treasury’s ongoing lack of transparency about the wildly unpopular auto bailouts.

The latest report follows the money and looks at how tens of billions of taxpayer dollars have been used to support Chrysler, General Motors, GMAC and parts makers.

In protecting the interests of taxpayers, the Panel found that Treasury “negotiated aggressively with all the players,” and now holds a combination of debt and equity in the reorganized Chrysler Group, General Motors Company and GMAC.

  • U.S. taxpayers have lent $49.9 billion of TARP funds in conjunction with GM’s bankruptcy and the subsequent creation of General  Motors Company.
  • The Chrysler transactions have spent $14.3 billion of TARP funding, of which $10.5 billion remains outstanding.
  • Assistance to automotive suppliers and investments in GMAC, the financial institution dedicated to automotive lending, account for another $16.9 billion of TARP resources.
  • Total TARP net support for the U.S. domestic automotive industry is slightly over $81 billion as of September 9, 2009.

A problem comes when  trying to figure out how much of this will be paid back. Earlier Congressional Budget Office estimates said that between 65% and 75% of the money was lost. The estimates, alas, still appear reasonable.

In the latest investigation, Treasury officials told the Panel staff that recovery of TARP investments in the automotive industry would be dependent upon the value of the stock that Treasury holds (or subsequently receives) in the two companies when they are able to go public. Therefore, the prospects for recovery of the TARP investments depend on the forecast for Chrysler and GM stock appreciation, which is something that cannot  be predicted.

However, in discussions with the Panel Treasury agreed with the Panel’s assessment that the new companies’ stock prices will have to appreciate sharply for taxpayers to be fully repaid.

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