GM posts $1.2 billion loss, to begin repaying U.S. aid next month
Filed under: Company News, General Motors
General Motors Co. says it lost $1.2 billion from the time it left bankruptcy protection through Sept. 30, far better than it has reported in previous quarters and a sign that the auto giant is starting to turn around its business.The company also says it will begin repaying $6.7 billion in U.S. government loans with a $1.2 billion payment in December. It could pay off the full amount by 2011, four years ahead of schedule.
GM said its improved performance was fueled by new products including the Chevrolet Camaro muscle car, and the Chevrolet Equinox and GMC Terrain midsize crossover vehicles. The company's top sellers through October were the Chevrolet Silverado pickup truck and Impala full-size car.
Also, GM's global presence helped the company, particularly in China, where its sales of 478,000 in the third quarter increased 6 percent over the second quarter.
The company cautioned that the earnings numbers mean little because they don't comply with U.S. accounting standards and cover only the part of the quarter after GM left Chapter 11 bankruptcy protection on July 10.
Even more unusual is the $79.4 billion profit the troubled automaker is reporting for the first nine days of the third quarter, when it remained under bankruptcy court protection but was able to scrap colossal amounts of debt and other obligations from its balance sheet.
"We have significantly more work to do, but today's results provide evidence of the solid foundation we are building for the new GM," CEO Fritz Henderson said in a statement.
Chief Financial Officer Ray Young said it's impossible to compare the third-quarter results to any previous quarter because GM is still reviewing the value of its assets and liabilities post-bankruptcy to comply with accounting principles.
"Direct comparisons are not necessarily applicable. You can make some judgments in terms of trends," Young said.
GM maintains the numbers show a company making progress, riding dramatically reduced structural costs to a far better performance than the $6 billion loss GM reported in the first quarter, the last full quarter for which its numbers met accounting standards.
GM took in $3.3 billion more cash than it spent for the third quarter, far better than the $10 billion the company burned through during the first quarter.
Its third-quarter revenue totaled $26.4 billion, also an improvement over the first quarter when it saw revenue drop nearly 50 percent from the same period in 2008 to $22.4 billion. Revenue was aided by sales boosts in July and August from the U.S. government's Cash for Clunkers rebates.
GM said its global market share was 11.9 percent in the third quarter, up three percentage points from the first half of the year. The U.S. share stayed flat for the quarter at 19.5 percent.
Many customers stayed away from GM showrooms in the first and second quarters as it headed into bankruptcy protection, fearing the company wouldn't be around to honor warranties and service their vehicles.
Young said GM accountants are in the process of cleaning up the new company's books, revaluing assets and liabilities and changes to pension and health care costs that came from bankruptcy and a new contract with the United Auto Workers union.
GM expects to meet accounting standards when it reports full-year results for fiscal 2009, but those figures probably won't be released until March as accountants go through the complex process of figuring out just how much the company is now worth.
But Young said the third-quarter results still are useful to management in spotting trends and measuring whether the company is making progress.
GM lost $78 billion from 2006 through the first quarter of this year. The gargantuan losses and debt eventually choked the company to the point where it could no longer operate without government help. GM entered bankruptcy protection with roughly $94.7 billion in debt. It emerged with $17 billion, including the $6.7 billion owed to the U.S. government. The government has given GM a total of $52 billion, $45.3 billion in exchange for a 61 percent equity stake in the company.
The automaker also says it will begin repaying $1.4 billion it owes to the Canadian and Ontario governments in December. The loan repayments will come from escrow accounts set up for the company by the U.S. Treasury Department and Canadian governments. GM also has paid $700 million on a $1.3 billion loan from the German government to keep GM's Opel division in operation. The balance will be repaid this month, GM said.
Although the company reported positive cash flow for the third quarter, it does not expect that to continue into the fourth quarter because of the government loan repayments and a $2.8 billion payment to help Delphi Corp., its former parts division, out of bankruptcy protection.
GM has said it plans to sell stock to the public late next year so taxpayers can recoup at least part of their remaining investment, though GM Chairman Ed Whitacre said last week the timing of any GM IPO remains uncertain and depends on when the company returns to profitability.
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Reader Comments (Page 1 of 6)
11-16-2009 @ 7:13AM
hotrodqd said...
so if they fail to repay ....what did we get for collateral ? if they dont have it can we throw them in jail too and confiscate all employees assets ?
Reply
11-16-2009 @ 11:43AM
maximum joe said...
This was bound to fail. Howie Long can make all the commercials in the world, but nothing is going to make people want to buy from Obama motor corp.
11-16-2009 @ 7:18AM
hotrodqd said...
naaaaaw democrats will pay them bonuses let them keep everything and blame ....somebody....anybody.....bush ?
Reply
11-16-2009 @ 11:43AM
maximum joe said...
LOL! You hit that one on the head!
11-17-2009 @ 1:26PM
Michael Pallotta said...
yr a bit confused my friend....thats the republicants way of doing business....why the hell do u think this country is so fu*ked up ?....8 years of dubya...& chaney with his head up hes a$$....wake up dude !
11-17-2009 @ 3:42PM
Barb said...
thats because they rob the retirees of their pension and benefits and used the money to infest in other countries, been going on for year, they deserve to fail for all the money they filter into the higher managenments pockets and now Obama who can make a decision , never ran a company in his life, will help them fail, shame on GM and shame on Obama and his task force
11-16-2009 @ 7:26AM
timothy said...
It would be good if GM could repay the money.....that the next Chrysler bankruptcy will cost US taxpayers. Then GM can use the next few years to pay off their own debt.
Reply
11-16-2009 @ 7:55AM
paul said...
the trouble the loan should have never been given to gm and the union! should have let them solve the problem on there own and it would have worked out about the same just we would not have such a huge national debt!this whole bail-out was a farce to steal millions from the tax payer
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11-16-2009 @ 8:01AM
hemipwr54 said...
And more GM (Government Motors) propaganda , the UAW is desperate , they know they need more cash .
The Anti-American UAW is worried it will soon have to ask for more Loans/Bailout , all is not well with the UAW .
BOYCOTT UAW MADE CARS AND TRUCKS .
Buy American NONUNION made cars and trucks , Nissan , Toyota (be careful there are some UAW made Toyota's) , Honda , they all are made by Americans , NONUNION Americans .
Marxism=Communism=Unions=UAW .
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11-16-2009 @ 8:14AM
Steady Eddie said...
These are some of the most asinine comments I've ever read! The UAW a communist organization? How do you come up with this? And wake up to reality, the UAW didn't get bailed out, GM did. And you can thank unions for such things as the 40 hour workweek, minimum wage, overtime pay, workplace safety, etc.
11-16-2009 @ 8:47AM
Kevin said...
Just a few words to describe you. Complete Moron
11-16-2009 @ 10:20AM
gleeminghope said...
This ranks as the dumbest post every written. Why on earth would anyone boycott US made products and buy foreign? First of all, get off the UAW kick..and think American. The Jap crap companies are recruiting Americans to hate the UAW so it can help their sales. We are facing overcapacity in manufacturing cars..too much capacity and not enough demand, so all car companies are fighting for their lives and America is fighting for her life. Getting mad at the UAW and buying Jap crap is just plain dumb. We are in a fight for our life, our economy, our jobs, our industry and you are telling people to be traitors to the United States? Imagine the Phillies annilhilating the Rays 4,000 to 3 in the final game of the worlds series and you have something like the U.S. Automakers success rate in breaking into the Japanese and Korean markets. They forbid our cars being sold in their countries...Ford sold about 2,500 vehicles in Korea last year, compared to 330,000 Hyundai and Kia vehicles exported to the U.S. Now, what is wrong with that, it puts millions of U.S. workers out of a job..not just the UAW workers, the other non union car companies workers..the designers, the engineers, the accountants, local businesses, it affects bank tellers, waitresses, hospital workers, policeman, fireman, it has a huge ripple effect to our economy. Buying foreign is plain wrong and ignorant...anyone who buys foreign is a traitor to the United States. If you want this economy to turn around, you need to buy American...why would help out another country when ours is hurting so bad makes no sense to me.
11-17-2009 @ 3:27PM
Barb said...
Your absolutely right, don't buy GM anything watch out for their new financial company that replaced GMAC its called ALLY BANK, stay away, if they robbed their retirees they will do the same to you and if you think I am kidding stick your head in the sand and wait, your get what they have for you! Their crooks and thats the long and the short of it!
11-16-2009 @ 8:26AM
joe said...
I say we boycott San Francisco and Las Vega until Pelosi and Reid are no longer in office.
How can you pay money when you have no money? Lost a billion? No, the unions conficated a billion before anything else gets paid. Believe it!
Reply
11-17-2009 @ 3:22PM
barb said...
GM isn't American and it hasn't been since they started taking everything out of the country they also have bought into foreign part country and steel companys because they are all over in EU, so you people who think they are still an American company, your in lala land
11-17-2009 @ 3:14PM
barb said...
not the Union but the upper management of GM has been milking it dry for years, they just let the media convience you people that it was the union members and by the way all you people think it was a cushy job have you ever worked for them? I rest my case! They have just been playing mind games with you for years and you guys just bite, but in reality you really wish you had one of those jobs, that now, oh the chineese are doing you can go over their and work in those deploable conditions and make 25 cent an hour because GM doesn't pay the workers the government does and there you have it greed greed and more greed oh and if you haven't heard now they are begging for a bail out of their financil instituion (GMAC)
11-16-2009 @ 8:32AM
algon said...
Lets see, the govt gave GM millions of dollars in the cash-for-clunkers program (avg 4k per vehicle), and now GM will use that money to pay back the govt. So if the govt keeps giving GM money with future programs, is GM really paying the govt back with profits?
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11-16-2009 @ 10:27AM
gleeminghope said...
Dah, the majority of money for the Cash 4 clunkers program went to Japan..almost 80% of our hard earned tax dollars went to help a foreign country, not ours. Once Japan heard how well our program went, they developed their own, but guess what, they forbid or banned U.S. cars in their program. Yes, we allowed their cars in our program, we sent over billions of our tax dollars to their country and they slammed the door in our faces. Everyone needs to boycott their products, plus their quality is horrible, they have a huge problems with "runaway cars"..cars that are killing Americans everyday...accelerator problems..it isn't the floor mats..it is in their computer chips..they need to recall all Toyota's, plus they destroyed crash test results for over 300 hundred rollver deaths...they lie and cheat..at our expense.
11-16-2009 @ 9:08AM
Ken Siemers Sr. said...
GM hasen't changed a thing. They're coming out with a new model Caddy, A high end price car. Now they're in the hole again. So what's Obama going to do now? Give them more of our money and continue failing? What a joke the Obama whitehouse is.
Reply
11-16-2009 @ 9:58AM
Dennis said...
stupid azz the money use to create the new caddy was done before gm got the bailout money learn your facts b4 u speak again dumb prick don't get mad cause you cannot afford it