$4.3 Billion Loss at G.M. Masks Progress Since Bailout

$4.3 Billion Loss at G.M. Masks Progress Since Bailout
By NICK BUNKLEY
Copyright by The New York Times
Published: April 7, 2010
http://www.nytimes.com/2010/04/08/business/08motors.html?emc=na


DETROIT — General Motors said Wednesday that it lost $4.3 billion in the six months after emerging from bankruptcy protection, but that it had positive cash flow of $1 billion in that period.

In its first earnings report since the bankruptcy, the automaker said it had $22.8 billion in cash reserves as of Dec. 31.

The new company said $3.9 billion of the $4.3 billion it lost between July 10 and Dec. 31 was attributable to a settlement with the United Automobile Workers union over retiree health care liabilities and to a “foreign currency remeasurement loss.”

“As the results for 2009 show, there is still significant work to be done,” G.M.’s chief financial officer, Christopher P. Liddell, said in a statement. “However, I continue to believe we have a chance of achieving profitability in 2010. 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.”

G.M. made $1.2 billion in payments to the United States and Canadian governments in December and March. It still owes the United States $4.7 billion.

Most of the $50 billion G.M. borrowed was converted to a 61 percent equity stake held by the Treasury Department. The only way the Treasury can recover that debt is through the sale of its stock, which will happen as soon as G.M. and government officials believe the company is in a financial position to begin offering its shares publicly.

G.M. emerged from bankruptcy July 10 by selling its desirable assets to a new company. Closed plants and other “bad assets” remain in bankruptcy protection and are being liquidated. Under the “fresh start” accounting principles used for the new company, the financial results are not directly comparable to those in previous quarters.

G.M. has not earned a full-year profit since 2004. It lost $88 billion between 2005 and its bankruptcy filing June 1. The company is expected to release its results for the first quarter of 2010 next month.