GM loses $1.15B in Q3

Robert Snell / The Detroit News

General Motors Co. said today it might be able to fully repay taxpayer-funded aid by next summer and that it lost $1.15 billion since emerging from bankruptcy July 10.

In announcing third-quarter results, GM gave the public its first comprehensive peek at the automaker's finances since emerging from bankruptcy with about $50 billion in federal aid.

Before special items, GM lost $261 million. The automaker posted revenue of $28 billion in the third-quarter, up about $4.9 billion compared to the second quarter -- a boost credited to higher industrywide sales and stabilized market share in China, Brazil, India and Russia.

GM had $3.3 billion operating cash flow and $42.6 billion in cash and other available assets.

That amount included $17.4 billion in U.S. and Canadian aid held in escrow. The $42.6 billion is expected to decline substantially in the fourth quarter because $8.1 billion is budgeted for future loan repayments, costs for funding parts supplier Delphi and other expenses.

GM said it will begin repaying its $6.7 billion in government loans, starting with a $1.2 billion payment Dec. 31. The company is required to repay the loans by July 2015 and will make payments of about $1 billion every quarter, at least until the second half of 2010, the earliest that it plans an initial public stock offering.

It is possible GM could fully repay the loans by June 2010 depending on the company's financial health.

That date is important because if GM has any money left in escrow, it will go towards repaying the loans. GM can ask for a one-year extension if executives determine the company still needs the money.

"Already the workers and management of General Motors are disproving the naysayers," said U.S. Rep. Thaddeus McCotter, R-Livonia. "While a hard road ahead remains, there should be no doubt: GM, Michigan and American manufacturing are going to make it."

Year-to-year comparison difficult

While the $1.15 billion net loss was far less than the $2.5 billion loss from a year earlier, an equal comparison is impossible because GM spent the first 10 days of the quarter in bankruptcy court. Another factor complicating a comparison is that since GM is not a publicly traded company, the automaker is not following U.S. accounting principles.

The results give President and CEO Fritz Henderson some concrete results to show the automaker's board, which is pressuring him to quickly improve finances and sales of a company that has lost more than $88 billion since 2004.

"You come away from it, we lost money," Henderson said. "Certainly much lower than what it has been. It is a loss and you cannot be satisfied with it."

The special items included $505 million spent on dealer restructuring, unspecified attrition-related charges and funding auto supplier Delphi Corp.'s exit from bankruptcy.

"We have significantly more work to do, but today's results provide evidence of the solid foundation we're building for the new GM," Henderson said.

Though GM is not considered a public company, the automaker agreed to release the quarterly results since the government holds a 60.8 percent stake in the automaker. Henderson said GM will work to arrange a revolving line of credit next year to give the automaker more financial flexibility.

And the company will work toward creating financial statements by March 31, 2010, a key step towards an initial public offering.

"The reason why that's important is all of our shareholders want to sell shares," he said.

GM said it expects to have negative cash flow in the fourth quarter due to a $2.8 billion payment related to Delphi, $2.5 billion in loan repayments to the U.S., Canadian, Ontario and German governments, and about $1 billion in restructuring costs.

Snapshot from last year

A year ago, GM posted a $2.5 billion third-quarter net loss and said it had $16.2 billion in cash, securities and readily available assets.

When GM released third-quarter results last year, the automaker reported a net loss of $4.45 a share and said its revenue fell to $37.9 billion.

GM has not released quarterly financial results since the first quarter, when it posted a $6 billion loss.

The results were released almost exactly one year after GM signaled it could have trouble paying its bills -- a precursor to the automaker's historic bankruptcy filing seven months later.

When GM released third-quarter results last year, the automaker also said it planned to lay off 3,600 factory workers, cut white-collar jobs and idle plants from Lansing to Lordstown, Ohio -- moves that would cut $5 billion in expenses.

It also was a year ago GM ended its courtship with rival Chrysler LLC because the possible acquisition was "gumming up the works" with efforts to win additional federal aid.

rsnell@detnews.com (313) 222-2028