Gm-$38.7 Billion Loss In 2007
Holy shit !
From the Detroit Free Press:
$38.7 BILLION LOSS IN 2007
GM offers new buyout program
February 12, 2008
By SARAH A. WEBSTER
FREE PRESS STAFF WRITER
General Motors Corp., which celebrates its 100th anniversary this year, today reported a net loss of $38.7 billion, or $68.45 a share — making 2007 the worst year on record for the world’s largest automaker.
The news came on the same day GM announced yet another sweeping buyout program to all of its 74,000 hourly workers who are represented by the UAW, part of an ongoing effort to reduce the number of highly paid autoworkers at the company.
In 2006, GM reported a net loss of $2 billion, or $3.50 per diluted share.
Excluding special items, GM posted a net loss of $23 million, or $0.40 per share, in 2007. That compares to adjusted net income of $2.2 billion, or $3.84 a share, in 2006.
Despite the historic decline, the loss is almost entirely attributable to a non-cash special accounting charge of $38.3 billion that GM announced in the third quarter.
The charge relates to the valuation allowance against deferred tax assets.
What’s more, there were positive signs beneath the overall result for GM, which is regarded by many as the Detroit automaker farthest ahead in its financial turnaround.
Last year, for example, GM posted its second best year of worldwide auto sales. The automaker’s sales increased 3%, or 277,000 units, to 9.4 million vehicles last year. Almost 60% of the company’s sales were outside of the United States, in key growth markets such as Eastern Europe, Latin America and the Asia Pacific.
Those improved sales, along with favorable currency exchanges, helped GM’s core automotive business generate record revenue of $178 billion, a $7 billion improvement from the prior year.
“We’re pleased with the positive improvement in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany,” said GM Chairman and CEO Rick Wagoner.
In the crucial North American market for the United States, Canada and Mexico — an area that has troubled all of Detroit’s automakers — GM reported a loss of $3.3 billion in 2007, compared to $7.5 billion the year before.
Most of that improvement, though, came from a reduction in special charges.
Excluding taxes and special charges, GM North America reported a loss of $1.5 billion in 2007, compared to an adjusted pre-tax loss of $1.6 billion the year before.
While GM will release more details on its buyout program in the weeks ahead, most of those who accept a deal are expected to leave by July 1, the company said.
GM’s new program seems to mirror one announced by Ford Motor Co. last month.
Ford is hoping to get 8,000 of its hourly workers to take a deal.
GM won’t say how many workers it hopes to shed, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of $28 per hour.
GM had been offering buyouts to about 5,200 UAW workers at service and parts operations and some closed plants since December, but those workers now are eligible for the new, sweetened offer, which raises the incentive payments for retirement-eligible production workers by $10,000 and for retirement-eligible skilled workers by $27,500.
Retirement-eligible production workers will be offered $45,000, and retirement-eligible skilled workers will be offered $62,500, to retire with their full pension and health benefits. Those workers can take the money in a lump-sum payment or as annual payments.
They also can roll the money directly into a retirement account or 401k.
GM is giving less than Ford and Chrysler, which are offering up to $70,000 in lump-sum payments, but GM said its offer is comparable because workers who roll the money into a retirement account won’t have to pay as much in taxes.