DETROIT, April 7 /PRNewswire/ — General Motors Company announced that it had completed fresh-start accounting, and would be filing its third quarter 2009 Form 10-Q and 2009 Form 10-K with the SEC today.
“We are building the foundation that will allow us to return to public ownership,” said Chris Liddell, GM vice chairman and CFO. “Completing fresh-start accounting is an important step in that process.”
The new company, which was formed on July 10, 2009 through the acquisition of substantially all the assets and certain liabilities of Motors Liquidation Company (formerly General Motors Corporation), had to complete the process of adopting fresh-start accounting to record the acquisition and establishment of the new GM as well as determine the fair value of assets and liabilities and implement new accounting policies.
The following table provides a summary of GM’s financial results for the period ended December 31, 2009 under fresh-start accounting.
The $4.3 billion net loss includes the pre-tax impact of a $2.6 billion settlement loss related to the UAW retiree medical plan and a $1.3 billion foreign currency re-measurement loss.
Going public will enable the company to invest in designing, building and selling the world’s best vehicles, attract the best people and access the capital markets. One of the most important measures in establishing the foundation for going public is the company’s ability to return to sustainable profitability.
“As the results for 2009 show there is still significant work to be done. However, I continue to believe we have a chance of achieving profitability in 2010,” said Liddell. “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.”
In this press release and in related comments by our management, our use of the words “expect,” “anticipate,” “possible,” “potential,” “target,” “believe,” “commit,” “intend,” “continue,” “may,” “would,” “could,” “should,” “project,” “projected,” “positioned” or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Among other items, such factors might include: our ability to comply with the requirements of our credit agreements with the U.S. Treasury and EDC and to repay those agreements as planned; our ability to realize production efficiencies and to achieve reductions in costs as a result of our restructuring initiatives and labor modifications; our ability to maintain quality control over our vehicles and avoid material vehicle recalls; our ability to maintain adequate liquidity and financing sources and an appropriate level of debt, including as required to fund our planning significant investment in new technology and our ability to realize successful vehicle applications of new technology.
GM’s most recent annual report on Form 10-K will provide information about these and other factors, which we may revise or supplement in future reports to the SEC.
General Motors Company was formed by the United States Department of the Treasury in 2009 originally as a Delaware limited liability company, Vehicle Acquisition Holdings LLC, and subsequently converted to a Delaware corporation, NGMCO, Inc. On July 10, 2009 this company acquired substantially all of the assets and assumed certain liabilities of General Motors Corporation (363 Sale) and changed its name to General Motors Company (GM). General Motors Corporation is sometimes referred to, for the periods on or before July 9, 2009, as Old GM. Prior to July 10, 2009 Old GM operated the business of the Company, and pursuant to the agreement with the SEC Staff, the accompanying consolidated financial statements include the financial statements and related information of Old GM as it is GM’s predecessor entity solely for accounting and financial reporting purposes. On July 10, 2009 in connection with the 363 Sale, General Motors Corporation changed its name to Motors Liquidation Company (MLC). MLC continues to exist as a distinct legal entity for the sole purpose of liquidating its remaining assets and liabilities.
The accompanying tables and charts for securities analysts include earnings before interest and taxes (EBIT), which is not prepared in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP) and has not been audited or reviewed by GM’s independent auditors. EBIT is therefore considered a non-GAAP financial measure. The accompanying charts for securities analysts also contain a reconciliation from EBIT to its most comparable GAAP financial measure.
Management believes EBIT provides meaningful supplemental information regarding GM’s operating results because it excludes amounts that management does not consider part of operating results when assessing and measuring the operational and financial performance of the organization. Management believes these measures allow it to readily view operating trends, perform analytical comparisons, benchmark performance among geographic regions and assess whether GM’s plan to return to profitability is on target. Accordingly, GM believes EBIT is useful in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making.
GM is filing an Annual Report on Form 10-K for the year ended December 31, 2009, a Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 and a Registration Statement on Form 10 pursuant to an agreement with the SEC Staff, as described in a no-action letter issued to Old GM by the SEC Staff on July 9, 2009 regarding GM’s filing requirements and those of MLC.
Certain prior period amounts have been reclassified in the consolidated statements of operations to conform to the current period presentation, primarily due to the adoption of ASC 810-10, “Consolidation” and ASC 470-20, “Debt with Conversions and Other Options,” which have retrospective application.
In the year ended 2009 certain data such as vehicle sales, market share data and production volume combine GM’s data in the period July 10, 2009 through December 31, 2009 with Old GM’s data in the period January 1, 2009 through July 9, 2009 for comparative purposes.