01—Abstract
Summary
Summary of the 10-K filed April 7, 2010. Cited figures are marked; the original filing is the authoritative source.
General Motors Company (the successor to Old GM, which emerged from Chapter 11 via a Section 363 sale on July 10, 2009) reports its first annual results for the period July 10 through December 31, 2009, alongside Old GM's predecessor results for January 1 through July 9, 2009.
The Successor period shows a net loss attributable to common stockholders of $4.4 billiona, an operating loss of $4.9 billion, and total net sales and revenue of $57.5 billion. Fresh-start reporting makes Successor and Predecessor figures non-comparable, and the Predecessor's January to July period is dominated by a $128.2 billion reorganization gain. Liquidity was $22.8 billion in cash and marketable securities at year-end, with an additional $13.4 billion held in UST and Canadian health care trust escrow accounts, and the company reported positive operating cash flow of $971 million for the Successor period.
The company is highly dependent on the U.S. government, which holds roughly 61% of common shares on a fully diluted basis and exerts significant influence over governance. The balance sheet carries about $15.8 billionb of debt, including $10.2 billion of short-term debt, much of it owed to the UST and Export Development Canada, with quarterly repayments of $1.0 billion and $192 million scheduled. Management plans to repay the UST loans and Canadian loan on schedule, and the 2010 Opel/Vauxhall restructuring and European plant closures are significant near-term cash needs.
Investors should weigh several major risks. Management and the auditor (Deloitte) concluded that internal control over financial reporting was not effective at December 31, 2009 due to a material weakness in the period-end financial reporting process.
The company faces substantial pension and retiree-benefit obligations (pension underfunding of about $27.4 billionc, with significant U.S. pension contributions possible from 2013), dealer network reductions subject to arbitration, environmental and product liability exposures, and continued dependence on GMAC financing. The company's common stock is not publicly traded, and no dividends are planned.
02—Key points
Key Highlights
- Successor (July 10 to Dec 31, 2009) net loss attributable to common stockholders of $4.4 billion; operating loss of $4.9 billion on net sales and revenue of $57.5 billion
- Year-end liquidity of $22.8 billion in cash and marketable securities, plus $13.4 billion in UST and Canadian health care trust escrow accounts; operating cash flow of $971 million for the Successor period
- Fresh-start reporting after the July 2009 363 Sale makes Successor and Predecessor results non-comparable; Predecessor Jan-Jul 2009 includes a $128.2 billion reorganization gain
- U.S. Treasury owns about 61% of common stock on a fully diluted basis and can exert significant control over management, strategy, and financing; the Series A Preferred carries 9.0% cumulative dividends
- Debt of $15.8 billion at year-end, with UST and Canadian loans carrying scheduled quarterly repayments of $1.0 billion and $192 million; the company targets repaying government loans in 2010
- Management and Deloitte concluded internal control over financial reporting was not effective at December 31, 2009 due to a material weakness in period-end financial reporting
- Ongoing restructuring: four core U.S. brands, Saab sold, Saturn/Pontiac/HUMMER being wound down, Opel/Vauxhall plan needing about Euro 3.7 billion in funding, and U.S. dealer reductions subject to arbitration
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2009, General Motors Co lost $0.07.
- Revenue$57.47B100.0%
- Cost of revenue−$56.32B98.0%
- Gross profit$1.16B2.0%
- Operating costs−$6.02B10.5%
- Operating income−$4.86B8.5%
- Interest, other & tax$566.0M1.0%
- Net income−$4.30B7.5%
04—Financials
Financial Highlights
Figures from 10-KFY2009filed April 7, 2010Financial Statements
05—Questions
Frequently Asked Questions
Why can't investors directly compare GM's 2009 results with prior years?
The company applied fresh-start reporting at July 10, 2009 after the 363 Sale, so assets and liabilities were restated to fair value and a new reporting entity began. The Successor period (July 10 to December 31, 2009) therefore reflects different asset values and depreciation than Old GM's Predecessor period (January 1 to July 9, 2009). The filing explicitly states the two periods are not comparable, and the Predecessor's results include large reorganization gains from the bankruptcy.
How much of GM is owned by the U.S. government, and what does that mean for investors?
The UST beneficially owns about 304 million of 500 million outstanding common shares, roughly 61% on a fully diluted basis. Under the Stockholders Agreement, the UST appoints most of the board and can influence strategy, executive compensation, and financing decisions, and its interests as a government entity may diverge from those of other stockholders. Common stock is not traded on any exchange, so there is no public market price.
What are GM's main near-term cash obligations?
Key obligations include quarterly UST and Canadian loan repayments ($1.0 billion and $192 million per quarter, with a suspension possible upon an IPO), VEBA Notes of $2.5 billion repayable in installments from 2013, capital expenditures of about $6.1 billion in 2010, $3.3 billion of other debt payments in 2010, and funding for the Opel/Vauxhall restructuring. Management believes current cash and restricted cash will be sufficient, but it notes that macroeconomic conditions could affect these plans.
What are the biggest risks identified in the filing?
Risks include continued weak vehicle sales and uncertain recovery, loss of market share and negative brand perception, dependence on suppliers and GMAC financing for dealers and customers, reliance on government-controlled governance and restrictive loan covenants, underfunded pensions, potential recalls, environmental and product liability exposure, stringent fuel economy and emissions regulation, failure to restructure European operations, and the material weakness in internal controls.
Is GM paying dividends, and what restrictions exist?
GM has paid no common dividends since formation and has no current plans to do so. Series A Preferred Stock must receive all accrued dividends (9.0% per annum, cumulative) before any common dividend can be declared, and the UST and VEBA note agreements bar common dividends unless no default exists and the consolidated leverage ratio is below 3.00 to 1.00.
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