"New GM" Losses Mount

DETROIT — General Motors on Monday released its first post-bankruptcy financial results, for the period from July 10 through September 30, posting what it referred to as a "managerial net loss" of $1.2 billion. GM said it also expected to continue spending more money than it takes in during the fourth quarter and said that its existing cash pile will "decline materially" by the end of the year.

Despite the dour outlook, GM said it plans to begin repaying government loans in the U.S. and Canada in December, ahead of their scheduled maturity date in 2015.

GM reported what it called "preliminary non-GAAP managerial results" — meaning the numbers don't conform to the industry standard of generally accepted accounting principles — for the restructured company's first 83 days of operation after it emerged from a brief government-sponsored bankruptcy, supported by $50 billion in government loans.

In a statement, GM president and CEO Fritz Henderson said, "Today's results provide evidence of the solid foundation we're building for the new GM."

The numbers suggest otherwise.

GM's total revenue in the third quarter was $28.0 billion, including $26.4 billion in the post-bankruptcy period. That compares with $37.9 billion in the third quarter of 2008 and $43.7 billion in the third quarter of 2007.

While GM's international operations earned a pretax profit of $238 million, GM North America posted a pretax loss of $651 million during the period, which included a temporary bump in sales from the government-sponsored Cash for Clunkers program.

GM's U.S. market share this year has plunged to 19.5 percent, from 24 percent last December. GM said its global market share has "stabilized" at just under 12 percent.

At the end of the period, GM said it held $42.6 billion in cash — essentially the balance remaining on its government handouts — including money set aside in an escrow fund to repay the U.S. Treasury and Export Development Canada. GM said it plans to accelerate repayment of the loans, beginning in December.

Despite shedding tens of billions of dollars in debt during its bankruptcy this summer, GM remains saddled with $17 billion in debt, mostly owed to the government, as well as more than $12 billion in notes and preferred stock held by the UAW and CAW unions.

GM said it expects to have "negative cash flows" in the fourth quarter, spending more than it takes in. As a result, the company's "global cash balances at the end of 2009 are expected to be materially lower than third-quarter levels of $42.6 billion."

Inside Line says: In its home market, the "new GM" is a shadow of the once-mighty industrial giant that routinely commanded 45-50 percent of U.S. vehicle sales through much of the 1950s, '60s and '70s, and generated billions in profits. — Paul Lienert, Correspondent