GM restates earnings, Banks say bankruptcy more likely now

OS

Lifer
Oct 11, 1999
15,581
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Shares of General Motors Corp., the world's largest automaker, fell to their lowest in 13 years after the company said it will restate 2001 earnings and that it lost more money in the second quarter than it first reported.

Profit in 2001 was overstated by as much as $400 million, GM said in a U.S. regulatory filing yesterday. The second- quarter revision arose from GM overestimating the value of its 20.1 percent stake in Japanese carmaker Fuji Heavy Industries Ltd. by 57 percent, according to a separate filing yesterday.

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Bank of America said that it had raised the probability that GM would have to file for bankruptcy protection in the next two years from 30pc to 40pc.


link 2
 

dartworth

Lifer
Jul 29, 2001
15,200
10
81
GM misstated '01 income by up to $400 million

Automaker says it improperly accounted for some supplier credits; SEC is investigating.

General Motors Corp., already under scrutiny from federal regulators for its accounting practices, said Wednesday that it overstated income in 2001 by $300 million to $400 million.

During a review of transactions with suppliers, the automaker discovered that it improperly recognized some supplier credits as income in the year in which they were received, rather than in future periods.

The U.S. Securities and Exchange Commission also is investigating the matter, GM said.

The automaker plans to restate earnings for subsequent periods, but said the amounts in those restatements aren't expected to be material, which means they are not likely to impact the value of GM stock.

GM declined to identify the suppliers.

In 2001, the automaker posted profits of $1.2 billion from continuing operations.

"We basically booked the income in the wrong period. We're going to restate it rather than taking it all in 2001," GM spokeswoman Toni Simonetti said. "The income still exists. It just shouldn't have been booked in all of 2001."

The company said in a filing with the Securities and Exchange Commission late Wednesday that the restatements are the result of an ongoing review of supplier credits from 2000 through 2005. Earlier this week, GM's audit committee determined the automaker's 2001 financial statements were not reliable, GM said in the filing.

The automaker expects to complete a review of the supplier credits by the time it files its annual financial report for 2005.

Last month, the automaker received subpoenas from the SEC concerning numerous accounting practices and transactions.

They include how GM calculates pension and other retiree benefit obligations; transactions between the automaker and auto parts maker Delphi Corp.; how the automaker recovers and records the costs of recalls from suppliers; and how the automaker calculates and records supplier price reductions and credits.

The SEC is also exploring GM's possible obligation to fund Delphi's pension plans following the auto parts maker's bankruptcy filing last month.

The disclosure, announced Wednesday after U.S. markets closed, is another setback in GM's efforts to reassure investors amid mounting losses in its core automotive operations.

The automaker's shares tumbled 4.8 percent to close at $24.63 in New York Stock Exchange trading Wednesday. It was the lowest closing price for the company in 13 years.

The shares slumped after Fitch Ratings Inc. lowered its credit rating on GM's debt several more notches below investment grade, with a negative outlook.

GM has lost $3.8 billion in the first nine months of the year and has posted four consecutive quarterly losses, its longest stretch without a profit in 13 years.
 

thedarkwolf

Diamond Member
Oct 13, 1999
9,015
114
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Nobody will buy them out. If they file it will be to dump their pension plan onto the tax payer like the airlines have.
 

OS

Lifer
Oct 11, 1999
15,581
1
76
Originally posted by: thedarkwolf
Nobody will buy them out. If they file it will be to dump their pension plan onto the tax payer like the airlines have.

What he said. GM's debt is 285 billion but their market cap (all shares) is 13 billion.

http://finance.yahoo.com/q/ks?s=GM

You'd have to PAY someone a couple hundred billion to take over GM for this to even begin to make sense.

 

MikeMike

Lifer
Feb 6, 2000
45,885
66
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Originally posted by: Cdubneeddeal
Originally posted by: Scouzer
so who will be buying GM out?

smells like toyota to me

Yup. Pontiac already has Toyota engines in their wannabe Matrix line.

and there are Honda engines in the Vue iirc.

and way the hell back when Toyota sold Cavaliers in Japan as Toyotas.

and
and
and

no one will buy GM out, it just wont happen, a merger within the big 3 wont even happen, just would become TO big.

if you think its manageable you are moronic.
 

CocoGdog

Senior member
May 31, 2000
848
0
0
Originally posted by: czech09
Originally posted by: CocoGdog
GMC-Ditech can follow them to hell. I hate that company.

Werd

Yeah, they're the loan division of GM. I had a very bad experience trying to re-fi my house because GMC-Ditech had some hidden wording in the doc's that called for early withdrawl penalties for which none of them jerks ever explained. Don't ever get a loan from them.
 

Ronstang

Lifer
Jul 8, 2000
12,493
18
81
Originally posted by: thedarkwolf
Nobody will buy them out. If they file it will be to dump their pension plan onto the tax payer like the airlines have.

Do your homework. The fund used to pay pensions if a company goes bankrupt is paid for by premiums from companies, not taxpayer money is used. In the future this will not even be a big issue because before long no one will have the traditional pension as they are all converted to 401K type programs.
 

Blazin Trav

Banned
Dec 14, 2004
2,571
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Capitalism at its best. The market system we have is pwning GMC... part of it is GMC has gotten far too big, bought out tons of companies...
 

compuwiz1

Admin Emeritus Elite Member
Oct 9, 1999
27,111
926
126
Gm should die, anyway. Their products bite. Their workers need money, so they should probably stay alive.
 

JLGatsby

Banned
Sep 6, 2005
4,525
0
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It's a solid fact that unions killed GM.

GM owes $60 billion to pensioners from the 1960 - 1990s, but only have $20 billion reserved.

Warren Buffett himself said that these workers were promised too much pension money.

You can thank unions for this.