GM Reports $9.6 Billion Loss In Fourth Quarter, 2008 Loss Of $30.9 Billion

GM just announced a preliminary fourth quarter 2008 net loss of $9.6 billion, bringing the net cash hemorrhaged for all of 2008 to $30.9 billion.

Why do we think this may come up in today's scheduled meeting with President Obama's Auto Task Force.

GM Reports Preliminary Fourth Quarter and Calendar Year 2008 Financial Results

* Results reflect global economic crisis and industry-wide collapse in vehicle demand
* Fourth quarter adjusted net loss of $5.9 billion, reported net loss of $9.6 billion
* 2008 adjusted net loss of $16.8 billion, reported net loss of $30.9 billion
* Structural cost improvement in North America of $3.0 billion in 2008

Calendar Year
2008 2007* '08 O/(U) '07
Revenue (bils.): $149 $180 $(31)
Adjusted automotive earnings before tax (bils.): $(10.4) $0.6 $(11.0)
Reported automotive earnings before tax (bils.): $(16.3) $(1.9) $(14.4)
Adjusted net income (bils.): $(16.8) $(0.3) $(16.5)
Reported net income (bils.): $(30.9) $(43.3) $12.4
Reported earnings per share (diluted): $(53.32) $(76.52) $23.20
Adjusted operating cash flow (bils): $(19.2) $(2.4) $(16.8)
* 2007 figures reflect continuing operations

DETROIT – General M otors Corp. (NYSE: GM) today announced its fourth quarter and calendar year 2008 financial results, which were affected by the dramatic deterioration in global economic and market conditions during the year, declining consumer confidence and a 50-year low in per-capita auto sales in the United States.

For the 2008 calendar year, GM reported an adjusted net loss, excluding special items, of $16.8 billion, or $29.00 per diluted share. This compares to an adjusted net loss of $279 million, or $0.49 per diluted share in 2007. The 2008 results were driven by the impact of the U.S. recession and subsequent global contagion. Including special items, the company reported a loss of $30.9 billion, or $53.32 per diluted share, compared to a reported loss of $43.3 billion, or $76.52 per diluted share in 2007, which included a non-cash special charge of $38.3 billion in the third quarter related to the valuation allowance against deferred tax assets.

"2008 was an extremely difficult year for the U.S. and global auto markets, especially the second half, " Chairman and CEO Rick Wagoner said." These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business.

"We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions. At the same time, we are continuing our commitment to exciting, fuel-efficient cars and trucks, and the leadership in advanced propulsion technology ."

GM total revenue in 2008 was $149 billion, compared with $180 billion in 2007. GM's core automotive business generated revenue of $148 billion in 2008, down from $178 billion in 2007. The revenue decline was predominantly due to the precipitous drop in sales amid record low consumer confidence in the U.S. and sharply lower sales across all of GM's operating regions due to economic turmoil in the global markets. Global industry sales in 2008 were down 5 percent, or 3.6 million vehicles, versus 2007 levels, and U.S. industry sales fell by 18 percent, or nearly 3 million units.

Fourth Quarter
2008 2007* '08 O/(U) '07
Revenue (bils.): $30.8 $46.8 $(16.0)
Adjusted automotive earnings before tax (bils.): $(4.0) $(0.8) $(3.2)
Reported automotive earnings before tax (bils.): $(6.4) $(1.2) $(5.2)
Adjusted net income (bils.): $(5.9) $0.05 $(5.9)
Reported net income (bils.): $(9.6) $(1.5) $(8.1)
Reported earnings per share (diluted): $(15.71) $(2.70) $(13.01)
Adjusted operating cash flow (bils): $(5.2) $(1.3) $(3.9)

* 2007 figures reflect continuing operations

In the fourth quarter 2008, GM posted an adjusted net loss of $5.9 billion or $9.65 per diluted share, compared to adjusted net income of $46 million, or $0.08 per diluted share in the year-ago period. Including special items, the company reported a net loss of $9.6 billion, or $15.71 per diluted share in the fourth quarter 2008, compared to a net loss of $1.5 billion, or $2.70 per diluted share in the year-ago period.

The fourth quarter 2008 results reflect special items totaling $3.7 billion. Special charges include :

* $1.1 billion impairment charge primarily relating to actions being taken regarding the Hummer and Saab brands
* $1.0 billion charge relating to adjustments to the value of deferred tax assets in various countries outside of the U.S.
* $900 million of restructuring and capacity-related costs
* $660 million increase to the Delphi reserve relating to the valuation of future pension obligations
* $610 million of gross goodwill impairments in Europe and North America
* $533 million net gain relating to GM's portion of the GMAC bond exchange gain, net of an impairment taken on GM's holdings in GMAC

Details on all special items are included in the "Highlights" section of this news release.

Effective Oct. 1, 2008, GM discontinued the use of hedge accounting treatment, on a prospective basis, to comply with SFAS 133. This resulted in a positive net effect on fourth quarter earnings of $436 million.

In accordance with SFAS 157, GM incorporates its credit risk when measuring the fair value of its derivative liabilities. As a result of GM's increasing credit risk, the fair value of its derivative liabilities declined in the fourth quarter, resulting in a net gain of $1.4 billion.

GM reported revenue of $30.8 billion in the fourth quarter 2008, down from $46.8 billion in the fourth quarter 2007. Revenue from automotive operations totaled $30.6 billion in the quarter, compared to $46.5 billion from the prior year, largely driven by the sharp decline in global industry volume.

GM reports its automotive operations and regional results on a pre-tax basis, with taxes reported on a total corporate basis.

GM Automotive Operations

GM's global automotive operations posted an adjusted loss before tax of $10.4 billion in 2008 (reported loss of $16.3 billion), compared to adjusted income before tax of $553 million in 2007 (reported loss of $1.9 billion). In the fourth quarter 2008, GM's automotive operations had an adjusted loss before tax of $4.0 billion (reported loss of $6.4 billion), compared to an adjusted loss before tax of $803 million in the year-ago quarter (reported loss of $1.2 billion).

GM 2008 worldwide sales were 8.35 million vehicles, down 11 percent, or 1.01 million vehicles, driven by the industry-wide contraction in global vehicle sales. In 2008, 5.38 million vehicles, or 64 percent of GM's global sales, were outside of the U.S., up from 59 percent a year ago. GM's Asia Pacific (GMAP) and Latin America, Africa and Middle East (GMLAAM) regions each grew sales volume by nearly 3 percent, and more than 2 million vehicles were sold in Europe for the third consecutive year. Despite softer industry sales, GM continues to lead in emerging markets, posting market share growth in 14 of 26 of the emerging markets.

GMNA

Fourth Quarter

2008

2007

'08 O/(U) '07

Revenue (bils.)

$19.3

$28.1

$(8.8)

Adjusted earnings before tax (bils.)

$(2.1)

$(1.1)

$(1.0)

Reported earnings before tax (bils.)

$(3.5)

$(1.3)

$(2.2)

GM market share

21.0%

22.7%

(1.7)p.p.

GM North America (GMNA) posted an adjusted loss before tax of $2.1 billion in the fourth quarter 2008 (reported loss of $3.5 billion), compared to an adjusted loss before tax of $1.1 billion in the fourth quarter 2007 (reported loss of $1.3 billion). These results were impacted by significant declines in U.S. industry volume, leased vehicle residual adjustments, increased incentives and unfavorable product mix, partially offset by favorable cost performance, SFAS 157 adjustments and foreign exchange. For 2008, GMNA posted an adjusted loss before tax of $9.4 billion (reported loss of $14.1 billion), compared to an adjusted loss before tax of $1.5 billion in the year-ago period, excluding special items (reported loss of $3.3 billion).

As a result of GM's ongoing restructuring initiatives to adapt to current economic conditions, significant actions have been taken to reduce its structural cost. In North America, GM reduced structural cost from $33.8 billion to $30.8 billion, or $3.0 billion, during 2008.

GME

Fourth Quarter

2008

2007

'08 O/(U) '07

Revenue (bils.)

$6.4

$10.7

$(4.3)

Adjusted earnings before tax (mils.)

$(956)

$(215)

$(741)

Reported earnings before tax (mils.)

$(1,890)

$(445)

$(1,445)

GM market share

9.1%

9.2%

(0.1)p.p.

For the fourth quarter 2008, GM Europe (GME) posted an adjusted loss before tax of $956 million (reported loss of $1.9 billion) versus an adjusted loss before tax of $215 million in the year-ago period (reported loss of $445 million). The decline in fourth quarter earnings was largely attributable to the lower industry volume across the region, unfavorable model mix and unfavorable foreign exchange and commodity hedging, partially offset by strong cost performance. For 2008, GME posted an adjusted loss before tax of $1.6 billion (reported loss of $2.8 billion), compared to adjusted income before tax of $55 million in the year-ago period, excluding special items (reported loss of $524 million).

GMLAAM

Fourth Quarter

2008

2007

'08 O/(U) '07

Revenue (bils.)

$4.7

$6.0

$(1.3)

Adjusted earnings before tax (mils.)

$(154)

$424

$(578)

Reported earnings before tax (mils.)

$(181)

$424

$(605)

GM market share

16.2%

17.3%

(1.1)p.p.

In the fourth quarter, GMLAAM posted an adjusted loss before tax of $154 million (reported loss of $181 million), down from adjusted income of $424 million in the fourth quarter of 2007 (reported income of $424 million). Fourth quarter results were impacted by lower industry volume in Brazil, Venezuela and other key markets, and unfavorable foreign exchange, offset by favorable model mix and pricing. For the year, GMLAAM posted adjusted earnings before tax of $1.3 billion (reported income of $1.3 billion), which was comparable to 2007 adjusted earnings of $1.3 billion (reported income of $1.3 billion). Despite a slowdown in the fourth quarter, GMLAAM achieved record revenue of $20.3 billion and sales volume of almost 1.3 million vehicles for the calendar year.

GMAP

Fourth Quarter

2008

2007

'08 O/(U) '07

Revenue (bils.)

$2.6

$5.3

$(2.7)

Adjusted earnings before tax (mils.)

$(879)

$72

$(951)

Reported earnings before tax (mils.)

$(917)

$72

$(989)

GM market share

7.2%

7.3%

(0.1) p.p.

GMAP posted an adjusted loss before tax of $879 million for the fourth quarter (reported loss of $917 million), compared to adjusted income of $72 million in the year-ago period (reported income of $72 million). GMAP fourth quarter earnings were impacted by lower industry volume, unfavorable pricing, unfavorable foreign exchange and commodity hedging, partially offset by favorable model and mix and continued favorable cost performance. For the year, GMAP posted an adjusted loss before tax of $664 million (reported loss of $800 million) compared to adjusted income of $744 million (reported income of $681 million) for 2007.

GMAC

In the fourth quarter, GMAC Financial Services (GMAC) reported net income of $7.5 billion, driven largely by the company's December bond exchange, compared to a net loss of $724 million in the fourth quarter of 2007. Excluding the $11.4 billion gain on its bond exchange, GMAC's results in the fourth quarter reflected a net loss of $4.0 billion, driven primarily by losses in North America automotive finance and continued losses at Residential Capital, LLC (ResCap). GMAC reported net income of $1.9 billion in 2008, compared with a net loss of $2.3 billion in 2007.

GM realized an adjusted loss of $4.7 billion attributable to GMAC, as a result of its 49 percent equity interest for the year, and an adjusted loss of $1.9 billion for the fourth quarter. This excludes a fourth quarter net gain of $533 million related to GM's portion of GMAC's bond exchange gain that was largely offset by an impairment of GM's investment in GMAC.

Cash and Liquidity

Cash, marketable securities and readily available assets of the Voluntary Employees Beneficiary Association (VEBA) trust totaled $14.0 billion as of Dec. 31, 2008, down from $27.3 billion on Dec. 31, 2007. GM had adjusted automotive operating cash flow of negative $5.2 billion in the fourth quarter, and ended the 2008 calendar year with adjusted automotive operating cash flow of negative $19.2 billion, largely due to lower volume across GM's global operations and negative working capital.

On Dec. 31, 2008, GM entered into a loan agreement with the U.S. Department of Treasury (UST) for funding of $13.4 billion, payable in three tranches. The initial installment of $4.0 billion was provided to GM on Dec. 31, 2008, followed by subsequent installments of $5.4 billion and $4.0 billion on Jan. 21, 2009 and Feb. 17, 2009, respectively.

In accordance with the terms of the loan, GM submitted to the UST on Feb. 17, 2009 a comprehensive global restructuring plan that demonstrates GM's long-term viability. GM is working with its key stakeholders as the company implements the actions outlined in the plan, to create a revitalized, more cost competitive company, dedicated to developing world-class vehicles and leading advanced propulsion technologies.

As a result of year-end measurements of GM's net pension obligations, it was determined that the U.S. hourly and salaried qualified pension plans are currently underfunded, on a combined basis, by approximately $12.4 billion. Several factors contributed to the underfunded status, including service and interest costs; lower asset returns; lower discount rates; changes in actuarial assumptions; various hourly initiatives including the UAW special attrition program, VEBA agreement, Delphi pension transfer and IUE contract; and salaried initiatives including the pension benefit changes relating to the elimination of post-65 retiree healthcare and the salaried retirement program. While no additional pension contributions are anticipated over the next three years, the funded status of the pension plan is subject to a number of variables. GM will continue to analyze its pension funding strategies going forward.

GM intends to take advantage of the extension of the time required to file its 2008 10-K, which the SEC rules allow by filing Form 12b-25. This provides GM with up to 15 additional days in which to file its 2008 10-K, without being considered "late" by the SEC. The company believes this is a prudent step to take at this critical time as it allows more time for thorough review of the extensive financial and other disclosures regarding the events that occurred at year-end 2008 and during early 2009. Additionally, as a result of the bond exchange, GM's 2008 10-K will contain information regarding executive compensation, which would not normally be disclosed until the proxy statement is issued for GM's annual stockholder meeting.

Finally, GM anticipates receiving a "going concern" opinion from its auditors in the 2008 10-K. GM and its auditors must determine whether there is substantial doubt about GM's ability to continue as a going concern. GM's Viability Plan filed with the UST on Feb. 17, 2009, included a request for additional funding from the UST, as well as support from other governments outside of the U.S. GM requires this funding in 2009 to continue operations until global automotive sales recover and its restructuring actions generate benefits, resulting in the company being able to fund its own operating requirements.

About GM

General Motors Corp. (NYSE: GM), one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 244,500 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the U.S., followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

Forward-Looking Statements

In this press release and in related comments by our management, our use of the words "expect," "anticipate," "ensure," "promote," "target," "believe," "improve," "intend," "enable," "continue," "will," "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 agreement with the U.S. Treasury; the availability of funding for future loans under that credit agreement; our ability to execute the restructuring plans that we have disclosed, our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; and changes in general economic conditions, market acceptance of our products; shortages of and price volatility for fuel; significant changes in the competitive environment and the effect of competition on our markets, including on our pricing policies, financing sources and an appropriate level of debt; and changes in general economic conditions.