General Motors Company · NYSE:GM
General Motors — Q4 2007 Earnings Presentation
49 slides from General Motors's earnings presentation, Feb 12, 2008
Slide 1: Preliminary 2007 Fourth Quarter and CY Results
Preliminary 2007 Fourth Quarter and CY Results
Slide 2: Forward Looking Statements
Forward Looking Statements 1 In this presentation and in related comments by our management, our use of the words "expect," "anticipate," "estimate," "goal," "target," "believe," "improve," "intend," "potential," "continue," "designed," "opportunity," "risk," "may," "would," "could," "should" or the
Slide 3: Fourth Quarter & Calendar Year Highlights
Fourth Quarter & Calendar Year Highlights Fourth Quarter GAAP net loss of $(0.7)B, $(1.28) EPS Adjusted net income of $46 million, $0.08 EPS, excluding special items including significant unfavorable items related to Delphi Adjusted automotive earnings before tax (EBT) down $0.8B Total automotive re
Slide 4: Calendar Year 2007 Adjusted Results
Calendar Year 2007 Adjusted Results 3 Refer to Supplemental Charts for reconciliation to GAAP figures Refer to Supplemental Charts for reconciliation to GAAP figures
Slide 5: Fourth Quarter Adjusted Results
Fourth Quarter Adjusted Results 4 Refer to Supplemental Charts for reconciliation to GAAP figures Refer to Supplemental Charts for reconciliation to GAAP figures
Slide 6: Fourth Quarter Taxes
Fourth Quarter Taxes 5 In Q3 2007 GM established valuation allowance for deferred tax assets in the U.S., Germany and Canada In Q4 2007 GM re-measured pension and OPEB liabilities, resulting in pension and OPEB related gains in Other Comprehensive Income (OCI) Gain in OCI generated tax related liabi
Slide 7: Adjustments to Income
Adjustments to Income 6 Exclusion of special items useful for: Management to measure operations Comparisons between reporting periods Investors to measure and assess company's core performance
Slide 8: Fourth Quarter Allison-related Special Item
Fourth Quarter Allison-related Special Item 7 As a result of the intra-period tax allocation, tax expense on the Allison discontinued operations was reduced by $0.8B Change in tax expense allocation to discontinued operations results in final net after-tax gain on sale of Allison of $4.3B Final tax
Slide 9: Fourth Quarter Delphi-related Special Items
Fourth Quarter Delphi-related Special Items 8 GM recorded Q4 charge of $622 million as result of amendments to the GM-Delphi Settlement Agreements, support of Delphi's sale businesses, updated estimates of Delphi retiree healthcare costs and possible support based on ongoing discussions with Delphi
Slide 10: Delphi Update
Delphi Update 9 Bankruptcy Court approved Delphi's Disclosure Statement in December Included amendments to the GM-Delphi Settlement Agreements, whereby GM agreed to accept a reduction in preferred stock recovery from $1.2 billion to $1.0 billion at Plan of Reorganization Value Bankruptcy Court confi
Slide 11: Fourth Quarter Other Items
Fourth Quarter Other Items 10 $0.3B of restructuring special items, largely related to GME Approximately $0.2B related to separation programs implemented in Belgium, Germany and Sweden Balance of approximately $0.1B in GMNA largely related to adjustments to plant closing reserve $0.1B or impairment/
Slide 12: GMNA Fourth Quarter Adjusted Results
GMNA Fourth Quarter Adjusted Results 11 11 Excludes results from Allison Transmission, now recorded as Discontinued Operations
Slide 13: GMNA Vehicle Revenue Per Unit
GMNA Vehicle Revenue Per Unit Calendar Year Fourth Quarter Net Revenue Gross Revenue less Sales Incentives Vehicle revenue per unit excludes items such as daily rental accounting impact, Service Parts, OnStar, other outside sales 12 Adjusted to remove Allison. Refer to Supplemental Charts for reconc
Slide 14: GMNA Adjusted EBT - Q4 2007 vs. Q4 2006
GMNA Adjusted EBT - Q4 2007 vs. Q4 2006 $ Billions - Continuing Operations Only Q4 2006 Earnings Before Tax $(0.1) Volume (0.5) Mix 0.3 Price (0.4) Material / Other Contribution Cost (0.1) Policy & Warranty / Campaigns 0.0 Pension / OPEB / Manufacturing 0.0 Engineering / Exchange / Other (0.3) 2007
Slide 15: GMNA Adjusted EBT - CY 2007 vs. CY 2006
GMNA Adjusted EBT - CY 2007 vs. CY 2006 $ Billions - Continuing Operations Only CY 2006 Earnings Before Tax $(1.6) Volume (2.7) Mix 2.0 Price 0.4 Material / Other Contribution Cost (0.6) Policy & Warranty / Campaigns (0.5) Pension / OPEB / Manufacturing 2.8 Engineering / Exchange / Other (1.3) 2007
Slide 16: Overview of Other Regions
Overview of Other Regions GM automotive revenue up 23% in regions outside of North America in Q4 40% of revenue and 54% of unit sales generated outside GMNA; 61% of unit sales generated outside the U.S. GM market share gains continue outside GMNA, up 0.3 p.p. and 0.4. p.p. for Q4 and CY, respectivel
Slide 17: GME Fourth Quarter Adjusted Results
GME Fourth Quarter Adjusted Results 16
Slide 18: GME Adjusted EBT - 2007 vs. 2006
GME Adjusted EBT - 2007 vs. 2006 $ Billions Q4 CY 2006 Earnings Before Tax $(0.0) $0.4 German Market Impact (0.3) (0.6) Foreign Exchange (0.1) (0.1) Volume / Mix / Price (ex. Germany) 0.1 0.4 Material / Structural Cost 0.2 0.2 Other (0.1) (0.2) 2007 Earnings Before Tax $(0.2) $0.1 17
Slide 19: GMLAAM Fourth Quarter Adjusted Results
GMLAAM Fourth Quarter Adjusted Results 18
Slide 20: GMAP Fourth Quarter Adjusted Results
GMAP Fourth Quarter Adjusted Results 19 19
Slide 21: GM China Results
GM China Results 20 China industry continues to show explosive growth, with volume up 20% in CY 2007 vs. CY 2006 GM, with its joint venture partners, became first manufacturer to sell over 1 million units in China in 2007 GM volume up 18% in CY 2007, and up 22% in Q4 2007 (ahead of industry growth i
Slide 22: GMAC CY & Fourth Quarter Overview
GMAC CY & Fourth Quarter Overview 21 Fourth Quarter GMAC reported $(0.7)B net loss due to continued ResCap losses ResCap net loss of $(0.9)B driven by asset write downs/impairments, restructuring costs and weaker consumer Global Auto Finance remained profitable, but reported lower results due to low
Slide 23: GMAC Fourth Quarter Business Line Results
GMAC Fourth Quarter Business Line Results 22 22
Slide 24: GMAC Calendar Year Business Line Results
GMAC Calendar Year Business Line Results 23 23
Slide 25: GMAC Summary & Outlook
GMAC Summary & Outlook 24 Losses in Q4 2007 smaller than those in Q3 2007, showing that actions undertaken in 2007 are starting to produce results Restructured ResCap Tightened lending standards Reduced balance sheet Accelerated Auto Finance "originate to distribute" model Took appropriate impairmen
Slide 26: GM Automotive Liquidity Position
GM Automotive Liquidity Position 25 Strong gross automotive liquidity position of $27.3B at year-end 2007 Includes $0.6B of readily-available VEBA assets (i.e. short-term VEBA) Represents increase of $0.9B from year-end 2006 Reflects proceeds from sale of Allison Transmission, partially offset by ne
Slide 27: Automotive Gross / Net Liquidity
Automotive Gross / Net Liquidity 26 1 Q4 2005 - Q3 2006 Net Liquidity figures exclude GMAC related debt 1 $ Billions Q4'00 YE '01 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4'07 Net Liquidity 5.2 4.8 4.8 3.5 -0.7 -13.833 -12.303 -11.394 -14.2 -12.323 -13.294 -12.093 -9.9 -12.1 Gross Ca
Slide 28: Fourth Quarter Key Cash Flow Drivers
Fourth Quarter Key Cash Flow Drivers 27 Q4 2007 adjusted automotive OCF of $(1.3)B primarily driven by negative EBT, traditionally higher capital expenditures, and ongoing legacy payments Partially offset by seasonally favorable working capital performance CY 2007 adjusted automotive OCF of $(2.4)B,
Slide 29: Automotive Cash Flow Summary
Automotive Cash Flow Summary Refer to Supplemental Charts for reconciliation to GAAP figures 28 * Earnings before Tax from Continuing Operations
Slide 30: Accrued Expenses and Pension/OPEB
Accrued Expenses and Pension/OPEB 29 Accrued Expenses and Other reflects timing of cash flows vs. accruals Net variance related to Pension/OPEB driven primarily by lower net pension and OPEB expense
Slide 31: U.S. Pension Expense
Gi | U.S. Pension Expense 2006 2007 2008 (S Billions) Actual Actual Outlook U.S. Pension Expense / (Income) ' (0.6) (1.1) (1.4) Related Interest Expense 1.0 1.1 14 Total Expense / (Income) 04 (0.3) YE Funded Status * 17.1 20.0 N/A - Hourly 11.6 11.8 - Salaried 55 82 YE Discount Rate (%) 5.90% 6.35%
Slide 32: U.S. Health Care Spending & OPEB Expense
U.S. Health Care Spending & OPEB Expense 31
Slide 33: GM-UAW Healthcare Settlement Update
GM-UAW Healthcare Settlement Update Negotiations with the UAW and Class Counsel progressing well Expect to complete negotiations and file Settlement Agreement with court shortly Do not anticipate delays in court approval process Agreement in principle on two developments $4B short term note Restruct
Slide 34: $4 Billion Short Term Note
$4 Billion Short Term Note In Q4 2007 GM withdrew $2.7B from its VEBA, representing residual salaried and hourly 2006 Healthcare PAYGO capacity Post withdrawal, UAW-related portion of the hourly VEBA estimated at $14.5B as of year-end 2007 Under GM-UAW MOU, agreement to set aside $18.5B upfront Agre
Slide 35: Restructuring $4.4B UAW Convertible
Restructuring $4.4B UAW Convertible UAW and Class Counsel approached GM for adjustment to terms of convertible note In spirit of cooperation, as part of the overall settlement agreement process GM agreed in principle to effective conversion price of $36 versus $40 through execution of derivative tra
Slide 36: 2007 Recap - Total Automotive Metrics vs. 2006
Capital Spending Increase Global Industry Increase GM Revenue Increase Adjusted Earnings Improve Cash Flow Improve but Negative 2007 Recap - Total Automotive Metrics vs. 2006 Structural Cost Decrease Net Material Performance Flat Jan 2007 Outlook CY 2007 Results Increase Increase Slightly Unfavorabl
Slide 37: 2008 GM Automotive Overview
2008 GM Automotive Overview Continued global revenue growth Continued improvement in material cost and structural cost metrics U.S. total industry outlook in the low 16 million unit range Sufficient liquidity cushion even in event of further U.S. industry decline Ahead of a possible downturn, should
Slide 38: Total Automotive Outlook - 2008 vs. 2007
Capital Spending Continued strong product and advanced technology development Global Automotive Revenue Revenue growth in all regions, particularly in emerging markets Footprint optimization, lower commodity increases, fewer majors Down in all regions, particularly GMAP & GMLAAM due to revenue growt
Slide 39: Special Attrition Program - Phase II
Special Attrition Program - Phase II 38 In Dec 2007, GM and the UAW reached agreement on Phase I of a new special attrition program (SAP) Offered to all Service Parts facilities and five other plants Today, GM and the UAW announced a comprehensive SAP to be offered to all UAW-represented GM employee
Slide 40: Mid-term Outlook - 2010/11
Mid-term Outlook - 2010/11 Opportunities Full impact of labor contract $4B - $5B Delphi-related cost reduction ~$0.5B If U.S. industry returns to trend ~$1-1.5B Pricing for stronger brands Material cost reductions Improved GMAC performance Further emerging markets growth Downside Risks U.S. industry
Slide 41: Summary
Summary 2007 results improved, but near-term challenges remain CY adjusted automotive earnings before tax improved by $0.9B, largely due to continued strength in GMAP and GMLAAM Q4 adjusted automotive earnings before tax deteriorated by $(0.8)B, due largely to headwinds in the U.S. and Germany Conti
Slide 42: Supplemental Charts
Supplemental Charts The following supplemental charts are provided to reconcile adjusted financial data comprehended in the primary chart set with GAAP-based data (per GM's financial statements) and/or provide clarification with regard to definition of non-GAAP terminology Note: As previously disclo
Slide 43: Reconciliation to Adjusted Net Income / EPS Q4 - 2007
Reconciliation to Adjusted Net Income / EPS Q4 - 2007 S1
Slide 44: Reconciliation to Adjusted Net Income / EPS Q4 - 2006
Reconciliation to Adjusted Net Income / EPS Q4 - 2006 S2
Slide 45: Reconciliation to Adjusted Net Income / EPS CY - 2007
Reconciliation to Adjusted Net Income / EPS CY - 2007 S3
Slide 46: Reconciliation to Adjusted Net Income / EPS CY - 2006
Reconciliation to Adjusted Net Income / EPS CY - 2006 S4
Slide 47: Reconciliation of GMNA Revenue Per Unit Fourth Quarter
Reconciliation of GMNA Revenue Per Unit Fourth Quarter S5 a). For GAAP reporting purposes, sales to other GM regions are eliminated whereas they are retained for managerial vehicle analysis b). Includes SPO parts, Powertrain engines, MSP, and Onstar service outside sales- excluded from managerial ve
Slide 48: Reconciliation of GMNA Revenue Per Unit Calendar Year
Reconciliation of GMNA Revenue Per Unit Calendar Year S6 a). For GAAP reporting purposes, sales to other GM regions are eliminated whereas they are retained for managerial vehicle analysis b). Includes SPO parts, Powertrain engines, MSP, and Onstar service outside sales- excluded from managerial veh
Slide 49: Reconciliation of Automotive Cash Flow Fourth Quarter & Calendar Year
Reconciliation of Automotive Cash Flow Fourth Quarter & Calendar Year S7