General Motors Company · NYSE:GM
General Motors — Q3 2007 Earnings Presentation
35 slides from General Motors's earnings presentation, Nov 7, 2007
Slide 1: 2007 Third Quarter Results
2007 Third Quarter Results
Slide 2: Forward Looking Statements
Forward Looking Statements 1 In this presentation and in related comments by General Motors' management, we will use words like "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursue," "se
Slide 3: Third Quarter Highlights
Third Quarter Highlights GAAP EPS $(68.85), $(39)B net loss Includes impact of $39B charge related to valuation allowance taken against Deferred Tax Assets Adjusted EPS $(2.80), $(1.6)B net loss Adjusted total automotive results improved $0.6B vs. Q3 '06 Significant loss at GMAC due entirely to loss
Slide 4: Third Quarter Adjusted Results
Third Quarter Adjusted Results 3 Refer to Supplemental Charts for reconciliation to GAAP figures Refer to Supplemental Charts for reconciliation to GAAP figures
Slide 5: Corp Other / Other Financing
Corp Other / Other Financing Corp Other / Other Financing sector deteriorated $1.3B vs. Q3 '06 due largely to tax-related items Prior period included approximately $0.4B of various favorable tax items and benefit related to pre-tax loss Current period includes approximately $0.7B of tax expense prim
Slide 6: Third Quarter Adjustments to Income
Third Quarter Adjustments to Income 5 Exclusion of special items useful for: Management to measure operations Comparisons between reporting periods Investors to measure and assess company's core performance
Slide 7: Deferred Tax Asset Accounting
Deferred Tax Asset Accounting Accounting for income taxes is governed by SFAS 109, which provides guidelines for determining if valuation allowances are required against a DTA Based on consideration of all available evidence using a "more likely than not" (MLTN) standard Weight given to positive and
Slide 8: Deferred Tax Asset Allowance
Deferred Tax Asset Allowance Allowance previously not deemed necessary for DTAs in the U.S., Canada and Germany based on several factors, including: Degree to which company's three-year historical losses were attributable to special items or charges, of which several were related to actions to impro
Slide 9: Deferred Tax Asset Allowance
Deferred Tax Asset Allowance Non-cash charges of $38.6B in Q3 related to recording a valuation allowance against DTAs in the U.S., Canada and Germany Canada included due to close linkage of U.S. and Canadian operations Full valuation allowance taken given that upon failing MLTN test, no one point es
Slide 10: GME Deferred Tax Assets
GME Deferred Tax Assets 9 On August 17, 2007 Germany effected legislation to lower the statutory corporate tax rate effective 1/1/2008 Anticipated to provide reduction of approximately 9 percentage points (from about 38% to about 29%) Due to lower tax rate, German DTAs have less future value as unde
Slide 11: Pension Prior Service Cost Adjustment
Pension Prior Service Cost Adjustment Prior labor agreements generally included both basic monthly pension benefit increases and pension lump sum payments Basic benefit increases paid from plan assets and amortized over average service life as part of pension expense Lump sums paid out of operating
Slide 12: Delphi Update
Delphi Update 11 In July and August, Delphi reached agreements with all remaining unions, patterned on the June UAW agreement GM to provide similar support as for UAW-Delphi agreement - - coverage of OPEB & certain attrition program reimbursements GM-Delphi Settlement Agreements signed in September
Slide 13: Delphi Recovery
Delphi Recovery 12 On October 29, Delphi filed potential amendments to its POR and Disclosure Statement reflecting lower net debt upon emergence Included amendments to the Global Settlement Agreement and Master Restructuring Agreement between Delphi and GM, whereby GM agreed to accept an alternative
Slide 14: Other Special Items
Other Special Items 13 Allison gain on sale Transaction closed in August 2007, with net proceeds of $5.4B Gain on sale of $5.3B pre-tax ($3.5B after-tax) Subject to adjustment for changes in working capital and debt Restructuring related items $262 million in GME related to separation programs offer
Slide 15: Other Matters - Legal Services Accounting
Other Matters - Legal Services Accounting Prior and current labor agreements include programs to provide personal legal services to hourly employees and retirees represented by the UAW, CAW and IUE-CWA Annual expense of approximately $35 million historically expensed as paid Upon completion of 2007
Slide 16: GMNA Third Quarter Adjusted Results
GMNA Third Quarter Adjusted Results 15 15 Excludes results from Allison Transmission, now recorded as Discontinued Operations
Slide 17: GMNA Vehicle Revenue Per Unit
GMNA Vehicle Revenue Per Unit Calendar Year Third 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 16 Adjusted to remove Allison. Refer to Supplemental Charts for reconci
Slide 18: GMNA Adjusted Net Income 2007 vs. 2006
GMNA Adjusted Net Income 2007 vs. 2006 $ Billions - Continuing Operations Only Q3 YTD 2006 Net Income $(0.7) $(1.1) Volume (0.2) (1.8) Mix 0.3 1.4 Price/Material 0.2 0.2 Policy & Warranty/Campaigns 0.3 (0.4) Pension/OPEB/Manufacturing 0.1 2.3 Engineering/Exchange/Other Cost (0.2) (1.0) 2007 Net Inco
Slide 19: Overview of Other Regions
Overview of Other Regions YTD through Q3, 58% of GM unit sales outside the U.S. 36% of automotive revenue YTD generated from outside GMNA Record third quarter volume in every region fueled share growth of 0.5 p.p. outside of North America Contributed to YTD global share gain of 0.2 p.p. (13.3% vs. 1
Slide 20: GME Third Quarter Adjusted Results
GME Third Quarter Adjusted Results 19 19
Slide 21: GMLAAM Third Quarter Adjusted Results
GMLAAM Third Quarter Adjusted Results 20 20
Slide 22: GMAP Third Quarter Adjusted Results
GMAP Third Quarter Adjusted Results 21
Slide 23: GMAC Third Quarter Results
GMAC Third Quarter Results 22 GMAC reported $(1,596) million net loss, due entirely to ResCap amidst global dislocation in mortgage and credit markets Total ResCap net loss of $(2,261) million including $(455) million impairment of substantially all goodwill attributable to ResCap Non-ResCap busines
Slide 24: GMAC Business Line Results
GMAC Business Line Results 23
Slide 25: GM Liquidity Position
GM Liquidity Position 24 Strong gross liquidity position at $30.0B Represents an increase of $2.8B vs. Q2 '07 Reflects $5.4B net proceeds from sale of Allison Transmission Gross liquidity includes $3.6B of readily-available VEBA assets (i.e. short-term VEBA) $2.6B of short-term VEBA will be excluded
Slide 26: Automotive Gross / Net Liquidity
Automotive Gross / Net Liquidity 25 1 Q4 2005 - Q3 2006 Net Liquidity figures exclude GMAC related debt Q4'00 YE '01 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '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 Gross Cash (incl. ST VEBA) 13.2 1
Slide 27: Third Quarter Key Cash Flow Drivers
Third Quarter Key Cash Flow Drivers 26 Adjusted Automotive Operating Cash Flow (OCF) of $(2.5)B driven primarily by scheduled production shutdown in July Q3 2007 OCF improved by $1.4B vs. Q3 '06 Improvement driven primarily by lower net sales allowance payments in Q3 '07 vs. Q3 '06 YTD Adjusted Auto
Slide 28: Automotive Cash Flow Summary
Automotive Cash Flow Summary Refer to Supplemental Charts for reconciliation to GAAP figures 27
Slide 29: Working Capital and Accrued Expenses
Year-to-year Q3 variance in working capital flows driven primarily by improvement in receivables in Q3 2006 Accrued Expenses and Other reflects timing of cash flows vs. accruals Working Capital and Accrued Expenses 28
Slide 30: Outlook
Outlook Fourth Quarter Ongoing revenue growth on strength in emerging markets Continued concerns over U.S. economic conditions Full benefit of CTS launch, ramp-up of Malibu launch Will see further financial impact of GM-UAW labor agreement (e.g. pension expense, active employee lump sum payments) Lo
Slide 31: Summary
Summary Significant valuation allowance for deferred tax assets and other special items drove substantial loss on reported basis Automotive operations delivered improved, but still not satisfactory, results Very strong global volume and revenue growth Strong growth and net income results at GMAP and
Slide 32: 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 33: Reconciliation to Adjusted Net Income / EPS
Reconciliation to Adjusted Net Income / EPS Q3 - 2006 & 2007 S1
Slide 34: Reconciliation of GMNA Revenue Per Unit
Reconciliation of GMNA Revenue Per Unit Calendar Year S2 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 35: Reconciliation of Automotive Cash Flow
Reconciliation of Automotive Cash Flow Third Quarter & Calendar Year S4