General Motors last night said it would restate its loss for 2005 to US$10.6bn, or $18.69 per share, compared to the previously reported loss of $8.6bn, or $15.13 per share.
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In a statement released after share trading had closed for the day, GM said its final 2005 results would include an increase in the previously announced North American restructuring charge; an increase in costs associated with Delphi ‘s Chapter 11 bankruptcy filing and recognition by GM level of the previously reported non-cash after-tax goodwill impairment charge of $439m at GMAC.
GM said it expects to change the amount of its 2005 North American restructuring charge to $1.7bn from the previously reported charge of $1.3bn to reflect an increase in the provision for employee costs at factories where it plans to end production.
The previously reported charge included cash payments that would be made to affected employees during the current labour agreement, attributable to the jobs bank provisions of that agreement.
However GM has now decided to factor in an estimate of the costs it expects after the current labour contract expires in September 2007.
It is currently discussing with the United Auto Workers union an accelerated attrition programme for active employees, by which GM would be able to reduce the number of employees in the jobs bank in a cost effective manner,” the automaker said in the statement.
It added that the charge would likely not be affected by any agreement on an attrition programme.
GM also said it expects higher costs relating to Delphi’s Chapter 11 filing, including benefit guarantees between the automaker and unions. These are now seen totalling up to $3.6bn from the previously estimated $2.3bn.
Its current estimate is now between $5.5bn and $12bn, “with amounts near the low end of the range considered more possible than amounts near the high end of the range, assuming an agreement is reached among GM, Delphi and Delphi’s unions”.
GM will also add non-cash after-tax goodwill impairment charges of $439m in the fourth quarter of 2005 related primarily to GMAC’s commercial finance segment.
GM reported but did not recognise these charges in its 2005 accounts because the goodwill was deemed recoverable from GMAC – a subsequent review decided otherwise.
General Motors also said it would delay filing its annual report with the US Securities and Exchange Commission due to an accounting issue regarding cash flows at ResCap, the residential mortgage subsidiary of GMAC.
It will also restate accounts for earlier years, primarily due to revising the way supplier payments and credits were booked.
GM will restate pre-tax income for financial years as far back as 2000, the statement said.
Graeme Roberts
