GM revises 2005 loss upward by $2 billion By Jeremy W. Peters The New York Times FRIDAY, MARCH 17, 2006
DETROIT General Motors has reported a revised and notably steeper loss for 2005, increasing the amount to $10.6 billion, or $2 billion more than it reported in January.
GM said Thursday that the revision was the result of higher costs of scaling back its North American operations and helping its former parts subsidiary, Delphi, restructure while under bankruptcy protection.
GM also said that it would restate five previous years of results and delay filing its annual report with the U.S. Securities and Exchange Commission while it looks into accounting irregularities at its residential mortgage unit.
The adjustment is the latest trouble for the automaker and its chief executive, Rick Wagoner. The disclosure comes as GM and Wagoner have been struggling to control losses and to regain market share in North America. In addition, Wagoner has come under pressure from large shareholders led by the investor Kirk Kerkorian, whose associate, Jerome York, recently joined GM's board.
In a statement late Thursday, GM said it expected to increase the charge for helping Delphi restructure to $3.6 billion, from $2.3 billion, a sign that there had been progress in its talks with its former subsidiary and the United Automobile Workers union.
On Wednesday, UAW officials said they were making progress in negotiating early retirement packages at Delphi. GM's reluctance to help pay for those packages has been a sticking point in the talks.
GM said a reason for recording a bigger loss in 2005 was because of the cost it faces for its own downsizing. GM will increase its North American restructuring charge to $1.7 billion, from $1.3 billion, to reflect the higher costs of closing factories. Last year the company said it would eliminate 30,000 factory jobs and close all or part of a dozen plants through 2008.
The restructuring costs include early retirement packages for unionized workers and payments to workers in the company's jobs bank, a program that guarantees full pay for workers whose factories have been shut down. GM has about 7,500 workers in its jobs bank, and more workers will flow in as the company follows through with plans to close more plants. GM will also take a $439 million charge that was initially booked at its finance arm, General Motors Acceptance Corp., but will now be booked at the corporate level.
Besides looking into the company's accounting of its pension and retiree health care funds, the SEC is looking at whether GM improperly accounted for certain transactions with Delphi just before and after the parts subsidiary was spun off in 1999.
This is the second time in four months that GM has restated earnings. In November, GM said it had overstated 2001 results by up to $400 million, or 35 percent, and had improperly recorded payments from some of its suppliers.
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