GM restates q2 results - another accounting snafu

[igor]

http://money.cnn.com/2006/08/01/news...reut/index.htm

GM restates loss, GMAC deal could be delayed
Marks automaker's second quarter of restatements arising from charges.
August 1 2006: 6:55 PM EDT


DETROIT (Reuters) -- General Motors Corp. said Tuesday it was restating its net loss for the just-reported second quarter, increasing the loss by $200 million to reflect a tax provision related to the sale of its finance arm, GMAC.

GM (Charts) also said the closing of the deal to sell a 51-percent stake in GMAC to an investor consortium led by hedge fund Cerberus Capital Management could be delayed beyond the fourth quarter because of difficulty in obtaining needed regulatory approval.

"GM and GMAC are now working with the consortium to consider ways to try to avoid delaying the targeted closing date until 2007," GM said in a filing with the U.S. Securities and Exchange Commission.

That disclosure marked a reversal from last Wednesday when GM Chief Financial Officer Fritz Henderson said that the deal was on track to close in the fourth quarter.

GM said prospects for the closing of the GMAC deal had been complicated by a move Friday by the Federal Deposit Insurance Corp., which announced a six-month moratorium on approving the change in control of industrial loan companies.

Obtaining FDIC clearance had been a condition for closing of the GMAC sale, GM said.

GM's deeper quarterly reported net loss marked the second consecutive quarter that the world's largest automaker has had to revise results because of changes in its accounting treatment of charges.

In Tuesday's SEC filing, GM said its revised net loss for the second quarter was $3.4 billion, or $5.97 per share, compared with the loss of $3.2 billion, or $5.62 per share reported last week with its quarterly results.

The Detroit-based automaker said it had increased its after-tax charge to $690 million from $490 million to reflect a difference between the book value and taxable value of several, unspecified GMAC subsidiaries.

On Wednesday, when GM reported its second-quarter results chief financial officer Fritz Henderson had told financial analysts that the GMAC deal was on track.

"We do expect to close the sale of our 51-percent controlling interest to the Cerberus-led consortium in the fourth quarter of this year. We have done a lot of work. There is a lot of work underway within GMAC and by the corporation to facilitate this, along with Cerberus and the consortium," Henderson said then.

GM shares, which have gained over 60 percent since the start of the year, rose sharply on Wednesday, as traders reacted to evidence that the automaker's cost-cutting efforts were showing results in adjusted earnings.
GM said its operating earnings, which exclude one-time charges, were not affected by its revision to its net loss for the second quarter.



Igor

[56 Starchief]

Henderson...

...This is not how we become CEO. Devine had to resign because of his errors!

Oh wait, this is GM. We reward mistakes!

[plane]

Originally Posted by 56 Starchief

Henderson...

...This is not how we become CEO. Devine had to resign because of his errors!

Oh wait, this is GM. We reward mistakes!

Anybody can sit on the sidelines and throw bombshells.

When you've memorized GAAP, and can recite it back verbatim, then we'll have something interesting to talk about.

[doh]

It is all politics, GM has always been known for misstating sales #'s and profits.

[give_it_all_]

I read this last night while waiting for the pictures that never showed up At least it was only $200 million and not $2 billion!

[69Firebird400]

What if it's just an adjustment that's necessary because new information has come to light after the Q2 books have closed?

[Aerodynamix]

Let's look on the bright side: Even though they actually lost a net amount of $3.4B, once you take out that one-time charge of $3.7B for the buy-outs, GM still made $300M for Q2.

[SigEpCutlass]

Originally Posted by 69Firebird400

What if it's just an adjustment that's necessary because new information has come to light after the Q2 books have closed?

I imagine that happens all the time. That's why there's retroactive adjustments made in most any transactional system.If it's a mistake, then somebody in GM over there in accounting needs to get their act together.

[asim]

What?! Can GM EVER get this accounting right?

[mikesright]

It's okay guys. Really. GM has made sure it has gotten the quarter done right, that's why they call the results they gave last week as "preliminary." They do not want to have another situation where they reported wrong figures for 5 years straight.

Besides, this issue is because of the FDIC changing its rules and variations in TAX LAW, not GAAP, and not because of errors.

[Greg Burr]

Tax provisions are always subject to change, especially on gains on sale of businesses. Not an isssue.

[ARTSBEST]

MIKESRIGHT SAYS: GM to other automakers: You have been warned. The sleeping giant is awake, and he's pissed. We don't need that childish "in your face" Bush crap here brother. A man is what a man does NOT what he says. GM is NOT going to overwhelm any other car maker. PERIOD.

[kodos78]

And in other news, cheerleaders have now been criticized for being biased towards their teams. We also believe that this is the fault of George Bush, a former cheerleader himself.

Originally Posted by ARTSBEST

MIKESRIGHT SAYS: GM to other automakers: You have been warned. The sleeping giant is awake, and he's pissed. We don't need that childish "in your face" Bush crap here brother. A man is what a man does NOT what he says. GM is NOT going to overwhelm any other car maker. PERIOD.

[toronado10]

Originally Posted by ARTSBEST

MIKESRIGHT SAYS: GM to other automakers: You have been warned. The sleeping giant is awake, and he's pissed. We don't need that childish "in your face" Bush crap here brother. A man is what a man does NOT what he says. GM is NOT going to overwhelm any other car maker. PERIOD.

Don't bring up politics, and don't go on a rant about something stupid. Besides, if you don't like GM, what are you doing at this website?