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November 17, 2009

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GM says it's back on the road to recovery

GENERAL Motors Co says it lost US$1.2 billion from the time it left bankruptcy protection to September 30, far better than it had reported in previous quarters and a sign the auto giant is starting to turn around its business.

The company also says it will begin repaying US$6.7 billion in government loans with a US$1.2 billion payment in December. It could pay off the full amount by 2011, four years ahead of schedule.

The company cautioned that the earnings numbers mean little because they don't comply with United States accounting standards and cover only the part of the quarter after GM left bankruptcy protection on July 10.

"We have significantly more work to do, but today's results provide evidence of the solid foundation we are building for the new GM," CEO Fritz Henderson said.

Chief Financial Officer Ray Young said it was impossible to compare the third-quarter results to any previous quarter because GM is still reviewing the value of its assets and liabilities post-bankruptcy to comply with accounting principles. "Direct comparisons are not necessarily applicable. You can make some judgments in terms of trends," Young said.

GM maintains the numbers show a company making progress, riding dramatically reduced structural costs to a far better performance than the US$6 billion loss reported in the first quarter, the last full quarter for which its numbers met accounting standards.

GM took in US$3.3 billion more cash than it spent for the third quarter, far better than the US$10 billion the company burned through during the first quarter.

Sales boosts

Its third-quarter revenue totaled US$26.4 billion, also an improvement over the first quarter when it saw revenue drop nearly 50 percent from the same period in 2008 to US$22.4 billion. Revenue was aided by sales boosts in July and August from the "Cash-for-Clunkers" rebates.

According to GM its global market share was 11.9 percent in the third quarter, up 3 percentage points from the first half. The US share stayed flat at 19.5 percent.

Many customers stayed away from GM showrooms in the first and second quarters, fearing the company wouldn't be around to honor warranties and service their vehicles.

Young said GM accountants are in the process of cleaning up the new company's books, revaluing assets and liabilities and changes to pension and health care costs that came from bankruptcy and a new contract with the United Auto Workers union.


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