GM Final Results

GM Provides Updated Preliminary 2005 Results, Delays Filing 10-K 
 
    DETROIT, March 17  -- General Motors Corp. (NYSE: GM) today 
provided updated preliminary financial results for 2005 and said it will delay 
filing its annual report on Form 10-K with the Securities and Exchange 
Commission due to an accounting issue regarding the classification of cash 
flows at ResCap, the residential mortgage subsidiary of GMAC. 
    The ResCap accounting issue relates to the erroneous classification of 
cash flows from certain mortgage loan transactions as cash flows from 
operations instead of cash flows from investing activities.  Although the 
company has not completed its review of this matter, the issue will not impact 
either net income or the balance sheet presentation but is expected to impact 
the presentation of cash flows from operating and investing activities. This 
issue may impact the statements of cash flows for 2005 and prior periods at 
ResCap, GMAC and GM, and the impact may be material in some or all of the 
affected periods.  
    With the exception of the ResCap accounting issue, GM is otherwise 
prepared to file its 2005 Form 10-K and intends to do so as soon as 
practicable and within the next two weeks.  At that time, GM also intends to 
report restated results for the years ended Dec. 31, 2000 to Dec. 31, 2004 on 
Form 10-K/A.   
    When GM files its 10-K, will provide final financial results for 2005 that 
differ from the preliminary results reported in January principally due to 
adjustments for three charges.  These charges will increase GM's reported loss 
in 2005 to a total of $10.6 billion, or $18.69 per share, including special 
items.  This compares to the previously reported loss of $8.6 billion, or 
$15.13 per share. 
    The final 2005 results will include an increase in the previously 
announced North American restructuring charge; an increase to the contingent 
liabilities associated with  Delphi Corp.'s Chapter 11 filing; and recognition 
at the GM level of the previously reported non-cash goodwill impairment charge 
of $439 million (after tax) at GMAC.  
 
               Revision to North American Restructuring Charge 
 
    GM expects to change the amount of its 2005 North American restructuring 
charge to $1.7 billion (after tax) from the previously reported charge of $1.3 
billion (after tax) to reflect an increase in the provision for employee costs 
at facilities where GM plans to cease production.  The previously reported 
charge included cash payments that would be made to affected employees during 
the current labor agreement, attributable to the JOBS bank provisions of that 
agreement.   However, after further review, GM has determined to also include 
in the revised charge management's best estimate of the costs it expects to 
pay during periods after the current labor contract expires in September 2007.  
In this regard, GM is currently in discussions with the United Auto Workers 
union on an accelerated attrition program for active employees, by which GM 
would be able to reduce the number of employees in the JOBS bank in a cost 
effective manner.   GM currently believes that any agreement on an attrition 
program would not likely change the amount of this charge.  
 
                  Revision to Delphi Charge, GMAC Impairment 
 
    GM also expects to increase the charge for GM's contingent exposure 
relating to Delphi's Chapter 11 filing, including benefit guarantees between 
GM and certain unions, to $3.6 billion ($5.5 billion before tax) from the 
previous estimate of $2.3 billion ($3.6 billion before tax).  GM's current 
estimate of the pre-tax range of this contingent exposure is now between $5.5 
billion and $12 billion, 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.  This is consistent 
with the company's previously issued guidance on the range of the contingent 
exposure to GM and it reflects developments in the discussions with Delphi and 
the UAW on a comprehensive agreement.  The revised Delphi charge is based on 
the facts and circumstances as they exist today.  Any new development in the 
Delphi discussions prior to GM's filing of the 2005 10-K could result in a 
further update to these estimates.  
    In addition, GM intends to recognize non-cash goodwill impairment charges 
of $439 million (after-tax) in the fourth quarter of 2005.  These charges 
relate primarily to GMAC's Commercial Finance operating segment.  Previously, 
GM reported but did not recognize these goodwill charges in its 2005 
consolidated financial statements because the goodwill was deemed recoverable 
by GM at the GMAC reporting unit level.    
    However, after further internal review of applicable accounting standards, 
and in consultation with the company's outside auditors, GM has determined 
that it should recognize the previously disclosed GMAC impairment in GM's 
consolidated results for 2005. 
 
                              Other SEC Filings 
 
    GM's Form 10-K/A is currently expected to reflect restatements relating to 
supplier credits and other matters.  GM had previously disclosed in November 
2005 that it would restate its financial statements for 2001 and subsequent 
periods to correct the accounting for supplier credits.   
    Among the items that GM expects to restate in its Form 10-K/A are the 
following: 
    GM erroneously recorded as a reduction to cost of sales certain payments 
and credits received from suppliers prior to the completion of the earnings 
process.  GM has concluded that the payments and credits received were 
associated with agreements for the award of future services or products or 
other rights and privileges and should be recognized when subsequently earned. 
The effect of these errors was a reduction in pre-tax income of $26 million 
for 2004; an increase in pre-tax income of $7 million in 2003; a reduction in 
pre-tax income of $69 million in 2002; a reduction in pre-tax income of $405 
million in 2001; and a reduction in pre-tax income of $52 million in 2000.  
After restatement, a deferred credit of approximately $548 million (pre tax) 
would exist as of Dec.  31, 2004, which will be recognized as a reduction of 
cost of sales in future periods.  
    In 2001, GM erroneously recorded, as a reduction in stockholders' equity, 
a $55 million pre-tax settlement with Delphi in the form of a credit to be 
used against amounts owed by Delphi to GM in relation to pension, Other Post 
Employment Benefits (OPEB), and other employment related benefits of former GM 
employees who had transferred to Delphi.  This item will now be recorded as a 
warranty expense in that period. 
    In 2001, GM erroneously recorded $18 million of pre-tax expense related to 
a contract involving Delphi's Flint East, Mich., plant that has now been 
recorded as an expense in 2000. 
    GM erroneously calculated the anticipated effect of cost reduction 
initiatives on its expected healthcare cost trend rate for 2002 and, as a 
result, understated that rate. Accordingly, GM's other postretirement employee 
benefit (OPEB) pre-tax expense was overstated by $9 million in 2004 and 
understated by $51 million in 2003 and $30 million in 2002. 
    In 2000, GM erroneously recognized a $27 million pre-tax gain on disposal 
of precious metals inventory that has now been recorded as a financing 
transaction because GM had an obligation to repurchase the inventory in 2001. 
    For all periods, GM intends to record all other accounting adjustments it 
has identified that were not recorded in the proper period.  The net effect of 
these other adjustments, net-of-tax, is currently expected to be an increase 
in net income of $10 million in 2004, an increase in net income of $64 million 
in 2003, a reduction in net income of $81 million in 2002, an increase in net 
income of $78 million in 2001, and a reduction in net income of $20 million in 
2000.  
    GM has also determined that investors should not continue to rely on its 
previously filed financial statements for the first quarter of 2005 due to 
accounting errors resulting in an unfavorable impact on net income of $149 
million, of which $107 million relates to accounting for vehicles on operating 
leases with daily rental car companies.  GM's portfolio of vehicles on 
operating lease with daily rental car companies, which was impaired at lease 
inception, was prematurely revalued in 2005 to reflect increased anticipated 
proceeds upon disposal. 
 
    Forward-looking Statements 
    In this press release and in related comments by General Motors' and 
General Motors Acceptance Corporation's management, the use of the words 
"expect," "anticipate," "estimate," "forecast," "initiative," "objective," 
"plan," "goal," "project," "outlook," "priorities," "target," "intend," 
"evaluate," "pursue," "seek," "may," "would," "could," "should," "believe," 
"potential," "continue," "designed," "impact," or the negative of any of those 
words or similar expressions is intended to identify forward-looking 
statements.  All statements in this press release and in related comments, 
other than statements of historical fact, including without limitation, 
statements about future events and financial performance, are forward-looking 
statements that involve certain risks and uncertainties. 
    While these statements represent our current judgment on what the future 
may hold, and we believe these judgments are reasonable, these statements are 
not guarantees of any events or financial results, and GM's actual results may 
differ materially due to numerous important factors that are described in GM's 
most recent report on SEC Form 10-K, which may be revised or supplemented in 
subsequent reports on SEC Forms 10-K, 10-Q and 8-K.  Such factors include, 
among others, the following: the resolution of accounting issues relating to 
ResCap cash flows, the ability of GM to realize production efficiencies, to 
achieve reductions in costs as a result of the turnaround restructuring, to 
achieve reductions in health care and pension costs and to implement capital 
expenditures at levels and times planned by management; the amount and rate of 
employee attrition; the pace of product introductions; market acceptance of 
the corporation's new products; significant changes in the competitive 
environment and the effect of competition in the corporation's markets, 
including on the corporation's pricing policies; our ability to maintain 
adequate liquidity and financing sources and an appropriate level of debt; 
restrictions on GMAC's and Residential Capital Corporation (ResCap)'s ability 
to pay dividends and prepay subordinated debt obligations to us; changes in 
the existing, or the adoption of new, laws, regulations, policies or other 
activities of governments, agencies and similar organizations where such 
actions may affect the production, licensing, distribution or sale of our 
products, the cost thereof or applicable tax rates; costs and risks associated 
with litigation; the final results of investigations by the SEC; costs and 
risks associated with litigation; the final results of investigations and 
inquiries by the SEC; changes in our accounting principles, or their 
application or interpretation, and our ability to make estimates and the 
assumptions underlying the estimates, which could result in an impact on 
earnings; changes in relations with unions and employees/retirees and the 
legal interpretations of the agreements with those unions with regard to 
employees/retirees; negotiations and bankruptcy court actions with respect to 
Delphi Corp.'s obligations to GM, negotiations with respect to GM's 
obligations under the pension benefit guarantees to Delphi employees, and GM's 
ability to recover any indemnity claims against Delphi; labor strikes or work 
stoppages at GM or its key suppliers such as Delphi or financial difficulties 
at GM's key suppliers such as Delphi; additional credit rating downgrades; the 
effect of a potential sale or other extraordinary transaction involving GMAC 
on the results of GM's and GMAC's operations and liquidity; other factors 
impacting financing and insurance operating segments' results of operations 
and financial condition such as credit ratings, adequate access to the market, 
changes in the residual value of off-lease vehicles, changes in U.S. 
government-sponsored mortgage programs or disruptions in the markets in which 
our mortgage subsidiaries operate, and changes in our contractual servicing 
rights; shortages of and price increases for fuel; and changes in economic 
conditions, commodity prices, currency exchange rates or political stability 
in the markets in which we operate. 
    In addition, GMAC's actual results may differ materially due to numerous 
important factors that are described in GMAC's most recent report on SEC Form 
10-K, which may be revised or supplemented in subsequent reports on SEC Forms 
10-K, 10-Q and 8-K.  Such factors include, among others, the following:  the 
ability of GM, to complete a transaction with a strategic investor regarding a 
controlling interest in GMAC while maintaining a significant stake in GMAC, 
securing separate credit ratings and low cost funding to sustain growth for 
GMAC and ResCap and maintaining the mutually beneficial relationship between 
GMAC and GM; significant changes in the competitive environment and the effect 
of competition in the corporation's markets, including on the corporation's 
pricing policies; our ability to maintain adequate financing sources; our 
ability to maintain an appropriate level of debt; the profitability and 
financial condition of GM, including changes in production or sales of GM 
vehicles, risks based on GM's contingent benefit guarantees and the 
possibility of labor strikes or work stoppages at GM or at key suppliers such 
as Delphi Corp.; funding obligations under GM and its subsidiaries' qualified 
U.S. defined benefits pension plans; restrictions on ResCap's ability to pay 
dividends and prepay subordinated debt obligations to us; changes in the 
residual value of off-lease vehicles; changes in U.S. government-sponsored 
mortgage programs or disruptions in the markets in which our mortgage 
subsidiaries operate; changes in our contractual servicing rights; costs and 
risks associated with litigation; changes in our accounting assumptions that 
may require or that result from changes in the accounting rules or their 
application, which could result in an impact on earnings; changes in the 
credit ratings of GMAC or GM; the threat of natural calamities; changes in 
economic conditions, currency exchange rates or political stability in the 
markets in which we operate; and changes in the existing, or the  adoption of 
new, laws, regulations, policies or other activities of governments, agencies 
and similar organizations. 
    Investors are cautioned not to place undue reliance on forward-looking 
statements. GM undertakes no obligation to update publicly or otherwise revise 
any forward-looking statements, whether as a result of new information, future 
events or other such factors that affect the subject of these statements, 
except where expressly required by law. 
    Use of the term "loans" describes products associated with direct and 
indirect lending activities of GMAC's global operations.  The specific 
products include retail installment sales contracts, loans, lines of credit, 
leases or other financing products.  The term "originate" refers to GMAC's 
purchase, acquisition or direct origination of various "loan" products. 
 
SOURCE  General Motors Corporation 
    -0-                             03/17/2006 P 
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