2006 cy and fourth quarter results
TRANSCRIPT
2006 CY and Fourth Quarter Results
Forward Looking Statements
1
In the presentations and in related comments by General Motors’ management, we will use words like “expect,” “anticipate,”“estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,”“pursue,” “seek,” “may,” “would,” “could,” “should,” “believe,” “potential,” “continue,” “designed,” or “impact” to identify forward-looking statements that represent our current judgments about possible future events. We believe these judgments are reasonable, but GM’s actual results may differ materially due to a variety of important factors. Among other items, such factors include: the ability of GM to realize production efficiencies, to achieve reductions in costs as a result of the turnaround restructuring and health care cost reductions and to implement capital expenditures at levels and times planned by management; 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; 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 orapplicable tax rates; costs and risks associated with litigation; the final results of investigations and inquiries by the SEC and other governmental agencies; changes in our accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, including the range of estimates for the Delphi pension benefit guarantees, 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 and the successful completion of a collective bargaining agreement; negotiations and bankruptcy court actions with respect to Delphi’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 and the effects thereof; factors affecting GMAC’s results of operations and financial condition such as credit ratings, interest rates, the housing market (including the downturn in residential mortgages, particularly in the nonprime sector) , adequate access to the capital, 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 GMAC’s contractual servicing rights; shortages of and price increases for fuel; changes in economic conditions, commodity prices, such as steel and other raw materials, currency exchange rates or political stability in the markets in which we operate; the effects of transactions oralliances entered into by one or more of our competitors; currency exchange rates or political instability in the markets in which we operate; and general economic conditions, in particular stability of consumer confidence.
The most recent annual reports on Form 10-K and quarterly reports on Form 10-Q filed by GM and GMAC provide information about these factors, which may be revised or supplemented in future reports to the SEC on those forms.
Fourth Quarter and Calendar Year Highlights• Q4 2006
– GAAP EPS $1.68, $950 million, improved $7.5B vs. Q4 2005
– Adjusted EPS $0.32, $180 million, improved $1.1B vs. Q4 2005• Automotive results improved over $1.4B on recovery in GMNA
– Total revenue of $51B; record Q4 Automotive revenue of $44B
– Adjusted Automotive Operating Cash Flow (OCF) positive $0.3B
– GMAC transaction closed on November 30th
• CY 2006– GAAP EPS $(3.50), $(1,978) million, improved $8.4B vs. CY 2005
– Adjusted EPS $3.88, $2,199 million, improved $5.4B vs. CY 2005
– Global market share of 13.5%, down 0.6 p.p. vs. CY 2005
– Exceeded $6B structural cost reduction target, on track for $9B in 2007
– Year-end cash balance of $26.4B
2
Summary of Accounting Matters• Deferred Tax Liabilities / Other Tax-related
– Determined that Deferred Tax Liabilities overstated due to excessive tax expense recorded in prior periods (largely pre-2002)
• Retained earnings adjusted upward to reflect decrease in Deferred Tax Liabilities– Partially offset by decrease in Accumulated Translation Adjustments to remove tax
effects recorded for certain foreign entities– Net impact is an increase in Stockholders Equity of $245 million as of Jan 1, 2002
• SFAS 133 Accounting– Stringent documentation/assessment requirements for derivatives to be eligible for
hedge accounting (e.g. gains/losses not recorded to earnings)– Certain commodity and foreign exchange contracts at GM, and certain interest rate
hedges at GMAC, later determined to not qualify • Changes in fair value of these instruments now recorded to earnings
– Cumulative impact of $249 million, with significant impacts in individual periods
• Other Miscellaneous Adjustments– As part of other restatements, recording various out-of-period adjustments, which are
not individually or collectively material, in appropriate periods
3
Summary of 2005/2006 Restatements
4
Increase/(Decrease) ($ Millions)Thru Q3
2006 CY 2005 CY 2004 CY 2003 CY 2002
GAAP Net Income - Previous (3,025) (10,567) 2,804 3,859 1,574
Deferred Taxes - (35) 2 (60) (77)
SFAS 133 208 66 (21) (125) 334
Other Miscellaneous (111) 119 (84) (149) (96)
GAAP Net Income - Restated (2,928) (10,417) 2,701 3,525 1,735
Calendar Year Adjusted Results
5Refer to Supplemental Charts for reconciliation to GAAP figures
($ Millions)Prior 2005
Restated 2005
Final 2006
2006Fav/(Unfav)
2005
GMNA (5,910)$ (5,807)$ (779)$ 5,028$ GME (260) (187) 227 414GMLAAM 147 152 533 381GMAP 583 557 441 (116) Total Automotive (5,440) (5,285) 422 5,707
GMAC 2,822 2,718 1,521 (1,197)Corporate Other (736) (638) 256 894 Total Net Income (3,354) (3,205) 2,199 5,404
EPS (excl. special items) (5.93)$ (5.67)$ 3.89$ 9.56$ Fully diluted 3.88$
Worldwide Production (000's) n/a 9,051 9,181 130Global Market Share n/a 14.1% 13.5% (0.6) p.p.
Calendar Year Adjustments to Income
6
$ Millions EPS
Adjusted Net Income 2,199 3.88$
Special Items (after-tax)Restructuring/Impairments (4,420) ($7.80)GMAC goodwill impairment (695) ($1.23)GMAC transaction related 344 $0.59Delphi-related (233) ($0.41)Gain on asset sale 759 $1.34Other 68 $0.13Total Special Items (4,177) ($7.38)
GAAP Net Income (1,978) (3.50)$
Exclusion of special items useful for:- Management to measure operations- Comparisons between reporting periods- Investors to measure and assess company performance
Fourth Quarter Adjusted Results
7Refer to Supplemental Charts for reconciliation to GAAP figures
($ Millions)Prior 2005
Restated 2005
Final 2006
2006Fav/(Unfav)
2005
GMNA (1,553)$ (1,416)$ (14)$ 1,402$ GME (77) 5 (8) (13)GMLAAM 60 63 128 65GMAP 142 124 122 (2) Total Automotive (1,428) (1,224) 228 1,452
GMAC 624 549 (284) (833)Corporate Other (217) (261) 236 497 Total Net Income (1,021) (936) 180 1,116
EPS (excl. special items) (1.81)$ (1.66)$ 0.32$ 1.98$ Fully diluted 0.32$
Worldwide Production (000's) n/a 2,332 2,274 (58)Global Market Share n/a 13.4% 13.3% (0.1) p.p.
Fourth Quarter Adjustments to Income
8
Exclusion of special items useful for:- Management to measure operations- Comparisons between reporting periods- Investors to measure and assess company performance
$ Millions EPS
Adjusted Net Income 180 0.32$
Special Items (after-tax)GMAC transaction related 712 $1.25Gain on asset sale 175 $0.31Restructuring related (129) ($0.23)Delphi-related 92 $0.16Other (80) ($0.13)Total Special Items 770 $1.36
GAAP Net Income 950 1.68$
Fourth Quarter GMAC Transaction Related
9
• Favorable $712 million after-tax for GMAC transaction largely related to Pension/OPEB and sale of securities– $394 million Pension/OPEB curtailment for unrecognized prior service
gains related to salaried plan changes• Recorded immediately as GMAC employees no longer covered by GM plan
– $567 million gain on sale of marketable securities held by GMAC’s insurance businesses
– $(249) million for Loss on Sale and other transaction-related items recorded in Q4
• Includes impact of lower Other Comprehensive Income (OCI) as sale of marketable securities reduced unrealized gains in OCI
• For GAAP accounting GM has impaired GMAC operating lease assets held for sale in lieu of depreciating them– Total Loss on Sale of $1.1B in GAAP income statement includes $0.7B
operating lease asset impairment– Offset by $0.7B lower depreciation expense (zero net P&L impact)
GMAC Results Overview• On a standalone basis, net income of $1.0B for Q4 and $2.1B for CY
– Includes Commercial Finance goodwill impairment and favorable one-time impact of LLC conversion
• Operating results deteriorated on significant weakness at ResCap– Partially offset by strength in Insurance due largely to higher capital gains
• ResCap loss driven by slowdown in U.S. residential mortgage market– Slowing home price appreciation and nonprime credit issues having
significant negative impact
• SFAS 133 accounting adjustments also impacted GMAC results for both Q4 and CY 2006– $(107) million after-tax in Q4; $(135) million after-tax in CY 2006– Related to interest rate derivatives to hedge callable debt instruments
10
GMAC Standalone Fourth Quarter Results
11
2006Restated Fav/(Unfav)
($ Millions) 2005 2006 2005
Automotive Finance 180$ 147$ (33)$ ResCap 118 (651) (769) Insurance 133 735 602 Other* 120 (6) (126) Operating Income 551$ 225$ (326)$ LLC Conversion - 791 791
Goodwill Impairment (439) - 439
Net Income 112$ 1,016$ 904$
Note: For comparison purposes, results for full 2006 period are show n (e.g. not adjusted to reflect reduced GM ow nership follow ing sale of 51% on 11/30/06).
* Includes GMAC Commercial Finance and equity interest in Capmark
GMAC Standalone Calendar Year Results
12
2006Restated Fav/(Unfav)
($ Millions) 2005 2006 2005
Automotive Finance 880$ 791$ (89)$ ResCap 1,021 182 (839)Insurance 417 1,127 710Other* 403 (71) (474) Operating Income 2,721$ 2,029$ (692)$
LLC Conversion - 791 791 Goodwill Impairment (439) (695) (256)
Net Income 2,282$ 2,125$ (157)$
Note: For comparison purposes, results for full 2006 period are show n (e.g. not adjusted to reflect reduced GM ow nership follow ing sale of 51% on 11/30/06).
* Includes GMAC Commercial Finance and equity interest in Capmark
GMAC Results Recognized by GM• GMAC results for Q4 and CY 2006 aggregate to GM in three ways
– Results fully consolidated on GM’s books through November 30, 2006– Results for month of December accounted for as equity income based on
GM’s 49% ownership– In addition, GM accrued dividends on its preferred interests beginning
December 1, 2006
• GMAC standalone results adjusted for items not flowing to GM – LLC conversion items that do not impact GM on a consolidated basis– Realized gains on marketable securities considered a special item in
GM results– Goodwill impairments already recognized by GM
• Going forward, GMAC LLC results will be reflected on GM’s books as equity income in the Financing sector
• GM will also realize $4B of cash flows over about three years from lease assets carved-out from transaction
13
GMAC Adjusted Results as Reported by GM
14
($ Millions) Q4 CY
GMAC Net Income - Standalone 1,016$ 2,125$ LLC Conversion (791) (791) Realized gain on marketable securities (567) (567) Goodwill Impairment - 695 GMAC Net Income - GM Adjusted Basis (342)$ 1,462$
Results thru Nov (fully consolidated) (288)$ 1,517$ Dec results @ 49% GM interest (5) (5) GMAC earnings accrued to GM (293)$ 1,512$
Preferred Dividends 9 9
Total GMAC-related - GM Adjusted Basis (284)$ 1,521$
GMAC Sale Transaction Update
• Final Closing Balance Sheet has been completed
• GM will refund approximately $1B to restore GMAC tangible equitybalance to $14.4B– Payment driven by significant deterioration in ResCap’s November 2006
results, as well as earnings restatements by GMAC
• Finalization of the Closing Balance Sheet a key milestone in concluding GM’s sale of a 51% controlling interest in GMAC– Allows GMAC to fully focus their attention on the future and achieving
their mission of becoming an independent globally-diversified financial services company
15
GMNA Fourth Quarter Adjusted Results
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($ Millions)Restated
2005 2006
2006Fav/(Unfav)
2005
Revenue $27,770 $26,584 ($1,186)Pre-Tax Income/(Loss) (1,577) 25 1,602 Net Income/(Loss) (1,416) (14) 1,402 Net Margin (5.1)% (0.1)% 5.0 p.p.
North America:- Production Volume (000) 1,281 1,107 (174)- Market Share 23.6% 23.2% (0.4) p.p.
United States: - Industry SAAR (Mil.) 16.5 16.9 0.4 - Market Share 23.8% 23.6% (0.2) p.p.- Retail/Fleet Mix - % Fleet 28.7% 25.8% 2.9 p.p.- Dealer Inventory (000) 1,043 1,055 (12)
18,727
20,204
19,160
19,417
19,425
20,189
19,759
20,779
19,500
18,880
$18,000
$18,500
$19,000
$19,500
$20,000
$20,500
$21,000
CY '02 CY '03 CY '04 CY '05 CY '06 Q4'02 Q4'03 Q4'04 Q4'05 Q4'06
GMNA Vehicle Revenue Per UnitCalendar Year Fourth Quarter
Net RevenueGross Revenue lessSales Incentives
Vehicle Revenue per Unit excl. such items as daily rental accounting impact, Service Parts, OnStar and other outside sales
17Refer to Supplemental Charts for reconciliation to GAAP figures
Memo: Q306
$20,195
GAAP Rev/Unit 20,460 20,957 21,052 20,714 22,277 19,424 21,017 21,414 20,555 22,567
GMNA Adjusted Net Income 2006 vs. 2005
Q4 CY2005 Net Income ($1.4)B ($5.8)B
Volume (0.9) (0.8)Mix 0.7 0.3Gain on Lease Residual Reserves 0.2 0.2Net Price / Other Contribution Margin (0.4) 0.1Pension / OPEB 0.9 2.3Manufacturing / Attrition Related 0.5 0.8Engineering / Marketing / Other Structural 0.6 1.3 One-time Items (0.2) 0.8
2006 Net Income $(0.0)B ($0.8)B
2006 Improvement vs. 2005 $1.4B $5.0B
18
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Q1 Q2 Q3 Q4 Total 2006
Structural Cost Reduction in North America*
19
* Includes North American costs accounted for in Corp Sector
($ B
illion
)
$3.0 $6.8
$2.3
$1.4
$0.0
In 2007, on track to achieve target of $9B savings on running rate basis
Overview of Other Regions• GME Q4 results essentially breakeven from year-ago period on
continued progress in turnaround– Strong structural cost performance– Continued pressures in material costs and foreign exchange
• GMLAAM Q4 results more than doubled on very strong industry growth– Q4 revenue up 12%; significantly improved results at GM do Brasil
• GMAP Q4 results virtually flat despite the loss of significant equity income from Suzuki equity sale– GM continues to outpace strong industry growth in region– Improved Holden performance
• Observations on 2006 Calendar Year adjusted results– GME: First adjusted profit in 7 years, improved $414 million vs. CY 2005– GMLAAM: $533 million net income on all-time record CY revenue – GMAP: $441 million net income notwithstanding loss of equity income
20
GME Fourth Quarter Adjusted Results
21
($ Millions)Restated
2005 2006
2006Fav/(Unfav)
2005
Revenue $8,102 $8,975 $873 Pre-Tax Income/(Loss) (72) (11) 61 Net Income/(Loss) 5 (8) (13)Net Margin 0.1% (0.1)% (0.2) p.p.
Total Europe:- Production Volume (000) 443 443 0 - Industry SAAR (Mil.) 21.3 22.3 1.0 - Market Share 9.1% 9.2% 0.1 p.p.
Germany: - Industry SAAR (Mil.) 3.7 4.1 0.4 - Market Share 10.4% 10.1% (0.3) p.p.
UK:- Industry SAAR (Mil.) 2.8 2.7 (0.1)- Market Share 14.7% 14.3% (0.4) p.p.
GMLAAM Fourth Quarter Adjusted Results
22
($ Millions)Restated
2005 2006
2006Fav/(Unfav)
2005
Revenue $3,546 $3,973 $427 Pre-Tax Income/(Loss) 48 74 26 Net Income/(Loss) 63 128 65 Net Margin 1.8% 3.2% 1.4 p.p.
Total LAAM:- Production Volume (000) 188 215 27 - Industry SAAR (Mil.) 5.1 6.1 1.0 - Market Share 18.1% 17.9% (0.2) p.p.
Brazil: - Industry SAAR (Mil.) 1.8 2.1 0.3 - Market Share 22.8% 21.0% (1.8) p.p.
GMAP Fourth Quarter Adjusted Results
23
($ Millions)Restated
2005 2006
2006Fav/(Unfav)
2005
Revenue $3,371 $4,492 $1,121 Pre-Tax Income/(Loss) (109) 71 180
China JVs Equity Income 93 86 (7)Other Equity Income/Minority Interest 17 (52) (69)
Net Income/(Loss) 124 122 (2)Net Margin 3.7% 2.7% (1.0) p.p.
Total Asia Pacific:- Industry SAAR (Mil.) 18.7 20.5 1.8 - Market Share 6.3% 6.6% 0.3 p.p.
China: - Industry SAAR (Mil.) 6.5 8.5 2.0 - Market Share 11.6% 10.8% (0.8) p.p.
GM-DAT: (Consolidated in Q2 2005)- Production (Complete Build Units) 180 201 21
Australia:- Industry SAAR (Mil.) 0.96 0.94 (0.0)- Market Share 17.3% 15.6% (1.7) p.p.
GM Liquidity Position
• Gross liquidity position remains strong at $26.4B1
– Additional $15.3B of VEBA assets available to fund healthcare costs
• GM remains committed to preserving strong liquidity position– In Q4 issued $1.5B debt backed by US Machinery and Equipment
• Issuance was 2x oversubscribed
– Closed GMAC transaction• $(1.0)B refund of prior distributions to be repaid in March• Now expect to receive approximately $13B over three years• GM re-invested $1.4B in GMAC preferred equity
– Near-term financial obligations are limited• $1.1B of convertible bonds put to GM on March 6• No additional U.S. term debt maturities in 2007• U.S. Salaried and Hourly pension plans $17.1B over-funded
1 Includes $2.5B in readily-available VEBA assets (i.e., short-term VEBA)
24
(0.3) (7.1) (10.9) (13.8) (12.3)
26.4
20.417.3
26.9
23.3
(15.0)
(10.0)
(5.0)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
YE '02
YE '03
YE '04
YE '05
YE '06
Net Liquidity
Gross Cash (incl. ST VEBA)
$ B
illio
nsAutomotive Gross / Net Liquidity
25
1 Net Liquidity figures restated to include capital leases and industrial revenue bond obligations (est. $1.7B at YE 2006) previously classified as Other Liabilities
2 Year-end 2006 debt balance includes GMAC-related debt of $2.9B
1,2
Fourth Quarter Key Cash Flow Drivers
26
• Q4 Automotive OCF of $0.3B; improved year-on-year by $1.4B– Achieved OCF improvements in all four regions– Led by higher net income at GMNA– Improvement partially offset by adjustments for non-cash elements of net
income (primarily related to legacy liabilities)
• CY 2006 Automotive OCF of $(3.8)B; improved year-on-year by $4.4B– Driven by significant improvement in net income, particularly at GMNA– Offset in part by $1.0B Mitigation VEBA contribution and negative
Accrued Expenses & Other adjustment
• CY 2006 net cash flows of $6.0B – Operating cash burn and restructuring costs funded by asset sales and
VEBA withdrawals– Further enhanced by GMAC sale proceeds
Automotive Cash Flow Summary
Refer to Supplemental Charts for reconciliation to GAAP figures 27
$ Billions 2006 2005
Operating Related Q4 CY Q4 CYNet Income (Automotive & Corp/Other) 0.7 (3.0) (6.6) (12.6) Depreciation & Amortization 2.1 8.2 2.7 10.1 Capital Expenditures (2.4) (7.5) (3.0) (7.9) Change in Receivables, Payables & Inventory 0.2 (0.8) - (1.0) Pension/OPEB expense (net of payments) (1.1) 3.4 0.3 2.8 Mitigation VEBA - (1.0) - - Accrued Expenses & Other 0.8 (3.1) 5.5 0.4 Adjusted Operating Cash Flow 0.3 (3.8) (1.1) (8.2)
Proceeds from Asset Sales 0.3 2.5 0.8 0.9 Cash Restructuring Costs (0.6) (2.3) (0.2) (0.8) Delphi - Cash Restructuring Costs (0.2) (0.4) - - GMDAT Consolidation - - - 1.5 FIAT Settlement - - - (2.0) Adj. Operating Cash Flow after Special Items (0.2) (4.0) (0.5) (8.6)
Non-Operating RelatedVEBA Withdrawals 0.1 4.1 1.2 3.2 Dividends (0.1) (0.6) (0.3) (1.1) Change in Debt 1.7 1.6 0.1 0.2 GMAC Dividends - 1.9 1.0 2.5 GMAC transaction proceeds 10.1 10.1 - - Preferred equity investment in GMAC (1.4) (1.4) - - GM-GMAC Intercompany Flows (3.5) (3.1) - - Change in ST VEBA - (1.3) (0.3) 0.3 Other (0.7) (1.3) (0.0) 0.6 Total Non-Operating Related 6.2 10.0 1.7 5.7
Net Change in Cash and Cash-related 6.0 6.0 1.2 (2.9)
Accrued Expenses & Other
28
• Q4 2006 Accrued Expenses & Other adjustment of $0.8B– Cash positively impacted by add-back of non-cash accruals (book taxes
and interest expense accruals)– Offset by net sales allowance payments and reduction in daily rental sales
• As GM reduces its daily rental sales, cash flow negatively impacted as repurchase of cars exceeds new sales
• For CY 2006, Accrued Expenses and Other adjustment was $(3.1)B – Net sales allowance payments, reduction in daily rental sales, and add-
back of non-cash tax benefits related to Special Attrition Program charge
$ billions CY 2006
Net Tax Expense / (Benefit) Add-back (2.6)Net Interest Expense Accruals 0.2Retail / Fleet Net Sales Allowances (1.6)Net Daily Rental Sales (1.1)Attrition Program / Restructuring Add-back 1.3Other 0.7
Total Accrued Expenses & Other (3.1)
U.S. Pension Expense
2005 2006 2007($ Billions) Actual Actual Outlook
U.S. Pension Expense / (Income) 1 1.3 (0.6) (1.1) Related Interest Expense 1.0 1.0 1.0 Total Expense / (Income) 2.3 0.4 (0.1)
U.S. Year-end Funded Status 2 7.5 17.1 -
Year-end Discount Rate (%) 5.70% 5.90% - Actual Asset Returns (%) 13% 15% 8.5%Contributions 2 0.0 0.0 0.0
1 FAS 87 expense, excludes U.S. Subsidiaries2 Reflects U.S. Hourly and Salaried Pension Plans only3 2007 assumption
3
29
U.S. Pension Investment Policy
30
• Given the overfunded status of its U.S. pension plans, GM is adopting a more conservative long-term asset allocation policy– Change involves reallocation of 20% of plan assets from equity to fixed
income exposure– Intended to significantly lower expected volatility of asset returns and plan
funded status, as well as probability of future contribution requirements
• U.S. pension plans now have the following target asset allocations:
• As a result of new target asset allocations, GM is revising its expected long-term annual return assumption for U.S. pension plans from 9.0% to 8.5% effective January 1, 2007
Asset CategoryTarget Percentage of U.S. Pension Assets
Global Equity ~29%Global Bonds ~52%Real Estate ~8%Alternative Investments ~11%
U.S. Health Care Spending & OPEB Expense($ Billions) 2005 2006 2007
Actual Actual OutlookAssumptionsYear-end Discount Rate 5.45% 5.90% -OPEB Health Care Trend Rate1 10.50% 10.00% 9.00%
U.S. OPEB Expense 5.3 3.3 2.1
OPEB Liability 81.2 64.3 - VEBA Assets 19.1 16.9 - Net Liability 62.1 47.4 -
U.S. Health Care Cash PaymentsActive 1.7 1.5 1.3 Retired 3.7 3.3 3.4 Total Cash 5.4 4.8 4.7
Mitigation VEBA contributions - 1.0 1.0
2 Reflects $3.2B withdrawals in CY 2005
1 OPEB trend rate in initial year; ultimate trend rate assumed to be 5.0% in six years
3 Reflects $4.1B withdrawals in CY 2006
2 3
31
Pension & OPEB – SFAS 158 Update
32
• Impact of adopting SFAS 158 at December 31, 2006 was a reductionof shareholders’ equity of $16.9B after-tax, to a new total of $(5.4)B
• GM will early adopt new measurement date provisions of SFAS 158 on January 1, 2007 using a “two-measurement” approach– Customary measurements taken on 9/30/06 (U.S. OPEB, international
pensions) and 11/30/06 (Canadian pensions) used to calculate expense from the date of those measurements through 12/31/06
• Beginning retained earnings adjusted by $(0.7)B on 1/1/07 for the net benefit expense/income during those periods
– Second measurement performed on 1/1/07 to determine net benefit expense/income that will be recorded in 2007
• Other Comprehensive Income (OCI) adjusted by $2.1B on 1/1/07 for the net change in benefit assets/liabilities since the previous measurement date
• 2006 financial statements reflect curtailments and settlements in Q4 (largely related to GMAC transaction)
Delphi Status
33
• Plan Framework Support Agreement entered into with Delphi and aninvestor group on December 18– Establishes a framework and exclusivity period within which to continue
negotiations to finalize definitive agreements– GM would receive $2.6B in cash, as well as a limited amount of equity– $1.5 - $2B net Delphi pension liabilities would be transferred to GM
pension plan; GM would receive note from Delphi payable for such amount
• Bankruptcy court approved framework agreement on January 12
• Contingent exposure estimate remains $6 - $7.5B pre-tax– Charges of $6B taken to date, of which $4.5B subsequently transferred to
OPEB liability for Delphi employees flowing to GM to work or retire
• Restructuring provides opportunity to address purchase price premium of about $2B annually
2007 Outlook
• First Quarter– Lower North America production
– Full benefit of structural cost savings• Pension and health care changes, attrition program
– Strong product launch cadence• Full-size pickups, crossover utilities
– Continued emerging market growth
• Calendar Year– Improved earnings
• Potential volatility due to mark-to-market for certain derivatives
– Improved but negative cash flow
– Capital spending increased to $8.5B - $9B
34
Summary
• On adjusted basis, automotive operations improved over $1.4B vs. Q4 2005 and $5.7B vs. CY 2005, largely on strength of turnaround inNorth America
• Continued automotive revenue growth, with revenue records for both Q4 and CY
• Q4 global share declined marginally vs. 2005 as strong volume growth in LAAM and AP helped offset lower U.S. results
• Automotive liquidity strengthened further to $26.4B, but intense focus remains on improving operating cash flow and maintaining strong liquidity– Will evaluate strategic alternatives for Allison
• Key priority is to finalize Delphi negotiations
35
Supplemental Charts
The following supplemental charts are provided to reconcile adjusted financial data comprehended in the primary chart set with GAAP-based data (per GM’s financial statements) and/or provide
clarification with regard to definition of non-GAAP terminology
Reconciliation to Adjusted Net Income / EPSQ4 – 2005 & 2006
S1
$ Millions
Q4 2006 GMNA GME GMLAAM GMAPTotal Auto Operations GMAC Other
Total Operations
Total Net Sales & Revenue 26,584 8,975 3,973 4,492 44,024 6,486 699 51,209 Net Income 50 (119) 128 135 194 1,069 (313) 950 EPS - Basic $1.68
Adjustments (after-tax):Asset Impairments (146) - - - (146) - - (146) Special Attrition 35 - - - 35 - - 35 Restructuring Charge - (111) - (53) (164) - - (164) Sale of Mesa Proving Grounds 175 175 175 Suzuki Residual Taxes - - - 66 66 - - 66 GMAC LLC Conversion - - - - - 786 786 GMAC OCI Monetization - - - - - 567 567 Loss on Sale of GMAC - - - - - - (205) (205) GMAC LLC Conversion - - - - - (786) (786) GMAC Pension/OPEB Curtailment - - - - 401 401 Delphi - - - - - - 92 92 Opel Bank Transfer to GMAC - - - - (167) (167) Incremental Tax on GMAC Sale - - - - - - 116 116 Total Adjust. - Net Income 64 (111) - 13 (34) 1,353 (549) 770
Total Adjust. - Net Revenue - - - - - 872 - 872
Adjusted Net Revenue 26,584 8,975 3,973 4,492 44,024 5,614 699 50,337 Adjusted Net Income (14) (8) 128 122 228 (284) 236 180 Adjusted EPS - Diluted $0.32
Q4 2005Total Net Sales & Revenue 27,770 8,102 3,546 3,449 42,867 8,808 (23) 51,652 Net Income (3,150) (56) (556) 171 (3,591) 111 (3,097) (6,577) EPS - Basic ($11.63)
Adjustments (after-tax):Cum. Eff. of Accting Change (83) (21) (2) (3) (109) - - (109) Change in Polish tax law 49 49 - - 49 Restructuring Charge (1,651) (69) - (21) (1,741) - (7) (1,748) Tax Items - - (617) - (617) - 746 129 GMAC Commercial Mort. Goodwill - - - - - (438) - (438) UAW/Delphi Ben. Guarantee - - - - - - (3,575) (3,575) FHI Impairment - (20) - 71 51 - - 51 Total Adjust. - Net Income (1,734) (61) (619) 47 (2,367) (438) (2,836) (5,641)
Total Adjust. - Net Revenue - - - 78 78 - - 78
Adjusted Net Revenue 27,770 8,102 3,546 3,371 42,789 8,808 (23) 51,574 Adjusted Net Income (1,416) 5 63 124 (1,224) 549 (261) (936) Adjusted EPS - Basic ($1.66)
Reconciliation of GMNA Revenue Per UnitCalendar Year
S2
a). For GAAP reporting purposes, sales to other GM regions are eliminated whereas they are retained for managerial vehicle analysisb). Includes SPO parts, Powertrain engines, MSP, and Onstar service outside sales- excluded from managerial vehicle analysisc). Includes Interest Income, Daily Rental Income, and GM Credit Card Income- excluded from managerial vehicle analysis
Revenue Revenue Revenue Revenue Revenue Revenue$ (Millions) per unit $ (Millions) per unit $ (Millions) per unit
GAAP 116,599 20,460$ 117,315 20,957$ 115,321 21,052$
add: Allied Sales 2,370 a 2,832 a 3,683 aless: Non Vehicle Sales (11,143) b (11,394) b (11,137) bless: Other Income Items (230) c (1,493) c (1,503) c
Managerial 107,596 18,880$ 107,260 19,160$ 106,364 19,417$ (shown on chart 17)
Revenue Revenue Revenue Revenue$ (Millions) per unit $ (Millions) per unit
GAAP 105,640 20,714$ 109,779 22,277$
add: Allied Sales 5,865 a 7,250 aless: Non Vehicle Sales (10,482) b (15,505) bless: Other Income Items (1,956) c (2,035) c
Managerial 99,067 19,425$ 99,489 20,189$ (shown on chart 17)
CY '05 CY '06
CY '04CY '03CY '02
Reconciliation of GMNA Revenue Per UnitFourth Quarter
S3
a). For GAAP reporting purposes, sales to other GM regions are eliminated whereas they are retained for managerial vehicle analysisb). Includes SPO parts, Powertrain engines, MSP, and Onstar service outside sales- excluded from managerial vehicle analysisc). Includes Interest Income, Daily Rental Income, and GM Credit Card Income- excluded from managerial vehicle analysis
Revenue Revenue Revenue Revenue Revenue Revenue$ (Millions) per unit $ (Millions) per unit $ (Millions) per unit
GAAP 28,670 19,424$ 30,706 21,017$ 29,187 21,414$
add: Allied Sales 1,385 a 1,117 a 726 aless: Non Vehicle Sales (2,747) b (2,871) b (2,637) bless: Other Income Items 333 c (462) c 262 c
Managerial 27,641 18,727$ 28,490 19,500$ 27,538 20,204$ (shown on chart 17)
Revenue Revenue Revenue Revenue$ (Millions) per unit $ (Millions) per unit
GAAP 27,770 20,555$ 26,584 22,567$
add: Allied Sales 1,908 a 2,063 aless: Non Vehicle Sales (2,459) b (3,720) bless: Other Income Items (524) c (449) c
Managerial 26,695 19,759$ 24,478 20,779$ (shown on chart 17)
Q4 2005
Q4 2004Q4 2003Q4 2002
Q4 2006
Reconciliation of Automotive Cash FlowQ4 – 2005 & 2006, CYTD – 2005 & 2006
S4
Automotive & Other$ Billions Q4 2006 CYTD 2006 Q4 2005 CYTD 2005
Net Cash Provided By Operating Activities (GAAP) 1.2 5.6 1.8 -
Reclassifications to/ (from) U.S. GAAP- Expenditures for PPE & Special Tools (2.4) (7.5) (3.0) (7.9) - VEBA Withdrawls (0.1) (4.1) (1.2) (3.2) - Cash Restructuring Costs 0.6 2.3 0.2 2.8 - Delphi - Cash Restructuring Costs 0.2 0.4 - - - Other 0.8 (0.5) 1.1 0.1
Total Reconciling Items (0.9) (9.4) (2.9) (8.2)
Total Operating before Special Items 0.3 (3.8) (1.1) (8.2)