Oops! GM restates net loss by 200 million for last quarter
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Oops! GM restates net loss by 200 million for last quarter
GM better close the deal on that 51% stake in GMAC fast before that deal falls apart.
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.
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.
Last edited by johnsocal; Aug 2, 2006 at 02:20 AM.
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