Posted on 02/14/2013 10:41:35 AM PST by jazusamo
“Hourly workers will receive close to $7,000 each in bonuses, despite the fact that GM missed earnings estimates.”
Can you imaging what they’ll get if/when GM ever again makes a profit? Shazzam! I’m in the wrong line of work.
IF the auto bailout had worked (??? because they were short on cash at the time??? I still don't get the reason for auto bailout, but that's beside the point), GM turned their business around and become a viable company, then they don't need to pull this stunt.
But we all know that's not the case. This 'mysterious earnings report' showed that GM will continue to need 'future bailout(s)'. Just like Obama's Coninuous Loop of Stimulus money to 'jump start our economy'.
The best description of that is "the patient is dying from multiple organ failures, and the doctor keeps pumping in viagra".
Give credit where credit is due.
Too big to fail...the perfect business model!
The Chevy Volt is a money loser and now they're coming out with the Cad ELR which is a much fancier Volt selling for a lot more money.
With the recent bad news that the Chevy Malibu is getting killed by the competition it seems that won't help the bottom line for GM.
Article on that in case you haven't seen it:
So Romney was right? GM should of done a traditional BK?
Not all that mysterious... On the Goodwill writeoff GAAP requires you to value the acquisitions you make periodically and if the present value of the future cash flows is less than what you paid for the business then you write down the asset to the fair value. Used to you would amortize goodwill over a period of time (typically 15-30 years). That method changed a few years back to the current one. the event is non-cash and has no impact on real earnings. For example my company wrote off about a billion in goodwill in 2009 and it had no impact on us at all. We excluded it from our non-GAAP earnings as well. It’s an accounting exercise.
The release of the valuation allowance is more complicated. Here’s the description from Wikinvest:
“A valuation allowance is a balance sheet line item that offsets all or a portion of the value of a company’s deferred tax assets because the company doesn’t expect it will be able to realize this value.
Sometimes, a company expects it will not be able to realize the benefits of its deferred tax assets. For example, If a company loses $10 million, it would record a deferred tax asset representing the decrease in taxes on its next $10 million in earnings. However, if the company doesn’t expect profits for the next several years, and doesn’t expect to earn $10 million in the seven-year time horizon before these deferred tax assets expire, it can’t record them at full value - because the company won’t be able to take advantage of this tax benefit.
If a company expects there is more than 50% chance it will not be able to realize some of its deferred tax assets (because its future income won’t be large enough to take full advantage of these tax breaks), it must report a valuation allowance to account for this.”
Thanks, I’m no accountant either and was hoping someone would post what you just did.
I believe so, it would have saved taxpayers a lot of money and required GM to buckle down and get back in the automobile business. Of course it would have invalidated UAW contracts and cost union members a lot. That’s my take on it.
No problem. My company had a “valuation allowance release” in the last quarter as well. We also adjusted it out on non-GAAP earnings. It’s not all that uncommon. The accounting rules have gotten so whacky that it’s hard to keep track. Our “adjusted” earnings (or non-GAAP) are meant to show investors what the underlying business is actually doing and not get bogged down in esoteric accounting rules that don’t impact actual cash performance.
GM doesn’t deserve a dime until all former holders of GM bonds are repaid.
Amen to that...That turned out to be legalized robbery.
Re: Malibu
Thanks, I hadn’t seen that.
GM uses non-GAAP
FWIW, I've had a couple modules of Acctg a while back and this was way above that, but many here me included, do not trust what GM has done. It is a gut feel thing. And how in the Frank-Dodd / Sarbanes Oxley world do they live without being GAAP? We know how they got away with the carry forward of 45 billion in losses in the non-bankruptcy, but their hidden liabilities are the VEBA liabilities that while not their paper, they in essense are still on the hook for IMHO. They tried to buy out old employee pensions, and that is done, But the Union Pension(s) are who's liability at this point? I still stand on my prediction, this entity may have to go Chapter 11 again, something doesn't pass the smell test.
Tell me where I am wrong here....
SEC rules state that Non-GAAP measures cannot be presented without a reconciliation from GAAP to Non-GAAP. Additionally you cannot present the Non-GAAP measure "more prominently" than the GAAP measures.
In our public filings we have safe harbor language on Non-GAAP financial measures that states in part, "The Company presents adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin because these are measures management believes are frequently used by securities analysts, investors and other interested parties in the evaluation of financial performance."
Additionally we state, "These non-GAAP measures have limitations as analytical tools, and securities analysts, investors and other interested parties should not consider any of these non-GAAP measures in isolation or as a substitute for analysis of the Company's results as reported under accounting principles generally accepted in the United States ("GAAP"). These non-GAAP measures may not be comparable to similarly titled measures used by other companies."
Finally we say, "A reconciliation of non-GAAP to GAAP results is included..." with the presentation, press release, what have you.
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