GM auditors raise doubts on automaker’s viability

Thursday, March 5, 2009

GM auditors raise doubts on automaker’s viability

Robert Snell / The Detroit News

DETROIT — General Motors Corp. says there is "substantial doubt" about the company’s ability to continue as a going concern, according to a regulatory filing today.

An independent audit done by GM’s accounting firm found "our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," GM wrote in the filing.

GM signaled last week that it would receive a "going concern" opinion from its auditors.

The Detroit automaker almost ran out of money in December before winning commitments of up to $13.4 billion in federal loans. GM said last week it needs up to $16.6 billion more to survive the weakest sales market since the early 1980s, including $2 billion this month to avoid bankruptcy.

GM ended the year with $14 billion in cash, securities and readily available assets — about $3 billion more than the minimum amount it needs to pay bills.

The automaker, which has lost about $82 billion in recent years, is implementing a broad cost-cutting plan aimed at becoming a viable company and repaying the federal loans.

GM is eliminating 47,000 jobs this year, shuttering 14 plants by 2012 and selling, shrinking or killing its Saturn, Hummer, Pontiac and Saab brands. Saab filed for reorganization last Friday in the Swedish equivalent of a Chapter 11 bankruptcy.

GM also is forcing most of its U.S. salaried workers to accept temporary pay cuts.

The restructuring plan and the company’s viability hinge on higher sales volumes. U.S. vehicle sales have fallen 40 percent from the peak in 2007 and global sales have fallen 23.5 percent since January 2008.

GM expects sales to decline more this year before starting to recover in 2010.

"Sales volumes may decline more severely or take longer to recover than we expect, however, and if they do, our results of operations and financial condition and the success of the Viability Plan will be materially adversely affected," GM wrote in the filing.

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