- The Washington Times - Thursday, January 26, 2006

DETROIT (AP) — General Motors Corp., which is planning big job cuts and plant closings as it fights to avoid bankruptcy, said yesterday it lost $4.8 billion in the fourth quarter and $8.6 billion in all of 2005, dragged down by losses and charges in its North American division.

It was the fifth straight quarterly loss for the world’s largest automaker and the worst annual loss since 1992. GM’s North American operations alone posted adjusted losses of $1.5 billion for the quarter and $ 5.6 billion for the full year as unit sales fell 3 percent in North America in 2005.

The dismal results were far worse than Wall Street expected. GM’s stock price, which already had fallen about 36 percent since July, slumped another 80 cents, or 3.4 percent, to close at $23.05 on the New York Stock Exchange.

GM Chairman and Chief Executive Officer Rick Wagoner said 2005 “was one of the most difficult years in GM’s history.”

“Two significant fundamental weaknesses in our North American operations were fully exposed — our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue,” Mr. Wagoner said.

GM’s latest loss compares with a loss of $99 million in the October-through-December period of 2004. It amounts to $8.45 per share for the quarter, compared with a loss of 18 cents per share in the fourth quarter of 2004.

Revenue was $51.2 billion for the quarter and $192.6 billion for the full year, both down just slightly from 2004.

Excluding special items, GM said it lost $1.2 billion, or $2.09 per share, in the latest quarter, compared with adjusted earnings of $726 million, or $1.28 per share, in the fourth quarter of 2004.

Special items included one-time restructuring costs of $1.3 billion in North America and a $2.3 billion charge associated with benefits at Delphi Corp., GM’s former parts division, which filed for bankruptcy in the fall. GM said it expects to spend between $3.6 billion and $12 billion on benefits promised to Delphi workers, and estimates that its total liability will be at the low end of that range.

Himanshu Patel, an auto analyst with JPMorgan Chase, said the specific amount set aside for Delphi indicates that GM might be close to an agreement with Delphi and the United Auto Workers on its liabilities.

“A $3.6 billion liability is probably better than the market’s worst fears,” Mr. Patel wrote in a note to investors.

Excluding items for the entire year, the company reported a loss of $3.4 billion, or $5.99 per share. Wall Street analysts were expecting a loss of 16 cents per share in the fourth quarter and $4.19 per share for the year, according to a survey by Thomson Financial.

Mr. Wagoner said the company is moving forward with its turnaround plans, including a restructuring that will cut 30,000 jobs and shutter 12 facilities by 2008 and a plan to cut structural costs by $4 billion this year, largely through a health care agreement with the United Auto Workers and manufacturing improvements.

GM sold 9.2 million vehicles worldwide last year, the largest volume in its history.

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