GM Finalizes First-Quarter Financial Results

Q1 Reported Net Income Revised to $445 million, or $0.78 Per Share
GM North America Adjusted Loss Reduced to $462 Million
Health-Care Settlement Costs to Be Recognized Over 7 Years

DETROIT – General Motors Corp. today announced that it had finalized its first-quarter 2006 financial results to reflect final determination of the first-quarter accounting treatment for the recently approved retiree health-care settlement agreement and other adjustments.

As a result, GM earned $445 million, or $0.78 per diluted share of common stock, in the first quarter. These results compare with a preliminary loss for the period of $323 million, or $0.57 a share. GM reported a loss of $1.3 billion, or $2.22 per share in the first quarter of 2005.

The difference between the preliminary and final results primarily reflects a change in the way GM will account for the health-care settlement agreement between GM and the United Auto Workers union. As part of the agreement, GM will make contributions to a new independent Voluntary Employees’ Beneficiary Association trust (VEBA) of $1 billion in each of 2006, 2007, and 2011. GM will also make supplemental contributions to this VEBA related to events like profit-sharing payments, wage deferrals from active employees, and increases in the value of GM stock.

After discussions with the U.S. Securities and Exchange Commission on the proper accounting treatment for the settlement agreement, GM has determined that it will recognize the impact of the contributions over approximately 7 years, beginning in the third quarter of 2006 when the health-care changes are scheduled to take effect.

Excluding special items, GM reported adjusted net income of $184 million, or $0.32 per diluted share in the first quarter of 2006, compared with a preliminary adjusted loss for the period of $529 million, or $0.94 per share. In the year-ago quarter, GM reported an adjusted loss before special items of $988 million, or $1.75 per share.

The following table describes the effects of the accounting treatment, and the adjustment in GMAC’s profitability as noted below, on adjusted net income, which excludes special items.

GM First Quarter Adjusted Net Income (loss) (Dollars in millions except per share amounts)
	Preliminary Q1-2006	Final Q1-2006	Q1-2005
GMNA	$ (946)	$ (462)	$ (1,513)
Total Automotive	(721)	(237)	(1,504)
Other	(413)	(216)	(212)
GMAC	605	637	728
Total GM	$ (529)	$ 184	$ (988)
Earnings (loss) per share - diluted	$ (0.94)	$0.32	$(1.75)

The reported results for the first quarter of 2006 include special items totaling a favorable $261 million after tax, or $0.46 per diluted share. These results include a gain of $372 million from the sale of most of GM’s stake in Suzuki. This gain was increased by $55 million to reflect finalization of the foreign exchange treatment for the transaction. The gain was partially offset by restructuring charges totaling $111 million, or $0.19 per share, at GM North America, GM Europe and GM Latin America/Africa/Middle East.

GM is also revising its first-quarter financial results for General Motors Acceptance Corporation (GMAC) to reflect finalization of the tax effect of the sale of GMAC Commercial Mortgage, which closed late in March. As a result, GMAC earned $637 million in the first quarter of 2006, compared to the previously reported preliminary first-quarter net income of $605 million. GMAC earned $728 million in the year-ago period.

GM remains committed to reducing structural costs in North America by $7 billion on a running rate basis by the end of 2006. Running rate basis refers to the average annualized cost savings into the foreseeable future anticipated to result from cost savings actions when fully implemented.

Due to the change in the accounting treatment of the UAW health-care settlement, GM now expects approximately $4.5 billion of structural cost reductions to be realized during calendar year 2006, compared with $4 billion previously estimated for calendar year 2006.

GM plans to file a complete set of revised financial results when it files its 10-Q report with the Securities and Exchange Commission later this week.

GM Finalizes First-Quarter Financial Results - Profitable!