Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 12, 1993 TAG: 9302120262
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: DETROIT LENGTH: Medium
GM LOSS SETS RECORD FOR U.S.
AFTER A WEEK of turmoil, GM saw its massive $23.5 billion loss break the record set by Ford just the day before. But the turnaround is taking hold, the automaker said.
Despite posting a $23.5 billion loss for 1992 - the largest ever by a U.S. company - General Motors said Thursday that its operating results improved greatly as its cost-reduction plan began taking hold.
The massive loss, which amounted to $38.28 a share, was largely attributable to charges of $22.2 billion for future retiree health benefits.
The report followed a week of turmoil in which the nation's biggest automaker was slapped with a $105.2 million court judgment for negligence in an auto-safety case, won a defamation suit against NBC News for rigging a crash test, and backed away from a major dumping case against the Japanese.
None of that could minimize the size of the deficit, which compared with a loss of $4.5 billion, or $7.97 a share, in 1991. GM lost $651.8 million, or $1.25 a share, in the fourth quarter, compared to a loss of $2.5 billion, or $4.25 per share, in the same period a year earlier.
Without the retiree-benefit charges, the company said it would have earned $92 million for all of last year and $273 million in the final three months of the year.
GM's North American automobile operations continued to bleed red ink, but the losses narrowed to $4.5 billion in 1992 from $7.9 billion in 1991.
Company officials described GM as being in the midst of a turnaround. And like their rivals at No. 2 car maker Ford, they speculated that the company might break even in North America this year.
"We think the trend is good," said G. Richard Wagoner Jr., executive vice president and chief financial officer. "No miracles, but we think there is good steady tracking in the right direction."
"The operating results were better than my expectations - and better than the expectations of most of Wall Street," said John Casesa, an analyst for Wertheim Schroder in New York.
David M. Garrity, an analyst with McDonald & Co. Investments, said he was encouraged by GM's improved operating margins. The automaker said its gross margin - the spread between the selling price of a vehicle and the cost of producing it - was 12.9 percent, up 2.4 percentage points for the year.
GM's loss broke a record $7.4 billion loss set the day before by Ford as it, too, accounted for future retiree benefit costs. Under new accounting standards, all major companies must account for those liabilities as they are incurred, not when they are paid out to retirees.
Chrysler, which had earnings of $723 million last year, has not yet taken that charge.
Despite the upbeat tone, GM still has some trouble spots.
The company noted that its European operations are under pressure because of economic problems in Germany and the United Kingdom. It also said its unfunded pension obligations increased $7 billion to $12 billion in 1992.
But GM continued to bask in its stunning victory over NBC. A little more than a day after NBC admitted misrepresenting crash tests in a report on GM's 1973-1987 pickups, GM rescinded its decision to pull advertising from ABC, CBS and NBC news.