GM’s incredibly sobering 10-Q…

November 11, 2008

Late yesterday, after a day of headlines like this one, General Motors (GM) filed an incredibly sober 10Q. Weighing in at 337 pages, GM seems to be worried that folks might not get through the whole thing. So they started off with a wallop of new disclosures, including this one:

We have had significant losses from 2005 through the nine months ended September 30, 2008, attributable to operations and to restructurings and other charges such as support for Delphi and future cost cutting measures. We have managed our liquidity during this time through a series of cost reduction initiatives, capital markets transactions and sales of assets. However, the global credit market crisis has had a dramatic effect on our industry. In the three months ended September 30, 2008, the turmoil in the mortgage and overall credit markets, continued reductions in U.S. housing values, historically high prices for energy, the high likelihood that the United States and Western Europe have entered into a recession and the slowdown of economic growth in the rest of the world, created a substantially more difficult business environment.

And, just in case it’s not exactly clear what GM thinks needs to be done, the 10Q goes on to say that, “We do not believe it is likely that these adverse economic conditions, and their effect on the automotive industry, will improve significantly in the near term, notwithstanding the unprecedented intervention by the U.S. and other governments in the global banking and financial systems.”

And, just in case there’s still some doubt over exactly how troubled GM is — cue the club over the head here — the company mentions the words “going concern” — an accounting-speak term that scares the daylights out of most investors — no fewer than 15 times in the filing.

The filing also mentions the discussions with various members of Congress as well as the discussions last month with Chrysler, though neither Nancy Pelosi nor Chrysler is actually named in the filing.

Meanwhile, Bill Ackman has somewhat different advice for GM: file a pre-planned bankruptcy.

So grab another cup of coffee and tuck into GM’s filing. At 337 pages, you should be done in time for lunch, assuming that you skim.

Image source: Associated Press

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