General Motors 2010 Annual Report Download - page 12

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10 General Motors Company 2010 Annual Report
Significantly Lower
Risk Profile
The new GM has a much improved balance sheet that, combined with our
competitive cost structure in North America, provides for a significantly lower risk
profile. Given the cyclical nature of our industry and the capital-intensive nature of
our business, our leadership team is committed to minimizing our financial lever-
age. After reinvesting in the business, we plan to use excess cash to fully fund our
pension plans and maintain minimal debt, with the goal of attaining an invest-
ment-grade credit rating over the long term.
We have made solid progress reducing our financial
leverage in 2010, with nearly $16 billion of combined
reductions in key automotive obligations, including
an $11.2 billion reduction in automotive debt and a
$4.7 billion improvement in the underfunded status
of our U.S. pension plans. In addition, we reduced
our Series A Preferred Stock by $1.5 billion. Importantly,
we ended the year with a very healthy $34 billion
in available automotive liquidity to support the
business going forward.
Our competitive cost structure in North America
was the result of the progress we made through our
restructuring and is supported by competitive agree-
ments with our labor partners and our ability to more
efficiently manage our manufacturing capacity. Our
cost structure, strong product portfolio and pricing
discipline in North America have allowed us to achieve
breakeven near the bottom of the industry cycle.
As we manage through the downturns and
rebounds of our industry, a key objective is to
maintain consistent levels of investment in our
engineering and product development in order to
deliver the world’s best vehicles, which will in turn
deliver consistent financial performance over the long
term. Minimizing financial leverage and maintaining
cost discipline will help ensure we are able to do so.
We still have more work to do, but the progress
we already have made is moving us closer to our
ultimate goal: to be in a solid position to play offense,
not defense, even in a down cycle. This is the
essence of the new GM.