When Corporations Like General Motors Run Out of Cash,
Eventually They File for Bankruptcy
General Motors Balance Sheet, 2000 —CQ1:09 6/09 — 3 Largest
Bankruptcy
Filing in USA History
mas Cash & Marketable Securities
am Assets (ex. Cash)
mas Accrued Pension + OPEB Liabilities
as Liabilities (ex. Pension & OPEB)
=—O=—Net Worth (Shareholders’ Equity)
Assets / Liabilities / Net Worth ($B)
ce
Note: *includes cash & equivalents, as well as marketable securities; **short-term debt also includes current portion of long-
KP term debt. Source: General Motors. (@ 4] www.kpcb.com USA Inc. | Consequences of Inaction 431
General Motors —
Entitlement Spending Became Too Onerous for this Great American Company
1908 — Founded in Flint, Michigan to manufacture automobiles 1954 — Shipped 50 millionth automobile
1988 — Free cash flow peaked at $6.3B
1999 — Reached a peak market capitalization of $61B
2006 — Revenue peaked at $207B
2009 — Filed for bankruptcy
Why did GM file for bankruptcy?
Products became increasingly uncompetitive. In addition, pension plans to support 650,000 retirees and their dependents (compared with 80,000 active employees in N. America as of 2010) rose to 4.8% of GM’s annual expenses and $4,679 in annual pension payments per worker to former workers.
Source: General Motors, FactSet, DataStream, History News Network. www.kpcb.com
USA Inc. | Consequences of Inaction 432
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