Comparing GM & USA, Inc...
General USA 2010 Motors 2008
Gross Debt as % of GDP 93% 82% Gross Debt as % of Revenue’ Federal Spending as % of GDP 24 114 Total Cost as % of Revenue Federal Budget Surplus as % of GDP -9 -21 Net Income as % of Revenue Interest Payments as % of GDP 1 2 Interest Payments as % of Revenue % of Citizens Receiving Government 36 75 % of Total GM Population2 Subsidy or on Government Payroll Dependent on the company
Note: 1) Gross debt of GM calculated as total liabilities — future OPEB & pension liabilities, as these liabilities are not reflected in USA gross debt. 2) % of total GM population dependent on the company = all living retirees / (living retirees + current workers). Source: White House Office of Management and Budget, OECD, Heritage Foundation, General Motors. www.kpcb.com USA Inc. | Consequences of Inaction 433
...Good News for GM Is It Has ‘Taken Its Medicine’ and Has
Begun to Implement a Successful Turnaround
Basic Framework of GM Turnaround:
e Focus on Expenses
— Eliminated some of the legacy entitlements - swapped employee healthcare for equity ownership.
— Significantly changed operating efficiency - took out costs so that GM was able to operate at breakeven at bottom of the cycle and turn cash flow positive during other parts of its business cycle.
e Focus on Revenue
— Changed business model to move away from lowering cost to improving vehicle quality, engineering and styling.
KP www.kpcb.com USA Inc. | Consequences of Inaction 434
HOUSE_OVERSIGHT_021058