UPDATE: GM CEO: Cash Position Allows Investment Into Business

General Motors Co. on Monday said its cash pool sits at $42.6 billion, $17.4 billion of which is already committed to existing liabilities.

The levels are far higher than GM's pre-bankruptcy balance sheet, when the auto maker came dangerously close to falling below minimum levels required to run the business.

The preliminary numbers provide a glimpse into GM's cash needs and its operations since emerging from bankruptcy protection on July 10.

"The balance sheet has been significantly deleveraged," GM Chief Executive Fritz Henderson said Monday. "We expect to be in a healthy position where we can support investment into our business."

But the company warned that its cash flow will again be negative in the fourth quarter, when it will pay out $2.8 billion to former auto-parts arm Delphi Corp. (DLPIV) and begin repaying U.S. and Canadian government loans.

Of the $42.7 billion in liquidity, $17.4 billion is earmarked for existing expenses. Meantime, GM expects increased costs for the remainder of the year as it steps up its spending on advertising and engineering activities as well as boosting its capital spending.

GM'S spending on marketing and new-product development came to a virtual standstill during its bankruptcy proceedings.

Additional costs could come if conditions worsen for GM's troubled supplier base or if the market performs worse than expected.

The auto maker, in its first post-bankruptcy release of financial results on Monday, reported positive cash flow since emerging from bankruptcy protection in a reversal from the massive cash burn it experienced before its government bailout.

Of GM's total liquidity, $17.4 billion remains in an escrow account of government loans. The other $25.2 billion is in an unrestricted account, from which GM can draw to fund anything including restructuring and overseas investments.

The level remains well above the $11 billion to $14 billion the company has said it need to run its business.

The figures are preliminary and are likely to change as GM reworks its balance sheet to meet federal accounting standards.

Post-bankruptcy GM has $135.6 billion in liabilities, down from $214.2 billion at the former company, or Old GM.

The auto maker reported $17 billion in liabilities, including government loans, payments owned to part suppliers and other expenses. Old GM had $94.7 billion on its balance sheet as of July 9.

-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; [e-mail]