General Motors auditors have looked at the company's dismal sales and its crushing debt and sky-high costs and said that the current factors "raise substantial doubt about [GM's] ability to continue as a going concern."
It may be hard to imagine a more grim report: Despite already cutting thousands of jobs, pledging to eliminate three brands and receiving more than $13 billion in government loans, GM -- one of the Big Three U.S. automakers -- is still on the brink.
The company is seeking nearly $17 billion more in government aid to keep running. But today's 402-page annual report said that even an influx of government cash may not be enough to keep GM in business.
Unless the union is more flexible when it comes to how the company contributes to a worker's health care and consumers start buying more cars, the auditors say it will be hard for the company to avoid a spiral into bankruptcy.
"There's still a risk that GM could liquidate, because no amount of government bailout money is going to force consumers to go into a GM showroom and buy a car," said David Whiston, an analyst at Morningstar Mutual Funds.
On Wall Street today, confidence waned as GM stock fell to $1.86 a share -- about the cost of a gallon of gas. Despite today's report, the company remains determined to avoid bankruptcy.
In a statement, it said that the results of today's report were "not unexpected" and that GM plans to continue its efforts to emerge stronger.
"The auditor's opinion has no impact on the aggressive actions we are taking to restructure our business for long-term viability," it read.
GM chairman and chief executive Rick Wagoner echoed that message.
"Our focus right now is taking the restructuring actions we need to accomplish this out of court," said Wagoner.
The company also revealed today that amid the worst auto sales climate in 27 years, Wagoner had received a pay package of $14.9 million in 2008. Last year, GM lost $30.9 billion.
It remains unclear if America's biggest automaker will be able to successfully implement its restructuring plan.
Bankruptcy May Be GM's Best Bet
Since President Bush agreed to provide the crippled auto industry with $17.4 billion in low-interest loans to keep both GM and Chrysler operational last year, many experts have argued that restructuring under the confines of bankruptcy would give GM the greatest chances of long-term survival.
Chapter 11 of the U.S. Bankruptcy Code allows a company to reorganize financially under court supervision. Proponents of letting GM go bankrupt say that it would allow the company to cut new deals with its unions and suppliers.
"The existing contracts are all up for grabs," said Edward Altman, a professor at New York University Stern School of Business. "It gives the company the possibility of emerging as a healthier, leaner, growing concern."
Some say that in bankruptcy, GM would be able to reduce the $98 billion in pension costs and $43 billion in health care it owes to its workers and retirees. It also would likely get another huge loan from the government.
Wagoner and many in the auto industry say that the consequences of bankruptcy would be devastating. If GM were to go bankrupt, there would be significant job cuts for its 240,000 employees and cuts in benefits for those who remain on staff.
Others worry that consumers won't buy cars from a bankrupt company, but not a lot of people are buying from GM now. February sales have dropped 53 percent from a year ago.
Bankruptcy would mean GM would become a drastically different company, but after today's report, it might be the only way to keep the automaker in existence.
The Associated Press contributed to this report.