Randy Arickx - Executive Director of IR and FinancialCommunications Fritz Henderson - Vice Chairman and CFO Walter Borst - Treasurer Nick Cyprus - Corporate Controller and CAO David Meline - CFO of GM North America Mike DiGiovanni - Executive Director of Global Market andIndustry Analysis

John Murphy - Merrill Lynch Brian Johnson - Lehman Brothers Himanshu Patel - JPMorgan Rod Lache - Deutsche Bank Jonathan Steinmetz - Morgan Stanley Joseph Szczesny - OaklandPress Tom Walsh - DetroitFree Press Joann Muller- Forbes Magazine Michael Kunz - South Deutsche

Ladies and Gentlemen, thank you for standing by. And welcometo the General Motors Corporation Third Quarter 2007 Earnings Call. During thepresentation, all participants will be in a listen-only mode. Afterwards, we'llconduct a question and answer session (Operator Instructions). As areminder, this conference is being recorded Wednesday, November 7th, 2007. I'd now like to turn theconference over to Mr. Randy Arickx, Executive Director, GMInvestor Relations and Financial Communications. Please go ahead, sir.

Good morning, and thank you for joining us, as we review our2007 third quarter results that we sent to you earlier this morning. I'd liketo direct your attention to the legend regarding forward-looking statements andrisk factors on the first page of the chart set. Like always, the content of our call will be governed bythis language. I should also mention that to comply with the SEC Regulation G,we provided some supplemental charts at the end of today's show charts thatwe'll be speaking to today, in order to provide reconciling data between managerialfinancial results as discussed today and the GAAP equivalent results that arein GM's financial statements. I would also like to highlight that GMis broadcasting this call live viathe Internet and that thefinancial press is participating. This morning, Fritz Henderson, our Vice Chairmanand CFO, will cover our third quarter earnings review. After thepresentation portion of thecall, 30 minutes will beset aside for questions from security analysts, followed by 30 minutes with thefinancial press. I would also like to mention, we have several otherexecutives available to assist in answering your questions. With us today areWalter Borst, Treasurer; Nick Cyprus, Corporate Controller and Chief AccountingOfficer; David Meline, CFO of GM North America; and Mike DiGiovanni, ExecutiveDirector, Global Market and Industry Analysis. Now, I'll turn the call over to Fritz Henderson.

Thanks, Randy. Good morning, everyone. Let's turn to page 2of the deck. Briefly, on the third quarter driven by the deferred tax assetsvaluation allowance, we had a $39 billion loss in the quarter, which was prettymuch largely explained by the valuation allowance. We'll spend some timetalking about this morning and then also go into what was going on in the restof the business. Adjusted profitability was a $1.6 billion loss. Our automotive results on an adjusted basis actuallyimproved $0.6 billion versus the third quarter of '06. We did have asignificant loss at GMAC, actually more than due to losses at ResCap related tothe challenging U.S.housing market. Automotive revenue at $43.1 billion, were a record for theautomotive business in the third quarter. Our share, for example, in U.S.stabilized, with share growth of 0.5% in the other regions in the world, butour overall global share was down, largely because the markets outside of NorthAmerica growing faster than North America. So, we basically lose on a regionalmix basis. But in terms of our overall market performance, we were encouragedby what we saw in the third quarter. And finally, we closed the quarter with $30 billion ofgrowth liquidity, driven by an adjusted operating Op cash flow of $2.5 billionRed, which I'll talk about later is actually better performance versus theprior year, but then obviously the proceeds from the Allison sale of $5.4billion in the quarter. Page 3. Looks atour results on anadjusted basis, recall, we look atour adjusted results from amanagerial perspective. We think itprovides how we manage thebusiness, and itprovides useful information for investors. What we have done here, and I'm going to touch on thiswhen I talk about the corporate sector. But theautomotive results here areshown in '07, using theeffective tax rates we established atthe beginning of theyear. So, we have held the effective tax rates for the automotiveoperations to insure comparability versus the prior year. I'll come back andtalk about the changing effective tax rates when I talk about the corporatesector and special charges. But here in North Americahad a $247 million loss on an adjusted basis. So for the company, for an operation the size of North America, a small loss base at the operating at or aroundbreakeven, actually in this case, is the other side of breakeven and its $247loss. But nonetheless, a $400 million improvement year-over-year in what isnormally our weakest seasonal quarter. GM Europe $90 million loss, also typically our weakestquarter. I'll talk about what the drivers were at GM Europe later. But that was$51 million wider than the prior period. GMLAAM, $340 million, this is aspectacular number. It's up $157 million from the third quarter of '06, whichin and itself is a pretty good number. GMAP, $138 million, very solidprofitability quarter, up $81 million, and then eliminations were $4 million inthe quarter. So, when you move down GMAC, you could see the substantialdeterioration year-to-year, $1.3 billion. Corporate sector is down $1.3 billion; again, I'll talkabout why later. In disc ops, we reported basically a stub period in '07 forAllison, whereas in '06 in the third quarter, we had the full quarter'sresults. So, when you move down to the adjusted loss for the quarter was $1.6billion versus about $0.5 billion profit in the prior year. Page 4. The corporate sector. The corporate other and other financing sectordeteriorated $1.3 billion versus the third quarter of '06, largely due to taxrelated items. First of all, in the third quarter of '06, we carried about $0.4billion dollars of various favorable tax items and benefits that were affectingour business around the globe. The current period, let me move back up a step. What I saidwas, when we looked at our automotive operations, we chose to hold theeffective tax rate for those, which we established at the beginning of theyear, so we could look at their performance on a comparable basis, but when wecomputed the total adjusted net income, we actually revised our effective taxrate on a cumulative basis through the first nine months in order to reflect,frankly, the loss of the tax benefits in the U.S, Canada, and Germany. The unfavorable impact associated with the loss of those taxbenefits, in other words, the losses which are no longer tax effected, amountedto $0.7 billion of tax expense, which we chose to carry in the corporate sectorfor purposes of display and for looking at our results in the quarter. As we look atboth the fourthquarter and calendar year in'08 next year, we obviously need to look atour effective tax rates with thevaluation allowances we've established for theU.S, Canada, and Germany, but interms of understanding theresults of operations on acomparable basis, again, we held theautomotive results, we held theregional tax rates, and then we basically pulled through theentire impact for 2007 calendar year only. On acumulative basis, we pulled itthrough into the thirdquarter, and we put itinto the corporatesector, which is why you have avery substantial unfavorable corporate sector inthe quarter. Other factors included increased legacy expense related topension and OPEB for Delphi retirees, for example, the Delphi checked the boxretirees that came aboard last year drove higher legacy expense, higherinterest expense and some impact of unfavorable currency and finally, just somehigher expenses. But the key factor here was the tax adjustments. And then wehad some higher legacy costs. Page 5. Take you from adjusted net income down to the GAAPloss. You went from adjusted net loss of $1.6 billion, and again, that numberdid include the reversal of the '07 impact only of the loss of the taxbenefits, as I mentioned in the prior chart. Then what you pick up is another$38.6 billion of valuation allowances, $38.3 billion largely relates to prioryears, actually. And then $250 million relates to tax benefits that wereapplied to special items in the first six months of this year. So, what we needto do, to the extent we had tax effected special items in the first six monthsof the year, which we had, we needed to reverse out and to establish anevaluation allowance associated with those special items. So the $250 million related to the tax benefits that hadpreviously been applied to the special items. The total valuation allowancethen included in special items was $38.6 billion, and when you include theimpact that's included in adjusted profitability, that's where you landed abouta $39 billion impact of valuation allowances affecting our overall results inthree different pieces, but in total, the impact was $39 billion. Pension prior service costs, I'll talk about this, $1.6billion in thequarter. I will cover this later, soI'm not going to belabor ithere. Restructuring related costs inNorth America and Europe, $420million in thequarter. We did adjust theDelphi reserve; I have achart on that as well, by $350 million inthe quarter, and wepick up the Allisongain, and here we actually show Allison net of thetax. We had previously disclosed that what theAllison gain would be, and candidly, as Allison was discontinued operations, wechose to tax effect it, and therefore, theDTA valuation allowance we took was lower as aresult of the taxes.We do not payany taxes associated with theAllison sale. But we areshowing it hereafter-tax. Again, thereason why we look atthese results on this basis is we think it's useful for first, management tomeasure and compare operations across periods, and we think it's useful forinvestors to measure and assess thecompany's coreperformance. Okay, next here, the charts talk about deferred taxes. Thiswas laid out in our press release yesterday, but I'm going to go through itagain here this morning. Accounting for income taxes is governed by SFAS 109,which provides guidelines for determining its valuation allowances are requiredagainst the deferred tax assets. The basis for consideration of all available evidence uses amore likely than not standard for purposes of determining whether a valuationallowance is required. And in looking at the evidence, weight is given to bothpositive and negative evidence, and based on whether and frankly, the strength of that evidenceis based on whether it can be objectively verified. For example, current orprevious losses are given more weight than the future outlook, inasmuch ascurrent or previous losses can be more objectively verified. A three-year historical cumulative loss is considered asignificant factor that is difficult to overcome, in the literature. And inaccordance with FAS 109 in the third quarter, GM evaluated its DTAs; itactually had it before on a quarterly basis and did again, in the thirdquarter, determine if any valuation allowances were required. Page 7. Allowances were previously not deemed necessary forour DTAs in the U.S, Canadaand Germany basedon several factors. These were the factors were laid out in our 2006 Form 10-K.But first, the degree to which the company's three-year historical lossesduring those periods were attributable to special items and charges, of whichseveral were related to actions to improve future profitability. And we took that into account as we assessed our DTAs inthose prior periods. Second, we had an expectation of continued strong earningsat GMAC, as we had through 2006, and improved earnings in GM North America. Andthird, our DTAs and ourloss carry forwards certainly a very long durations, over which theycould be utilized. Recent events that we saw in the third quarter providedevidence, whereby we concluded a valuation allowance should be established underFAS 109 guidelines. First, we looked at it; we had a three year historicalcumulative loss in the U.S.,Canada, and Germanyon an adjusted basis. So, the basis upon which we were looking at was negativein the third quarter. Second, we saw inthe third quarterresults, the ongoingweakness at GMACrelating to our ResCap mortgage business. Inother words, we had very sizeable losses from GMAC, which passed through to GMat 49%, given thatGMAC is structured as anLLC, those pass through to GM, pass through to our U.S. business, and we saw inthe third quarter verysizeable losses. And then finally, as we looked at the near-term outlook, andagain, I stress near-term, the automotive market conditions in the U.S.and Germanyremain challenging. And so, based upon these factors, we concluded a deferredtax assets valuation allowance was necessary in the third quarter. Page 8. Therefore, non-cash charges of approximately $39billion in the quarter were recorded against DTAs in the U.S.,Canada and Germany.Canada was in athree-year cumulative loss position, but we actually also evaluate Canadaon an integrated basis with the U.S.,inasmuch as we run Canadaas part of our GMNA operations. And our U.S.and our Canadian operations are basically run in an integrated way. Once you determined a valuation allowance is required thefull valuation allowance was taken, given that upon failing that more likelythan not test and being in a three-year cumulative loss position on an adjustedbasis, no one point estimate is better than another, when measured against anaverage three year loss. In other words, once you're in that position, there is noone point estimate, which represents anything better. And so the conclusion inboth theory and in practice is that 100% valuation allowances are established. Our loss carry forwards, and frankly, other timingdifferences still exist and will beused and can be andwill be used to offsetfuture taxable income. So, theestablishment of thevaluation allowance doesn't changethe tax attributes ofour business. And avaluation allowance can bereversed in thefuture if there's no longer athree-year cumulative loss position, and we can pass themore likely than not test for future deferred tax assets utilizations. For example, in the third quarter of '06, we reversed aprior valuation allowance for our Korean DTAs after three years of cumulativeprofitability of our Korean business. In the fourth quarter of '05, we established a fullvaluation allowance for our Brazilian business as well. Since that time, ourBrazilian operation has turned profitable; we have not reestablished the DTArelated to Brazilat this point. But we are benefiting from a lower effective tax rate. And we'llcontinue to evaluate Brazilon an ongoing basis to see if that's warranted in the future. It's not aforecast today. But this is something that you continuously monitor eachquarter. The establishment of a valuation allowance does not reflectany change in the company's view of its long-term automotive financial outlook.But instead, really focuses on a historical test, in terms of determining, interms of the weight of evidence that was used to reach this decision. Page 9. Talk about Germanynow and GM Europe. On August 17, Germanyeffected legislation to lower the statutory corporate tax rate, effective 1/1/08. And actually, in our priordisclosures, we talked about what the impact of this would be on our German DTAbalance. It anticipated that this tax change will result in areduction of approximately 9 percentage points in the German corporate taxrate. And due to that lower tax rate, German deferred tax assets and loss carryforwards obviously have less future value, as the underlying tax attributeswill be offset by future income taxed at lower rates. The value of the DTA is based on tax rates expected to climbin the years in which they're expected to be recovered. So therefore, evenapart from the valuation allowance, we would have written down our DTAs in Germany,to the extent of this 9 percentage point reduction in the corporate effectivetax rate. But based on our assessment of our operations in Germany,and specifically again, we were in a three year cumulative loss basis, on anadjusted basis, excuse me. We concluded that a full valuation allowance shouldbe taken against our German DTAs and a related charge in the third quarterincludes, therefore, both the reduction in the value of the German DTA from thetax rate change and the valuation allowance associated with the determinationthat it was not, we failed the more likely than not test. Important to note, to the extent the valuation allowancesare reversed in the future, the value of the German DTAs would still be reducedby the same $0.5 billion to reflect the lower tax rate. Moving out of deferred taxes into pensions. Page 10. We madesome changes in pensions in the third quarter. Pensions, specifically, how wereported pension expense. Prior labor agreements generally included both basicmonthly pension benefit increases and pension lump sum payments. Basic benefit increases have been paid from plan assets andhave historically been amortized over the average service life of employees aspart of pension expense. Lump sums have been paid out of operating cash andhave historically been expensed upon ratification. The 2007 labor agreement with the UAW granted basic benefitincreases and lump sums. And the company concluded, as opposed to pastpractice, that the lump sums would now be paid out of plan assets and includedin our projected benefit obligation or PBO. In looking at this matter, we concluded that the life of thelabor contract would be a preferable period of economic benefit for purposes ofamortizing pension benefit increases. So, these basic benefit increases and thelump sums included in thenew contract will now beamortized over thenext four years and would begin to affect our financials inthe fourth quarter. So, just thinking about it conceptually, an average servicelife for an active employee could be 10 years. We would have historicallyamortized the cost of basic benefit increases over 10 years. And instead whatwe're planning to do is amortize the cost of both basic benefit increases andlump sums over the contract life for four years instead. And as part of adoptingthis approach, we chose, in the third quarter, to expense the remainingunamortized prior service costs of $1.6 billion that remained from the 1999 and2003 agreements. And we expensed those in the third quarter. And so this ishow we affected, frankly, prior agreements. And then when we get into thefourth quarter, you'll begin to see the impact of how we account for the newagreement. This $1.6 billion would have been expensed over time, as wehistorically had done, had we not made, had we not adopted this shift. Page 11 and 12. Deal with Delphi. InJuly and August, the Delphi reached agreements with allof its remaining unions, patterned largely on the June UAW agreement. And GMagreed to provide similar support, as we did for the UAW-Delphi agreement,including coverage of OPEB and certain attrition program reimbursements. The GM and Delphi Settlement Agreements were signed inSeptember, and these were filed with the bankruptcy court, as part of Delphi'splan of reorganization. Settlement Agreements resolve all claims by and againstDelphi and documents GM's support of Delphi'splan of reorganization. Delphi subsequently announced itwould delay hearings on its Disclosure Statement to provide more time tonegotiate exit financing due to changes in the credit markets. The partiesfiled amendments to the plan, Disclosure Statements and the GM-Delphi agreementon October 29. Delphi announced on November 5, that itwould again delay the Disclosure Statement hearing to continue discussions withthe statutory committees. Candidly, the company believed that not all conditions forthe effectiveness of its planned investor agreements would be met prior to thescheduled November 8 hearing and our discussions with Delphiand with the other parties continue at this point. Page 12. As I mentioned on October 29, the company did filepotential amendments to its POR and Disclosure Statements reflecting a lowerlevel of net debt upon emergence. The document filed included amendments to theGlobal Settlement Agreement and Master Restructuring Agreement between Delphiand GM, whereby GM agreed to accept an alternative composition of itssettlement. For example, as compared with its $2.7 billion in cash underthe September 6 plan of reorganization, under the amended plan and relatedagreements, GM will receive the following consideration upon Delphi's emergencefrom bankruptcy, at least $750 million of cash, $750 million of second liennote reduced by the extent of cash received above $750 million, and then $1.2billion of preferred stock convertible into common at $45 a share. GM recorded in the third quarter a charge of $350 million,as a result of all of these agreements, as well as the final agreements withthe labor union, and reflecting the GM-Delphi Settlement Agreements as amended,finally, also reflective of incremental Delphi retireehealthcare costs. So, at this point, including a $350 million charge that wetook in the third quarter, we would have taken a total of approximately $6.9billion of Delphi related charges through the thirdquarter. At this point, we expect no material change to the ongoing periodcosts disclosures that we previously provided to investors. Page 13. Other special items included in the quarter. First,the Allison gain on sale, the transaction did close in August; net proceedswere $5.4 billion. Actually, what we did is we collected $0.2 billion inreceivables, around the closing, and so therefore, the $5.6 billion purchaseprice that was discussed was adjusted downward to $5.4 billion as a result ofthe fact that we collected the accounts receivable. The gain on sale remained the same as $5.3 billion pre-tax,$3.5 billion after. And I already mentioned that it was subject to adjustmentsfor changes in working capital and debt. And that was one of the reasons why wehad this minor difference versus the $5.6 billion announced. We also had restructuring related items, $262 million inEurope, related to separation programs offered primarily in Belgium, Germanyand Sweden. And $158 million in North America, relatedprimarily to adjustments to the plant closing reserve, as well as curtailmentreserve adjustments related to the special attrition programs offered in 2006. Page 14. Prior labor agreements and specifically the currentlabor agreements, included programs to provide personal legal services tohourly employees and retirees represented by the UAW, the CAW, and the IUE,Communication Workers in America. Typically, the annual expense associated withthese programs has been approximately $35 million historically, per year, andexpensed as paid. Upon completion of the'07 UAW negotiations and areview of theaccounting for allprovisions of thecontract, the companydetermined that theretiree portion of these programs should beaccounted for instead as postretirement defined benefits, as opposed to PAYGO. Benefits paid to active employees will continue to beaccounted for as period costs on a "pay as you go" basis or PAYGOwith additional accruals for defined benefit accounting as they accrueretirement benefits. But we did conclude that we felt that we should change ouraccounting for the retiree portion of these plans. As a result of this, an immaterial adjustment of $211million, which I'll talk about how, that was determined in a moment, waseffected in GM's financial statements through a restatement of shareholdersequity as of 1/1/2006, inthe quarter. And in fact, what we'll do, as we file our Ks, we'll go back tothe very first period beginning retained earnings and adjust that number, as wemake our filings going into the calendar year, to reflect the impact of thischange in accounting for legal services, basically, a prior period adjustment. That $211 million is comprised of the $323 millionliability, offset by $112 million tax benefit. And the tax benefit, obviously,is then rolled into the valuation allowance in later periods. Again, thisimmaterial adjustment is basically effected through a change in beginningbalance of retained earnings. When we looked at the impact of this program, it wasconsidered to be immaterial in all prior periods between accounting for it on aPAYGO basis, which is how we historically recorded it, or/and versus theexpense if we had accounted for it at OPEB. So, we looked at the degree towhich this might have affected profits or cash flows in every quarter and inevery year previously, and the conclusion was that it was immaterial in allperiods prior to the third quarter. And therefore, no change has been reported to our profit andloss or to our cash flow statements. And again, we will effect this change viaprior period adjustments that will affect the beginning balance of retainedearnings on the balance sheet. I will also note that the impact of this is alsoimmaterial to the balance sheet. Okay, page 15. Coming back to theautomotive business, North America. If you looked atwhat happened in thequarter, again, I want to reinforce that we've held our effective tax rates,and we've looked at theadjusted profitability for each of theregions. You can see North America revenues basically flat year-over-year inthe third quarter weredown $181 million. You could see a significant improvement in pre-taxprofitability, $624 million. After-tax profitability, $413 million. You see thenet margin at 0.9% shows you how close we are to breakeven at this point, andyou see the income from discontinued operations. So, in effect, profitabilityin the quarter improved significantly year-to-year. On the other hand, we ran in the red. And so therefore, obviously,the results are just not acceptable. And even if we had turned to the rightside of zero, it's still certainly not adequate for what the business shouldearn. Our production volumes were down 30,000 units. Our marketshares in North America were 24.3%. You can see, it wasdown 0.2% but you can look down below to the U.S.,our market share in the U.S.25.1%, flat for the quarter. The U.S. SAAR at 16 million units in the quarter,down 1.1 million units. So, in the quarter we saw, I think, the impact on theconsumer. Not a terrible number, but frankly, certainly a number well belowtrend. And it affected us as well as number of other manufacturers.Our fleet mix in the quarter actually was up 3.8 points, but if you look at usyear-to-date, we're down 0.5%. And frankly, at the 27.8%, we are gettingourselves in alignment or equilibrium, if you will, between retail shares aswell in our fleet mix. And then finally, our dealer inventory at 896,000 units wasdown 107,000 units. So, we feel pretty good about where our inventories arelanding, as we completed the quarter. Page 16. Looks at vehicle revenue per unit. In the thirdquarter, I might add, by the way, you could see at the bottom of this chart,this is a non-GAAP measure. Vehicle revenues here are excluding items such asdaily rental, accounting impacts, service parts, OnStar, other outside sales,try to give you some idea, what's happening with vehicle revenues. In the third quarter, our number was $21,605, significantimprovement from the third quarter of '06. But also, frankly, a continuation ofwhat we saw in the first and the second quarter, where we've had, frankly,richening mix, largely model option mix, as well as some price driving betterrevenues per unit in our North American business. Page 17. Takes a look at the variance analysis for North America profitability, both in the third quarter as well ascalendar year-to-date. In the third quarter, volume was actually unfavorable$0.2 billion, mix favorable $0.3 billion, price and material net was $0.2billion, policy, warranty campaigns was $0.3 billion. There are two thingsgoing on there, one, last year we had the retroactive effect of our revisedwarranty, powertrain warranty that adversely affected the third quarter of lastyear. And then in the third quarter of this year, we hadrecoveries from Delphi, actually in warranty recoveriesfrom Delphi, which were a little less than $200 millionin the quarter. So, the net effect of those two resulted in better policy,warranty and campaign expense by $0.3 billion. Pension, healthcare, manufacturing, basically $0.1 billion.Once you get to the third quarter, a year-over-year comparisons. We had by thethird quarter of last year, run a substantial amount of costs out of our coststructure. When you look at the year-to-date, we are $2.3 billion calendaryear-to-date favorable on this measure. But in the third quarter it wasfavorable, but only by $0.1 billion. And then finally, engineering exchange other was $0.2billion and a host of items going on in that category, none of which arefrankly bigger than $100 million. But one thing that did affect us that is inthere is the impact of exchange of C dollar to U.S. dollar. But there are awhole host of other factors; there's the Delphi costs inthere, there are engineering costs in there. Favorable product liabilityreserve adjustment in the prior period a whole host of things, but none of themare more than $0.1 billion. Overview of other regions. I'm not going to spend a lot oftime in this chart, in as much as I have charts on each individual operation,but a couple general points. First, year-to-date through the third quarter, 58%of our unit sales were outside the U.S.About 36% of our automotive revenues were generated from outside of North America; it shows you still how obviously important our North America business is to us from the revenue and profitabilityperspective. We had record third quarter volume inevery region, in theother regions of theworld fueled by share growth of 0.5% outside of North America.These contributed to year-to-date global share gains of 0.2%, and our revenueswere up 28% with significant gains inevery region. GMEvolume was up 15%, as we leveraged our position inEastern Europe particularly Russiaand gained share inmost key WesternEuropean Markets. GMLAAM, volume was up 22% outpacing what was otherwise avery strong industry and almost doubling our debt to profitability, and thenGMAP volumes were up 16%, and adjusted net income more than doubled, withstrong results inChina, Korea, India and some improved performance actually inAustralia. Moving to Europe, page 19. You seethe impact of revenues in Europe, up a $1.278 billion.Let me stop and point out that, the business that we do in Russiais not exclusively done for GM Daewoo, but it's substantially done through GMDaewoo. And it is much as GM Daewoo, we have 51% of the business weconsolidated but nonetheless we have obviously 49% minority shareholders. We largely reflect the results of our Russian business inour Asia Pacific operations. And so, while you'll see the volumes in Europe,you generally see the revenues and the P&L affect associated with that, byand large concentrated in GMA Pacific. You see, but nonetheless even quite apart from that you dosee a sizeable increase in revenue in the quarter in part driven by volumes andin part driven by a strong Euro. Pre-tax losses were wider by $70 million. Net income, thenet loss was wider by $51 million, net margin a 1% loss. As we look at ourEuropean business in the quarter, in general, third quarter is tough in Europe.But I'd say, certainly relative to the third quarter of '06, a milddisappointment. It was not something that we would consider to be acceptable. We have made good progress inEurope, calendar year-to-date. We've been okay, but Iwould say thethird quarter was atough quarter for GMEurope. Certainly, from aprofitability perspective, we continue to growthe business and growthshare, but we weren't satisfied with our financial results. If you looked atsome of the keycountries, you see Germanyhere loss as anindustry, and that, frankly, understates theweakness of the Germanindustry. You've got higher fleet sales and deliveries in Germany.And actually, the retail market in Germanyis off substantially. U.K.holding in there relatively strong, our share up by 1.6 points in the U.K.And then you see Russia,industry in Russia2.8 million, units up 40% from the prior year, our share at a little over 9%,so we're up about two points. GMLAAM; revenues almost $5 billion, pre-tax profits $375,net income $340 and the net margin almost 7% in Latin America,after Middle East; just a very good quarter for GMLAAM.Production volumes up substantially, industry up substantially, our share upsubstantially at 0.4%. So, we're growing faster than an otherwise very fastgrowing market. The biggest single market in LAAM remains Brazil.You can see the Brazilian market up 30% on a SAAR basisand our share down 0.2%. We're frankly pleased with how the Brazilian market ismoving. Page 21. GMA Pacific, continued strong growth in AsiaPacific, $1.6 billion increase in revenues. Pre-tax profitability swinging tothe positive and improving by $180 million; you see the improvement in ourChina JV equity income. You do see more minority interest, more of an impact ofminority interest in the third quarter of '07, driven by better profitabilityin Korea and GMDaewoo. So, we have better profitability in Korea,we have more minority interest reported in our Asia Pacific operations. You seethe net income has improved $81 million, net margin improved by one point. Looking down at some of the key markets, again, very stronggrowth in Asia; our share up 0.3% overall. The Chinamarket growing just still at a very fast pace. The SAARin China, inthe third quarter, 8.7 million units. Our share down 0.7% in China, in partreflecting, not been able to keep up with growth in some key areas, but also alot of the growth has been in some of the very low or entry level segmentswhere we're not as strongly positioned competitively. So, our share-off abit versus the thirdquarter of '06, but nonetheless at11.3%, we feel pretty good about how we're doing inour business in Chinawith our partners. Australia,you see acontinued strong industry actually inAustralia. TheAustralian market hasbeen going through apretty significant transformation, and our job is to basically right size our coststructuring in Australiato deal with what is adifferent mix of sales; and that's what we have been focusing our attention on. Finally, fully built-up units in Korea,193,000 units up. It doesn't include our CKV business in Korea,which is also a substantial piece of business or kits I should say, excuse me. GMAC. GMAC reported a $1.6 billion net loss in the quarter,actually more than due to ResCap, amidst the global dislocation in the mortgageand credit markets. ResCap's total net loss was $2.3 billion, including $455million impairment of substantially all of its goodwill. The goodwill that wasattributable to ResCap. Non-ResCap businesses continue to perform well. I'lltalk about each individual segment in the next chart. TheGM reported anadjusted net loss of $757 million that included our 49% of thenet loss, partially offset by apreferred dividend, and this was versus, certainly thethird quarter of '06, asignificant deterioration of $1.3 billion. In thethird quarter of '06, we fully consolidated GMAC, and GMAC was profitable. Inthe third quarter of'07, we picked up 49% of GMAC when GMAC was unprofitable. Page 23. Looks at the individual lines of business. You cansee automotive finance up substantially, actually; so, good to see wideningmargins and improved results in Global Auto Finance. Insurance while downyear-to-year at $117 million that's a good performance, in the prior year, wedid have some capital gains in the insurance business. So, the operating trends in the insurance business arepositive. GMAC's other businesses, Commercial Finance and its equity interestand Capmark was favorable year-to-year. So, operating income, exclusive ofResCap was up $226 million or right around 50%. ResCap, however, you can seethe wide losses [$108.9billion] a swing at the ResCap level. And you can see in the thirdquarter of '07, $455 million of goodwill impairment. In the third quarter of '06, GMAC reported goodwillimpairment associated with the commercial finance business. Page 24. Shift in liquidity. We closed the quarter with astrong growth liquidity position of $30 billion. It reflects an increase of$2.8 billion versus the second quarter of '07, which is more than explained bythe net proceeds from the sale of Allison. Our gross liquidity that we're measuring here includes $3.6billion of readily available VEBA assets, i.e. our short-term VEBA. $2.6, anestimated $2.6 billion of this amount in short-term VEBA will be excluded as wemove into year-end '07, due to the recent GM-UAW independent VEBA trustsettlement. In other words, this amount is readily available as of September 30th, '07, but as of December 31st, '07, we will nolonger include as readily available. Page 25. Looks at both gross liquidity as well as netliquidity with the improvement as a result of the Allison sale, you can see thereduction in net debt from $12.1 billion at the end of the second quarter of'07 to $9.9 billion at the end of the third quarter of '07. And over this timeperiod, this will be the first time that our net debt position fell below $10billion. Page 26. Moving into cash flow drivers. We did have anadjusted operating cash flow of a negative $2.5 billion in the quarter, drivenby scheduled production shutdown in July. This was $1.4 billion improvementfrom the $3.9 billion of negative cash operating cash flow reported in the thirdquarter of ‘06; I'll talk about why in a subsequent chart. And then year-to-date, our adjusted automotive operatingcash flow is an outflow of $1.1 billion, which is an improvement of $3.6billion relative to the first nine months of 2006, with operating cash flowimprovements achieved at all four GM regions. Page 27. I'm going to focus my attention here on thethird quarter of '07. You can seethe substantial lossdue to reported net income line, and then you seethe substantial addback in accrued expensesand other as a resultof the fact that thevaluation allowance is anon-cash charge. And so, you can seethat adjusted operating cash flowactually comes out atnegative $2.5. I'll talk about what's happening inworking capital at alater chart. But you can seethe changeyear-to-year. Below theadjusted operating cash flowline, frankly, not much going on inthe quarter. You had thesale of Allison, and then you had some small moves insome of the othercategories. But not really much going on inthat regard. Page 28. Looks at both, working capital as well as accruedexpenses and other to try to give you some sense of what's going on in theseline items. In the third quarter of '07, working capital is a $1.1 billion useof cash. And if you looked at it versus the third quarter of '06, really theonly difference is in third quarter of '06, we had some acceleration ofaccounts receivable collections. In the third quarter of '07, we frankly were flat. So, thechanges that you saw in inventory and accounts payable were pretty comparableyear-over-year in working capital. So, the change in working capital is drivenby, frankly, the timing of collections of accounts receivables. And then looking at accrued expenses and other, lookingdown, you see not much change in terms of net interest accrual. What you saw inthe quarter is $0.6 billion use of funds. As we continue to reduce our sales tofleets, we do continue to pay back more customer deposits than we take. Sotherefore, we have a $0.6 billion use of funds. Moving down to non-cash charges and other of $1.1 billion.What you see in that number in the quarter, you see the impact of the Delphicharge, which was non-cash, you see some of the charges and the restructuringcharges that were taken in both North America and GMEurope are also non-cash. So the $1.1 billion is almost entirely comprised of thespecial items that we outline, that are restructuring related in the quarterthat were by and large in the quarter, non-cash. Page 29. Looking at the outlook in the fourth quarter. Wesee ongoing revenue growth and strength in the emerging markets. We do haveconcerns over near-term U.S.economic conditions. The market, as I said, ran at a $16 million pace in the U.S.in the third quarter. Not a terrible number but certainly well below trend. And while we're pleased with our share performance duringrecent months, excuse me, the overall pace of economic activity and primarydemand in the U.S.market is certainly below our expectations, and it's something we need to becognizant of. We do see the full benefit, for example, though, moving into thefourth quarter, of some very important product launches with our CTS as well asour Malibu Sedan, both veryimportant for us, in terms of reestablishing brand and market momentum. : So on page 30, to summarize and close here, large loss inthe quarter on a GAAP basis driven by the valuation allowance established fordeferred tax assets. But even apart from that, we still had a $1.6 billion lossat the adjusted net income level, but also, a large part of that was alsodriven by tax-related adjustments. Automotive operations delivered improved, but clearly, stillnot satisfactory results. Very strong global volume and revenue growth we sawin the quarter. We saw strong growth in net income results in Asia Pacific andLAAM. I mentioned GME results being somewhat disappointing. And North America, while delivering improved results, we're still in a lossposition. GMAC results were poor, more than explained by thesignificant losses at ResCap. And finally, we did make some progress at Delphi.And we did close the quarter with improved automotive liquidity of about $30billion. Thank you for your time. At this point, we'll takequestions.

Thank you. Ladies and gentlemen, we will now proceed withthe analyst portion of the question-and-answer session. (Operator Instructions)Our first question comes from the line of John Murphy from Merrill Lynch.Please proceed. John Murphy - MerrillLynch: Good morning, Fritz.

Hi, John. John Murphy - MerrillLynch: Just a quick technical question, first, on a DTA taxallowances here. If you look at the technical measurement for this on atrailing basis, and we step forward, I mean, what are the ceilings on -- orwhat is the ceiling on future earnings? I mean, you've had some pretty biglosses in 2005, so I would imagine the technical ceiling on earnings goingforward, based on this 12-quarter measurement, is pretty high going forward. Isthat correct?

Did you say ceiling or feeling? John Murphy - MerrillLynch: Ceiling.

Okay. Well, clearly, if you do a 12 quarter trailingaverage, the inclusion of '05 in any 12-quarter trailing average is asignificant drag. But I'm not sure I got your question. So why don't you tryagain? John Murphy - MerrillLynch: So meaning that there is I mean, even if you had somemassive improvement in pre-tax income in the USnext year, there is the very good chance that this DTA allowance would not bereversed?

Yeah. In order for us reverse the DTA allowance, let me seeif I can't touch on this directly, we would need to see three-year cumulativehistorical losses turn into three-year historical cumulative profits. So that'sthe very first thing we would want to see. The second thing you'd want to seeis you'd want to see some expectation of continued strong results. You'd wantto have some expectation of continued favorable results before you wouldconsider removing the valuation allowance. John Murphy - MerrillLynch: Okay. So, inthe interim, we'd lookat atax rate inNorth America of 0%, and that corporate other line wouldreturn to more normal level. Is that acorrect assumption?

Yeah. What we did here in the quarter and candidly, we needto consider how we want to handle the fourth quarter. So, I would say, staytuned. But what we did here in this quarter is we held the tax rates in theautomotive businesses constant so that we could provide some measure of comparabilityyear-over-year. We put the cumulative effect from '07 results in thecorporate sector. But over time, we would expect to basically move that intothe individual automotive sector and then disclose that to you. And North America, I mean there will be some taxes in Mexico,but by and large, North America will be very close to a0% rate. John Murphy - MerrillLynch: Okay. And then, switching gears real quick to GMAC and thetroubles at ResCap. It does sound like there's potential for a need or maybe adesire from Cerberus to commit more capital to ResCap. But given that businessis ring-fenced and any mishaps at ResCap wouldn't necessarily directly impactthe auto financing business. What's your resolve in potentially committing morecapital to GMAC and ResCap, specifically, outside of GMAC really from yourbalance sheet directly?

Well, a couple of things. First, reflecting back on the GMACearnings release last week, GMAC itself actually did make an equity injectioninto ResCap during the third quarter. What the shareholders did, we actuallydisclosed this in GMAC's earnings results as well as subsequent to the close,but prior to the release the shareholders agreed to capitalize a portion of thepreferred that was outstanding. In other words, we and Cerberus agreed tocapitalize a pro rata portion of our preferred stock into GMAC. We've not made nor do we plan to make any injectionsdirectly into ResCap, obviously. We're a shareholder of GMAC. And so far, ourapproach has been, with Cerberus, to capitalize a portion of our preferred. Andthen, we obviously have an interest in making sure that GMAC stays wellcapitalized and it continued to do a good job supporting the sale of GM carsand trucks. But I would say GMAC was taking the right measured approach to howwe want to handle capitalization to ResCap. And in terms of shareholders at GMAC from the GMperspective, the way we look at it, we certainly felt, with Cerberus, that thecapitalization of the preferred was the right action for us to take at thispoint. John Murphy - MerrillLynch: Do you envision a point in time where Cerberus may want tocommit more capital to help ResCap out? And you may not and you could get takenout of that equity stake at ResCap, specifically?

Hypothetical question, which at this point, I don't think Ican answer, actually. So I'd just prefer to defer that for a different day, ifand when the subject comes up. John Murphy - MerrillLynch:

Well, let me first talk about the Crossovers, the Enclave,the Acadia and the Outlook relative to the Trailblazerand Envoy. Actually earlier, maybe it was last year or earlier this year I wasasked this question. And what I said then is true today is that theprofitability of those vehicles is better than, let's say, the mid-utilities,the rate at which has been running recently, but certainly not as robust as theprofitability that we have in our full size sport utilities. But, nonetheless, we've been pleased with the market'sperformance. And these have been important contributors to both shareperformance, as well as improved financial results in North America.In terms of the new Malibu, I amnot going to really go into the profit of this car versus the profit of theprior car. But I would say on this one, we're very encouraged by early marketacceptance and we actually think we can do a fair amount more volume with thiscar than the prior car, at retail. John Murphy - MerrillLynch: Okay. Thank you very much.

You're welcome.

And our next question comes from the line of Brian Johnsonwith Lehman Brothers. Please proceed. Brian Johnson -Lehman Brothers: Good morning, Fritz.

Hi, Brian. Brian Johnson -Lehman Brothers: I'd like to focus on Europe asopposed to the housekeeping details on the accounting. Can you give us a senseof where you think the European turnaround really is? I'd actually been hopefulfor some more profits in Europe this quarter. And is the business configured, how much of what we saw wasa weakness in the market versus a weakness in your positioning? And even if itwas a weakness in the market, given BMW different business, 540 basis pointsthis quarter, what's it going to take to get a Europe that can produce 2% to 3%operating profits, even in a flattish environment?

Well, acouple of things. Impacting thequarter, I would say alot of positive things have happened to our European business to date. But twothings I would point to inthe quarter, whichbeen tough for us to deal with. One, avery weak German retail market, and Germanyis historically thelargest single market inthe EU. Second, ithas historically beenone of the mostprofitable markets in Europe,in as much as ittends to sell a richermix of vehicles. And sotherefore, both its contraction and then its even more severe contraction inretail are weighedpretty heavily on us, to behonest. The second thing is, is that while we've been very, verypleased with the reception to our new Corsa, what we've seen is some adverseproduct mix. What we've seen is Corsa growing. And we've seen; I wouldn't sayweakness in Zafira, but we've sold, on a relative basis, more Corsas than wehave Zafiras. So therefore, certainly per unit, that's not a particularly goodtrade from a profit perspective. We would actually prefer to be selling more ofboth. I would say those two factors, as I looked at Europe,combined with pretty continued challenges at Saab, are what really impacts us.And in Saab, a couple of things. One, we are in a difficult period from aproduct launch perspective. We got a lot of product coming, but we do not havea lot of new products in the market today. Second, shipping products from Swedento the US and you still have about 30% of Saab's business that's in the US, isvery tough sweating, given both the Kroner and the Euro versus the Dollar. Last point I'd make Europe that hasbeen weighing on us is FX, even intra-Europe. So we've had the impact of let'ssay, Euro/Pound, Euro/Turkish Lyra and Euro versus some of the Eastern currencycountries and the Ruble, which has been a drag on margins. Because most of ourmanufacturing is actually in the Euro denominated countries and our salesgrowth, particularly have been in these other countries, both factors have allweighed down on GM Europe's profitability. We've hit all of our cost targets. We've actually performedbetter in the market. I mentioned before that the profitability from Russiawould largely be earned in Asia Pacific. But all of these are reasons but we'rejust not happy with our overall performance. And we understand why, butobviously we need to do a better job. Brian Johnson -Lehman Brothers: Does this imply restructuring is needed at Saab? Or are yousaying it is a product cycle issue?

The Saab issue is in part product cycle. And over time, Ithink not only product cycle, I think we need to get… and here it's not reallya Saab issue, but more of a corporate issue. We need to get a bit more inbalanced in foreign exchange. We need to find more flows that go from US-basedcurrencies back into Euro to give us a bit more of a hedge, naturally. Brian Johnson -Lehman Brothers: And are there opportunities to expand Daewoo further into Eastern Europe?

There are great opportunities to expand GM-Daewoo through Eastern Europe. We have, for example, moved into Uzbekistan.We've grown in Ukraine.We've grown very fast in Russia.And in fact, the engine for a lot of the growth, not exclusively by the way,we've done a huge amount of Opel volume into Russiaas well, but the driver of growth has really been the GM-Daewoo product. Brian Johnson -Lehman Brothers: Okay. And just accounting-wise, we see that in Asia Pacificrevenue and profits?

Yeah. You'll typically see it, I mean, the profit impact ofthe Chevrolet sales will be entirely in Asia Pacific. Brian Johnson -Lehman Brothers: Okay. Thanks.

Yes. Thank you.

And our next question comes from the line of Himanshu Patelfrom JP Morgan. Please proceed. Himanshu Patel - JPMorgan: Hi. Good morning, guys.

Hi, Himanshu. Himanshu Patel - JPMorgan: A couple of questions on the accounting here. On thepensions, I think you mentioned that the pension basic benefit increasepreviously was amortized over about 10 years, the lump sums were expense. Andit sounds like now both of them are going to be amortized over four years. Justsome rough, back of the envelope math, does that roughly sort of $700 million,$800 million per annum incremental expense that you may recognize now?

I'll answer that question, Himanshu, when we get to thefourth quarter. But I also, I mean, one thing you have to take into account isthe fact that we've expensed the '99 and the '03 contract in the third quarter.So that will no longer be expensed over that period. So we really did threethings. One, rather than doing lumps up-front, we will spread those over fouryears. Two, instead of doing basic benefit increases over 10 years, we'll gofour years. And three, we take the '99 and the '03 remaining prior servicecosts and expense it in the third quarter. Himanshu Patel - JPMorgan: I see. So that's an offset.

Correct. Himanshu Patel - JPMorgan: That is correct. Okay. Going back to the DTAs. So if youwere to, let's say, become profitable, at least on an earnings basis in somefuture period after, let's say, all of the UAW contract savings wererecognized. It sounds like you would not be a tax payer, at least in the firstcouple of years of that, on the assumption that '07, '08 and '09 would still bea loss position in the US.Is that a fair characterization?

Yeah. If you look at, well, it obviously depends on theextent to which our pre-tax profits grow, but let me step aside from that,because I'm not going to forecast profitability today. If you look at thecomponents of our DTAs, our annual report had them; our actual NOL is actuallyvery large. And so, we would not anticipate actually being a cash taxpayer forquite some time. And then, once you've exhausted that, then you've got timingdifferences you got to deal with. But first things first, we had some prettysubstantial loss carry-forwards in the US, but also not just US, in Germany andCanada. Himanshu Patel - JPMorgan: Okay. And then, you mentioned that the third quarterresults, when you showed the adjusted net income for the automotive division inthe individual regions, you had held the previous managerial tax rate. Andyou've kind of reconciled that in corporate/other.

Correct. Himanshu Patel - JPMorgan: What did you dofor GMAC's contribution, interms of tax treatment? Because I think when theearnings flow from theLLC to GM, I think there is atax impact, right on atleast the auto andResCap portion of theGMAC earnings.

All in the corporate sector. Himanshu Patel - JPMorgan: All captured in corporate/other. Okay. And then lastly, justthe change in accounting treatment on how you look at the legal service expenseon how you treat the lump sums. A lot of this doesn't sound like, I mean, I'mwondering what triggered you guys to change this now. It sounds like you'vetaken a more conservative accounting approach to this. Is there something thatcame up in some of the reviews that you guys were doing on the accounting frontover the last couple of years that sort of prompted this change? Or was it justthe treatment of these items in the new UAW contract that forced that change?

Well, let me just kind of take them one at a time. First onpensions, we took a look at our pensions, and frankly, we looked at a pasthistory. We've done it correctly, so we're not concerned about our prioraccounting. But we just thought it would be preferable to expense the benefitsthat were negotiated in any given contract over the life of that contract.That's why we chose the approach. And that was just frankly something that is as we went into the'07 contract, we finished it, we did areview of it and ourcollective judgment, my judgment, my Controllers, Chief Accounting Officers,and frankly, with support of our auditors. We concluded that than rather having lump sums in one period, 10-year life,and then we come back, and we have prior service costs, we just felt that thepreferable approach would beto expense it over thelife of the contract,because we negotiate these benefits over thecontract. Then, on legal services, as we looked at it, frankly, youmight imagine at $30 million to $35 million per year. It doesn't necessarilycome up on the radar screen all the time. And when we looked at all of theagreements that were in the 2007 labor agreement, whether it's what we need todo with the VEBA, how we want to handle pensions, where we're going with OPEB,all of these other things we looked at everything. We frankly we took an opportunity to look at every singleprovision of the contract to make sure that we were confident and comfortablewith how we're handling it. As we looked at this -- as I said, it's animmaterial adjustment. But we frankly thought that the more correct accountingwas to take the retiree portion of it and handle it as OPEB. This is something;this is a benefit that is equally available to actives or retirees, actually. And frankly, you don't really determine who uses it. It'sequally available to anybody. So if it wound up that 90% of the people using itwere actives, we wouldn't be having this discussion. But as we looked at thefacts, we looked at it in about a big piece of the services were used byretirees. And our conclusion was, this is more appropriately accounted for atOPEB. And when we looked at its materiality, we chose to handle it this way. Himanshu Patel - JPMorgan: Okay. And then last question. Can you talk a little bitabout the tax implications, of both cash and GAAP, of the VEBA deal? Because, Imean, there's the practical implementation of it, where there's a largecontributions made over the next two years. But then, it sounds like, from anaccounting perspective, you're using the smoothing mechanism with negative planamendment accounting. I'm wondering, how does that impact the taxes goingforward?

Well, as long as we're in a three-year cumulative lossposition, we'll just be reporting our results almost, in effect, on a pre-taxbasis. So you really wouldn't have any effect. Once you determine that you werein a three-year cumulative profit position, if we actually got to the pointwhere we reestablished the DTA, then, we would be tax effecting that and likelywith any element of our earnings for our North American business. So I wouldn't say that there's any special treatment thatwould be accorded the labor agreement or the VEBA deal. I think it would justbasically go into the pre-tax number. Himanshu Patel - JPMorgan: Just to be clear, when you measure whether or not you're ina cumulative three-year profit, are you including in there the benefit of theamortization of the negative plan amendment? Is that captured as part ofprofit? I know it is captured as part of GAAP profit. I just want to make surethe same treatment here.

Yeah. The negative plan amendment that we have from the '05healthcare deal has been included in our measurements to date. We have notincluded any negative plan amendment from our '07 healthcare deal because thatdoesn't really kick in until 2010. Himanshu Patel - JPMorgan: Okay. And maybe one last one, if I could sneak it in. Anydirectional thoughts on mix in North America, how weshould think about that? It's been holding up pretty well in '07, but as welook out into '08?

Well, we've had last year, if I think about '06, we wereheavily impacted by model option mix for things like our full size utilities.This year we've benefited pretty significantly in North Americafrom the richer mix on our new full size pick-ups, as well as the Acadia,Outlook, Enclave. As I look into next year, therefore, all of that would havealready been baked in. And so what we'll have is things like the new CTS,things like the new Malibu. Butthis is pure guesswork; obviously, the market will determine what our mix is. But I think we've seen, you wouldn't expect to seethe same kind ofsubstantial move onmix in' 08 that you've seen inprior periods, because what you've seen in'06 and '07 is largely driven by these major launches of very high-volumevehicles, and we don't necessarily have that replicated next year. But stepping back to thequestion of the mix,we think that we'll beable to hold what we've done. We've been quite pleased with theresults to date, and we don't see, necessarily, any reason why we should slip. Himanshu Patel - JPMorgan: Okay. Thank you.

You're welcome.

(Operator Instructions) Our next question at this time comesfrom the line of Rod Lache from Deutsche Bank. Please proceed. Rod Lache - DeutscheBank: Good morning, Fritz.

Hi, Rod. Rod Lache - DeutscheBank: Your comments in the presentation about conditions beingmore challenging in the US,are you signaling that your outlook is worse than what you're seeing currently?Or can you just elaborate on that a little bit?

Well, actually, I guess what I'll sayis it's pretty much we'veseen 16-1. For example, inOctober, the market hasrun right around 16-1, 16-2, 16-0. We candidly think that will continue. SoI wouldn't say we'resignaling significant weakness from where it's been. I'm just saying, todayit's certainly well below trend. Rod Lache - DeutscheBank: Okay. Got it. And can you just give us a little bit of helpon the other income level, excluding these tax adjustments, which I guess, youhaven't finalized how you're going to treat that. But just adjusting for thepension and lump sums, these adjustments that you're making, what would youestimate the ongoing level to be in there?

Well, I was actually not planning to go through that today.I was going to go through that when I got into the fourth quarter when we'vedone all of our re-measurements. So if you'd just permit me, I want to hold offon answering that question for at least a little while. Rod Lache - DeutscheBank: Okay. Let me then ask you, on the North American price andmaterial being a positive, can you just give us a sense of how that looks,price versus material? And what's your outlook for material as you go out to'08?

Yes. Let me, I'll give you my outlook for material when wego through our '08 results, typically inJanuary is when we would provide that. But if I look at, I'm just trying to getto it here for asecond. Material was frankly slightly unfavorable. Sofrankly, the entireamount of that price material was priced favorable. Material was slightlyunfavorable. And largely driven by acontinuation of what we've seen, anything that's ametal, so whether it'ssteel, precious metal, nonferrous metals, thelevel of inflation we've seen inthose commodities hasbeen horrific. Now, thequestion is where dothey go in '08? If Iknew that, I'd betrading them. Rod Lache - DeutscheBank: Okay. Let me just get one last one in here. Just broadlyspeaking, some of the thinking behind the sale of GMAC and ResCap was toimprove the borrowing costs, and obviously that hasn't happened, at least atthis point. Is there any thought being given by GM to changing that structurein anyway at this point? Or are you basically at the mercy of the markets andwaiting for this mortgage situation to settle out?

Well, let me speak to one at a time. First, in terms oflower borrowing costs, we have seen it in the auto finance business, actually.And the reason you've seen substantial improvement in automotive financeprofitability has been the margin expansion not volume driven. Margin expansiondriven by lower borrowing costs, I mean GMAC's rating, for example, is fiveratings higher than GM. It's been volatile, obviously impacted in part bymortgages. But in general, we've achieved our goals, in terms of automotivefinance and better margins in that regard. But as I said, it's been a bit of avolatile ride. Now, we don't have any, I think you said is there any, arewe thinking about any change in structure? The simple answer to that is no. Wethink that what we foresaw, in terms of the benefits of the deal, in terms ofimproved GMAC access to funds, cost competitiveness we're actually seeing inthe automotive business what we obviously didn't foresee is what was going tohappen in the mortgage business. And I guess it depends on your benchmark, buthad we not done the deal, our costs would be a lot worse than they are today. Rod Lache - DeutscheBank: Okay. Thank you.

Thank you.

And our next question comes from the line of JonathanSteinmetz from Morgan Stanley. Please proceed. Jonathan Steinmetz -Morgan Stanley: Hi, thanks. Good morning.

Hi, Jonathan. Jonathan Steinmetz -Morgan Stanley: Hi. Just to follow-up on the North American profit walk onpage 17. If you could talk about a little deeper on mix, it was $300 millionnet favorable in the quarter, but it ran 1-1 I guess, in the first half of theyear. And I would think, with the full pick-ups and the Acadiaand all that stuff, it wouldn't be really decelerating. So, can you talk onthat year-on-year, what the bad guys were, so to speak?

Let me see. It's interesting. Since I looked at the thirdquarter what you did see in the third quarter is you saw the full array of ourpick-ups hitting the market. So earlier in the year, our pick-up mix wasespecially rich. And then, what you got out as you got out to the third quarteris you saw, certainly much more traditional, you had more work trucks versuscrew cabs. I think you had what you saw, you said a slowdown, I think it'sright. Your rate of improvement certainly slowed. It was driven by, frankly, amuch more normal mix of distribution of full size pick-ups than what we saw inthe first half. Jonathan Steinmetz -Morgan Stanley: And were the large SUVs showing any kind of fading as theyaged in life?

Actually, our penetration of the segment, I think, lastmonth hit 77%, 80%, sorry, I'm wrong. So, we like our position. The issue isthe segment itself is obviously been under pressure. And it is what it is, butin terms of our product competitiveness, we haven't lost a beat. Jonathan Steinmetz -Morgan Stanley: Okay. And staying on that slide, on the policy and warranty,I think you mentioned in the $200 million favorable related to Delphi,what was the pre-tax amount? And is there anything left to bleed out there? Oris that sort of a one-off?

It's actually a little less than that. It rounded to that,but it was a little less than that. That was largely the result of a number ofitems that were included in the comprehensive settlement. Last year we had this$100 million unfavorable effect in the third quarter of last year associatedwith the move to the new power train warranty, which didn't repeat itself. Andthose two factors pretty much explained the variance on policy and warranty inthe third quarter. Jonathan Steinmetz -Morgan Stanley: Okay. And finally, on LAAM you're running at a 7.6% pre-tax,can you give a little bit more color on sort of was there anything unusual inthe Middle East, as perhaps unsustainably propping thatup? Or just, I guess you're very familiar with the region. Is that a marginlevel that you think can be sustained over the next two or three years? Or areyou leery of saying that?

It's interesting. I am very familiar with the region. I lovethe place. But three years ago, we're making this presentation and LAAM waschallenged. I think what's happening in LAAM is you see a couple things. One,if you kind of go back to the growth in Chinaand the global growth in economies, particularly in China,it's really pulled a lot of commodity-based economies forward. So you've seen countries like Argentinacontinue to improve. Brazil,while it has done a very good fiscally managing its economy, has also begun tosee significant growth, in part, driven by China.So many of the commodity-related countries, South Africa, although they're recentlyconstricted credit. But if I think about the Latin American economies, Venezuelahas been remarkably driven by oil, obviously, but when you look at LatinAmerica, one of the few times, certainly, in my career where you've seen suchconsistent strength across all the Latin American countries and a common driverof that has been commodities, global growth, or in the case of Venezuela, oil. Sotherefore, thesustainability of ityou have to ask yourself thequestion, is what's thesustainability of long-term demand and growth inplaces like China,and what's happening with oil and commodity prices? So, as I look atLatin America actually, thereason I'm focusing on Latin America, Latin America is what's driving thesignificant swing in theprofitability of LAAM. We run our Middle East business very,very well, but it's adistribution business and generally anearnings distributor margins. Sowhen you seesignificant margin expansion ina place like LAAM, it'sgenerally Latin America or inSouth Africa. South Africa, as I said, hasn't been akey driver of LAAM's profitability. But I would say, we arein anenvironment in LAAMwhere you have to always bevigilant because itcan be avolatile place. But we like our position, we like our share, we like our marketpositions, we've been there along time, we havegreat brands there. And frankly, theeconomies are growing,and we're taking advantage of it. I think that the key, over time, in terms of sustainability,is going to be a function of what happens with these global demand drivers,because I think as long as they're robust, the LAAM countries can stay robust. Jonathan Steinmetz -Morgan Stanley: Thank you.

You're welcome.

Our next question comes from the line of Joseph Szczesnyfrom the Oakland Press. Please proceed. Joseph Szczesny - Oakland Press: Fritz, what arethe prospects for morelosses from ResCap atthis point. I mean you were sort of surprised by the$757 million loss from GMAC inthis quarter, what's theoutlook going forward for that business, and how much more is there; how muchmore liability do you seeout there?

I would sayJoe, the outlook as Ilook at it, it's beenvery volatile, and it's interesting as we exited thesecond quarter, and we saw asignificantly narrower loss inResCap and improved profitability inGMAC. We were feeling better about market condition as we exited secondquarter. And then we had avery rude August and September as did theentire market. At thispoint, I think you have to saythat the outlook for themortgage industry ingeneral is challenging. I'm not good enough, nor smart enough, nor prescient enoughto predict itactually. I think what we've tried to dowith our partner Cerberus is develop agame plan, and they've been -- Cerberus hasbeen very good to work with. We've got management team on theground. The focus hasbeen on restructuring thebusiness, refocusing thebusiness, moving away from some of thebusinesses that have generated thelion share of losses today, try to shrink thesize of the losses,work very aggressively to doit, shrink the balancesheet. We basically tighten alot of our underwriting criteria and try to cope with what hasbeen a highlyuncertain market. Liquidity has improved the GMAC. Liquidity has improved theResCap. But in terms of the outlook for profitability, I can't really give youa good solid prognostication. I just got to say today is just a challengingmarket that we need to watch everyday, every month and every quarter. Joseph Szczesny - Oakland Press: And when doyou expect to see someof the gains from thelabor contracts begin to impact your bottom-line, and how much of your labor costcome down do yourestimates?

Well, I'm not going to answer your second question becausewe're just not in a position to do that today. What we'll see is the impact ofthe healthcare agreement, you would not see really until 2010 as we talkedabout when we went through the contract, I guess it was a month ago or so. The other related elements of the contract, though, we can'twork together with the UAW to begin to transform our workforce to makeourselves more competitive. And we plan to do that with the UAW, ASAP on anaggressive basis. There is a cost associated with some of transformation,however, so one of the reasons we've been reticent to talk about what thesavings potential is at this point, we talked about what the potential is,certainly given the demographics of our workforce etcetera. But there is thecost associated with thetransformation, and we don't want to talk about what thebenefits are until weactually can communicate what thecost areof achieving it. Joseph Szczesny - Oakland Press: So the transformation is going to take a lot longer then?

No. I didn't saythat. I actually said, if I think about thehealthcare related part of itthat doesn't kick into 2010, that's exactly what we said before. With respect to theoperating related savings whether it's second-tier, non-core, competitiveoperating agreement, frankly this is on our agenda for now and in2008. Joseph Szczesny - Oakland Press: Okay. Thank you.

You're welcome.

And our next question comes from the line of Tom Walsh withthe Detroit Free Press. Please proceed. Tom Walsh - Detroit Free Press: Morning, Fritz.

Hi, Tom. Tom Walsh - Detroit Free Press: Following up on Joea little bit. Thenet loss in North America is still there. Was that higher than you expected inthis quarter as it,and if so is that aresult of slightly higher fleet numbers, or is itabout where you were thinking itwas?

Actually, if I look at our North American profitability, itwas improved year-over-year. Third quarter is historically our toughestquarter. If you look at page 15, our pretax losses were improved by $624million. We pretty much got the business very close to breakeven but obviouslynot on the right side of breakeven. Soeven if we were above breakeven we still wouldn't besatisfied with it. I would say, our market performance hasbeen good. Certainly inthe third quarter, Iwouldn't say it's beengreat. I mean we would like to actually even improve from here, but if I look atour US share,it's hung right inthere. Primary demand hasbeen a challenge. I would saythe things that havesurprised me this yearis North America that have been adrag on profitability, one, hasbeen the strength of Cdollar. It's not something that we saw certainly coming into theyear and the speedwith which itappreciated. Second is, metals escalations we knew was going to betough. It's just been really tough. And if I think about those two factors, andfrankly at $60 millionof market, which we didn't necessarily seecoming into the year,those three factors have been themajor headwinds that I did not seenor did we see as wecame into '07. Tom Walsh - Detroit Free Press: So you're still expecting to be a cash flow negative for theyear and how much beyond that?

Yeah. We said earlier we came into the year, we expectedoperating cash flow to be improved, but negative. And we still expect that tobe the case. Tom Walsh - Detroit Free Press: Okay. Thanks.

You're welcome.

And our next question comes from the line of Joann Mullerfrom Forbes Magazine. Please proceed. Joann Muller- ForbesMagazine: Hi, Fritz. I just wondered if, regarding this valuationallowance, if you can help us, help the lay person understand, what should theyconclude about GM's view of its future chance of profits over the next fewyears.

Okay. Joann, good morning. I think what we've tried to dois portray that that's theprimary way of evidence that was used for purposes of determining whethervaluation allowances required is alook in our rearviewmirror. In other words,we look at itthree-year historical loss position, as being theprimary weight of evidence as we said inour press release. Athree-year cumulative loss, and inour case on anadjusted basis, is very difficult to overcome interms of negative evidence. And so, as we looked at it, one, this is a very clear test.You do apply some judgment about it because as we said before we looked to ouradjusted profitability, we look at the actions that we've taken, but when weapplied that methodology on a consistent basis, combined that test with thelevel of losses that we saw coming in from ResCap in the third quarter, wemoved into what we saw was a substantial three-year cumulative loss position inthe third quarter. We obviously have at this point an uncertain outlook withrespect to ResCap and therefore, its impact on our USprofitability. Our near-term view of North America, Imean we like our position, but the North American business and particularly USmarket is challenging. A $60 million of market, as I said before, we are notlooking for great steps down from that, but that level itself is a verychallenging market, substantially below trend. I would not read anything at all into this vis-à-vis ourlonger term automotive outlook. We think that what we're doing from a productsand brand perspective combined with what we can do on the cost side andimplementation of our labor agreements, we feel good about our long-termprospects. But interms of looking atthis test, Joann, you need to first put alot of weight on things that areobjectively verifiable, i.e. actual historical results. And second, you doneed to use some judgment about outlook, but as we looked atthe outlook inthe short-term it'suncertain, for example, inthe case of ResCap,and frankly, it's challenging. Joann Muller- ForbesMagazine: Okay. Thanks.

You're welcome.

And our next question comes from the line of [Michael Kuntz] from Süddeutsche.Please proceed. Michael Kuntz - Süddeutsche: Hello, I am Michael Kuntz. I am with the Süddeutsche Zeitungin Germanybased in Munich. Could you explainus the impact of German tax reform on the result?

Sure, Michael. Good morning. Two things; one, since we have adeferred tax asset position associated with our German operation that basicallythink of it as aloss carried forward, by and large, it's aloss carried forward. It's anasset we carry in ourbooks. When you lower thetax rate, as Germanydid, that asset is worthless because itwill be used to shelter.I mean, it was createdat ahigher tax rate, then, itwill be used. And so,therefore, as we disclosed inour second quarter head Q, for example, even quite apart from a valuationallowance. We expect that they have to write down by about $1.5 billionI believe the impact of our deferred tax asset in Germany,directly as a result of the fact that we had this non-operating loss carryforward or deferred tax asset position. We then though, in the third quarter asa result of frankly evaluating the outlook and looking at a three-yearcumulative loss position on an adjusted basis in Germany, our conclusion was asit was in the US and Canada that we are in a three-year cumulative lossposition and that we need to establish evaluation allowance on the entireamount of balance. Not simply the portion that would have been reduced solelyby virtue of the tax rate reduction. I know that's a mouthful, but I guess the way I would put itis, if you have the deferred tax asset, if tax rates are lowered, it lowers thevalue of the asset.

And our next question comes from the line of Mickey Maynardfrom New York Times. Please proceed. Mickey Maynard - NewYork Times: Thank you very much. Good morning, Fritz. Fritz Henderson Hi, Mickey. Mickey Maynard - NewYork Times: I have a question for you about the timing of the chargeyesterday, is this something that's up to GM or is there something in IRSrequirements that required you to do it at this particular point on the year?

It has nothing to do with the IRS. It's basically thetermination that we've been doing this evaluation on a quarterly basis becausewe are required to under US GAAP. The GAAP for this is covered under Statementof Financial Accounting Standards Number 109. There are criteria that need tobe applied for purposes of looking at this. We've been applying these criteriain a consistent basis. And then in the third quarter, again, as a result of beingin the three-year historical cumulative loss position on an adjusted basis, thelosses that we saw coming in from GMAC and this uncertain near term outlook,our conclusion was that a valuation allowance was required. And it was requiredunder accounting guidelines that really doesn't have anything to do with theIRS. Mickey Maynard - NewYork Times: Okay. The other question I had was to your point on trend.When you put the restructuring plan together, were you assuming trend volume ataround $70 million? I'm just trying to get a handle for how far off this mightput you, if we have a 16 million market going into next year, some people arepredicting.

I don't know what assumption was for the market in 2005 whenthe restructuring plan was put together. My sense is, we certainly weren'tlooking at 16 million-unit market at that time. We would often -- and if youlooked at primary demand in '05, it wasn't bad. So, I think, in general, atthat point running over 17 million units or close to 17.3, 17.4 trends probablywhat was used for the purpose of looking at the business planning. We certainlydid not foresee that point a 16 million of market. We didn't see what'shappening in housing. Mickey Maynard - NewYork Times: And so are there further adjustments that you have to makejust to reflect trend, this 16 million number not the old trend number?

See, Mickey, we have been very aggressive at makingadjustments in our business certainly year-to-date, because in the end, theobjective is achieving satisfactory results. And so I think we've shown an abilityto make adjustments and increase the level of cost reduction or improve ourcapacity utilization or work with UAW, for example, on a new labor agreementthat will provide us the ability to become cost competitive and be moreflexible. I think what we've shown some ability to adjust, but we haveto, because in the end we need to, I think, base the business on the reality oftoday, '08 is tough. Actually, I should say a 16 million of market is tough.And I think we like our penetration, we like our products and what we're doingwith our brand, but we got to get the job done on both the revenue and the costside. Mickey Maynard - NewYork Times: Thank you.

Welcome.

At this time, we will conclude the question-and-answer session.I would now like to turn the call back to you. Please continue with yourpresentation or closing remarks.

Okay. Thanks very much, operator, and thanks for everyone'stime this morning.

And ladies and gentlemen, that does conclude the conferencecall for today. We thank you for your participation and ask that you pleasedisconnect your lines.