GM Announces Gains from Keeping Plant Open and Possible Expenditures

08/19/96

Reuters reported that General Motors announced that it expects to record a $250 million after-tax non-cash gain in this year's third quarter. The gain will result from the carmaker's decision to produce a new Saturn model at its Wilmington, Delaware plant, instead of closing the facility as it had previously announced.

In its 10-Q quarterly report to the Securities and Exchange Commission, GM disclosed that it will reverse part of a plant closing reserve taken several years ago in anticipation of several plant shut-downs, including the Wilmington factory.

The automaker announced that its board approved Project Innovate--the Wilmington based production of a new larger Saturn car based on GM's Opel Vectra platform from Europe--last week. The Wilmington plant employs about 2,600 hourly workers and had been scheduled to close after 1998 when production of the Chevrolet Corsica, Beretta and Malibu cars ends.

In the same 10-Q quarterly report, GM said it may spend part of the unexpected $250 million gain by recognizing plant restructuring costs associated with its Delphi Automotive Systems unit during the third quarter. GM said it is evaluating restructuring plans for Delphi plants other than the the four facilities it put up for sale in April, and the one plant one it said it intends to close.

"In addition, evaluations are underway with respect to appropriate plans for other Delphi facilities," GM said in the report. "The plans related to the Delphi facilities were not yet finalized at June 30, 1995.

"The associated costs are expected to be recognized in the future when firm plans are adopted and could occur as early as the third quarter of 1996," GM continued.

A GM spokeswoman said the company made the disclosure to leave the door open for GM to make a possible addition to its plant closing reserve as early as the third quarter.

Paul Dever -- The Auto Channel