Create a free account to continue

Navistar Looking To Buy GM Truck Business

Talks to buy General Motors Corp.'s medium-duty truck business are against backdrop of an ongoing overhaul at the vehicle maker.

WARRENVILLE, Ill. (AP) — Truck maker Navistar International Corp. said Thursday it is in talks to buy General Motors Corp.'s medium-duty truck business.
The disclosure came as the beleaguered Navistar restated its earnings for fiscal 2003 and 2004 and forecast a 30 percent drop in third-quarter truck sales.
The talks with GM take place against a backdrop of a huge ongoing overhaul at the car and truck maker which has paid off in recent improvement following thousands of layoffs and numerous plant closings in an effort to become more competitive with Asian automakers.
GM spokesman Tom Wilkinson says it is company policy not to talk about potential transactions.
''As we previously announced, we're looking at strategic options for our medium-duty truck business,'' Wilkinson said Thursday morning. ''We don't have anything to comment on at this point.''
Navistar's restated figures show a significantly wider loss than originally reported. The company had not reported financial results for more than two years because of accounting problems. It was delisted by the New York Stock Exchange in February.
In 2003, Navistar lost $338 million, or $4.92 per share, rather than the loss of $17 million, or 31 cents per share, reported previously.
In 2004, it lost $27 million, or 39 cents per share. It earlier reported a gain of $247 million, or $3.20 per share.
The company still expects to restate its 2005 finances.
For the period up to and including 2003, 2004 and the first three quarters of 2005, Navistar reported negative adjustments of $1.12 billion. That figure includes warranty reserve increases of $321 million, which the company said represent the largest change to operating results. Navistar also said it expects to book $874 million in income tax adjustments.
The company said it identified weaknesses in controls over its financial reporting and launched a ''a broad and aggressive plan'' to address ethics, accountability and communication issues.
For the third quarter of this year, Navistar warned of an ''extremely weak North American truck market'' and said it expects to sell 316,000 medium and heavy trucks and school buses in the U.S. and Canada. That is 30 percent fewer than it sold during the same period last year.
Diesel engine sales fell nearly 15 percent to 108,300 units in the third quarter of 2007. ''Expansion market'' sales, which include military vehicles, increased 22 percent to 7,900 units.
The company said it continues to expect $250 million to $350 million in capital spending this year, excluding acquisitions of certain lease vehicles.
Navistar also is exploring building and selling GMC and Chevrolet brand medium trucks and parts through GM's North American dealer network.
More in Supply Chain