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Earnings

American Motors Posts $52-Million Loss in Quarter

July 18, 1986

Financially troubled American Motors reported a $52-million loss for the second quarter and proposed a financial restructuring to raise cash. AMC said it would sell publicly 8 million shares of convertible preferred stock to raise $187 million. A company statement disclosed that some of the cash may be needed to keep AMC's vital vehicle development programs on track.

It would be the first time that any AMC preferred stock has been in public hands since 1979, when the French auto maker Renault bought into AMC, the company said.

Renault's 46.1% common stock ownership, through which it controls AMC, would be unchanged, AMC spokesman Edd Snyder said.

However, since the preferred stock offering would change Renault's total holdings, stockholder approval is required. AMC scheduled a special meeting for Aug. 13.

The second-quarter 1986 loss was an improvement from the $70.4-million loss of last year's second quarter, which included the considerable costs of layoffs and firings that were part of a 25% cut in internal budgets in the spring of 1985.

AMC President Joseph Cappy cited the austerity program in explaining how the company could cut losses while selling fewer cars and suffering a 17% decline in revenue.

Second-quarter revenue came to $801 million, compared to $961 million a year earlier.

Sales of U.S.-made AMC cars--the subcompact Renault Alliance and Encore and a small number of compact Eagle four-wheel-drive models--are down more than 44% so far this year, compared to a year ago.

However, sales of Jeep vehicles, which carry a much higher profit margin, are up 19.4% in the first half of the year, a record rate for Jeeps.

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