Goodyear announces accounting problems; postpones third-quarter financial results
Goodyear Tire & Rubber Co. will restate its financial results for the years 1998-2002 and for the first and second quarters of 2003 "to record adjustments primarily resulting from the implementation of an enterprise resource planning accounting system (ERP) in 1999 and errors in inter-company billing systems." The errors were found principally within the company's North American Tire and Engineered Products business units.
Goodyear said these adjustments "do not
affect the company's net cash position, and the restatement will not affect its access to credit facilities."
Goodyear, which was planning to announce third-quarter financial results today, will not announce detailed results until mid-November in the wake of its accounting problems.
Goodyear said the adjustments are expected to decrease net income over the restatement period by up to $100 million. It is expected that the adjustments "will result in an improvement in the net loss for the first half of 2003" because certain charges previously recognized during the first half now will be reflected in the restatement for prior years.
In addition, "a reduction is anticipated in shareholders' equity as of June 30, 2003, of up to $120 million, of which $20 million relates to periods prior to 1998," according to the company.
Goodyear did release estimated results. A net third-quarter loss in the range of $90 million to $115 million on sales of $3.9 billion are expected. The net loss will include net rationalization charges of approximately
$56 million before tax related to a plant closing and employment reductions in North America and Europe.
"These programs will result in employment reductions totaling about 1,360 and approximate annualized cost savings of $65 million," added Goodyear.