Goodyear concludes European accounting probe
Goodyear Tire & Rubber Co. has finished its investigation into improper accounting practices in its European operations and says that the net income reduction between 1997 and 2003 identified through the probe will total $10 million.
Most of the reduction will impact Goodyear's European Union business, according to Goodyear officials, who plan to file the company's 2003 Annual Report on Form 10-K and its amended 10-K by the middle of next month.
"We look forward to issuing our financial results and refocusing all of our energies toward Goodyear's on-going turnaround efforts," says Robert Tieken, Goodyear executive vice president and chief financial officer.
The accounting probe was requested by Goodyear's audit committee last December. On Feb. 11, the Akron, Ohio-based tiremaker announced it was extending the investigation from Europe to other overseas operations. Early last month, Goodyear revealed it had fired and disciplined several senior managers in its European unit in connection with the investigation.
Goodyear also has "identified additional adjustments to those previously disclosed in its Sept. 30, 2003, Form 10-Q that are expected to result in net income of approximately $65 million between 1997 and 2003," say Goodyear officials.
The adjustments include:
* $20 million related to workers' compensation claims;
* $10 million "to the aforementioned investigation;"
* $10 million to fixed assets;
* $8 million to product liability;
* $7 million to "intercompany profit elimination in inventory;"
* $10 million to "other items."
Because Goodyear will not file its 2003 Form 10-K by April 19, as required in its loan agreements, the company is in discussions with lenders to extend the deadline by 30 days.
"While Goodyear does not expect to need access to these facilities during this 30-day period, in the absence of an extension, the company would not be able to access them," say Goodyear officials.
"In that case, it would have until May 19 to file financials and regain access.
"If Goodyear does not file financials by May 19, there could be an event of default under the loan agreements and thereafter under other debt instruments."