AKRON (Oct. 23, 2003) — Goodyear will restate five years of its financial results—expected to decrease net income over the period by up to $100 million—and postponed the release of its third quarter results until mid-November.
The beleaguered Akron-based tire maker said it discovered errors in inter-company billing and the implementation of an enterprise resource planning (ERP) computerized accounting system in 1999. The adjustments cover 1998 through 2002 and the first and second quarters of 2003.
Because of the timing of the restatement—Goodyear announced the changes after market close the day before it was to announce earnings—Goodyear said it will report third quarter earnings as well as the amended 2002 annual report and 2003's first and second quarter reports by mid-November.
For the third quarter, Goodyear expects to report a net loss of about $90 million to $115 million. It also expects to report sales of about $3.9 billion for the period. The tire maker said the results reflect rising raw material prices, a relatively weak truck market, stronger volume in passenger tires and weakness in private labels. The net loss also includes various charges related to a plant closing and employment reductions of about 1,360 people with annual cost savings of about $65 million.
Goodyear said the changes will not affect either the company's net cash position or its access to credit facilities. While the adjustments may decrease net income over the years by up to $100 million, they also may improve the net loss for the first half of 2003 because of various charges the tire maker had taken then that will now be reflected in the restatement. The company had reported a net loss of $236.9 million for that period.
Shareholder's equity is expected to fall as much as $120 million as a result of the restatement. Of that, $20 million relates to periods prior to 1998, the company said.
Goodyear said it discovered the errors during a review of various accounts, including the ERP-impacted balance sheet accounts which, for the most part, were in its North American Tire and Engineered Products units.