Accounting & Tax

Goodyear’s Lenders Cut It Slack

Terms of its credit facilities have been amended to give the company more time to file its annual report.
Stephen TaubApril 21, 2004

Goodyear Tire & Rubber Co. is slowly moving beyond its accounting scandal.

The world’s largest tire maker announced that its lenders have amended the terms of its credit facilities to allow it until May 19 to file its 2003 annual report with the Securities and Exchange Commission. Goodyear is one of a number of companies that missed initial and extended deadlines for filing reports with the SEC.

Last week, however, the company finally concluded its investigation into its overseas accounting. Goodyear will reduce net income between 1997 and 2003 by about $10 million, mostly affecting the company’s European Union business.

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Goodyear also announced that it will make additional adjustments to those disclosed in September, paring earnings by a total of about $65 million between 1997 and 2003. That figure includes $10 million related to the investigation, $20 million related to workers’ compensation claims, $10 million to fixed assets, $8 million to product liability, $7 million to inter-company profit elimination in inventory, and $10 million to other items.

Not everyone is forgiving, however. Last week, Standard & Poor’s said its BB-minus corporate credit and other ratings on Goodyear Tire remain on CreditWatch with negative implications, where they were placed on December 11 after the company announced fresh problems with its books.