Goodyear Reveals More Accounting Woes- Where The Rubber Meets The Road

AKRON, Ohio December 11, 2003 The AP is reporting that The Goodyear Tire & Rubber Co. is probing possible improper accounting issues in its Europe operations, the second time in as many months the world's largest tire maker has jolted investors with news of faulty accounting.

The issue will delay until next year a Goodyear financial report to the Securities and Exchange Commission.

There has been no determination whether the accounting for its business in Europe will have a material impact on its financial report, Goodyear said Wednesday in a statement.

Goodyear shares fell 84 cents, or 11 percent, to close at $6.52 on the New York Stock Exchange.

In October, Goodyear said accounting system errors forced it to lower net income since 1998 by as much as $100 million. The company said then that an accounting system implemented in 1999 caused the mistakes.

The issue forced Goodyear to delay the release of its quarterly earnings report.

Akron, Ohio-based Goodyear has crafted a turnaround plan that includes possibly selling some of its non-tire businesses and cutting $1.15 billion in wage and benefits costs over the next three years.

A new three-year contract with the United Steelworkers of America gives the company the option to cut jobs if production and cost-cutting goals aren't met.

But the delay in filing its amended 10-K filing to the SEC could hurt the company's ability to satisfy an obligation to the union to raise $325 million in debt and equity financing by the end of this year.

Goodyear spokesman Keith Price said the contract does not specify how the money would be used. Price said Goodyear's expectation is that the funds would reduce debt and go toward general corporate purposes.

Goodyear said its recently completed contract gives the Steelworkers the right to strike after going through a grievance process if Goodyear does not complete the financing as planned. The company opened new discussions with the union Wednesday concerning financing options, including capital market access, once the amended SEC filing is completed.

In a statement, the union said it was monitoring the situation and that it hoped the European issues would not be significant.

Jack Hefner, vice president of Steelworkers Local 2 in Akron, said the contract provision was not intended to do anything specifically for the Goodyear workers.

"It was just part making sure the company is getting its house in order," he said.

Goodyear has about 88,000 employees and makes tires, engineered rubber products and chemicals in 28 countries.

Goodyear: http://www.goodyear.com