DETROIT (AP) — General Motors Corp. said Wednesday it plans to restate its earnings from 2001 because an accounting error led the company to overstate its earnings by up to 35 percent. In an unrelated action, Fitch Ratings lowered GM’s debt deeper into “junk” status Wednesday and the automaker’s shares tumbled to a 13-year low.
In a filing with the Securities and Exchange Commission, GM said its 2001 earnings were overstated by about $300 million to $400 million, but the final amount hasn’t been determined. GM plans to issue the restated earnings for 2001 and any subsequent years before it issues its 2005 annual report next year.
The world’s largest automaker said it has been conducting an internal review of credits received from suppliers, an issue also being investigated by the SEC. The review indicates GM erroneously booked the supplier credits as income in the year they were received rather than to future periods, GM said.
GM filed its statement Wednesday evening after the markets closed. The audit committee of GM’s board warned investors not to rely on GM’s financial statements for 2001.
Fitch downgraded GM’s issuer default and senior unsecured debt ratings to BB+ from BBB. The ratings agency said it was concerned about the costs GM might incur as its former parts division, Delphi Corp., restructures in bankruptcy court.
Fitch didn’t lower the rating for GM’s finance arm, General Motors Acceptance Corp., because GM announced last month it wants to sell a controlling interest in GMAC to a strategic partner. Fitch said it will consider lowering GMAC’s rating if GM doesn’t make progress on that sale in the first quarter of 2006.
GM has said it could be liable for up to $12 billion for benefits for Delphi employees as part of the supplier’s restructuring. Besides that financial burden, Fitch said GM also is at risk if Delphi and its unions fail to agree on wages and benefits.
“A labor disruption at Delphi for any extended period would have an immediate impact on GM’s ability to operate and would quickly reduce liquidity,” Fitch said.
GM had $19.2 billion in cash as of Sept. 30, Fitch said. The company has $31 billion in outstanding debt.
GM spokeswoman Gina Proia said the company is taking steps to restore profitability, including reaching a tentative agreement with the United Auto Workers to cut health care costs, reducing its structural costs and committing to using 100 percent of its North American plant capacity by 2008.
GM shares fell $1.23, or nearly 5 percent, to close at $24.63 on the New York Stock Exchange, a 13-year low.
Business
GM to restate 2001 earnings
Company said its overstated earning by $300M to $400M
- Business
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Busy with Bowl Goers
Hotel bookings have not been record-breaking this weekend in Kokomo, but the Super Bowl made for a much more lucrative few days than normal.
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Business briefs - Sunday, Jan. 29, 2012
Events
Ivy Tech Community College will have the Corporate College Expo on Wednesday in Kokomo.
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Ahead of the Curve
Delphi Electronics and Safety developments displayed last week at a Las Vegas expo were glimpses at how cars and cell phones — often a risky mix — can marry into safety products.
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Business briefs - Sunday, Jan. 1, 2012
Careers
Kokomo resident Brian Dunham of Rex Byers Heating and Cooling Systems Inc. has earned certification as a Service Technician for Heating, Cooling, and Heat Pump equipment and systems from North American Technician Excellence.
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Antique, second-hand retailers see better sales
A lot of it is old, some of it is kind of homely, but it has sold well, according to store owners.
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Fight against a ‘right’
Union leaders from Kokomo and the rest of Indiana plan to be outside the Statehouse Jan. 4 to greet legislators as they reconvene that day for the 2012 General Assembly.
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Business briefs - Sunday, Dec. 11, 2011
Careers
PERU — The Indiana State Police Peru Post has recognized two of its civilian employees, Cathy Shuler and Pam Woodhouse, for their more than 25 years of service.
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Elite place to meet
The owners of a banquet hall that opened this year have almost everything set up just as a post-Thanksgiving rush in business approaches.
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Artisans expand store
PERU — For Eileen and Friends Craft Mall, the approach has been opposite of every man for himself.
Every woman has worked together.
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Experts say small, struggling towns need broadband
Broadband Internet has become a must to propel the American economy, but lighter government regulations and low-income assistance would be necessary elements, a panel of industry experts said last week.
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