Friday, March 09, 2007

GM's annual report will be late

Friday, March 02, 2007
GM's annual report will be late
Automaker says accounting problems will delay its financial statement's release.
Tom Krisher / Associated Press

DETROIT -- Pesky accounting problems have forced General Motors Corp. to delay filing its annual report with federal regulators until after the Thursday deadline.

The world's largest automaker, in a filing with the U.S. Securities and Exchange Commission, said Thursday it would need until March 16 to file.

"We're continuing to finalize the items we previously reported, and it became necessary to file an extension," said GM spokeswoman Renee Rashid-Merem.

The filing said GM could not meet the deadline "without unreasonable effort or expense." GM will seek an extension with the SEC today, the company said.

GM said last month that it had "substantially completed" its review of financial statements from 2002 until late September 2006. It estimated a deferred tax liability overstatement to be about $1 billion and said accounting changes involving interest rate hedging would increase its retained earnings by about $200 million.

The accounting problems, which include General Motors Acceptance Corp., have delayed the automaker's release of fourth-quarter and 2006 earnings. The Detroit company has said it would post a fourth-quarter profit.

GM officials won't divulge the size of the expected profit, but it would be the auto giant's first quarter in the black since the fourth quarter of 2004, when it made $630 million.

Problem isn't a big concern

Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co. Inc. in Memphis, Tenn., said while the accounting troubles may be persistent, they are not a big concern compared to other issues facing GM, like softening auto sales and upcoming contract talks with the United Auto Workers.

"For a multinational corporation with fairly complex issues in front of them, I'm not altogether surprised" at the delay, he said.

GM, which reported losing $3 billion through the first nine months of last year and $10.6 billion in 2005, is looking into other accounting problems involving hedging activities.

GM also attributed the delays to its financial arm, GMAC, which needed more time to close its books on 2006. GM sold a 51 percent stake in GMAC to a group of investors for $14 billion last year.

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