GM Delays Earnings Report
General Motors (GM) said late Thursday that it will delay the release of its fourth-quarter results due to accounting issues, but it expects to report record revenue and a significant bottom-line improvement for the period.
GM said its finance arm, GMAC, is finalizing its financial statements for 2006 and its balance sheet as of Nov. 3, the day GM sold a 51% stake in the business to a private equity group. GMAC isn't yet able to provide the financial information needed to complete the parent company's fourth-quarter financial results.
GM had been scheduled to report its results on Tuesday.
Meanwhile, the company said it will restate its financials for 2002 through the third quarter of 2006, due to deferred tax liabilities that were overstated because of errors made "primarily before 2002.""While these errors do not impact cash flow or previously reported cash balances, retained earnings as of Dec. 31, 2001 and subsequent periods were understated by a range of $450 million to $600 million as a result," GM said in a press release. In light of a recent focus by regulators on accounting rules for derivative securities and hedging activities, GM said it's reviewing its practices in this area. "While this review is still ongoing, GM currently anticipates that it will make accounting restatements in this area, and the completed review may result in additional restatements that could be material," said the company. "GM also is assessing various other miscellaneous adjustments for 2002 through 2006, and believes these adjustments, individually and collectively, will not be material on a consolidated basis." GM said it intends to provide further information on these issues in early February, and it also anticipates filing its annual 10K form with the Securities and Exchange Commission by its due date on March 1. As for its fourth-quarter performance, GM said it expects to show profitability for the period on a reported consolidated basis. Also, it improved its cash position in the year, ending 2006 with approximately $26.4 billion in cash and equivalents, including $2.5 billion of readily available Voluntary Employee Beneficiary Association assets. That marks a cash increase of about $5.9 billion over year-end 2005. Shares of GM were recently down 4 cents, or 0.1%, to $33.10 in after-hours trading. The stock gained 1.2% in the regular trading session.
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