FRAMINGHAM (10/24/2003) - The Goodyear Tire & Rubber Co. is being forced to restate its financial results for more than five years due to glitches caused partially by the rollout of an SAP-based financials system.
Earlier this week, the Akron, Ohio-based company announced that it will readjust its financial results for the years 1998 to 2002 and for the first and second quarters of 2003 because of errors created by the implementation of an SAP AG accounting application and legacy intercompany billing systems. Goodyear will also postpone its earnings announcement until mid-November. The company had planned to issue its latest quarterly earnings report Thursday.
"Although the company is still reviewing the matter, the adjustments are currently expected to decrease net income over the restatement period by up to US$100 million," the company said in a statement. "Goodyear will continue its ongoing process of strengthening its accounting procedures and is implementing further improvements to its system of internal controls. The company remains fully dedicated to providing timely and accurate financial reporting."
The errors were uncovered during a review of company accounts, including those affected by the ERP system, mostly in the North American Tire and Engineered Products businesses. The company also said it expects to report a net loss for the third quarter of 2003 in the range of $90 million to $115 million.
"It's important to note that we said the situation involved the implementation of the ERP (software) and did not say we had a problem with the software itself," a Goodyear spokesman said.
William Wohl, spokesman for SAP Americas Inc., a subsidiary of SAP, agreed.
"Goodyear has been customer since 1994, and we have had a very successful, strong and strategic relationship with (the company). As they have said, they do not see what happened as an issue with the software. It was how the solution was implemented and what they are describing as an internal cross-billing system, which is a legacy system."
He added that SAP is working with Goodyear to help correct the problems and that the two companies will maintain their relationship.