The Daily Caveat wrote yesterday about Goodyear's receipt of a wells notice from the SEC indicating the likelihood of a future civil or adninistrative action agains the tiremaker. More details on the why's and wherefores from USAToday.com:

Goodyear Tire expecting SEC lawsuit on billing

By Jeff Bennett
Bloomberg News
USA Today
August 16, 2005

...Goodyear's accounting has been the subject of an SEC probe since November 2003, when the company restated results for part of that year and for several previous years, reducing net income by $84.7 million. Goodyear blamed a 1999 planning software system from SAP and errors in internal billings. The company posted a profit in 2004 after three years of losses.

"This is more of a final nail in the coffin of the company's past accounting practices," says Efraim Levy, analyst at Standard & Poor's Equity Services. "Investors are looking at the company going forward rather than past. They have been doing a lot of things right lately."

Goodyear said it will have a chance to respond before the SEC staff formally recommends any action. "We have cooperated fully ... and this is the next step in the process," Price said. "We continue to implement ongoing improvements in financial controls."

The two former executives also continue to cooperate with the SEC, Goodyear said in a statement. Tieken and Bergeron couldn't be reached for comment.

The company disclosed the SEC investigation in November 2003 and said in February 2004 that the inquiry had become a formal probe. A formal investigation gives SEC staff the authority to subpoena documents and compel witness testimony.

Goodyear said in a November 2003 filing with the SEC that more than 23 lawsuits had been filed against it related to the restatements. Price said he didn't know how many of those lawsuits are pending.

"There may be more lawsuits and a fine, but I think they will be manageable," says Sean Egan, managing director of Egan-Jones Ratings, an independent debt-rating firm in Haverford, Pa.

The company in March 2004 said an internal inquiry into its accounting led to "disciplinary actions" against several senior managers in Europe, who were either fired, resigned or asked to retire. The company won't identify those managers, Price said...

The full article can be read here.

-- MDT