Posted on 10/19/2004 10:53:02 AM PDT by BurbankKarl
DETROIT (Reuters) - U.S. regulators asked automotive giants General Motors Corp. and Ford Motor Co. for information on how they account for pension and health care plans, the companies said on Tuesday.
Last week, the Securities and Exchange Commission said it was looking into possible accounting abuses involving employee pension funds. The automotive industry has been particularly hard hit by rising health care costs and underfunded pension plans.
"It's obviously not a positive," Carl de Jounge, auto credit analyst at Deutsche Bank in New York, said when asked about the request to Ford.
"Investors have been concerned about pension and health care costs," he said. "If we have a regulatory push for more conservative assumptions, that could put more pressure on future earnings."
GM and Ford stock prices slipped slightly in early trade on the New York Stock Exchange. GM shares fell 60 cents, or 1.5 percent, to $38.30, while Ford fell 27 cents, or 2 percent, to $13.12
GM and Ford bonds fell relative to U.S. Treasuries on the news.
In a conference call to analysts and reporters about Ford's earnings, Ford Chief Financial Officer Don LeClair said, "We adhere to the highest accounting standards and we will cooperate with the agency on this review."
He added that given the size of the company's pension and retiree health care obligations, it was not surprising that a general SEC inquiry would include Ford.
Earlier on Tuesday, Ford posted a stronger-than-expected quarterly profit, but only because its finance arm offset losses from its automotive business. Last week, GM also posted a loss from its automotive arm, the first since strikes nearly shut North American operations in the third quarter of 1998.
Delphi Corp., the largest U.S. automotive supplier, said on Monday in a securities filing that the SEC also requested the information.
GM spokeswoman Toni Simonetti said the automaker would comply with the request.
"We are confident that GM's financial reporting in this complex area has been accurate and complete," she said.
ping
Blue Oval Ping!
Don't worry, Kerry has a plan.
I better go check out his web site!
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