GM to Restate ’01 Earnings

General Motors Corp. said Wednesday that it planned to restate its earnings from 2001 because an accounting error led the company to overstate its earnings by up to 35%.

GM disclosed the error after the markets closed. Earlier in the day, Fitch Ratings lowered GM’s debt deeper into “junk” status. The automaker’s shares fell $1.23, or nearly 5%, to $24.63, a 13-year low.

In a filing with the Securities and Exchange Commission, GM said its 2001 earnings were overstated by about $300 million to $400 million, but the final amount hasn’t been determined. The Detroit-based automaker plans to issue the restated earnings for 2001 and any subsequent years before it issues its 2005 annual report next year.

GM said it had been conducting an internal review of credits received from suppliers, an issue also being investigated by the SEC. The review indicates GM erroneously booked the supplier credits as income in the year they were received rather than to future periods, GM said.

The audit committee of GM’s board warned investors not to rely on GM’s financial statements for 2001.

In an unrelated action, Fitch downgraded GM’s issuer default and senior unsecured debt ratings to BB-plus from BBB. The ratings agency said it was concerned about the costs GM might incur as its former parts division, Delphi Corp., restructures in Bankruptcy Court.

Fitch didn’t lower the rating for GM’s finance arm, General Motors Acceptance Corp., because GM announced last month that it wanted to sell a controlling interest in GMAC to a strategic partner. Fitch said it would consider lowering GMAC’s rating if GM didn’t make progress on that sale in the first quarter of 2006.

GM has said it could be liable for up to $12 billion for benefits for Delphi employees as part of the supplier’s restructuring.