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GM may seek to delay filing of annual report

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DETROIT — General Motors Corp. said Friday it has "substantially completed" its review of financial statements from 2002 until late September 2006 but may seek an extension of a deadline to file its annual report.

The world's biggest automaker estimated its deferred tax liability overstatement to be about $1 billion and said accounting changes involving interest rate hedging would increase its retained earnings by about $200 million.

The accounting problems, which include General Motors Acceptance Corp., have delayed the automaker's release of fourth-quarter and 2006 earnings, but the company said it would post a fourth-quarter profit.

Last month, GM estimated tax accounting mistakes from before 2002 would increase its retained earnings for all subsequent years by between $450 million to $600 million.

The automaker said Friday in a filing with the Securities and Exchange Commission that previously filed financial statements and information from 2002 through the third quarter of 2006 "should no longer be relied upon, largely due to adjustments in hedge accounting."

GM said it was working to complete its restated financial information by its March 1 due date, but would seek an extension until March 16 "if necessary."

Chief Financial Officer Fritz Henderson said in late January the company could not yet estimate the amount of its expected fourth-quarter 2006 profit. But it would be GM's first quarterly profit since the fourth quarter of 2004, when it earned $630 million.

Kip Penniman, a corporate bonds analyst with KDP Investment Advisors in Montpelier, Vt., said GM's accounting troubles won't be enough to move the bond market.

"I don't think GM has a fatal flaw in their accounting department," he said. "They're just getting their house in order. There's been a lot of transactions and ebbs and flows in the company and its financial statements."

Last year's sale of a 51 percent stake in GMAC, GM's financial arm, placed the company's accounting under a sharp lens and errors were discovered, Penniman said.