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DETROIT – Ford Motor Co. narrowed its third-quarter loss and restated financial results from the last five years to correctly account for interest rate derivatives used to hedge longer-term debt.
The restated results are for 2001-2005, the company said in a regulatory filing with the U.S. Securities and Exchange Commission.
For the third quarter of 2006, the company reported a net loss of $5.25 billion, an improvement of about $550 million from the preliminary results released on October 23. For the first nine months of 2006, Ford recorded an improvement of $250 million, reducing its loss to $7 billion.
“The headline number is a positive, but if you look at recent years, they were not as good as originally reported,” Argus Research analyst Kevin Tynan said. “I think that is an indication that this is a company that is still facing a lot of challenges.”
Ford will be filing amended 10-Qs for the first and second quarters of 2006 on or by November 20, Ford spokeswoman Becky Sanch said, adding the company’s cash position was not affected.
The restatements added, in total, about $850 million to net income through the third quarter of 2006, she said.
Tynan said the numbers show that Ford’s initial turnaround plan, announced in 2002, did not have the traction that was originally reported.
“It’s a company that is struggling and those numbers indicate it,” he said.
Ford Chief Financial Officer Don Leclair told analysts and reporters that the automaker should be profitable in its North American unit in 2009, but cost-reduction efforts would continue beyond that year.
“That is a way of life for us,” he said, referring to cost cuts.
Leclair also said the company has made certain assumptions on the 2007 labor negotiations with the United Auto Workers union while compiling its outlook, but he declined to give details.
2001 TO 2005
The accounting changes that triggered the restatements involved the use of derivatives by Ford’s finance arm. Ford said the restatements bring its financial reporting up to date with the SEC.
The company said it also identified adjustments that should have been recorded in periods earlier than 2001 but decided these to be immaterial to the originally filed financial statements, and recognized the adjustments as “out-of-period.”
In the restatement, Ford narrowed its 2001 net loss to $4.8 billion from a previously reported loss of $5.45 billion.
For 2002, it reported a profit of $900 million instead of a loss of $1 billion. Net income for 2003, 2004 and 2005 was reduced by $300 million, $500 million and $600 million, respectively, Ford said.
The restated net income for 2003, 2004 and 2005 were $200 million, $3 billion and $1.4 billion.
Last month, Ford reported a $5.8 billion third-quarter preliminary net loss — its biggest in 14 years — and predicted fourth-quarter operating losses and significant cash drain in the “near to medium term.”
The company said it was exploring various financing strategies, including secured financing involving a substantial portion of its automotive operations to raise cash.
Leclair said the company is close to arranging a secured financing deal, but declined to reveal the value of the deal.
Ford shares were down 11 cents, or 1.24 percent, at $8.76 in noon trading on the New York Stock Exchange.