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Old 11-14-2006, 06:48   #1 (permalink)
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US:Ford restates results from past years

Ford restates results from past years

Reuters

DETROIT -- Ford Motor Co. today restated financial results from the last five years.

The restated results are for the years ended Dec. 31, 2005, 2004, 2003, 2002 and 2001.

Ford had said it would restate results when it reported a preliminary third-quarter loss of $5.8 billion last month. The automaker said its finance unit didn't follow accounting standards on interest rate derivatives used to hedge longer-term debt.
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Old 11-14-2006, 08:58   #2 (permalink)
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Re: US:Ford restates results from past years

Ford restates results for 5 years, narrows third quarter loss

Reuters

DETROIT (Reuters) -- Ford Motor Co. today 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 the years 2005, 2004, 2003, 2002 and 2001, the company said in a regulatory filing with the 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 Oct. 23.

For the first nine months of the 2006, Ford recorded an improvement of $250 million, reducing the loss to $7 billion.

Ford will be filing an amended Form 10-Q for the first and second quarters of 2006 on Monday, Nov. 20, Ford spokeswoman Becky Sanch said, adding that the restated results did not affect the company's cash position.

In the restatement, Ford narrowed its 2001 net loss by $700 million, to $4.8 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.

The restated net income for 2003, 2004 and 2005 were $200 million, $3 billion and $1.4 billion.

"Changes in interest rates can cause substantial volatility in the fair values that must now be recognized in earnings," Ford said in a statement. "For 2001 and 2002, when interest rates were trending lower, Ford is now recognizing large derivative gains in its restated financial statements."

The company said the upward trend in interest rates from 2003 through 2005 caused the interest rate swaps to decline in value, resulting in derivative losses for these periods.
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Old 11-14-2006, 10:50   #3 (permalink)
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Re: US:Ford restates results from past years

Accounting fix lifts Ford profit $1.2 billion over 5 years

By SARAH A. WEBSTER

DETROIT FREE PRESS BUSINESS WRITER

Ford Motor Co. today said in a federal regulatory filing that it earned $1.2 billion more in profit over the past five years than it previously reported.

The struggling Dearborn-based automaker revised its earnings results over the past five years to correct for an accounting error.

While the automaker earned $805 million between 2001 and last year, far more than the $427 million loss previously reported, the company's results continued to show deterioration in 2005.

It was that poor performance that led the automaker to embark on its most recent restructuring effort, which calls for cutting 44,000 jobs and closing 16 plants by 2012.

Most of the financial gains booked because of the accounting fix were in 2001 and 2002. In the following years, Ford's results were actually worse than reported.
In all, here's how Ford's financial results changed:

2005: Ford posted net income of $1.4 billion - not the $2.0 billion previously reported.
2004: Ford earned net income of $3.0 billion - not $3.5 billion.
2003: Ford earned $239 million - not $495 million.
2002: Ford earned $875 million - a better performance than the net loss of $980 million reported.
2001: Ford posted a loss of $4.8 billion - not the $5.5 billion loss reported then.

For the third quarter and first nine months of 2006, the company reported a net loss of $5.2 billion and $7 billion, respectively. This is an improvement over the $5.8 billion loss previously reported for the July-September period, which had brought year-to-date losses to $7.2 billion.

Several top analysts who have reviewed Ford's accounting problem believed the error was technical in nature, relating to the way companies account for hedging activities, and not uncommon.

CFO Magazine reported in May that many companies have had a problem applying SFAS 133, which is an accounting rule issued by the Financial Accounting Standards Board, since they began complying with it six years ago.

Last year, the magazine reported, 57 companies restated their earnings because of faulty hedge accounting - up from 27 in 2004.

"A lot of savvy companies were caught out on this," Wesley Smyth, vice president and senior accounting analyst at Moody's Investors Service, previously told the Free Press.

Hedges, in general, are investments designed to offset changing prices, such as fluctuations in currencies or commodities. In Ford's case, the company's credit arm enters into hedges to protect against fluctuations in the interest rate. How Ford has accounted for those hedges is the issue.

The value of the hedge changes with everyday market conditions, and the company's financial statements are supposed to reflect those ups and downs unless a company qualifies for a certain exemption.

They can do that if they can prove that their hedge is highly effective in offsetting the fluctuations, under the rules and guidance outlined in SFAS 133, which is about
1,000 pages long, Smyth said.

Many companies mistakenly thought they qualified for this exemption under a provision known as the "shortcut" method. Now they have to record changes in the value of their hedges in financial results.

"That increases the volatility," Smyth said.

Ford acknowledges now that it didn't qualify for the exemption, even though "these interest-rate swaps were and continue to be highly effective economic hedges."
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My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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