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*KILLER74Z28* · 10-23-2006, 03:07 PM

Ford financial results 'clearly unacceptable'

October 23, 2006

By SARAH A. WEBSTER

FREE PRESS BUSINESS WRITER

The ailing Dearborn-based Ford Motor Co. today reported its largest quarterly loss in 14 years — a result of plummeting sales, a costly restructuring and growing challenges in its luxury division.

Ford said it lost $5.8 billion, or $3.08 per share, during the July to September period this year. Sales fell 10% to $36.7 billion. Last year during the same period, Ford posted a net loss of $284 million, or 15 cents per share.

The third quarter loss was the largest three-month loss since the first quarter of 1992, when the company lost $6.7 billion due mainly to accounting changes.

For the year, Ford’s losses now total $7.2 billion, and it was unclear whether Ford’s full-year results might come close to or surpass General Motors Corp.’s $10.6 billion loss last year.

On a conference call with journalists and automotive analysts, Ford CEO Alan Mulally, who took his post at the beginning of the month, called the results “clearly unacceptable.”

The company’s North American division, which manages the United States, Canada and Mexico, has long been the weight dragging Ford’s results down. Through the first half of the year, Ford posted a $1.4 billion loss, with $4 billion coming from that unit. But North America is no longer solely to blame.

The deep losses announced today were also caused by challenges in Asia Pacific, Africa and the Premier Automotive Group, which manages Volvo, Land Rover, Jaguar and Aston Martin.

And as bad as the results were, they were also a cliffhanger. Ford also said today that it would restate its financial results for the past five years at a later date to correct the accounting for certain transactions. The net impact of those changes was unclear. The company expected the restatement would improve results for 2002, but said other periods are under study.

Ford is working aggressively on its revamped Way Forward turnaround plan, which calls for eliminating a cumulative 44,000 hourly and salaried jobs, closing 16 factories and making other changes by 2012. The plan will cut $5 billion in costs by the end of 2008, when most of the job reductions are expected to be complete.

Most of Ford’s losses in the quarter — $4.6 billion or $2.46 per share — were for special one-time charges, many related to that restructuring. Among the special charges:
• A net charge of $861 million for jobs bank benefits and employee separations directly related to plans to idle facilities in North America.
• A charge of $259 million associated with continued personnel reduction programs at facilities other than those identified for idling.

Excluding special charges, Ford posted a loss from continuing operations of $1.2 billion or 62 cents per share.

Ford’s current restructuring plan estimates Ford’s North American operations will be profitable again by 2009, and Mulally said, “These actions will lead to profitable growth of our business over the long term.”

Meanwhile, Ford still has plenty of cash for now. The automaker had $23.6 billion, including money in a fund for employee benefits, at the end of September. That is unchanged from the end of June.

Some automotive analysts expressed concern this morning that Ford will burn through cash quickly as it restructures, asking questions about Ford’s lines of credit and how little cash Ford might feel comfortable with going forward.

However, Don Leclair, Ford’s chief financial officer, said that maintaining strong liquidity will continue to be a high priority, so the company can have a cushion.

JP Morgan automotive analyst Himanshu Patel said he still thinks Ford will miss its year-end cash projection of $20 billion. He expects the company to be $1 billion short of that mark. He expected Wall Street to react negatively to Ford’s earnings results today, although they were largely in line with forecasts.

Check Ford's Stock performance at http://customwire.ap.org/dynamic/ext...any=Ford&go=Go

Contact SARAH A. WEBSTER at 313-222-5394 or swebster@freepress.com.
The Associated Press contributed to this report.

10-23-2006, 03:07 PM	#14
KILLER74Z28 MOD SQUAD Drives: 2G1FT1EW9A9100666 Join Date: Aug 2006 Location: West Michigan Posts: 5,782 View My Garage	Ford financial results 'clearly unacceptable' October 23, 2006 By SARAH A. WEBSTER FREE PRESS BUSINESS WRITER The ailing Dearborn-based Ford Motor Co. today reported its largest quarterly loss in 14 years — a result of plummeting sales, a costly restructuring and growing challenges in its luxury division. Ford said it lost $5.8 billion, or $3.08 per share, during the July to September period this year. Sales fell 10% to $36.7 billion. Last year during the same period, Ford posted a net loss of $284 million, or 15 cents per share. The third quarter loss was the largest three-month loss since the first quarter of 1992, when the company lost $6.7 billion due mainly to accounting changes. For the year, Ford’s losses now total $7.2 billion, and it was unclear whether Ford’s full-year results might come close to or surpass General Motors Corp.’s $10.6 billion loss last year. On a conference call with journalists and automotive analysts, Ford CEO Alan Mulally, who took his post at the beginning of the month, called the results “clearly unacceptable.” The company’s North American division, which manages the United States, Canada and Mexico, has long been the weight dragging Ford’s results down. Through the first half of the year, Ford posted a $1.4 billion loss, with $4 billion coming from that unit. But North America is no longer solely to blame. The deep losses announced today were also caused by challenges in Asia Pacific, Africa and the Premier Automotive Group, which manages Volvo, Land Rover, Jaguar and Aston Martin. And as bad as the results were, they were also a cliffhanger. Ford also said today that it would restate its financial results for the past five years at a later date to correct the accounting for certain transactions. The net impact of those changes was unclear. The company expected the restatement would improve results for 2002, but said other periods are under study. Ford is working aggressively on its revamped Way Forward turnaround plan, which calls for eliminating a cumulative 44,000 hourly and salaried jobs, closing 16 factories and making other changes by 2012. The plan will cut $5 billion in costs by the end of 2008, when most of the job reductions are expected to be complete. Most of Ford’s losses in the quarter — $4.6 billion or $2.46 per share — were for special one-time charges, many related to that restructuring. Among the special charges: • A net charge of $861 million for jobs bank benefits and employee separations directly related to plans to idle facilities in North America. • A charge of $259 million associated with continued personnel reduction programs at facilities other than those identified for idling. Excluding special charges, Ford posted a loss from continuing operations of $1.2 billion or 62 cents per share. Ford’s current restructuring plan estimates Ford’s North American operations will be profitable again by 2009, and Mulally said, “These actions will lead to profitable growth of our business over the long term.” Meanwhile, Ford still has plenty of cash for now. The automaker had $23.6 billion, including money in a fund for employee benefits, at the end of September. That is unchanged from the end of June. Some automotive analysts expressed concern this morning that Ford will burn through cash quickly as it restructures, asking questions about Ford’s lines of credit and how little cash Ford might feel comfortable with going forward. However, Don Leclair, Ford’s chief financial officer, said that maintaining strong liquidity will continue to be a high priority, so the company can have a cushion. JP Morgan automotive analyst Himanshu Patel said he still thinks Ford will miss its year-end cash projection of $20 billion. He expects the company to be $1 billion short of that mark. He expected Wall Street to react negatively to Ford’s earnings results today, although they were largely in line with forecasts. Check Ford's Stock performance at http://customwire.ap.org/dynamic/ext...any=Ford&go=Go Contact SARAH A. WEBSTER at 313-222-5394 or swebster@freepress.com. The Associated Press contributed to this report.