Ford revision cuts losses for 2001-06

Accounting errors dating to the beginning of the decade led Ford Motor Co. to restate its earnings Tuesday, reducing the amount the company has lost since 2001 by $850 million.

The company also reiterated its prediction that its North American operations would return to profitability in 2009, largely because of continued cost cuts and its expectation that it would maintain a U.S. market share of 14% to 15%.

Company officials said the profit would be small, but they would not give a dollar figure during a conference call with reporters and industry analysts.

Ford said the errors stemmed from accounting for interest rate swaps, financial instruments used to hedge money that it borrowed to make auto loans against changing interest rates.

Other companies have had to make similar corrections because of rule clarifications by the Financial Accounting Standards Board, said Pete Hastings, a corporate bond analyst at Morgan Keegan & Co.

The corrections caused Ford to reduce its retained earnings as of Dec. 31, 2000, by $629 million. The company also said its 2001 net loss narrowed from $5.5 billion to $4.8 billion due to the changes, while a $1-billion loss in 2002 became a profit of roughly $900 million.

For 2003, when interest rates began rising, the company’s net income of $500 million was reduced to $200 million, and for 2004, Ford’s net income dropped from $3.5 billion to $3 billion. A $2-billion profit in 2005 dropped to $1.4 billion in the restatement. The company’s net loss for the first nine months of this year narrowed to $7 billion from the initial report of $7.25 billion.

Ford Chief Financial Officer Don Leclair also gave a presentation designed to counter analysts’ skepticism about the company’s plan to make money in 2009 in North America.

He said the company expected $5 billion in cost reductions through 2008 and further reductions in 2009, but he would not give a specific dollar figure.

Leclair also said the company was encouraged by the number of production workers who have taken buyouts or early retirement. The deadline for the 75,000 workers to make a decision to leave the company is Nov. 27.

Ford shares fell 7 cents to $8.80.