Ford Motor Co
23 October 2006
Contact: Media: Equity Investment Fixed Income Shareholder Inquiries:
Becky Sanch Community: Investment Community: 1.800.555.5259 or
1.313.594.4410 Raj Modi Rob Moeller 1.313.845.8540
bsanch@ford.com 1.313.323.8221 1.313.621.0881 stockinf@ford.com
fordir@ford.com fixedinc@ford.com
Editor's note: The following is one of two related press releases Ford Motor
Company is issuing today. Please also refer to the release entitled: 'FORD
REPORTS PRELIMINARY THIRD QUARTER 2006 FINANCIAL RESULTS.'
FORD TO RESTATE RESULTS SINCE 2001 FOR ACCOUNTING UNDER SFAS 133
DEARBORN, Mich., Oct. 23, 2006 - Ford Motor Company (NYSE: F) today announced it
plans to restate previous financial results from 2001 through the second quarter
of 2006 to correct the accounting for certain derivative transactions under the
Statement of Financial Accounting Standards (SFAS) 133, Accounting for
Derivative Instruments and Hedging Activities.
The correction to the accounting does not affect the economics of the derivative
transactions, nor have any impact on the company's cash. However, the
restatements are expected to affect the preliminary financial results Ford
announced today for its 2006 third quarter. The company expects to finalize
restatement amounts for the current period and all previous periods by the time
of the filing of its Quarterly Report on Form 10-Q for the quarter ended Sept.
30, 2006. (For full details regarding Ford's preliminary results for the 2006
third quarter, please see press release entitled, 'FORD REPORTS PRELIMINARY
THIRD QUARTER 2006 FINANCIAL RESULTS.')
Ford discovered that since 2001, certain interest rate swaps Ford Motor Credit
Company had entered into to hedge the interest rate risk inherent in certain
long-term fixed rate debt were accounted for incorrectly under SFAS 133 because
they did not satisfy the standard's technical accounting rules to qualify for
exemption from the more strict effectiveness testing requirements. Ford Motor
Credit Company uses transactions involving derivatives, including swaps,
forwards and options, to reduce economic risk and volatility in a disciplined
and defensive manner. PricewaterhouseCoopers LLP, the company's independent
registered public accounting firm, audited Ford's 2001 through 2005 financial
statements, which included a review of these swaps.
'This is a very complicated accounting standard, and interpretation of its
proper application has continued to evolve,' said Executive Vice President and
Chief Financial Officer Don Leclair. 'Our overall hedging strategy is sound. We
will correct our accounting for these types of derivative instruments. We remain
committed to strong internal controls and reporting transparency.'
Ford Motor Credit Company's interest rate swaps were entered into as part of the
unit's asset-liability management strategy. The swaps economically hedge the
interest rate risk associated with long-term debt issuances. Although the final
restatement amounts have not yet been determined, we estimate based on the
information to date that Ford and Ford Motor Credit Company's results in 2002
will improve materially. Other periods are still under study.
About Ford Motor Company
Ford Motor Company, a global automotive industry leader based in Dearborn,
Mich., manufactures and distributes automobiles in 200 markets across six
continents. With about 300,000 employees and 108 plants worldwide, the company's
core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land
Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services
include Ford Motor Credit Company.
This information is provided by RNS
The company news service from the London Stock Exchange