The U.S. Securities and Exchange Commission has started an informal inquiry into Ford Motor Co.'s recent earnings restatement that was brought on by accounting errors.
In a filing with the SEC on Friday, Ford said the SEC's Division of Corporation Finance and the Division of Enforcement had contacted the company for additional information about the restatement, which changed Ford's earnings from 2001 through the third quarter of this year. The restatement reduced by $850 million the amount the automaker has lost since 2001.
SEC spokesman John Heine said Monday that the commission does not comment on pending investigations.
The accounting errors, caused by the way Ford counted interest rate hedging by its financial arm, Ford Motor Credit Co., narrowed the company's net loss for the first nine months of this year to $7 billion from the initial report of $7.25 billion, the company said last week. It also reduced the third-quarter net loss to $5.2 billion from previously reported $5.8 billion.
Also on Friday, Ford restated its earnings for the first half of the year, reporting a net loss of $1.74 billion, about $300 million wider than the previously reported $1.44 billion loss. The company said it lost $1.42 billion in the first quarter instead of the previously reported $1.19 billion. It lost $317 million in the second quarter instead of $254 million.
The company expects to report more losses until turning a profit in 2009.
Ford said the restatements stemmed from mistakes made in accounting for interest rate swaps, financial instruments used to hedge money that it borrowed to make car loans against changing interest rates.
In the past, Ford accounted for the swaps by changing pretax income and balancing that with a change in the value of its debt. But a review of national accounting standards showed that the swaps had to be offset on the bottom line, affecting net income, Ford officials said.
Ford shares fell 3 cents to $8.86 in morning trading on the New York Stock Exchange.
