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FORD ACCOUNTING ACTIONS TO AFFECT 1992 EARNINGS

 DEARBORN, Mich., Dec. 16 -- Ford Motor Company (NYSE: F) has taken a series of actions, including accounting changes and one-time charges, that will substantially affect 1992 earnings.
 Ford today announced adoption, effective for 1992, of new accounting standards governing reporting for retiree benefits and income taxes. The change for retiree health care benefits results in one-time charges as well as annual ongoing costs.
 Additionally, Ford incurred one-time charges related to work force reductions at Ford's European operations. These reductions will help Ford's European operations become more productive.
 "The ongoing effects of the retiree benefit standard and the one-time charges relating to Europe will result in Ford reporting a net loss from operations in 1992," said Ford Chairman Harold A. Poling.
 Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," requires a conversion from "pay-as-you-go" accounting to accrual accounting. There are two components to SFAS 106: (1) an initial liability associated with benefits already accrued by current employees and retirees, and (2) an annual ongoing charge representative of the growth of the liability over time.
 The effect on net income of the initial liability for retiree benefits is a one-time charge of $7.5 billion or $15.51 per share of common and Class B stock. Ford elected to write off the initial liability fully in 1992 to avoid charging $375 million after taxes in each of the next 20 years.
 Net income also will be reduced by the annual charge associated with the retiree benefits; in 1992 these annual charges amount to $440 million or 91 cents per share of common and Class B stock.
 "The magnitude of the charge to earnings highlights the high level and inordinate rise in health care costs -- one of the largest components of the compensation package," Mr. Poling said. "As we saw in the recent presidential campaign, the quality and rapidly rising costs of health care are a concern not only to Ford, but to the entire nation. Ford advocates that government, business, labor and providers work toward reform of the health care system."
 Adoption of the standard will not affect Ford's cash flow because the payments will continue on a "pay-as-you-go" basis.
 Ford also adopted for 1992 a new accounting standard for accruing and reporting taxes -- Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The tax standard's effect on net income is a one-time improvement of $685 million or $1.41 per share of common and Class B stock. The new standard adjusts the amount recorded in Ford's balance sheet for future taxes payable to reflect lower tax rates that are now in effect.
 In addition to the accounting changes, Ford announced that it was taking one-time charges of $419 million after taxes in the fourth quarter of 1992, related to Ford's European operations. The charge reflects primarily reductions in employment levels across European automotive operations. This is part of Ford's ongoing cost reduction efforts, which have been accelerated in response to the depressed European industry and competitive pressures. Ford will reduce its European work force by about 10,000 employees during 1993.
 "The effect of the actions in Europe will be to improve Ford's profitability in 1993 and beyond," Mr. Poling said.
 -0- 12/16/92R
 /CONTACT: John W. Spelich of Ford Motor Company, 313-322-9600/
 (F)


CO: Ford Motor Company ST: Michigan IN: AUT FIN SU:

SM -- DE024R -- 7960 12/16/92 18:28 EST
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Publication:PR Newswire
Date:Dec 16, 1992
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