Oct. 23 (Bloomberg) -- Ford Motor Co., the second-biggest U.S. automaker, reported a $5.8 billion third-quarter loss as sales continued to slump and the costs of shedding jobs mounted in North America. Ford also said it will restate five years of earnings because of accounting changes.

The loss, Ford's biggest in 14 years, widened to $3.08 a share from $284 million, or 15 cents, in 2005's third quarter, the company said today. Excluding costs for asset writedowns and shedding jobs, the loss was $1.2 billion, or 62 cents, in line with analysts' estimates.

In its first earnings report under Chief Executive Officer Alan Mulally, Ford said North American automotive operations lost money for the eighth time in nine quarters. The automaker's U.S. auto sales have fallen 8.6 percent this year as buyers shunned big pickup trucks and the Explorer and Expedition sport-utility vehicles.

The performance ``was distressing because it included a big operating loss, and there's no product-led revival right around the corner to reverse it,'' said John Casesa, an analyst with Casesa Strategic Advisors LLC in New York. ``In addition, there are all these charges and restatements that will be difficult for investors to assess.''

Ford said it would restate earnings from 2001 through this year's second quarter to correct its accounting of derivative transactions.

Ford's North American auto operations had a pretax loss of $1.98 billion, excluding one-time costs, while revenue fell to $15.4 billion from $18.2 billion. Losses in the region are overwhelming profits at other auto units and at Ford Motor Credit Co., which makes loans to buyers of Ford-built vehicles.

Profit Pledge

``We are going to return to profitability in North America by 2009,'' Mulally said in an interview. Ford set the 2009 target last month, after abandoning an earlier goal of making the region profitable by 2008.

Mulally called Ford's results ``unacceptable.'' Earnings declined at Ford Credit, and the Premier Automotive Group had a wider pretax loss. Asia-Pacific operations swung to a loss from a year-earlier profit. Ford's South American business had a bigger profit, while its European unit narrowed its losses.

Ford's shares fell 11 cents, or 1.4 percent, to $7.90 at 4:01 p.m. in New York Stock Exchange composite trading. The stock had gained 2.3 percent this year.

Cash Drain

The automaker, based in Dearborn, Michigan, also said it expects a drain on its cash in ``the near to medium term.'' Ford is ``exploring various financing strategies, including secured financing involving a substantial portion'' of its automotive operations, it said in a regulatory filing.

Under such a transaction, Ford would use assets as collateral for financing. Chief Financial Officer Don Leclair, speaking on a conference call, declined to say what assets would be involved.

``We want to make sure we have enough capital and liquidity'' to restructure North American operations and develop new models, Leclair said.

Standard & Poor's and Fitch Ratings both said today they're reviewing ratings on Ford debt, and said unsecured creditors may be affected if Ford boosted secured borrowings. Both companies have `B' ratings on Ford, five levels below investment grade.

Ford expects the restatements to affect the preliminary third-quarter results announced today. The company plans to complete revisions by the time it makes a quarterly regulatory in November.

Ford Motor Credit used derivatives to hedge the interest- rate risk from longer-term debt and didn't follow standards in accounting for them.

Improvement for 2002

The restatements will `materially'' improve results for 2002, when Ford Motor posted a $980 million loss. Ford had a $5.45 billion loss in 2001 and a combined $6 billion in profit in 2003 through 2005. Through the first three quarters of this year, Ford's losses have totaled $7.24 billion.

The company also is reviewing its financial controls and procedures, the filing said.

``If there's any skeletons in the closet, I would expect them to come out between now and the end of this year, if they're not out already,'' said Dan Poole, who helps manage $34 billion, including Ford shares, at Cleveland-based National City Corp.

The third-quarter results included one-time costs of $4.63 billion, or $2.46 a share. Ford said last month it's speeding up previously announced factory-job cuts and slashing additional North American salaried jobs.

Ford said it expects expenses of $2.5 billion because of plant closings. This includes spending on ``Job Banks'' benefits, where laid-off workers continue to draw 95 percent of their take- home pay and for buyout offers, the filing said.

Analysts' Estimates

Ford's loss had been projected at 72 cents a share, excluding one-time expenses, by Citigroup's Jon Rogers, ranked by StarMine Corp. among the five most accurate Ford analysts. A Thomson Financial survey of 15 analysts estimated the loss at 61 cents.

The writedowns cover Ford's North American automotive operations and its U.K.-based Jaguar and Land Rover brands. Jaguar is losing money and is in the midst of a restructuring announced in 2004. Ford is writing down North American assets by $2.2 billion on a pretax basis and Jaguar and Land Rover by $1.6 billion.

Ford also had one-time expenses of $861 million for programs to reduce the number of U.S. salaried workers during the quarter; $259 million for other ``personnel reduction'' programs; and $437 million in pension costs stemming from cutting jobs.

`Wood to Chop'

``We think the stock is about fairly valued,'' Poole said. ``We're not seeing much to get us excited, but the company is doing a lot of the right moves, right now. They just have a lot of wood to chop.''

The price of credit-default swaps based on $10 million of Ford bonds fell to $650,000, from $660,000 on Oct. 20, according to data compiled by GFI Group Inc., a New York-based derivatives broker. A decline in price indicates improvement in the perception of credit quality; an increase suggests deterioration.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt.

Ford Credit said its net income fell to $262 million from $577 million a year earlier. The unit's earnings exceeded losses at Ford's auto operations last year, keeping the parent company profitable.

Ford's European auto unit had a pretax loss of $13 million compared with a $55 million loss in 2005's third quarter. Premier Automotive Group, which includes Jaguar and Land Rover, saw its pretax loss widen to $593 million from $108 million a year ago; Ford's Asia Pacific and African unit had a pretax loss of $56 million compared with a year-ago $21 million profit.

Profit in South America

The company's South American auto operations generated a third-quarter pretax profit of $222 million, up from $96 million during the same period in 2005.

Ford's North American auto unit has relied on sales of pickup trucks and sport-utility vehicles for profits. With those sales sliding, the automaker's total U.S. sales of cars and light trucks dropped 17 percent during the quarter. Slides in pickup and SUV sales were steeper.

Falling sales and production cuts provided the backdrop for Ford's announcement in September it would finish shedding 30,000 factory jobs by 2008, four years sooner than the target it set in January. As part of that, Ford is offering buyouts to all 75,000 U.S. factory employees.

New Chief

Ford's leadership changed hands during the third quarter, as Chairman William Clay Ford Jr., 49, yielded the CEO title to Mulally, a former Boeing Co. executive, effective Sept. 1. Mulally, 61, started full time as CEO this month after shuttling between Ford and Boeing in September.

Mulally said he's still reviewing the status of Jaguar and Land Rover. Leclair said the company has no plans to sell a stake in Ford Credit. General Motors Corp. is selling a 51 percent stake in its General Motors Acceptance Corp. unit, GM's equivalent of Ford Credit, to a group of investors.

Mulally also said he has no plans to form an alliance with another automaker. GM this month rejected a proposed tie-up with Renault SA and Nissan Motor Co.

Ford's 7.45 percent note due in July 2031 fell less than one quarter of a cent to 76.5 cents on the dollar, yielding 10 percent, according to Trace, the NASD's bond-price reporting service.

To contact the reporter on this story: Bill Koenig in Dearborn, Michigan, at wkoenig@bloomberg.net

Last Updated: October 23, 2006 18:28 EDT