Ford Motor said today that there were several large special items that it intends to report in early February as part of the company’s fourth-quarter and full-year 2021 financial results. Special items are included in Ford’s reported GAAP net income and earnings per share but are excluded from its non-GAAP adjusted earnings before interest and taxes and adjusted EPS.
Ford is warning shareholders and the capital markets that the $8.2 billion it earned from its Rivian investment after the public offering will not be included in Ford’s full-year adjusted EBIT or adjusted EPS. When Ford last provided full-year adjusted EBIT guidance with its Q3 results on Oct. 27, a ~$900 million gain was included in the forecast range of $10.5 billion to $11.5 billion.
On a preliminary basis, the special items are expected to include:
- A fourth-quarter gain of $8.2 billion on Ford’s equity investment in Rivian, following Rivian’s Nov. 10 initial public offering of common stock and a mark-to-market revaluation of the holdings.
Additionally, Ford will reclassify its ~$900 million first-quarter 2021 non-cash gain on the Rivian investment as a special item – a step Ford said in October it would take after Rivian’s IPO.
The reclassification means the gain from first-quarter 2021 will not be included in Ford’s full-year adjusted EBIT or adjusted EPS. When Ford last provided full-year adjusted EBIT guidance with its third-quarter results on Oct. 27, the ~$900 million gain was included in the forecast range of $10.5 billion to $11.5 billion.
Going forward, mark-to-market revaluations to account for changes in Rivian’s stock price could result in related gains or losses each quarter reported as special items.
- An annual revaluation of Ford’s global pension and other post-retirement employee benefits – resulting in a non-cash, pre-tax accounting re-measurement gain of about $3.5 billion in the fourth quarter and about $3.9 billion for the full year. Overall, the re-measurement gain is mostly attributable to higher discount rates and asset returns.
- Recording about $1.7 billion in costs associated with Ford repurchasing and redeeming more than $7.6 billion in high-cost debt in the fourth quarter. The repurchases and redemptions were made to further strengthen the company’s balance sheet and reduce ongoing interest expenses.
- Reporting a $3.6 billion tax special item – a non-cash benefit – primarily resulting from changes in Ford’s global tax structure and its effect on deferred tax assets.
Additional details on Ford’s fourth-quarter and full-year 2021 special items are available in a Form 8-K sent today to the U.S. Securities and Exchange Commission.