r LOCAL/STATE The Michigan Daily - Friday, January 18, 2002 - 5 Smooth jazz Ford's losses surpass $5 billion DEARBORN (AP) - After tucking away $4.1 billion in restructuring costs into last year's books, Ford Motor Co.'s chief financial officer says the automaker expects to break even in 2002 as a result of a major cost-cutting plan. "In 2002 we will realize $2 billion in pretax profit improvement from the revitalization plan," Ford CFO Martin Inglis said during a conference call yes- terday with financial analysts and reporters. After an expected loss in the first quarter of this year, Inglis said he expected the automaker would either break even or return to profitability by year's end. Ford posted a $5.07 billion loss in the fourth quar- ter of 2001, or $2.81 a share, mostly due to the $4.1 billion in costs related to its restructuring plan and an additional $102 million in accounting charges, the automaker reported yesterday. Excluding those costs, the automaker would have lost $860 million or 48 cents a share, beating Wall Street expectations. A consensus of analysts polled by Thomson/First Call estimated Ford would lose 50 cents a share excluding special costs. "It was the expected disaster. Ford is hemorrhag- ing red ink all over the place," said David Healy, an "It was the expected disaster. Ford is hemorrhaging red ink all over the place." - David Healy Analyst with Burnham Securities Inc. analyst with Burnham Securities Inc. The loss means there will be no profit-sharing checks for hourly workers. On Wednesday, hourly workers at General Motors Corp. were told they would not receive profit sharing checks this year because even though the automaker reported a profit for 2001, it did not meet financial goals. Inglis called 2001 a challenging year for the automaker, citing "unexpected" economic factors and the Firestone tire replacement program. During the October-December period in 2000, Ford earned $1.08 billion, or 57 cents a share, including special items, but not including earnings from its parts subsidiary, Visteon Corp., which it spun-off. For all of 2001 Ford lost $5.45 billion or $3.02 per share including the special charges, compared with earnings of $3.47 billion, or $2.30 a share in 2000. This was Ford's first losing year since 1992 when the world's second-largest automaker lost $7.4 billion. Excluding the charges, in 2001 Ford lost $782 million or 44 cents a share. Revenues for 2001 were $162.4 billion, down 5 percent from $170.1 billion a year ago. Inglis said while Ford gained .3 percent market share in the United States during the fourth quarter, the automaker's market share dropped almost 1 per- cent to 22.8 percent for the year. The automaker's worldwide automotive operations lost $803 million in the fourth quarter compared to a $762 million profit in the same period in 2000. In North America, Ford's automotive operations lost $916 million in the fourth quarter of 2001 com- pared to a profit of $740 million in 2000. ALYSSA WOOD/Daily The "Evil Jazz Quartet" performs last night at Leonardo's Cafe on North Campus, where they perform every Thursday. Kmart searches for respect with management shakeup Analysts say Troy-based company still appears headed toward declaring the biggest retail bankruptcy in history DETROIT (AP) - Charles Conaway, who was brought in to restructure the ailing Kmart Corp. in May 2000, was replaced as chairman yesterday but remains CEO in a man- agement shakeup some analysts say is an attempt to restore credibility to the retailer. Kmart named James B. Adamson, one of the Troy-based company's board of directors, the new chairman. Kmart president and chief operating officer Mark S. Schwartz, who joined the company in September 2000, has left the company, Kmart said. The new role for Adamson, who has experience with bank- rupt companies, comes amid speculation that the nation's No. 3 retailer could declare bankruptcy within days. "Conaway has lost respect outside the company, and what the board, is trying to do is earn back that respect by bringing Jim," said John Plummer, president of Plummer Associates, an executive recruiting firm based in Rowaton, Conn. "Jim has bankruptcy experience, and he is also the kind of guy who can get Kmart through public relations troubles." Adamson, who joined Advantica in 1995 as president and CEO, helped spearhead the company out of bankruptcy, industry observers said. He also played a significant role in getting back respect for Denny's, which was faced with a number of racial discriminatory claims a few years ago. Kurt Barnard, president of Barnard's Retail Trend Report, based in Montclair, N.J., sees hiring Adamson as a sign that the retailer probably will file for bankruptcy. "Conaway will now be able to devote his entire time to run- ning the company, without getting involved in bankruptcy- issues"'Barnard said. The company's stock price saw a bit of a jump after the announcement. The stock closed at $1.79, up 19 cents from Wednesday's closing price of $1.60. It was the most heavily traded stock on the New York Stock Exchange, with nearly 82 million shares changing hands. Kmart's troubles picked up speed earlier this month after officials announced that 2001 results would break even at best because of disappointing holiday sales, and suggested they might seek additional.financing. The retailer's board of directors held a regularly scheduled meeting on Monday and Tuesday. Until yesterday's announce- ment, Kmart had refused to comment on its financial state. Details about the company's finances and future remained sketchy after the announcement. Jack Ferry, a Kmart spokesman, declined comment on the company's finances and the specific reason for Schwartz's departure. In its statement, Kmart said it continues to evaluate its finances and business plans for the 2002 and 2003 fiscal years. The company said it also is continuing discussjons with its lenders regarding existing and possible supplemental financ- ing facilities. "We appreciate the loyalty Kmart has received from our customers and the continuing support shown by many of our vendors and other business partners;' Conaway said. On Jan. 2, Prudential Securities Inc. said it would not be surprised if Kmart filed for Chapter 11 bankruptcy "if trends do not improve" in the next six months. The financial organi- zation downgraded the discount retailer's stock from "hold" to "sell." For the most part, industry experts have been able only to speculate about a Chapter 11 filing, which bankruptcy experts say would mark the biggest retail bankruptcy in history. 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