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January 20, 2022updated 21 Jan 2022 12:54pm

Ford to get $8.2bn windfall from Rivian stake

Regulatory filing reveals a big Ford gain from EV startup Rivian’s IPO and subsequent valuation.

By David Leggett

In a US regulatory filing, Ford has outlined 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.

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 November 10 2021 initial public offering of common stock and a mark-to-market revaluation of the holdings.
  • Additionally, Ford will reclassify its c.$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 remeasurement 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 to the U.S. Securities and Exchange Commission.  Ford plans to issue its fourth-quarter and full-year 2021 earnings release on Thursday, Feb. 3, 2022.

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