Friday, April 24, 2009

Ford's Intercompany Adjustment

Ford (F) announced Q1 results and made much of the fact that they are not needing government assistance. They have made some progress in reducing costs both fixed and labour. Volvo is on the block and has immediately generated a non cash impairment charge. But when you read Ford Motor Credit's press release you get an interesting insight into how some inter-company accounting comes into play. Read this quote from credit's press release

".....During the quarter, Ford Motor Credit used $1.1 billion of cash to purchase a portion of Ford Motor Company's senior secured term loan debt. Ford Motor Credit distributed the term loan debt to its immediate parent, Ford Holdings LLC, whereupon it was forgiven."

But wen you read Ford automotive release there is no mention of shedding $1.1 Billion of indebtedness. If you can do this legitimately why not make more stuff disappear?

Thursday, April 23, 2009

UPS & Editorial Adjustments

UPS (UPS) announced their quarterlies and recited the expected issues. Global recession, changing product mix, delivering to more businesses and zip codes than any other transportation provider (need this category better defined). When reading the press release we came upon an interesting category "Editors Note" The note started to give details of when the conference call will be, then threw in some cautionary language about forward looking statements and then went on to speak in some detail about impairment charges finishing up with language about GAAP and non-GAAP comparisons.

Gentlemen this is not an Editors note. You do not sneak in detail about impairment charges as an editors note. You do not include the high level details such as these as editors notes.

Wednesday, April 22, 2009

Boeing Needs Scrutiny

Boeing (BA) announced results and a few items need to be taken with a grain of salt. Boeing Chairman, President, and Chief Executive Officer Jim McNerney says "we are making progress toward our milestones on the 787 and other important programs." Later the press release goes on to inform investors that "the program saw orders for 32 airplanes cancelled by mutual agreement with customers during the quarter. Total firm orders are now 886 airplanes from 57 customers." Progress, order cancellations and a gnaw at the bones angst about the program still exist. The press releases speak to the first few milestones of testing but the program is still untested. Its all in the nuance about this one.

Speaking of nuance under Segment Results for commercial they speak to the margins which are shrinking. They slip in an interesting term in this sentence "That impact, somewhat offset by a refinement in cost estimates, resulted in the charge of $347 million," What is a refinement in cost estimates? Refining means to take out impurities. They have soft pedalled an increase in costs and want investors to believe something has been refined.

Tuesday, April 21, 2009

Lockheed Martin Claims To Balance Cash!

Lockheed Martin (LMT) announced earnings and included an interesting provision in their earnings release. They had a balanced Cash Deployment Strategy which they claim to be continuing into 2009. No explanation or description as to where the strategy is and how well execution is going. The strategy for deploying cash consists or several categories which may be in conflict with each other. They pay dividends, spend money on capital expenditures, make acquisitions and yes of course repurchase the companies stock on the open market. They claim this is a strategy.

Investors would like to see what the strategy actually entails once you get past the conceptual smoke screen.

Monday, April 20, 2009

China Sky One Medical Attracts Skepticism

China Sky One Medical (CSKI) has attracted some serious skepticism from Asensio. He has issued two negative reports taking issue with the accuracy of financial statements. Once you do not believe the numbers what is there to believe in? China Sky has had problems filing a good 10-K because of non cash issues relating to escrowed shares.

The investor relations firm that China Sky uses is an outfit called CCG. Started by Crocker Coulsen with offices in New York, London, Los Angeles and a client list from all over the world. Looking at CCG's web site you find the very interesting sentence.

"Our offices in New York, Los Angeles and Hong Kong have established partnerships with local investment institutions." What kind of partnerships are we touting here? Which financial institutions agree to partner with an investor relations firm? Just how do these things work? Anyone?

Sunday, April 19, 2009

President Obama & Cuban Cigars

It just occurred to me that if President Obama opens up relations with Cuba and eventually normalizes them the American citizen will be able to legally buy Cuban cigars. This sudden increase in demand will of course drive the price up. So if you can, go long Cuban Cigars. The question is how?