3rd Quarter Results
Ford Motor Co
16 October 2002
Contact: FORD EXCEEDS ESTIMATES FOR THIRD QUARTER, REPORTS OPERATING PROFIT
Media:
David Reuter • Third quarter profit of 12 cents per share, excluding unusual items, beats consensus estimate
1.313.594.4410 by 9 cents per share
dreuter@ford.com • Operating profit, revenue and unit sales all rise from year ago levels
• Automotive gross cash at $25.7 billion, up $800 million from last quarter
Securities • Expect slight profit for fourth quarter and a full year profit of about 40 cents per share -
Analysts: within the range of analysts' estimates of 35 to 55 cents per share
Anne Bork
1.313.323.8221 DEARBORN, Mich., Oct. 16 - Ford Motor Company (NYSE: F) today reported a net loss of $326 million, or
abork@ford.com 18 cents per share, in the third quarter of 2002. Excluding charges related to the sale of Kwik-Fit
and other unusual items, Ford earned an operating profit of $220 million, or 12 cents per share. Ford
Shareholder reported a loss of $502 million, or 28 cents per share, excluding unusual items, in the third quarter
Inquiries: of 2001.
1.800.555.5259 or
1.313.845.8540 Ford's third quarter revenues were $39.6 billion, a nine percent increase from last year's third
stockinf@ford.com quarter. Worldwide vehicle sales in the 2002 third quarter were 1,657,000 units - also up nine
percent over the previous year's quarter.
Media Information
Center 'The fundamentals of our business are improving, as evidenced by increases in our revenue and vehicle
1.800.665.1515 or sales, improvements in our market share and tangible progress on cost efficiencies,' said Bill Ford,
1.313.621.0504 chairman and CEO. 'While we are pleased with our progress, we continue our work with a strong sense
media@ford.com of urgency to restore our business to its full profit potential.'
The company's Revitalization Plan advanced on multiple fronts this quarter, including progress in the
areas of right-sizing capacity and overhead reductions. These improvements, along with numerous other
cost improvement actions already identified, are being implemented across the company to reduce $2
billion in non-product costs in 2002. In addition, the company is on track to offset all product cost
increases and reduce its material costs by $3 billion by mid-decade.
The sale of Kwik-Fit, a European maintenance and light vehicle repair business, and Collision Team of
America, a U.S.-based chain of collision repair shops, improved the total cash to be realized on the
sale of non-core assets to more than $700 million in 2002. The company continues to expect to realize
$1 billion in cash from the divestiture of non-core assets in 2002, with some of the proceeds to be
received in the first quarter of next year.
'Our Revitalization Plan is like a bridge from our current challenges to a much stronger future for
the Ford Motor Company,' said Nick Scheele, Ford president and chief operating officer. 'Our plan is
stronger now than at any time this year, and I anticipate that it will only continue to improve in
the coming months.'
In addition to progress on key aspects of the Revitalization Plan, the company is focusing on growth
plans for the premium brands - Jaguar, Volvo, Land Rover and Aston Martin. In the past 18 months,
Ford's premium brands have experienced rapid growth. The company is reassessing their sustainable
rate of growth and the appropriate cadence of new products to ensure that brand value is protected
and product execution is not jeopardized.
'Our premium brand strategy has created some outstanding new products in the past two years and has
brought an entirely new set of customers to our luxury car showrooms,' said Scheele. 'Our focus in
the future will center on capturing the full potential of this growth while strengthening the
integrity of our premium brands.'
Third quarter 2002 results included the following after-tax, unusual items:
• $525 million loss on the agreement to sell Kwik-Fit and other businesses
• $142 million benefit related to interest income earned on a U.S. federal tax refund
• $158 million charge relating to the accounting standard for derivative instruments and hedging
activities (SFAS No. 133)
• $5 million charge for the projected costs related to legislation passed in the third quarter in
selected countries to implement a European Parliament directive involving end-of-life vehicles
The following discussion of third quarter results excludes unusual items in both years:
AUTOMOTIVE OPERATIONS
Worldwide automotive operations reported a loss of $243 million in the third quarter, compared with a
loss of $877 million one year ago. Worldwide automotive revenues were $32.4 billion, compared with
$28.4 billion a year ago.
Automotive gross cash at Sept. 30 totaled $25.7 billion, including $900 million of pre-funding
employee benefit expenses through a Voluntary Employee Beneficiary Association trust.
North America: Ford posted a loss of $50 million in North America in the third quarter, compared with
a loss of $849 million one year ago. Higher unit volume, favorable net revenue and positive net cost
performance largely accounted for the improvement.
Europe: In Europe, Ford lost $121 million compared with a loss of $24 million a year ago. The decline
was largely due to higher marketing at Jaguar and Volvo and increased product costs at Jaguar.
South America: Ford operations in South America reported a loss of $138 million, compared with a loss
of $56 million a year ago. Unfavorable exchange rates more than offset improved cost performance.
Economic and industry conditions in the region remain very difficult.
Rest-of-World: Operations in the rest of the world earned a profit of $66 million, compared with a
profit of $52 million a year ago. The increase primarily reflects improvements at Mazda.
FORD CREDIT
Ford Credit earned $408 million in the third quarter, up $19 million from earnings of $389 million in
the same period a year earlier. The improvement is more than accounted for by lower provisions for
credit losses. Ford Credit's profit was up $65 million from the second quarter, reflecting improved
net financing margins and the favorable impact of securitization transactions, offset partially by a
higher provision for credit losses.
HERTZ
Hertz reported a third quarter profit of $106 million, up from last year's $26 million profit in the
third quarter. The continued recovery of business and leisure travel is the principal reason for the
increase.
OUTLOOK
'Our results have been better than we expected each quarter this year, causing us to remain
cautiously optimistic as we move into the fourth quarter,' said Allan Gilmour, Ford vice chairman and
chief financial officer. 'Many of our efforts to increase efficiency and improve our profitability
are beginning to take hold, and we are projecting a slight profit for the fourth quarter and a full
year profit of about 40 cents per share - within the range of analysts' estimates of 35 to 55 cents
per share.'
Investors can access a review of third quarter results by Allan Gilmour, vice chairman and chief
financial officer, and an update on the status of the company's Revitalization Plan by Bill Ford,
chairman and chief executive officer, and Nick Scheele, President and COO, by dialing 703-736-7227.
The teleconference will also be Web cast on the Internet at http://www.shareholder.ford.com, http://
www.streetevents.com (subscribers only) or http://www.companyboardroom.com. The presentation will
start at 9 a.m. EDT, Oct. 16.
Ford Motor Company (NYSE: F) is the world's second largest automaker, with approximately 335,000
employees in 200 markets on six continents. Its automotive brands include Aston Martin, Ford, Jaguar,
Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Credit,
Hertz and Quality Care. The company's world headquarters are in Dearborn, Michigan. Ford Motor
Company will officially observe its 100th anniversary on June 16, 2003. Additional information can be
found on the company's web site at www.ford.com.
###
Statements included herein may constitute 'forward looking statements' within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements involve a number of risks,
uncertainties, and other factors that could cause actual results to differ materially from those
stated, including, without limitation: greater price competition in the U.S. and Europe resulting
from currency fluctuations, industry overcapacity or other factors; a significant decline in industry
sales, particularly in the U.S. or Europe, resulting from slowing economic growth or other factors;
lower-than-anticipated market acceptance of new or existing products; currency or commodity price
fluctuations; economic difficulties in South America or Asia; reduced availability of or higher
prices for fuel; a market shift from truck sales in the U.S.; lower-than-anticipated residual values
for leased vehicles; a credit rating downgrade; labor or other constraints on our ability to
restructure our business; increased safety, emissions, fuel economy or other regulation resulting in
higher costs and/or sales restrictions; work stoppages at key Ford or supplier facilities or other
interruptions of supplies; the discovery of defects in vehicles resulting in delays in new model
launches, recall campaigns or increased warranty or litigation costs; insufficient credit loss
reserves; and our inability to implement the Revitalization Plan.
Ford Motor Company
SELECTED CONSOLIDATED DETAIL
2002 Compared with 2001
Third Quarter First Nine Months
2002 2001 2002 2001
(unaudited) (unaudited)
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- North America 1,060 933 3,338 3,178
- Outside North America 597 589 1,853 2,005
Total 1,657 1,522 5,191 5,183
Sales and revenues (Mils.)
- Automotive $ 32,445 $ 28,451 $ 99,971 $ 97,377
- Financial Services 7,135 7,873 21,765 23,253
Total $ 39,580 $ 36,324 $121,736 $120,630
Net income (Mils.)
- Automotive $ (675) $ (1,054) $ (805) $ (1,559)
- Financial Services 349 362 957 1,174
Income/(loss) before cumulative effect of
change in accounting principle (326) (692) 152 (385)
- Cumulative effect of change in
accounting principle - - (1,002) -
Total net income/(loss) $ (326) $ (692) $ (850) $ (385)
Adjusted net income/(loss) before cumulative
effect of change in accounting principle
(Mils.) a/ $ 220 $ (502) $ 722 $ 78
Unusual items (Mils.)
- Interest Income on U.S. federal tax refund $ 142 $ - $ 142 $ -
- Kwik-Fit and other held for sale entities (525) - (525) -
- SFAS 133 (158) 9 (141) (150)
- End-of-life vehicle legislation (5) - (46) -
- E-commerce and Automotive-related ventures - (199) - (199)
- Mazda restructuring actions - - - (114)
Capital expenditures (Mils.)
- Automotive $ 1,697 $ 1,408 $ 4,635 $ 3,994
- Financial Services 152 199 452 428
Total $ 1,849 $ 1,607 $ 5,087 $ 4,422
Automotive capital expenditures as a
percentage of sales 5.2% 4.9% 4.6% 4.1%
Automotive net cash at September 30 (Mils.)
- Cash and marketable securities $ 24,819 $ 13,002 $ 24,819 $ 13,002
- VEBA 888 2,213 888 2,213
Gross cash including VEBA 25,707 15,215 25,707 15,215
- Debt 13,813 12,087 13,813 12,087
Automotive net cash including VEBA $ 11,894 $ 3,128 $ 11,894 $ 3,128
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Income assuming dilution
- Automotive $ (0.37) $ (0.59) $ (0.44) $ (0.87)
- Financial Services 0.19 0.20 0.52 0.65
Subtotal (0.18) (0.39) 0.08 (0.22)
- Cumulative effect of change in
accounting principle - - (0.55) -
Total $ (0.18) $ (0.39) $ (0.47) $ (0.22)
Adjusted net income/(loss) before cumulative
effect of change in accounting principle a/ $ 0.12 $ (0.28) $ 0.39 $ 0.04
Unusual items
- Interest Income on U.S. federal tax refund $ 0.08 $ - $ 0.08 $ -
- Kwik-Fit and other held-for-sale entities (0.29) - (0.29) -
- SFAS No. 133 (0.09) - (0.08) (0.08)
- End-of-life vehicle legislation - - (0.02) -
- E-commerce and Automotive-related ventures - (0.11) - (0.11)
- Mazda restructuring actions - - - (0.07)
a/ Excludes unusual items disclosed by the Company
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
2002 Compared with 2001
(in thousands)
Third Quarter First Nine Months
2002 2001 2002 2001
North America
United States
Cars 348 286 1,119 1,046
Trucks 615 561 1,893 1,853
Total United States 963 847 3,012 2,899
Canada 57 46 205 166
Mexico 40 40 121 113
Total North America 1,060 933 3,338 3,178
Europe
Britain 132 149 444 493
Germany 67 72 241 289
Italy 49 47 160 174
France 34 36 98 118
Spain 35 43 125 136
Sweden 39 26 105 90
Other countries 98 87 276 309
Total Europe 454 460 1,449 1,608
South America
Brazil 41 24 104 99
Argentina 8 8 19 23
Other countries 4 12 19 30
Total South America 53 44 142 152
Other international
Australia 28 29 85 85
Taiwan 16 14 51 43
Other countries 46 42 126 117
Total other international 90 85 262 245
Total worldwide vehicle unit sales 1,657 1,522 5,191 5,183
Vehicle unit sales generally are reported worldwide on a 'where sold' basis and
include sales of all Ford-badged units, as well as units manufactured by Ford
and sold to other manufacturers.
Third quarter 2001 units have been adjusted to amend unit sales reported.
Excludes SFAS 133 Effect,
& Unusual Items
Ford Motor Company
AUTOMOTIVE GEOGRAPHIC AND COST OF SALES DETAIL
2002 Compared With 2001
GEOGRAPHIC DATA
3rd Quarter Nine Months
02 B/(W) 02 B/(W)
2002 2001 Than 01 2002 2001 Than 01
PBT (Mils.)
U.S. $23 ($1,351) $1,374 ($459) ($2,259) $1,800
Canada/Mexico (19) 55 (74) 13 374 (361)
North America $4 ($1,296) $1,300 ($446) ($1,885) $1,439
Europe (188) (30) (158) 220 320 (100)
South America (211) (86) (125) (431) (276) (155)
Rest of World 105 80 25 346 123 223
Worldwide ($290) ($1,332) $1,042 ($311) ($1,718) $1,407
Net Income (Mils.)
U.S. ($37) ($872) $835 ($438) ($1,462) $1,024
Canada/Mexico (13) 23 (36) 3 224 (221)
North America ($50) ($849) $799 ($435) ($1,238) $803
Europe (121) (24) (97) 151 205 (54)
South America (138) (56) (82) (285) (179) (106)
Rest of World 66 52 14 221 58 163
Worldwide ($243) ($877) $634 ($348) ($1,154) $806
Sales (Mils.)
U.S. $21,059 $18,251 $2,808 $65,348 $62,920 $2,428
Canada/Mexico 1,710 1,516 194 5,635 4,769 866
North America $22,769 $19,767 $3,002 $70,983 $67,689 $3,294
Europe 7,549 6,705 844 22,899 23,469 ( 570)
South America 406 518 (112) 1,264 1,763 (499)
Rest of World 1,721 1,461 260 4,825 4,456 369
Worldwide $32,445 $28,451 $3,994 $99,971 $97,377 $2,594
COST OF SALES 3rd Quarter Nine Months
02 B/(W) 02 B/(W)
2002 2001 Than 01 2002 2001 Than 01
(Mils) (Mils) (Mils) (Mils) (Mils) (Mils)
Total Costs and Expenses $32,543 $29,546 $(2,997) $99,595 $98,408 $(1,187)
Less: Depreciation 646 632 (14) 1,869 1,989 120
Amortization 580 482 (98) 1,803 1,832 29
Selling and Admin. 2,418 2,276 (142) 7,024 7,025 1
Postretirement Exp. 501 358 (143) 1,561 1,086 (475)
Net Cost of Sales $28,398 $25,798 ($2,600) $87,338 $86,476 $(862)
Memo: Gross Margin 12.5% 9.3% 3.1 pts 12.6% 11.2% 1.4 pts
Ford Motor Company
THIRD QUARTER 2002 DATA SHEET
2002 Compared with 2001
2002 2002 2001
2nd Qtr 3rd Qtr 3rd Qtr Full Year
Market Share Data (%)
U.S.
Car 16.7% 16.6% 17.1% 17.7%
Truck 25.7% 25.7% 27.1% 27.4%
Total 21.3% 21.3% 22.1% 22.8%
Europe
Car 11.3% 11.4% 11.2% 11.0%
Truck 7.7% 8.3% 9.0% 8.6%
Total 10.8% 11.0% 10.9% 10.7%
U.S. Total Marketing Costs (Ford/LM)
-- Variable and Fixed
(% of Gross Revenue) 15.6% 15.9% 16.0% 14.7%
U.S. Sales Mix (Ford/LM)
Fleet Sales (% of Total) 28% 17% 17% 23%
Red Carpet Lease (% of Total) 13% 8% 18% 15%
Red Carpet Lease (% of Retail) 18% 10% 22% 20%
U.S. Inventory (Days' Supply) (Ford/LM)
Car 64 67 48 63
Truck 68 65 70 60
Average 67 65 62 61
Avg. Portfolio Borrowing Rate
Ford Credit (%) 5.1% 5.1% 5.9% 6.1%
Worldwide Taxes
Effective Tax Rate 32.5% 32.7% a/ 32.5% 32.5%
Common and Class B
Shares Outstanding (Mils.)
Average - actual 1,813 1,822 1,812 1,820
Average - assuming full dilution 2,112 1,820 1,806 1,810
Period ended - actual 1,816 1,823 1,811 1,809
Common Stock price (per share)
High $18.23 $15.76 $25.76 $31.46
Low 14.88 9.34 15.34 14.93
Cash Dividends (per share) $0.10 $0.10 $0.30 $1.05
a/ Includes dividends from Ford Motor Capital Trust and excludes unusual items
Ford Motor Company
2002 NORTH AMERICAN AND OVERSEAS PRODUCTION
2002 Actual 2002 Planned
First Second Third Fourth
Quarter Quarter Quarter Quarter
(000) (000) (000) (000)
North American Production and Imports*
Car 392 426 316 310
Truck 660 749 635 655
North American Production 1,052 1,175 951 965
Imports (Volvo, Jaguar, Land Rover, Fiesta) 63 73 80 76
Total North America (Incl. Imports) 1,115 1,248 1,031 1,041
Overseas Vehicle Production 612 666 593 716
Ford Worldwide 1,727 1,914 1,624 1,757
Over/(Under) Prior
North America
Units:
. Forecast 0 0 9 10
. Quarter 21 133 (217) 10
. Year (13) 47 163 (53)
Percentage:
. Forecast 0% 0% 1% 1%
. Quarter 2% 12% (17)% 1%
. Year (1)% 4% 19% (5)%
Overseas
Units:
. Forecast 0 0 (39) 0
. Quarter (57) 54 (73) 123
. Year (87) (50) 13 47
Percentage:
. Forecast 0% 0 (6)% 0%
. Quarter (9)% 9% (11)% 21%
. Year (12)% (7)% 2% 7%
Worldwide
Units:
. Forecast 0 0 (30) 10
. Quarter (36) 187 (290) 133
. Year (100) (3) 176 (6)
Percentage:
. Forecast 0% 0% (2)% 1%
. Quarter (2)% 11% (15)% 8%
. Year (5)% (0)% 12% (0)%
- - -
* Includes units produced for other manufacturers (e.g. Mazda and Nissan).
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended September 30, 2002 and 2001
(in millions)
Third Quarter Nine Months
2002 2001 2002 2001
(unaudited) (unaudited)
AUTOMOTIVE
Sales $32,445 $28,451 $ 99,971 $97,377
Costs and expenses (Note 2)
Cost of sales (Note 3) 30,712 27,193 93,073 91,380
Selling, administrative and other expenses 2,475 2,342 7,204 7,184
Total costs and expenses 33,187 29,535 100,277 98,564
Operating income/(loss) (742) (1,084) (306) (1,187)
Interest income 378 144 662 617
Interest expense 342 308 1,041 1,005
Net interest income/(expense) 36 (164) (379) (388)
Equity in net loss of affiliated companies (17) (346) (97) (686)
Income/(loss) before income taxes - Automotive (723) (1,594) (782) (2,261)
FINANCIAL SERVICES
Revenues (Note 3) 7,135 7,873 21,765 23,253
Costs and expenses
Interest expense 1,876 2,287 5,763 7,331
Depreciation 2,655 2,680 7,968 7,873
Operating and other expenses 1,229 1,401 3,967 4,002
Provision for credit and insurance losses 794 879 2,526 2,137
Total costs and expenses 6,554 7,247 20,224 21,343
Income/(loss) before income taxes - Financial Services 581 626 1,541 1,910
TOTAL COMPANY
Income/(loss) before income taxes (142) (968) 759 (351)
Provision/(benefit) for income taxes 68 (285) 324 2
Income/(loss) before minority interests (210) (683) 435 (353)
Minority interests in net income of subsidiaries 116 9 283 32
Income/(loss) before cumulative effect of change in
accounting principle (326) (692) 152 (385)
Cumulative effect of change in accounting
principle (Note 4) - - (1,002) -
Net income/(loss) $ (326) $ (692) $ (850) $ (385)
Income/(loss) attributable to Common and Class B
Stock after preferred stock dividends $ (330) $ (696) $ (861) $ (396)
Average number of shares of Common and Class B
Stock outstanding 1,822 1,812 1,814 1,823
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Note 5)
Basic Income
Income/(loss) before cumulative effect of change
in accounting principle $ (0.18) $ (0.39) $ 0.08 $ (0.22)
Cumulative effect of change in accounting principle - - (0.55) -
Net income/(loss) $ (0.18) $ (0.39) $ (0.47) $ (0.22)
Diluted Income
Income/(loss) before cumulative effect of change
in accounting principle $ (0.18) $ (0.39) $ 0.08 $ (0.22)
Cumulative effect of change in accounting principle - - (0.55) -
Net income/(loss) $ (0.18) $ (0.39) $ (0.47) $ (0.22)
Cash dividends $ 0.10 $ 0.30 $ 0.30 $ 0.90
The accompanying notes are part of the financial statements.
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
September 30, December 31,
2002 2001
ASSETS (unaudited)
Automotive
Cash and cash equivalents $ 8,682 $ 4,079
Marketable securities 16,137 10,949
Total cash and marketable securities 24,819 15,028
Receivables, net 2,070 2,214
Inventories (Note 6) 7,504 6,191
Deferred income taxes 2,596 2,595
Other current assets 3,929 6,155
Current receivable from Financial Services 1,904 938
Total current assets 42,822 33,121
Equity in net assets of affiliated companies 2,434 2,450
Net property 35,172 33,121
Deferred income taxes 7,670 5,996
Goodwill (Note 4) 4,645 5,283
Other intangible assets (Note 4) 796 1,194
Other assets 6,573 7,154
Total Automotive assets 100,112 88,319
Financial Services
Cash and cash equivalents 7,391 3,139
Investments in securities 675 628
Finance receivables, net 104,551 110,358
Net investment in operating leases 44,329 47,262
Retained interest in sold receivables 9,675 12,548
Goodwill (Note 4) 798 1,088
Other intangible assets (Note 4) 251 265
Other assets 14,202 9,224
Receivable from Automotive 3,712 3,712
Total Financial Services assets 185,584 188,224
Total assets $285,696 $276,543
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 16,444 $ 15,677
Other payables 2,688 4,227
Accrued liabilities 26,021 24,340
Debt payable within one year 209 302
Total current liabilities 45,362 44,546
Long-term debt 13,604 13,492
Other liabilities 35,865 30,868
Deferred income taxes 457 362
Payable to Financial Services 3,712 3,712
Total Automotive liabilities 99,000 92,980
Financial Services
Payables 2,032 1,595
Debt 148,393 153,543
Deferred income taxes 10,324 9,703
Other liabilities and deferred income 8,403 9,326
Payable to Automotive 1,904 938
Total Financial Services liabilities 171,056 175,105
Company-obligated mandatorily redeemable preferred and mandatorily
redeemable convertible preferred securities of subsidiary trusts
holding solely junior subordinated debentures of the Company (Note 7) 5,670 672
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate liquidation
preference of $177 million) * *
Common Stock, par value $0.01 per share (1,837 million shares issued) 18 18
Class B Stock, par value $0.01 per share (71 million shares issued) 1 1
Capital in excess of par value of stock 5,699 6,001
Accumulated other comprehensive income/(loss) (Notes 3 and 8) (2,524) (5,913)
Treasury stock (2,320) (2,823)
Earnings retained for use in business 9,096 10,502
Total stockholders' equity 9,970 7,786
Total liabilities and stockholders' equity $285,696 $276,543
* Less than $1 million
The accompanying notes are part of the financial statements.
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended September 30, 2002 and 2001
(in millions)
Nine Months 2002 Nine Months 2001
Automotive Financial Automotive Financial
Services Services
(unaudited) (unaudited)
Cash and cash equivalents at January 1 $ 4,079 $ 3,139 $ 3,374 $ 1,477
Cash flows from operating activities before
securities trading 10,911 12,130 5,481 11,123
Net sales/(purchases) of trading securities (4,698) (53) 5,274 109
Net cash flows from operating activities 6,213 12,077 10,755 11,232
Cash flows from investing activities
Capital expenditures (4,635) (452) (3,994) (428)
Acquisitions of receivables and lease investments - (61,334) - (67,695)
Collections of receivables and lease investments - 38,409 - 35,250
Net acquisitions of daily rental vehicles - (1,658) - (1,864)
Purchases of securities (1,460) (423) (11,793) (566)
Sales and maturities of securities 1,232 390 13,061 615
Proceeds from sales of receivables and lease investments - 28,237 - 29,515
Net investing activity with Financial Services 409 - 116 -
Cash paid for acquisitions (94) - (1,935) (743)
Other - 690 375 (111)
Net cash (used in)/provided by investing activities (4,548) 3,859 (4,170) (6,027)
Cash flows from financing activities
Cash dividends (555) - (1,654) -
Net sales/(purchases) of Common Stock 196 - (1,347) -
Proceeds from mandatorily redeemable convertible
preferred securities (Note 7) 4,900 - - -
Changes in short-term debt (123) (13,346) (2) (12,506)
Proceeds from issuance of other debt 281 14,014 386 31,123
Principal payments on other debt (761) (13,190) (1,066) (20,675)
Net financing activity with Automotive - (409) - (116)
Other (20) 74 174 (212)
Net cash (used in)/provided by financing activities 3,918 (12,857) (3,509) (2,386)
Effect of exchange rate changes on cash (14) 207 (95) (13)
Net transactions with Automotive/Financial Services (966) 966 (228) 228
Net increase in cash and cash equivalents 4,603 4,252 2,753 3,034
Cash and cash equivalents at September 30 $ 8,682 $ 7,391 $ 6,127 $ 4,511
The accompanying notes are part of the financial statements.
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements - The financial data presented herein are unaudited,
but in the opinion of management reflect those adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of such
information. Results for interim periods should not be considered indicative of
results for a full year. Reference should be made to the financial statements
contained in the registrant's Annual Report on Form 10-K (the '10-K Report') for
the year ended December 31, 2001. For purposes of this report, 'Ford', the
'Company', 'we', 'our', 'us' or similar references means Ford Motor Company and
its majority-owned subsidiaries unless the context requires otherwise. Certain
amounts for prior periods were reclassified to conform with current period
presentation.
2. Selected Automotive Costs and Expenses are summarized as follows (in
millions):
Third Quarter Nine Months
2002 2001 2002 2001
Depreciation $ 646 $ 632 $1,869 $1,989
Amortization of special tools 580 482 1,803 1,832
Postretirement expense 501 358 1,561 1,086
3. Derivative Instruments and Hedges - Ford adopted Statement of Financial
Accounting Standards ('SFAS') No. 133 on January 1, 2001. For further
discussion on SFAS No. 133, refer to Note 14 in the 10-K Report. Non-cash
benefits/(charges) recorded to income and to stockholders' equity for the third
quarter of 2002 and 2001 were (in millions):
Third Quarter 2002 Third Quarter 2001
Financial Total Financial Total
Automotive Services Company Automotive Services Company
Income/(loss) before income
taxes a/ $(67) $(182) $ (249) $33 $(20) $ 13
Net income/(loss) (44) (114) (158) 22 (13) 9
Stockholders' equity b/ 94 201
- - - - -
a/ Automotive recorded in cost of sales; Financial Services recorded in revenues.
b/ Recorded in accumulated other comprehensive income.
4. Goodwill and Other Intangibles - Effective January 1, 2002, Ford adopted
SFAS No. 142, which eliminates amortization of goodwill and certain other
intangible assets, but requires annual testing for impairment (comparison of
estimated fair value to carrying value). Fair value is estimated using the
present value of expected future cash flows and other valuation measures. The
Automotive sector completed the transitional impairment test in the first
quarter of 2002 and the Financial Services sector completed the transitional
impairment test in the second quarter of 2002. After-tax, non-cash transition
charges of $708 million and $294 million were taken in the Automotive and
Financial Services sectors, respectively.
If SFAS No. 142 had been in effect in 2001, Company earnings would have been
improved because of reduced amortization, as described below:
Third Quarter 2001 Nine Months 2001
Net Income/ Basic Diluted Net Income/ Basic Diluted
(loss) Earnings Earnings (loss) Earnings Earnings
(millions) Per Share Per Share (millions) Per Share Per Share
Reported net loss $(692) $(0.39) $(0.39) $(385) $(0.22) $(0.22)
Add: amortization 64 * 0.04 0.04 192 ** 0.11 0.11
Adjusted net loss $(628) $(0.35) $(0.35) $(193) $(0.11) $(0.11)
- - - - -
* $56 million Automotive and $8 million Financial Services
** $168 million Automotive and $24 million Financial Services
Effective July 1, 2001, Ford adopted SFAS No. 141 which specifies the types of
acquired intangible assets to be reported separately from goodwill and those to
be included in goodwill. Certain Company intangible assets, primarily acquired
distribution networks and technology, continue to be amortized over their useful
lives, with no significant residual value.
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Changes to Automotive sector goodwill and other intangible assets were as
follows (in millions):
Goodwill Other Intangibles
Amortizable Non-amortizable
December 31, 2001 balance $ 5,283 $1,194 $ -
Transitional impairment (pre-tax) (1,041) - -
Tradenames reclassification - (618) 618
Workforce reclassification 126 (126) -
Currency translation 285 41 38
Amortization & other (8) (87) (264)
September 30, 2002 balance $ 4,645 $ 404 a/ $392
- - - - -
a/ Gross balance of $532 million, net of accumulated amortization and other adjustments of
$128 million.
Changes to Financial Services sector goodwill and other intangible assets were
as follows (in millions):
Goodwill Other Intangibles
Amortizable Non-amortizable
December 31, 2001 balance $1,088 $ 265 $ -
Transitional impairment (pre-tax) (294) - -
Tradename reclassification - (189) 189
Currency translation 5 2 -
Amortization & other (1) (16) -
September 30, 2002 balance $ 798 $ 62 a/ $189
- - - - -
a/ Gross balance of $102 million, net of accumulated amortization of $40
million.
In addition, equity in net assets of affiliated companies included goodwill of
$453 million and $465 million at September 30, 2002 and December 31, 2001,
respectively. Company pre-tax amortization expense for other intangible assets,
excluding goodwill, in the first nine months of 2002 and 2001 was $27 million
and $64 million, respectively; and in the third quarter of 2002 and 2001 was $7
million and $25 million, respectively. Intangible asset amortization is
forecasted to be about $15 million to $25 million per year for the next 5 years.
5. Income Per Share of Common and Class B Stock - The calculation of diluted
income per share of Common and Class B Stock takes into account the effect of
obligations, such as stock options and convertible securities, considered to be
potentially dilutive. Basic and diluted income per share were calculated using
the following (in millions):
Third Quarter Nine Months
2002 2001 2002 2001
Diluted Income
Income/(loss) attributable to Common and Class B
Stock after preferred stock dividends $(330) $(696) $(861) $ (396)
Diluted Shares
Average shares outstanding 1,822 1,812 1,814 1,823
Issuable and uncommitted ESOP shares (1) (5) (1) (8)
Basic shares 1,821 1,807 1,813 1,815
Contingently issuable shares (1) (1) - (1)
Net dilutive effect of options - * - * 13 - *
Diluted shares 1,820 1,806 ** 1,826 1,814 **
- - - - -
* Not included in calculation of diluted earnings per share due to the antidilutive
effect - 8 million potential shares related to options in third quarter 2002; 26 million in third
Quarter 2001; and 34 million in the first nine months of 2001.
** Diluted earnings per share has been corrected to exclude the antidilutive effect of stock
options and contingently issuable shares.
6. Inventories - Automotive inventories are summarized as follows (in millions):
September 30, December 31,
2002 2001
Raw materials, work in process and supplies $3,158 $2,436
Finished products 5,313 4,660
Total inventories at FIFO 8,471 7,096
Less LIFO adjustment (967) (905)
Total inventories $7,504 $6,191
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
(unaudited)
7. Company-Obligated Mandatorily Redeemable Preferred and Mandatorily
Redeemable Convertible Preferred Securities of Subsidiary Trusts - The sole
assets of Ford Motor Company Capital Trust I ('Trust I'), which is the obligor
on the preferred securities of Trust I issued in 1995, are $632 million
principal amount of 9% Junior Subordinated Debentures due 2025 of Ford Motor
Company.
In January 2002, Ford Motor Company Capital Trust II, a subsidiary trust of the
Company ('Trust II'), issued 100 million shares of 6.5% Cumulative Convertible
Trust Preferred Securities, each with a liquidation preference of $50 per share.
At the option of the holder, each preferred security is convertible at any
time on or before January 15, 2032 into shares of Ford Common Stock at a rate of
2.8249 shares for each preferred security. The sole assets of Trust II are
$5,155 million principal amount of 6.5% Junior Subordinated Debentures due 2032
of Ford Motor Company.
8. Comprehensive Income - Other comprehensive income primarily reflects foreign
currency translation adjustments and adjustments related to SFAS No. 133 (See
Note 3). Total comprehensive income is summarized as follows (in millions):
Third Quarter Nine Months
2002 2001 2002 2001
Net income/(loss) $ (326) $ (692) $ (850) $ (385)
Other comprehensive income/(loss) 408 775 3,389 (2,143)
Total comprehensive income/(loss) $ 82 $ 83 $2,539 $(2,528)
9. Automotive Sector Acquisitions, Dispositions, Restructurings and Other
Actions - In August 2002, we signed an agreement with CVC Capital Partners to
sell Ford's 100% interest in Kwik-Fit Holdings Ltd., our European all-makes
vehicle repair business, to an acquisition company formed by CVC. The purchase
price of £330 million (equivalent to about $500 million) will consist of a
combination of about $300 million in cash and a note with face value of about
$200 million. In addition, Ford will acquire a 19 percent equity stake in the
acquisition company. This transaction is expected to be completed in the fourth
quarter of 2002. In addition to the sale of Kwik-Fit, Ford is currently in
negotiations to dispose of several other non-core businesses. These
transactions are expected to be finalized in the fourth quarter of 2002. We
recorded a pre-tax loss of $570 million in cost of sales, which reflects the
fair value less costs to sell. This amount is included in the financial results
for the quarter ended September 30, 2002. For the nine months ended September
30, 2002, these entities had combined revenues of $890 million, with pre-tax
income of $11 million. These operating results exclude the cumulative effect of
adoption of SFAS No. 142 in the first quarter of 2002 and the effect of
impairing the assets of the disposal group under SFAS No. 144. Total assets of
these entities, which are all included in the Automotive segment, approximate $1
billion as of September 30, 2002.
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
(unaudited)
10. Segment Information - Ford's business is divided into two business sectors -
Automotive and Financial Services (including Ford Credit and Hertz); detail is
summarized as follows (in millions):
Financial Services Sector
Third Quarter Auto Ford Other Elims/
Sector Credit Hertz Fin Svcs Other Total
2002
Revenues
External customer $ 32,445 $ 5,716 $ 1,413 $ 6 $ - $ 39,580
Intersegment 904 96 7 15 (1,022) -
Total Revenues $ 33,349 $ 5,812 $ 1,420 $ 21 $ (1,022) $ 39,580
Net income/(loss) before
cumulative effect of
change in accounting
principle $ (675) $ 294 $ 106 $ (51) $ - $ (326)
2001
Revenues
External customer $ 28,451 $ 6,335 $ 1,364 $ 174 $ - $ 36,324
Intersegment 388 93 7 25 (513) -
Total Revenues $ 28,839 $ 6,428 $ 1,371 $ 199 $ (513) $ 36,324
Net income/(loss) $ (1,054) $ 376 $ 26 $ (40) $ - $ (692)
Financial Services Sector
Nine Months Auto Ford Other Elims/
Sector Credit Hertz Fin Svcs Other Total
2002
Revenues
External customer $ 99,971 $ 17,543 $ 3,754 $ 468 $ - $121,736
Intersegment 3,490 271 21 52 (3,834) -
Total Revenues $103,461 $ 17,814 $ 3,775 $ 520 $ (3,834) $121,736
Net income/(loss)
before cumulative
effect of change in
accounting principle $ (805) $ 880 $ 111 $ (34) $ - $ 152
Total assets at September 30 $100,112 $169,387 $ 11,597 $ 4,600 $ - $285,696
2001
Revenues
External customer $ 97,377 $ 18,939 $ 3,821 $ 493 $ - $120,630
Intersegment 2,932 333 21 83 (3,369) -
Total Revenues $100,309 $ 19,272 $ 3,842 $ 576 $ (3,369) $120,630
Net income/(loss) $ (1,559) $ 1,136 $ 81 $ (43) $ - $ (385)
Total assets at September 30 $ 87,630 $174,318 $ 11,811 $ 3,768 $ - $277,527
'Other Financial Services' data is an aggregation of miscellaneous smaller
Financial Services sector business components.
'Elims/Other' data includes intersegment eliminations.
This information is provided by RNS
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