DBRS confirms Ford Motor Company at A (high) and R-1 (low)

Ford Motor Company - Confirms at A (high) and R-1 (low) 

May 23,2001.10:07AM 

Kam Hon / David Schroeder
(416) 593-5577 x243/x232
e-mail: khon@dbrs.com <mailto:khon@dbrs.com>


Rating 		Trend 		Rating Action		Debt Rated 
A (high)		Negative	Confirmed		Long
Term Debt - Commercial Paper
 							Rating 
R-1 (low)	Stable		Confirmed		Commercial Paper



The Long Term Debt rating of Ford Motor Company ("Ford", or "the
Company") is confirmed at A (high) and the trend remains Negative. The
Commercial Paper rating is confirmed at R-1 (low) with a stable trend.
(See Previous Press Release dated April 23, 2001.) These confirmations
follow the announcement yesterday that the Company is going to replace
about 13 million Firestone "Wilderness AT" tires on Ford vehicles to
prevent potential future failures. The Company will take a $2.1 billion
after-tax charge in the second quarter of 2001 to cover the program. In
addition, the Company has suspended share repurchases effective
immediately.

The Company has ample liquidity to fund the tire replacement program
internally. As at the end of March 2001, the Automotive Group has $7.1
billion in net cash including VEBA, ($5.5 billion, net of payment to AB
Volvo in early April). The suspension of the share repurchase program
also strengthens the Company's liquidity. The Company's financial
position, although weakened by the charge, will remain above average.
Furthermore, the Company's modest debt maturities schedule, averaging
28.5 years, further increases Ford's financial flexibility. However, the
Company's profitability has been under pressure. The weakening North
American automobile market and intensifying competition in the highly
profitable truck and SUV segments have dented the Company's performance
during the first quarter of 2001. Although the tire replacement action
will likely help preserve the reputation of the Ford brand in the long
run, the negative publicity could hurt current sales, reigniting the
safety concerns brought on by the tire-recall incident in August 2000.
Potential impact on the Company's operation in the near term is
uncertain. At a minimum, the unwelcome distraction would add to the
Company's challenge to maintain profitability in the face of weakening
market conditions and intense competition.

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