Ford Reports Second Quarter Net Profit of $570 Million
-->DEARBORN, Mich., July 17 - Ford Motor Company today reported a net profit of $570 million, or 29 cents per share, in the second quarter of 2002. Excluding unusual items related to the European end-of-life vehicles' directive and Statement of Financial Accounting Standards (SFAS) No. 133, Ford earned an operating profit of $610 million, or 31 cents per share. Ford lost $551 million, or 31 cents per share in the second quarter of 2001, excluding unusual items but including costs associated with the tire replacement action.
Ford's second quarter revenues were $42.3 billion, equal to last year's second quarter. Worldwide vehicle unit sales in the 2002 second quarter were 1,854,000, approximately equal to the previous year's quarter.
"The second quarter was an important leg on Ford Motor Company's journey to financial health, but we still have much work to do," said Bill Ford, chairman and CEO.
"The successful introduction of the Expedition and Navigator, improved J.D. Power quality ratings, continued improvements at Ford Credit and in Europe, as well as further progress on our Revitalization Plan highlighted the accomplishments of the entire Ford team."
Ford made progress this quarter on many of the Revitalization Plan milestones, including posting a 12 percent overall improvement, the most of any domestic manufacturer, in this year's J.D. Power Initial Quality Study. Also, the all-new Ford Expedition and Lincoln Navigator began arriving at dealerships late in the second quarter and are driving improvements in full- size and luxury SUV sales and segment shares. The sales success of these products is expected to continue during the second half of this year. In addition, substantially stronger sales at Jaguar and Land Rover, combined with the arrival of several new premium brand products at dealerships later this year, are expected to strengthen Ford's luxury vehicle lineup.
"We made progress against several of our Revitalization Plan milestones, including a significant improvement in the J.D. Power quality study, but we are not satisfied with our results," said Nick Scheele, Ford president and chief operating officer. "Quality is our top priority and we expect further improvements going forward."
The company further rationalized its manufacturing capacity, remaining on track to increase capacity utilization by 10 percentage points by year's end. Shifts have been eliminated at the Edison and Ohio assembly plants, with an additional shift elimination scheduled at the Wixom Assembly plant at the end of the summer. The company has also realized more than $400 million in cash from the divestment of non-core operations during the first six months of the year.
Second quarter 2002 results included the following non-cash, after-tax unusual items:
- $41 million charge for the projected costs related to legislation passed to date in selected countries to implement a European Parliament directive involving end-of-life vehicles
- Net $1 million benefit relating to the accounting standard for derivative instruments and hedging activities (SFAS No. 133)
First half 2002 results included a non-cash $294 million charge for the final transition, completed in the second quarter, to a new accounting standard for goodwill (SFAS No. 142).
The following second quarter results exclude unusual items in both years:
AUTOMOTIVE OPERATIONS
Worldwide automotive operations earned $205 million in the second quarter, compared with a loss of $1 billion a year ago. Worldwide automotive revenues were $35.2 billion, compared with $34.6 billion a year ago.
Automotive gross cash at June 30 totaled $24.9 billion, including $1.5 billion of pre-funding employee benefit expenses through a Voluntary Employee Beneficiary Association trust.
North America: Strong production contributed to a $45 million profit in North America in the second quarter. This compared with a loss of $1.1 billion in the 2001 second quarter, which included costs associated with the customer safety initiative to replace Firestone tires.
Europe: In Europe, Ford earned $155 million and increased market share in the second quarter, compared with earnings of $141 million a year ago. Overall volumes were down due to a lower industry and the changeover to the all-new Fiesta.
South America: Ford operations in South America lost $96 million, compared with a loss of $70 million a year ago. South America continues to represent a difficult business environment due to lower industry volume and currency weakness. However, in Brazil, Ford market share increased 1.9 percentage points over last year's second quarter on the strength of the all-new Fiesta.
Rest-of-World: Operations from the rest of the world earned a profit of $101 million, compared with a profit of $47 million in the 2001 second quarter. The biggest improvement was at Mazda.
FORD CREDIT
Ford Credit posted its second consecutive quarterly improvement, earning $343 million in the second quarter. Compared with a profit of $399 million in the second quarter of 2001, earnings were down because of higher actual credit losses and the unfavorable impact of securitizations, offset partially by the impact of currency changes in overseas markets and higher levels of managed receivables. Higher actual credit losses reflected higher levels of unemployment and bankruptcies in the United States. Over the past 12 months, increased securitizations have resulted in lower owned receivables and related revenue, offset partially by higher income from assets retained in securitizations and servicing fees.
HERTZ
Hertz reported a second quarter profit of $53 million, down from last year's $59 million profit in the second quarter. Rental volume has started to recover due to a pickup in summertime travel, but still remains lower year- over-year.
OUTLOOK
"We continue to expect a modest profit for the full year, but those results are still unacceptable," said Allan Gilmour, Ford vice chairman and chief financial officer. "We are continually monitoring our progress on the Revitalization Plan and are intensifying our efforts to reduce costs and improve efficiency to ensure that we stay on track."
Investors can hear a review of second quarter results by Allan Gilmour, vice chairman and chief financial officer, 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, July 17.
Ford Motor Company is the world's second largest automaker, selling vehicles in 200 markets and with approximately 350,000 employees 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.
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; 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, increased warranty costs or litigation; insufficient credit loss
reserves; and our inability to implement the Revitalization Plan.
Ford Motor Company
SELECTED CONSOLIDATED DETAIL
2002 Compared with 2001
Second Quarter First Half
2002 2001 2002 2001
(unaudited) (unaudited)
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- North America 1,183 1,143 2,275 2,245
- Outside North America 671 713 1,256 1,416
Total 1,854 1,856 3,531 3,661
Sales and revenues (Mils.)
- Automotive $ 35,238 $ 34,552 $ 67,559 $ 69,202
- Financial Services 7,094 7,762 14,630 15,558
Total $ 42,332 $ 42,314 $ 82,189 $ 84,760
Net income (Mils.)
- Automotive $ 178 $(1,194) $ (130) $ (505)
- Financial Services 392 442 608 812
Income before cumulative effect
of change in accounting
principle 570 (752) 478 307
- Cumulative effect of change in
accounting principle - - (1,002) -
Total net income $ 570 $ (752) $ (524) $ 307
Adjusted net income before cumulative
effect of change in accounting
principle
(Mils.) a/ $ 610 $ (551) $ 502 $ 580
Unusual items (Mils.)
- SFAS 133 $ 1 $ (87) $ 17 $ (159)
- End-of-life vehicle legislation (41) - (41) -
- Mazda restructuring actions - (114) - (114)
Capital expenditures (Mils.)
- Automotive $ 1,402 $ 1,229 $ 2,938 $ 2,586
- Financial Services 119 99 300 230
Total $ 1,521 $ 1,328 $ 3,238 $ 2,816
Automotive capital expenditures
as a percentage of sales 4.0% 3.6% 4.3% 3.7%
Automotive net cash at June 30 (Mils.)
- Cash and marketable
securities $ 23,425 $ 16,205 $ 23,425 $ 16,205
- VEBA 1,480 2,729 1,480 2,729
Gross cash including VEBA 24,905 18,934 24,905 18,934
- Debt 14,050 12,061 14,050 12,061
Automotive net cash
including VEBA $ 10,855 $ 6,873 $ 10,855 $ 6,873
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Income assuming dilution
- Automotive $ 0.10 $ (0.66) $ (0.08) $ (0.28)
- Financial Services 0.19 0.24 0.34 0.44
Subtotal 0.29 (0.42) 0.26 0.16
- Cumulative effect of change in
accounting principle - - (0.55) -
Total $ 0.29 $ (0.42) $ (0.29) $ 0.16
Adjusted net income before cumulative
effect of change in accounting
principle a/ $ 0.31 $ (0.31) $ 0.27 $ 0.31
Unusual items
- SFAS 133 $ - $ (0.05) $ 0.01 $ (0.09)
- End-of-life vehicle legislation (0.02) - (0.02) -
- Mazda restructuring actions - (0.06) - (0.06)
a/ Excludes unusual items disclosed by the Company
Prior periods have been reclassed.
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
2002 Compared with 2001
(in thousands)
Second Quarter First Half
2002 2001 2002 2001
North America
United States
Cars 389 397 773 760
Trucks 675 640 1,278 1,292
Total United States 1,064 1,037 2,051 2,052
Canada 72 69 144 120
Mexico 47 37 80 73
Total North America 1,183 1,143 2,275 2,245
Europe
Britain 157 168 312 343
Germany 94 112 174 217
Italy 61 64 111 127
France 41 40 65 83
Spain 48 53 90 93
Sweden 36 31 66 64
Other countries 101 108 177 220
Total Europe 538 576 995 1,147
South America
Brazil 34 40 62 75
Argentina 7 8 11 15
Other countries 6 10 15 18
Total South America 47 58 88 108
Other international
Australia 30 31 56 56
Taiwan 16 12 35 30
Other countries 40 36 82 75
Total other international 86 79 173 161
Total worldwide vehicle unit
sales 1,854 1,856 3,531 3,661
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.
Prior periods have been reclassed.
Excludes SFAS 133 Effect,
& Unusual Items
Ford Motor Company
AUTOMOTIVE GEOGRAPHIC AND COST OF SALES DETAIL
2002 Compared With 2001
GEOGRAPHIC DATA 2nd Quarter
02 B/(W)
2002 2001 Than 01
PBT (Mils.)
U.S. $86 (1,733) $1,819
Canada/Mexico 61 41 20
North America $147 (1,692) $1,839
Europe 231 212 19
South America (141) (109) (32)
Rest of World 144 74 70
Worldwide $381 ($1,515) $1,896
Net Income (Mils.)
U.S. $8 (1,170) $1,178
Canada/Mexico 37 27 10
North America $45 ($1,143) $1,188
Europe 155 141 14
South America (96) (70) (26)
Rest of World 101 47 54
Worldwide $205 ($1,025) $1,230
Sales (Mils.)
U.S. $23,130 $22,569 $561
Canada/Mexico 1,942 1,695 247
North America $25,072 $24,264 $808
Europe 8,186 8,080 106
South America 446 635 (189)
Rest of World 1,534 1,573 (39)
Worldwide $35,238 $34,552 $686
COST OF SALES 2nd Quarter
02 B/(W)
2002 2001 Than 01
(Mils) (Mils) (Mils)
Total Costs and Expenses $34,673 $35,907 $1,234
Less: Depreciation 633 682 49
Amortization 651 624 (27)
Selling and Admin. 2,324 2,288 (36)
Postretirement Exp.* 572 351 (221)
Net Cost of Sales $30,493 $31,962 $1,469
Memo: Gross Margin 13.5% 7.5% 6.0
- - - - -
* Now includes Benefit Expenses from Total Pension, Retiree Health
Care, and Retiree Life Insurance
Excludes SFAS 133 Effect,
& Unusual Items
Ford Motor Company
AUTOMOTIVE GEOGRAPHIC AND COST OF SALES DETAIL
2002 Compared With 2001
GEOGRAPHIC DATA First Half
02 B/(W)
2002 2001 Than 01
PBT (Mils.)
U.S. ($482) (908) $426
Canada/Mexico 32 319 (287)
North America ($450) (589) $139
Europe 408 350 58
South America (220) (190) (30)
Rest of World 241 43 198
Worldwide ($21) ($386) $365
Net Income (Mils.)
U.S. ($401) (590) $189
Canada/Mexico 16 201 (185)
North America ($385) ($389) $4
Europe 272 229 43
South America (147) (123) (24)
Rest of World 155 6 149
Worldwide ($105) ($277) $172
Sales (Mils.)
U.S. $44,289 $44,668 ($379)
Canada/Mexico 3,925 3,253 672
North America $48,214 $47,921 $293
Europe 15,350 16,764 (1,414)
South America 858 1,245 (387)
Rest of World 3,137 3,272 (135)
Worldwide $67,559 $69,202 ($1,643)
COST OF SALES First Half
02 B/(W)
2002 2001 Than 01
(Mils) (Mils) (Mils)
Total Costs and Expenses $67,085 $69,138 $2,053
Less: Depreciation 1,223 1,357 134
Amortization 1,223 1,350 127
Selling and Admin. 4,606 4,749 143
Postretirement Exp.* 1,060 728 (332)
Net Cost of Sales $58,973 $60,954 $1,981
Memo: Gross Margin 12.7% 11.9% 0.8
- - - - -
* Now includes Benefit Expenses from Total Pension, Retiree Health
Care, and Retiree Life Insurance
Ford Motor Company
SECOND QUARTER 2002 DATA SHEET
2002 Compared with 2001
2002 2002 2001
Full
1st Qtr 2nd Qtr 2nd Qtr Year
Market Share Data (%)
U.S.
Car 16.1% 16.7% 18.4% 17.7%
Truck 24.9% 25.7% 28.1% 27.4%
Total 20.7% 21.3% 23.2% 22.8%
Europe
Car 11.7% 11.2% 10.9% 11.0%
Truck 8.4% 7.8% 8.5% 8.6%
Total 11.3% 10.8% 10.6% 10.7%
U.S. Total Marketing Costs (Ford/LM)
-- Variable and Fixed
(% of Gross Revenue) 15.7% 15.6% 14.1% 14.7%
U.S. Sales Mix (Ford/LM)
Fleet Sales (% of Total) 25% 28% 28% 23%
Red Carpet Lease (% of Total) 14% 13% 17% 15%
Red Carpet Lease (% of Retail) 19% 18% 24% 20%
U.S. Inventory (Days' Supply)
Car 59 64 54 63
Truck 66 68 66 60
Average 64 67 62 61
Avg. Portfolio Borrowing Rate
Ford Credit (%) 5.4% 5.1% 6.2% 6.1%
Worldwide Taxes
Effective Tax Rate 32.5% 32.5% a/ 32.5% 32.5%
Common and Class B
Shares Outstanding (Mils.)
Average - actual 1,807 1,813 1,819 1,820
Average - assuming full dilution 1,805 2,112 1,810 1,810
Period ended - actual 1,806 1,816 1,812 1,809
Common Stock price (per share)
High $17.29 $18.23 $30.71 $31.46
Low 13.90 14.88 24.00 14.93
Cash Dividends (per share) $0.10 $0.10 $0.30 $1.05
a/ Includes dividends from Ford Motor Capital Trust
Ford Motor Company
2002 NORTH AMERICAN AND OVERSEAS PRODUCTION
2002 Actual 2002 Planned
First Second Third
Quarter Quarter Quarter
(000) (000) (000)
North American Production and Imports*
Car 392 426 315
Truck 660 755 625
North American Production 1,052 1,175 940
Mexican Domestic Units Incl. Above Incl. Above Incl. Above
Imports (Volvo, Jaguar, Land Rover,
Fiesta) 63 73 82
Total North America (Incl.
Imports) 1,115 1,248 1,022
Overseas Vehicle Production 612 666 632
Ford Worldwide 1,727 1,914 1,654
Over/(Under) Prior
North America
Units:
. Forecast 0 (5) 0
. Quarter 57 133 (226)
. Year (13) 47 154
Percentage:
. Forecast 0% 0% 0%
. Quarter 5% 12% (18)%
. Year (1)% 4% 18%
Overseas
Units:
. Forecast 0 (17) 0
. Quarter (57) 54 (34)
. Year (87) (50) 52
Percentage:
. Forecast 0% (2)% 0%
. Quarter (9)% 9% (5)%
. Year (12)% (7)% 9%
Worldwide
Units:
. Forecast 0 (22) 0
. Quarter 0 187 (260)
. Year (100) (3) 206
Percentage:
. Forecast 0% (1)% 0%
. Quarter 0% 11% (14)%
. Year (5)% 0% 14%
- - -
* Includes units produced for other manufacturers (e.g. Mazda and
Nissan)