Ford Announces Third-Quarter Financial Results

- Net loss of $25 million, or 1 cent per share. - Earnings from continuing operations of 15 cents per share, excluding special items. - Cash position remains strong at $26.9 billion. - Increases full-year earnings guidance to $0.95 to $1.05 per share from continuing operations, excluding special items; reconfirms commitment to automotive pre-tax breakeven.

DEARBORN, Mich., Oct. 16 -- Ford Motor Company today reported a net loss of $25 million, or 1 cent per share, for the third quarter of 2003. This compares with a net loss of $326 million, or 18 cents per share, in the third quarter of 2002.

The 2003 third-quarter net income includes the effects of adopting a new accounting standard (Financial Interpretation 46), which revises U.S. GAAP consolidation requirements, resulting in a change in accounting treatment of several entities. The adoption of the standard reduced third-quarter net income by $264 million, or 14 cents per share.

Earnings from continuing operations, before the cumulative effect of the change in accounting principles related to FIN 46, were $237 million, or 13 cents per share, compared with a loss of $244 million, or 14 cents per share, in the third quarter of 2002.

Ford recently announced restructuring actions related to Ford Europe that include personnel reductions in the United Kingdom, Germany and a shift removal in Genk, Belgium. The company incurred a charge of $56 million for a portion of these actions in the third quarter of 2003. Charges of between $550 million and $600 million for the balance of these actions are expected to be incurred, primarily in the fourth quarter of 2003.

Excluding the $56 million third-quarter charge, Ford's third-quarter earnings from continuing operations were 15 cents per share. This result exceeds the First Call consensus estimate of analysts, which projected a loss of 11 cents per share.

Ford's third-quarter 2003 total revenue declined to $36.9 billion from $39.3 billion in the year-ago period, primarily reflecting lower vehicle-unit sales.

"We continue to make significant progress on cutting costs, building relationships and launching great products," said Bill Ford, chairman and chief executive officer. "Our successful UAW negotiations, coupled with sales records set in September by F-Series and Volvo in the U.S. and Jaguar worldwide, make it clear that Ford Motor Company is moving in the right direction. During the next year alone, we will launch 40 new products across all of our vehicle brands to consumers worldwide."

AUTOMOTIVE SECTOR

On a pre-tax basis, Ford's worldwide automotive sector reported a loss of $609 million during the third quarter of 2003, compared with a loss of $618 million a year ago. Excluding the $56 million restructuring charge in Ford Europe, third-quarter results were a loss of $553 million.

Worldwide automotive revenue for the third quarter declined 6.5 percent, or $2.1 billion, to $30.3 billion during the third quarter of 2003. Worldwide vehicle-unit sales in the quarter were 1,410,000, down from 1,656,000 units in the 2002 third quarter.

Automotive cash, marketable securities, loaned securities and Voluntary Employee Beneficiary Association (VEBA) assets on Sept. 30 were $26.9 billion, down from $28.7 billion at the end of the second quarter, and up from $25.3 billion at the end of 2002.

NORTH AMERICA AUTOMOTIVE

North America Automotive reported a loss of $116 million on a pre-tax basis, compared with a pre-tax profit of $591 million in the third quarter of 2002. The decline primarily reflects lower market share and a planned reduction in dealer stocks, related primarily to the F-150, Freestar and Monterey changeovers. Favorable cost performance and product mix were partial offsets.

North America Automotive revenue in the third quarter was $17.9 billion, down from $21.3 billion in the 2002 third quarter, primarily reflecting lower sales volume, partially offset by improved product mix.

INTERNATIONAL AUTOMOTIVE

The 2003 third-quarter pre-tax loss for International Automotive was $494 million, compared with a loss of $714 million for the year-ago period.

Ford Europe: Ford Europe incurred a pre-tax loss of $452 million in the third quarter, compared with a pre-tax loss of $246 million during the 2002 period. The decline primarily reflects a planned reduction in dealer stocks; unfavorable net pricing, product mix and exchange rates; and the restructuring charge of $56 million discussed above, partially offset by cost improvements. Ford Europe's revenue in the third quarter was $4.7 billion, compared with $4.4 billion during the third quarter of 2002.

Ford South America: The pre-tax loss for Ford South America narrowed to $26 million during the third quarter from a loss of $243 million during the year-ago period, primarily reflecting favorable exchange rates as well as improved net pricing and market share. Third-quarter revenue in South America rose to $500 million, compared with $400 million in the third quarter of 2002.

Ford Asia-Pacific: During the third quarter of 2003, Ford Asia-Pacific reported a pre-tax profit of $1 million, compared with a pre-tax loss of $49 million in the same period last year. The improvement reflected higher industry volumes and market share as well as favorable exchange rates, partially offset by higher development costs for new products. Revenue rose to $1.6 billion, compared with $1.1 billion during the third quarter of 2002.

Premier Automotive Group (PAG): PAG reported a pre-tax loss of $22 million for the third quarter, compared with a pre-tax loss of $160 million for the third quarter of 2002. PAG's improvement reflected favorable vehicle mix and lower costs, partially offset by unfavorable exchange rates. Third- quarter revenue for PAG was $5.6 billion, compared with $4.9 billion a year ago.

FORD CREDIT

Ford Motor Credit Company reported record net income of $504 million for the third quarter of 2003, up $210 million from earnings of $294 million in the same period a year earlier. On a pre-tax basis, Ford Credit earned $809 million in the third quarter of 2003 compared with $460 million in the third quarter of 2002. The increase in earnings primarily reflected a lower provision for credit losses, the favorable impact of the interest rate environment on borrowing costs, and the favorable market valuation of derivative instruments.

HERTZ

Hertz reported pre-tax earnings of $186 million in the third quarter, compared with $160 million during the same period a year ago. The result is attributable to strong cost performance and higher rental volumes, partially offset by lower pricing.

OUTLOOK

"Despite increasing competitive pressures in the U.S. and Europe, we remain committed to achieving at least automotive pre-tax breakeven, excluding special items. This commitment reflects continued progress in reducing costs and the growing acceptance of our new products," said Don Leclair, chief financial officer.

Based on continued strong performance in the financial services group, Ford is revising its full-year earnings guidance from $0.70 per share to $0.95 to $1.05 per share, based on income from continuing operations, excluding special items.

Investors and media can hear a review of third-quarter results by Don Leclair via conference call at 800-901-5218 (617-786-4511 for international dial-in) or on the Internet at http://www.shareholder.ford.com/ . Supporting presentation material will be available at the same Internet address. The presentation will begin at 9:00 a.m. EDT, Oct. 16.

Ford Motor Company, headquartered in Dearborn, Mich., 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, Quality Care and Hertz. Ford Motor Company celebrated its 100th anniversary on June 16, 2003.

Ford Motor Company and Subsidiaries SECTOR STATEMENT OF INCOME For the Periods Ended September 30, 2003 and 2002 (in millions, except per share amounts) Third Quarter Nine Months 2003 2002 2003 2002 (unaudited) (unaudited) AUTOMOTIVE Sales $30,337 $32,396 $98,719 $99,764 Costs and expenses Cost of sales 28,437 30,568 91,205 92,736 Selling, administrative and other expenses 2,536 2,467 7,321 7,140 Total costs and expenses 30,973 33,035 98,526 99,876 Operating income/(loss) (636) (639) 193 (112) Interest income 445 378 727 661 Interest expense 373 340 915 1,037 Net interest income/(expense) 72 38 (188) (376) Equity in net income/(loss) of affiliated companies (45) (17) 48 (97) Income/(loss) before income taxes - Automotive (609) (618) 53 (585) FINANCIAL SERVICES Revenues 6,551 6,942 19,727 21,242 Costs and expenses Interest expense 1,552 1,868 4,794 5,741 Depreciation 2,095 2,530 6,939 7,631 Operating and other expenses 1,342 1,180 3,767 3,832 Provision for credit and insurance losses 530 792 1,802 2,523 Total costs and expenses 5,519 6,370 17,302 19,727 Income/(loss) before income taxes - Financial Services 1,032 572 2,425 1,515 TOTAL COMPANY Income/(loss) before income taxes 423 (46) 2,478 930 Provision for/(benefit from) income taxes 141 81 672 350 Income/(loss) before minority interests 282 (127) 1,806 580 Minority interests in net income/(loss) of subsidiaries 45 117 245 285 Income/(loss) from continuing operations 237 (244) 1,561 295 Income/(loss) from discontinued/held-for-sale operations 2 (27) (4) (48) Loss on disposal of discontinued/held-for-sale operations - (55) (5) (95) Cumulative effect of change in accounting principle (264) - (264) (1,002) Net income/(loss) $(25) $(326) $1,288 $(850) Income/(loss) attributable to Common and Class B Stock after Preferred Stock dividends $(25) $(330) $1,288 $(861) Average number of shares of Common and Class B Stock outstanding 1,831 1,822 1,832 1,814 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income/(loss) Income/(loss) from continuing operations $0.13 $(0.14) $0.85 $0.16 Income/(loss) from discontinued/held-for-sale operations - (0.01) - (0.03) Loss on disposal of discontinued/held-for-sale operations - (0.03) - (0.05) Cumulative effect of change in accounting principle (0.14) - (0.15) (0.55) Net income/(loss) $(0.01) $(0.18) $0.70 $(0.47) Diluted income/(loss) Income/(loss) from continuing operations $0.13 $(0.14) $0.81 $0.16 Income/(loss) from discontinued/held-for-sale operations - (0.01) - (0.03) Loss on disposal of discontinued/held-for-sale operations - (0.03) - (0.05) Cumulative effect of change in accounting principle (0.14) - (0.13) (0.55) Net income/(loss) $(0.01) $(0.18) $0.68 $(0.47) Cash dividends $0.10 $0.10 $0.30 $0.30 Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME For the Periods Ended September 30, 2003 and 2002 (in millions, except per share amounts) Third Quarter Nine Months 2003 2002 2003 2002 (unaudited) (unaudited) Sales and revenues Automotive sales $30,337 $32,396 $98,719 $99,764 Financial Services revenue 6,551 6,942 19,727 21,242 Total sales and revenues 36,888 39,338 118,446 121,006 Automotive interest income 445 378 727 661 Costs and expenses Cost of sales 28,437 30,568 91,205 92,736 Selling, administrative and other expenses 5,973 6,177 18,027 18,603 Interest expense 1,925 2,208 5,709 6,778 Provision for credit and insurance losses 530 792 1,802 2,523 Total costs and expenses 36,865 39,745 116,743 120,640 Automotive equity in net income/(loss) of affiliated companies (45) (17) 48 (97) Income/(loss) before income taxes 423 (46) 2,478 930 Provision for/(benefit from) income taxes 141 81 672 350 Income/(loss) before minority interests 282 (127) 1,806 580 Minority interests in net income/(loss) of subsidiaries 45 117 245 285 Income/(loss) from continuing operations 237 (244) 1,561 295 Income/(loss) from discontinued/held-for-sale operations 2 (27) (4) (48) Loss on disposal of discontinued/held-for-sale operations - (55) (5) (95) Cumulative effect of change in accounting principle (264) - (264) (1,002) Net income/(loss) $(25) $(326) $1,288 $(850) Income/(loss) attributable to Common and Class B Stock after Preferred Stock dividends $(25) $(330) $1,288 $(861) Average number of shares of Common and Class B Stock outstanding 1,831 1,822 1,832 1,814 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income/(loss) Income/(loss) from continuing operations $0.13 $(0.14) $0.85 $0.16 Income/(loss) from discontinued/held-for-sale operations - (0.01) - (0.03) Loss on disposal of discontinued/held-for-sale operations - (0.03) - (0.05) Cumulative effect of change in accounting principle (0.14) - (0.15) (0.55) Net income/(loss) $(0.01) $(0.18) $0.70 $(0.47) Diluted income/(loss) Income/(loss) from continuing operations $0.13 $(0.14) $0.81 $0.16 Income/(loss) from discontinued/held-for-sale operations - (0.01) - (0.03) Loss on disposal of discontinued/held-for-sale operations - (0.03) - (0.05) Cumulative effect of change in accounting principle (0.14) - (0.13) (0.55) Net income/(loss) $(0.01) $(0.18) $0.68 $(0.47) Cash dividends $0.10 $0.10 $0.30 $0.30 Ford Motor Company and Subsidiaries SECTOR BALANCE SHEET (in millions) September 30, December 31, 2003 2002 ASSETS (unaudited) Automotive Cash and cash equivalents $6,817 $5,180 Marketable securities 12,226 17,464 Loaned securities 6,942 - Total cash, marketable and loaned securities 25,985 22,644 Receivables, net 2,755 2,065 Inventories 10,085 6,980 Deferred income taxes 3,358 3,462 Other current assets 5,514 4,551 Current receivable from Financial Services 637 1,062 Total current assets 48,334 40,764 Equity in net assets of affiliated companies 1,858 2,470 Net property 40,471 36,364 Deferred income taxes 11,039 11,694 Goodwill 5,212 4,805 Other intangible assets 837 812 Assets of discontinued/held-for-sale operations - 98 Other assets 11,408 10,783 Total Automotive assets 119,159 107,790 Financial Services Cash and cash equivalents 21,070 7,070 Investments in securities 1,323 807 Finance receivables, net 109,173 97,030 Net investment in operating leases 33,761 40,055 Retained interest in sold receivables 10,203 17,618 Goodwill 763 752 Other intangible assets 241 248 Assets of discontinued/held-for-sale operations - 2,406 Other assets 15,272 16,643 Receivable from Automotive 3,947 4,803 Total Financial Services assets 195,753 187,432 Total assets $314,912 $295,222 LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $15,797 $14,606 Other payables 2,710 2,485 Accrued liabilities 31,348 27,644 Debt payable within one year 976 557 Total current liabilities 50,831 45,292 Senior debt 14,149 13,607 Subordinated debt 5,843 - Total long-term debt 19,992 13,607 Other liabilities 48,849 46,886 Deferred income taxes 338 303 Liabilities of discontinued/held-for-sale operations 24 138 Payable to Financial Services 3,947 4,803 Total Automotive liabilities 123,981 111,029 Financial Services Payables 2,235 1,890 Debt 159,268 148,058 Deferred income taxes 11,521 11,644 Other liabilities and deferred income 8,491 9,448 Liabilities of discontinued/held-for-sale operations - 831 Payable to Automotive 637 1,062 Total Financial Services liabilities 182,152 172,933 Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of the Company - 5,670 Minority interests 589 - Stockholders' equity Capital stock 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 5,432 5,420 Accumulated other comprehensive income/(loss) (4,756) (6,531) Treasury stock (1,903) (1,977) Earnings retained for use in business 9,398 8,659 Total stockholders' equity 8,190 5,590 Total liabilities and stockholders' equity $314,912 $295,222 Ford Motor Company and Subsidiaries CONSOLIDATED BALANCE SHEET (in millions) September 30, December 31, 2003 2002 (unaudited) ASSETS Cash and cash equivalents $27,887 $12,250 Marketable securities 13,549 18,271 Loaned securities 6,942 - Receivables, net 2,755 2,065 Finance receivables, net 109,173 97,030 Net investment in operating leases 33,761 40,055 Retained interest in sold receivables 10,203 17,618 Inventories 10,085 6,980 Equity in net assets of affiliated companies 2,877 3,569 Net property 42,077 37,935 Deferred income taxes 14,397 15,213 Goodwill 5,975 5,557 Other intangible assets 1,078 1,060 Assets of discontinued/held-for-sale operations - 2,504 Other assets 29,569 29,250 Total assets $310,328 $289,357 LIABILITIES AND STOCKHOLDERS' EQUITY Payables $20,742 $18,981 Accrued liabilities 29,113 25,088 Debt 180,236 162,222 Other liabilities and deferred income 56,922 56,276 Deferred income taxes 14,512 14,561 Liabilities of discontinued/held-for-sale operations 24 969 Total liabilities 301,549 278,097 Minority interests 589 - Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of the Company - 5,670 Stockholders' equity Capital stock 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 5,432 5,420 Accumulated other comprehensive income/(loss) (4,756) (6,531) Treasury stock (1,903) (1,977) Earnings retained for use in business 9,398 8,659 Total stockholders' equity 8,190 5,590 Total liabilities and stockholders' equity $310,328 $289,357 Ford Motor Company and Subsidiaries CONDENSED SECTOR STATEMENT OF CASH FLOWS For the Periods Ended September 30, 2003 and 2002 (in millions) Nine Months 2003 Nine Months 2002 Financial Financial Automotive Services Automotive Services (unaudited) (unaudited) Cash and cash equivalents at January 1 $5,180 $7,070 $4,064 $3,133 Cash flows from operating activities before securities trading 4,875 13,318 10,877 11,457 Net sales/(purchases) of trading securities 1,516 (166) (4,698) (53) Net cash flows from operating activities 6,391 13,152 6,179 11,404 Cash flows from investing activities Capital expenditures (5,568) (271) (4,632) (452) Acquisitions of receivables and lease investments - (42,305) - (60,461) Collections of receivables and lease investments - 33,921 - 38,204 Net acquisitions of daily rental vehicles - (1,487) - (1,658) Purchases of securities (7,356) (490) (1,460) (423) Sales and maturities of securities 4,136 589 1,232 390 Proceeds from sales of receivables and lease investments - 15,781 - 28,237 Proceeds from sale of businesses 77 204 - - Repayment of debt from discontinued operations - 1,421 - - Net investing activity with Financial Services 2,975 - 409 - Cash paid for acquisitions - - (22) - Cash recognized on consolidation of joint ventures 256 - - - Other 696 20 (72) 690 Net cash (used in)/provided by investing activities (4,784) 7,383 (4,545) 4,527 Cash flows from financing activities Cash dividends (549) - (555) - Net sales/(purchases) of Common Stock (43) - 196 - Proceeds from mandatorily redeemable convertible preferred securities - - 4,900 - Changes in short-term debt (179) 3,405 (123) (13,332) Proceeds from issuance of other debt 883 16,338 281 13,991 Principal payments on other debt (689) (23,173) (736) (13,193) Net financing activity with Automotive - (2,975) - (409) Other (6) 9 (20) 60 Net cash (used in)/provided by financing activities (583) (6,396) 3,943 (12,883) Effect of exchange rate changes on cash 188 286 (14) 207 Net transactions with Automotive/Financial Services 425 (425) (966) 966 Net increase/(decrease) in cash and cash equivalents 1,637 14,000 4,597 4,221 Cash and cash equivalents at September 30 $6,817 $21,070 $8,661 $7,354 Ford Motor Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Periods Ended September 30, 2003 and 2002 (in millions) Nine Months 2003 2002 (unaudited) Cash and cash equivalents at January 1 $12,250 $7,197 Cash flows from operating activities before securities trading 18,193 22,334 Net sales/(purchases) of trading securities 1,350 (4,751) Net cash flows from operating activities 19,543 17,583 Cash flows from investing activities Capital expenditures (5,839) (5,084) Acquisitions of receivables and lease investments (42,305) (60,461) Collections of receivables and lease investments 33,921 38,204 Net acquisitions of daily rental vehicles (1,487) (1,658) Purchases of securities (7,846) (1,883) Sales and maturities of securities 4,725 1,622 Proceeds from sales of receivables and lease investments 15,781 28,237 Proceeds from sale of businesses 281 - Repayment of debt from discontinued operations 1,421 - Cash paid for acquisitions - (22) Cash recognized on consolidation of joint ventures 256 - Other 716 618 Net cash (used in)/provided by investing activities (376) (427) Cash flows from financing activities Cash dividends (549) (555) Net sales/(purchases) of Common Stock (43) 196 Proceeds from mandatorily redeemable convertible preferred securities - 4,900 Changes in short-term debt 3,226 (13,455) Proceeds from issuance of other debt 17,221 14,272 Principal payments on other debt (23,862) (13,929) Other 3 40 Net cash (used in)/provided by financing activities (4,004) (8,531) Effect of exchange rate changes on cash 474 193 Net increase/(decrease) in cash and cash equivalents 15,637 8,818 Cash and cash equivalents at September 30 $27,887 $16,015