Ford Posts Net Income of $2.6 Billion in Second Quarter 2010; Continues to Deliver Profitable Growth+
 |
DEARBORN, Mich., July 23, 2010; Ford Motor Company today reported second quarter 2010 net income of $2.6 billion, or 61 cents per share, a $338 million improvement from second quarter 2009, as each of its major business operations around the world recorded improved profits.
Excluding special items, Ford reported a pre-tax operating profit of $2.9 billion, or 68 cents per share, an improvement of $3.5 billion from a year ago and a $932 million improvement from the prior quarter, and the company's best quarterly performance since the first quarter of 2004. Ford has posted an Automotive and total company pre-tax operating profit for four consecutive quarters.
Ford North America posted a second quarter pre-tax operating profit of $1.9 billion, a $2.8 billion improvement from second quarter 2009.
"We delivered a very strong second quarter and first half of 2010 and are ahead of where we thought we would be despite the still-challenging business conditions," said Ford President and CEO Alan Mulally. "We remain on track to deliver solid profits and positive Automotive operating-related cash flow for 2010, and we expect even better financial results in 2011.
"Our progress is being led by the strength of our new products and our leaner, global structure," Mulally added. "Customers are responding to our strongest ever product lineup - a full family of vehicles with world-class quality, fuel efficiency, safety, smart design and value."
Ford's second quarter revenue was $31.3 billion, up $4.5 billion from the same period a year ago. Excluding Volvo revenue from 2009, Ford's revenue in the second quarter was up $7.4 billion compared to 2009, or over 30 percent.
Automotive operating-related cash flow was positive $2.6 billion during the second quarter, primarily reflecting pre-tax operating profits and favorable changes in working capital.
Ford finished the second quarter with $21.9 billion in Automotive gross cash, a decrease of $3.4 billion since the first quarter, as a result of substantial debt reduction actions. Including available credit lines, total Automotive liquidity was $25.4 billion at the end of the quarter.
The company ended the second quarter with Automotive debt of $27.3 billion, down $7 billion in the quarter. The reduction included a $3.8 billion payment by Ford to the UAW Retiree Medical Benefits Trust, and a $3 billion repayment of Ford's revolving credit facility. The debt reduction will save Ford more than $470 million in annualized interest savings.
Special items were an unfavorable pre-tax amount of $95 million in the second quarter. Ford recorded $229 million of personnel and dealer-related charges related primarily to the plan to discontinue production of the Mercury brand, which was offset partially by $94 million of favorable held-for-sale adjustments for Volvo and a $40 million gain related to the full pre-payment of Ford's VEBA Note A debt obligation at a discount.
The first half cost associated with Mercury discontinuation and total U.S. dealer reductions is expected to be somewhat less than half of the total expected special item charges for these actions during the 2010 to 2011 period.
If Volvo had continued to be reported as an ongoing operation, Ford would have reported a second quarter pre-tax operating profit of $53 million for Volvo, representing a $290 million improvement compared to the second quarter of 2009.
"Our fundamental business is strong and we continue to gain momentum around the world," said Lewis Booth, Ford executive vice president and chief financial officer. "Profits improved across our global business operations in the second quarter and we made continued progress in paying down our debt and strengthening our balance sheet."
The following discussion of second quarter highlights and results are on a pre-tax basis and exclude special items. See tables following "Safe Harbor/Risk Factors" for the nature and amount of these special items and any necessary reconciliation to U.S. GAAP. Discussion of Automotive cost changes is measured primarily at prior-year exchange, and excludes special items and discontinued operations. In addition, costs that vary directly with volume, such as material, freight, and warranty costs are measured at prior-year volume and mix.
SECOND QUARTER 2010 HIGHLIGHTS
-- Repaid $7 billion of Automotive debt, including $3.8 billion to the
UAW Retiree Medical Benefits Trust and $3 billion of the company's
revolving credit facility
-- Ranked No.1 in UBS Investment Research quarterly survey of
OEM-supplier relations in the U.S.
-- Announced $450 million investment to build a flexible vehicle
manufacturing plant in Thailand
-- Announced $250 million investment in Ford Pacheco Plant in Argentina
-- Announced $135 million investment to design, engineer and produce key
components in Michigan for Ford's next-generation hybrid-electric
vehicles that go into production in 2012
-- Announced plan to discontinue production of the Mercury brand in the
fourth quarter to increase focus on the Ford and Lincoln brands in
North America
-- Ford brand ranked highest among all non-luxury brands in the 2010 J.D.
Power & Associates Initial Quality Study
-- Received seven Top Safety Picks in the Insurance Institute for Highway
Safety's awards for the 2010 model year, tying the highest mark for
the industry
-- Announced plans to expand and enhance Lincoln lineup with seven
all-new or significantly refreshed vehicles in the next four years -
including the brand's first-ever C-segment vehicle
-- Revealed freshened Mondeo in Europe with restyled exterior, upgraded
interior and new EcoBoost gasoline and TDCi diesel powertrains
-- Announced plan to begin delivering the Transit Connect Electric in
Europe in late summer 2011
-- Launched and sold out of the limited edition Focus RS 500 high
performance model in Europe
-- Began production in Thailand of the new Fiesta for Southeast Asian
markets
-- Reported a 21 percent sales increase and gained a half-point of market
share in the U.S. on strong retail market performance of Ford's
products, including the F-Series, Taurus, and Transit Connect
-- Posted a 27 percent sales increase in Asia Pacific Africa, including a
20 percent increase in China
-- Tripled quarterly sales in India, setting a new record, as the new
Ford Figo received 25,000 orders in its first 100 days on the market
-- Ford solidified its position as Canada's top-selling brand, expanding
market share to 17.5 percent, up 2.1 percentage points from a year ago
AUTOMOTIVE SECTOR
Automotive Sector* Second Quarter First Half
-------------- ----------
O/(U) O/(U)
2009 2010 2009 2009 2010 2009
---- ---- ------ ---- ---- ------
Wholesales (000) 1,194 1,418 224 2,180 2,671 491
Revenue (Bils.) $23.6 $28.8 $5.2 $44.6 $54.2 $9.6
Pre-Tax Results
(Mils.) $(1,149) $2,067 $3,216 $(3,112) $3,262 $6,374
*excludes special
items
-----------------
For the second quarter of 2010, Ford's worldwide Automotive sector reported a pre-tax operating profit of $2.1 billion, compared with a loss of $1.1 billion a year ago. The improvement primarily reflected favorable volume and mix, net pricing and exchange.
Total vehicle wholesales in the second quarter were 1.4 million, compared with 1.2 million units a year ago. Worldwide Automotive revenue in the second quarter was $28.8 billion, up from $23.6 billion a year ago. Wholesales, revenues and operating results for 2010 exclude Volvo, while 2009 results include Volvo.
North America: For the second quarter, Ford North America reported a pre-tax operating profit of
$1.9 billion, compared with a loss of $899 million a year ago and a profit of $1.2 billion in the first quarter of 2010. The year-over-year improvement was explained primarily by favorable volume and mix, net pricing and exchange. Second quarter revenue was $16.9 billion, up from $10.7 billion a year ago.
South America: For the second quarter, Ford South America reported a pre-tax operating profit of $285 million, compared with a profit of $86 million a year ago and a profit of $203 million in the first quarter. The year-over-year increase reflects primarily favorable net pricing, favorable exchange, and higher volume, offset partially by higher commodity and structural costs. Second quarter revenue was $2.6 billion, up from $1.8 billion a year ago.
Europe: For the second quarter, Ford Europe reported a pre-tax operating profit of $322 million, compared with a profit of $57 million a year ago and a profit of $107 million in the first quarter. The year-over-year increase was explained primarily by lower costs, driven in part by lower spending related to distressed suppliers and a warranty reserve adjustment not expected to reoccur, offset partially by unfavorable net pricing. Second quarter revenue was $7.5 billion, up from $7 billion a year ago.
Asia Pacific Africa: For the second quarter, Ford Asia Pacific Africa reported a pre-tax operating profit of $113 million, compared with a loss of $27 million a year ago and a pre-tax operating profit of $23 million in the first quarter. The year-over-year improvement is more than explained by higher volume, reflecting primarily higher industry, lower costs, and favorable exchange. Second quarter revenue was $1.8 billion, up from $1.2 billion a year ago.
Other Automotive: Other Automotive consists primarily of interest and financing-related costs and resulted in a second quarter pre-tax loss of $551 million, explained by net interest expense of $459 million and $92 million of unfavorable fair market value adjustments, associated primarily with Ford's investment in Mazda.
FINANCIAL SERVICES SECTOR
Financial Services
Sector* Second Quarter First Half
-------------- ----------
O/(U) O/(U)
2009 2010 2009 2009 2010 2009
---- ---- ------ ---- ---- ------
Revenue (Bils.) $3.2 $2.5 $(0.7) $6.6 $5.2 $(1.4)
Ford Credit Pre-Tax
Results (Mils.) $646 $888 $242 $610 $1,716 $1,106
Other Financial
Services Pre-Tax
Results (Mils.) (51) (13) 38 (77) (26) 51
--- --- --- --- --- ---
Financial Services
Pre-Tax Results
(Mils.) $595 $875 $280 $533 $1,690 $1,157
==== ==== ==== ==== ====== ======
*excludes special
items
-----------------
For the second quarter, the Financial Services sector reported a pre-tax operating profit of $875 million, compared with a profit of $595 million a year ago.
Ford Motor Credit Company: For the second quarter, Ford Credit reported a pre-tax operating profit of $888 million compared with a profit of $646 million a year ago and a profit of $828 million in the first quarter. The year-over-year increase reflected primarily a lower provision for credit losses and lower residual losses due to higher auction values, offset partially by the non-recurrence of prior year net gains related to unhedged currency exposures and lower volume.
OUTLOOK
Ford said it continues to make progress on all four pillars of its plan:
-- Aggressively restructuring to operate profitably at the current demand
and changing model mix
-- Accelerating the development of new products that customers want and
value
-- Financing the plan and improving the balance sheet
-- Working together effectively as one team, leveraging Ford's global
assets
Ford expects third quarter 2010 production to be up 126,000 units compared with year-ago levels, reflecting continued strong demand for Ford products, maintenance of competitive stock levels, and the non-recurrence of prior-year stock reductions. Third quarter production will be down 174,000 units compared to second quarter 2010 production, reflecting planned vacation shutdowns during the third quarter that generally are used to prepare for new models.
Fourth quarter production also will be affected by planned holiday shutdowns and new product changeovers for vehicles such as Focus and Explorer. Overall, Ford's third and fourth quarter production schedule is lower than the first half but consistent with the company's strategy to match supply with demand.
Ford expects full-year 2010 U.S. industry volume will be in the range of 11.5 million to 12 million units. In the 19 markets Ford tracks in Europe, full-year industry volume is expected to be in the 14.5 million to 15 million unit range, reflecting a stronger-than-expected first half offset by a weaker second half.
Ford now expects full-year 2010 U.S. total market share and its share of the U.S. retail market to be improved compared with 2009. Europe market share for the full year is now expected to be about equal to the first half of 2010, but lower than 2009, reflecting the company's decision to limit increases in incentives in the region.
Ford is on track to improve full-year quality for all regions, compared with a year ago.
Ford has achieved significant structural cost reductions over the past four years. In 2010, Ford expects full-year Automotive structural costs to be about $1 billion higher to support growth and key product introductions. Ford's cost structure, however, continues to improve as a percentage of revenue. Ford also expects full-year commodity costs to increase by about $1 billion.
Capital expenditures were $1.9 billion in the first half. Ford expects full-year capital spending to be about $4.5 billion to support its product plan, as the company continues to realize efficiencies from its global product development processes.
Ford Credit now expects full-year 2010 profits to be higher than its 2009 profits. The second half of 2010, will be lower than the first half because Ford Credit expects smaller improvements in the provision for credit losses and depreciation expense for leased vehicles compared with the improvements during the first half.
Ford expects to have solid financial results in the second half, continuing to exceed the expectations it had earlier this year.
As in most years, Ford's first half results will be stronger than second half, reflecting normal seasonality - including lower second half volumes related to planned shutdowns and product launches. This year, Ford also expects higher investment and costs in the second half to support growth and key product introductions, as well as higher commodity costs and smaller reductions in reserves at Ford Credit.
Overall, Ford is on track to deliver solid profits and positive Automotive operating-related cash flow for 2010, providing a solid foundation for continuing growth.
2011 Outlook
For 2011, based on present planning assumptions, Ford expects continued improvement in total company profitability and Automotive operating-related cash flow, including improvements in its Automotive operations. These improvements are driven primarily by the growing strength of Ford's global products, continued cost structure improvements and the gradually strengthening global economy.
Ford Credit will continue to be solidly profitable for 2011 but at a lower level than 2010, reflecting primarily a lower occurrence of this year's favorable factors.
By the end of 2011, Ford expects to move from a net Automotive debt position to a net cash position.
Overall, Ford said its performance gives it great confidence going forward. It has aggressively restructured its business to be profitable in the current environment and, going forward, it will continue to:
-- Expand its business, particularly in the growth regions of the world,
such as China and India
-- Improve its overall cost structure and achieve competitive costs while
strengthening further its operational excellence
-- Take actions to strengthen its balance sheet and become investment
grade
"Our business performance this year and the growing success of our products give us great confidence going forward," Mulally said. "Our plan is to continue to enhance our operational excellence and improve our competitiveness to continue to deliver profitable growth for everyone associated with Ford."
Ford's 2010 planning assumptions regarding the industry and operating metrics include the following:
Planning Full Year Full Year
Assumptions Plan First Half Outlook
------------ --------- ---------- ---------
Industry Volume
(SAAR)*
- U.S. (million
units) 11.5 - 12.5 11.4 11.5 - 12.0
- Europe
(million
units)** 13.5 - 14.5 15.4 14.5 - 15.0
Operational
Metrics
-----------
Compared with
Prior Year:
-- Quality: Improve Improved On Track
--Automotive
Structural
Costs*** Somewhat $350 Million Higher About $1
Higher Billion Higher
--U.S. Total
Market Share
(Ford, Lincoln, Equal/
and Mercury) Improve 16.7% Improve
--U.S. Share of
Retail Equal/
Market**** Improve 14.1% Improve
--Europe Market
Share ** Equal 8.7% About
Equal to
First Half 2010
Absolute Amount:
-- Automotive
Operating-
Related Cash
Flow Positive $2.5 Billion On Track
--Capital About $4.5
Spending $4.5 to $5 $1.9 Billion Billion
Billion
We Are On Track To Deliver Solid Profits In 2010
With Positive
Automotive Operating-Related Cash Flow,
And Continued Improvement in 2011
---------------------------------
* Includes medium and heavy trucks
** European 19 markets we track
*** Structural cost changes are measured primarily at prior-year
exchange, and exclude special items and discontinued operations
**** Estimate
Ford's production volumes are shown below:
Production
Volumes Actual Forecast
---------- ------ --------
Second Quarter 2010 Third Quarter 2010
------------------- ------------------
Units O/(U) O/(U)
----- 2009 Units 2009
(000) ---- ----- ----
(000) (000) (000)
Ford North
America 653 202 570 80
Ford South
America 131 21 130 15
Ford Europe 451 53 356 (29)
Ford Asia Pacific
Africa 208 68 213 60
--- --- --- ---
Total 1,443 344 1,269 126
----- ===== === ===== ===
CONFERENCE CALL DETAILS
Ford Motor Company [NYSE:F] releases its preliminary second quarter 2010 financial results at 7 a.m. EDT today. The following briefings will be conducted after the announcement:
-- At 9 a.m. EDT, Alan Mulally, Ford president and CEO, and Lewis Booth,
Ford executive vice president and chief financial officer, will host a
conference call for the investment community and news media to discuss
the second quarter results.
-- At 11 a.m. EDT, Bob Shanks, Ford vice president and controller, Neil
Schloss, Ford vice president and treasurer, and K.R. Kent, vice
chairman and chief financial officer, Ford Motor Credit Company, will
host a conference call for fixed income analysts and investors.
Listen-only presentations and supporting materials will be available on the Internet at www.shareholder.ford.com. Representatives of the news media and the investment community participating by teleconference will have the opportunity to ask questions following the presentations.
Access Information - Friday, July 23 ------------------------------------ Earnings Call: 9 a.m. EDT Toll Free: 866-515-2909 International: +1 617-399-5123 Earnings Passcode: "Ford Earnings" Fixed Income: 11 a.m. EDT Toll Free: 866-318-8613 International: +1 617-399-5132 Fixed Income Passcode: "Ford Fixed Income" Replays - Available after 2 p.m. EDT the day of the event through July 30. --------------------------------------------------------- www.shareholder.ford.com Toll Free: 888-286-8010 International: +1 617-801-6888 Passcodes: ---------- Earnings: 37739096 Fixed Income: 36743554 ----------------------
Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 178,000 employees and about 80 plants worldwide, the company's automotive brands include Ford, Lincoln and Mercury, production of which has been announced by the company to be ending in the fourth quarter of 2010, and, until its sale, Volvo. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford's products, please visit www.ford.com.
The financial results discussed herein are presented on a
preliminary basis; final data will be included in Ford's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2010. As a
result of Ford's agreement to sell Volvo, 2010 results for Volvo
are being reported as special items and excluded from operating
results; 2009 operating results include Volvo unless otherwise
indicated. As disclosed last quarter, the new accounting standard
for variable interest entity consolidation, effective Jan. 1, 2010,
required Ford to deconsolidate many of its joint ventures. In
addition to results in the second quarter of 2010 reflecting this
new standard, 2009 results have been adjusted to reflect the
deconsolidation of many of Ford's joint ventures, with Ford's joint
venture in Turkey, Ford Otosan, being the most significant. For
wholesale unit sales and production volumes, amounts include the
sale or production of Ford-brand and JMC-brand vehicles by
unconsolidated affiliates. JMC refers to our Chinese joint venture,
Jiangling Motors Corporation. See materials supporting the July 23,
2010 conference calls at www.shareholder.ford.com for discussion of
wholesale unit volumes. Discussion of overall Automotive cost
changes is at constant exchange and excludes special items and
discontinued operations; in addition, costs that vary directly with
production volume, such as material, freight, and warranty costs,
are measured at constant volume and mix (generally, by holding
constant prior-year levels). See tables following the "Safe
Harbor/Risk Factors" for the nature and amount of special items,
and reconciliation of items designated as "excluding special items"
to U.S. generally accepted accounting principles ("GAAP"). Also
see the tables following "Safe Harbor/Risks Factors"
reconciliation of Automotive gross cash and operating-related cash
+ flow to GAAP.
++ Excluding special items.
Excluding special items and "Income/(Loss) attributable to non-
controlling interests." See tables following "Safe Harbor/Risk
Factors" for the nature and amount of these special items and
+++ reconciliation to GAAP.
Safe Harbor/Risk Factors
Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
-- Further declines in industry sales volume, particularly in the United
States or Europe, due to financial crisis, recession, geo-political
events, or other factors;
-- Decline in market share;
-- Lower-than-anticipated market acceptance of new or existing products;
-- An increase in or acceleration of market shift beyond our current
planning assumptions from sales of trucks, medium- and large-sized
utilities, or other more profitable vehicles, particularly in the
United States;
-- A return to elevated gasoline prices, as well as the potential for
volatile prices or reduced availability;
-- Continued or increased price competition resulting from industry
overcapacity, currency fluctuations, or other factors;
-- Adverse effects from the bankruptcy, insolvency, or government-funded
restructuring of, change in ownership or control of, or alliances
entered into by a major competitor;
-- A prolonged disruption of the debt and securitization markets;
-- Fluctuations in foreign currency exchange rates, commodity prices, and
interest rates;
-- Economic distress of suppliers that may require us to provide
substantial financial support or take other measures to ensure
supplies of components or materials and could increase our costs,
affect our liquidity, or cause production disruptions;
-- Single-source supply of components or materials;
-- Labor or other constraints on our ability to restructure our business;
-- Work stoppages at Ford or supplier facilities or other interruptions
of production;
-- Substantial pension and postretirement health care and life insurance
liabilities impairing our liquidity or financial condition;
-- Worse-than-assumed economic and demographic experience for our
postretirement benefit plans (e.g., discount rates or investment
returns);
-- Restriction on use of tax attributes from tax law "ownership change;"
-- The discovery of defects in vehicles resulting in delays in new model
launches, recall campaigns, or increased warranty costs;
-- Increased safety, emissions, fuel economy, or other regulation
resulting in higher costs, cash expenditures, and/or sales
restrictions;
-- Unusual or significant litigation or governmental investigations
arising out of alleged defects in our products, perceived
environmental impacts, or otherwise;
-- A change in our requirements for parts or materials where we have
long-term supply arrangements that commit us to purchase minimum or
fixed quantities of certain parts or materials, or to pay a minimum
amount to the seller ("take-or-pay" contracts);
-- Adverse effects on our results from a decrease in or cessation of
government incentives related to capital investments;
-- Adverse effects on our operations resulting from certain geo-political
or other events;
-- Substantial levels of Automotive indebtedness adversely affecting our
financial condition or preventing us from fulfilling our debt
obligations (which may grow because we are able to incur substantially
more debt, including additional secured debt);
-- Failure of financial institutions to fulfill commitments under
committed credit facilities;
-- Inability of Ford Credit to obtain competitive funding;
-- Inability of Ford Credit to access debt, securitization, or derivative
markets around the world at competitive rates or in sufficient amounts
due to credit rating downgrades, market volatility, market disruption,
regulatory requirements or other factors;
-- Higher-than-expected credit losses;
-- Increased competition from banks or other financial institutions
seeking to increase their share of financing Ford vehicles;
-- Collection and servicing problems related to finance receivables and
net investment in operating leases;
-- Lower-than-anticipated residual values or higher-than-expected return
volumes for leased vehicles; and
-- New or increased credit, consumer, or data protection or other
regulations resulting in higher costs and/or additional financing
restrictions.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. For additional discussion of these risks, see "Item 1A. Risk Factors" in our 2009 Form 10-K Report.
SECOND QUARTER & FIRST HALF 2010 REVENUE AND NET INCOME/(LOSS)
COMPARED WITH 2009
Second Quarter First Half
-------------- ----------
2009* 2010 2009* 2010
----- ---- ----- ----
Revenue (Bils.)
---------------
North America $10.7 $16.9 $20.7 $31.0
South America 1.8 2.6 3.2 4.6
Europe 7.0 7.5 12.8 15.2
Asia Pacific Africa 1.2 1.8 2.4 3.4
--- --- --- ---
Sub-Total (Excluding Volvo) $20.7 $28.8 $39.1 $54.2
Volvo 2.9 - 5.5 -
--- ---
Total Automotive (Excluding
Special Items) $23.6 $28.8 $44.6 $54.2
Special Items - Volvo** - 3.7 - 7.2
--- ---
Total Automotive $23.6 $32.5 $44.6 $61.4
Financial Services 3.2 2.5 6.6 5.2
--- --- --- ---
Total Company Revenue $26.8 $35.0 $51.2 $66.6
===== ===== ===== =====
Memo:
Total Company Revenue
(Excluding Special Items) $26.8 $31.3 $51.2 $59.4
Income (Mils.)
--------------
Pre-Tax Results from
Continuing Operations
(Excluding Special Items) $(554) $2,942 $(2,579) $4,952
Special Items* 2,795 (95) 3,158 30
----- --- ----- ---
Pre-Tax Income/(Loss) from
Continuing Operations $2,241 $2,847 $579 $4,982
====== ====== ==== ======
(Provision for)/Benefit from
Income Taxes 15 (251) 242 (301)
--- ---- --- ----
Income/(Loss) from
Continuing Operations $2,256 $2,596 $821 $4,681
Income/(Loss) from
Discontinued Operations 5 - 5 -
--- --- --- ---
Net Income/(Loss) $2,261 $2,596 $826 $4,681
Less: Income/(Loss)
attributable to Non-
Controlling Interests - (3) (8) (3)
--- --- --- ---
Net Income/(Loss)
attributable to Ford $2,261 $2,599 $834 $4,684
====== ====== ==== ======
* Adjusted to reflect the new accounting standard on VIE
consolidation
** Special items detailed in table on page 14
2009-2010 SECOND QUARTER & FIRST HALF INCOME/(LOSS) FROM CONTINUING
OPERATIONS
Second Quarter First Half
-------------- ----------
2009* 2010 2009* 2010
----- ---- ----- ----
North America $(899) $1,898 $(1,564) $3,151
South America 86 285 149 488
Europe 57 322 (528) 429
Asia Pacific
Africa (27) 113 (124) 136
Volvo (237) - (486) -
Other Automotive
(Excl. Special
Items) (129) (551) (559) (942)
---- ---- ---- ----
Total Automotive
(Excl. Special
Items) $(1,149) $2,067 $(3,112) $3,262
Special Items -
Automotive** 2,795 (95) 3,248 30
----- --- ----- ---
Total Automotive $1,745 $1,972 $136 $3,292
Financial Services
(Excl. Special
Items) 595 875 533 1,690
Special Items -
Financial
Services** - - (90) -
--- --- --- ---
Total Financial
Services $595 $875 $443 $1,690
Pre-Tax Results $2,241 $2,847 $579 $4,982
(Provision
for)/Benefit from
Income Taxes 15 (251) 242 (301)
--- ---- --- ----
Income/(Loss)
from Continuing
Operations $2,256 $2,596 $821 $4,681
Discontinued
Operations 5 - 5 -
(Income)/Loss
attributable to
Non-Controlling
Interests - 3 8 3
--- --- --- ---
Net Income/(Loss)
attributable to
Ford $2,261 $2,599 $834 $4,684
====== ====== ==== ======
Memo: Excluding
Special Items
----------------
Pre-Tax Results $(554) $2,942 $(2,579) $4,952
(Provision
for)/Benefit from
Income Taxes (84) (241) 140 (490)
(Income)/Loss
attributable to
Non-Controlling
Interests - 3 8 3
--- --- --- ---
After-Tax Results $(638) $2,704 $(2,431) $4,465
===== ====== ======= ======
* Adjusted to reflect the new accounting standard on VIE consolidation
** Special items detailed in table on page 14
SECOND QUARTER SPECIAL ITEMS
(in millions)
Income/(Loss)
-------------
Personnel and Dealer-Related Items: 2009 2010
----------------------------------- ---- ----
Automotive Sector
Personnel-reduction programs $(258) $(31)
Retiree health care and related charges (110) 20
Mercury discontinuation/U.S. dealer
reductions (12) (232)
Job Security Benefits/Transition Assistance
Plan 22 14
--- ---
Total Personnel and Dealer-Related Items -
Automotive sector $(358) $(229)
Other Items:
------------
Automotive Sector
Liquidation of foreign subsidiary - foreign
currency translation impact $(281) $-
Investment impairment and related items* (100) -
Net gains on debt reduction actions 3,385 40
Volvo held-for-sale cessation of
depreciation and related charges* 141 94
Other 8 -
---
Total Other Items - Automotive sector $3,153 $134
Financial Services Sector
Total Other Items - Financial Services sector - -
Total $2,795 $(95)
====== ====
Memo: Special Items Impact on Earnings Per
Share $0.90 $(0.02)
* All Volvo Second quarter 2010 financial results treated as special
items, including Volvo's
revenue of $3.7 billion and wholesales of 99,000 units.
FIRST HALF SPECIAL ITEMS
(in millions)
Income/(Loss)
-------------
Personnel and Dealer-Related Items: 2009 2010
----------------------------------- ---- ----
Automotive Sector
Personnel-reduction programs $(442) $(117)
Retiree health care and related charges (288) 40
Mercury discontinuation/U.S. dealer
reductions (93) (247)
Job Security Benefits/Transition Assistance
Plan 314 32
--- ---
Total Personnel and Dealer-Related Items -
Automotive sector $(509) $(292)
Other Items:
------------
Automotive Sector
Volvo held-for-sale impairment $(650) $-
Liquidation of foreign subsidiary - foreign
currency translation impact (281) -
Investment impairment and related items* (100) -
Other 6 -
Volvo held-for-sale cessation of
depreciation and related charges* 127 282
Net gains on debt reduction actions 4,655 40
----- ---
Total Other Items - Automotive sector $3,757 $322
Financial Services Sector
DFO Partnership impairment $(141) $-
Gain on purchase of Ford Holdings debt
securities 51 -
--- ---
Total Other Items - Financial Services sector $(90) $-
---- ---
Total $3,158 $30
====== ===
Memo: Special Items Impact on Earnings Per
Share $1.20 $0.05
* All Volvo first half 2010 financial results treated as special
items, including Volvo's revenue of
$7.2 billion and wholesales of 191,000 units.
TOTAL COMPANY CALCULATION OF EARNINGS PER
SHARE
Second Quarter 2010
-------------------
(in millions) Net Income After-Tax
Attributable Operating
to Ford* Results
-------- Excluding
Special
Items**
--------
Numerator
---------
After-Tax Results $2,599 $2,704
Impact on income from assumed exchange of
convertible notes and convertible trust
preferred securities 103 103
--- ---
After-Tax Operating Results for EPS $2,702 $2,807
======
Impact on income from assumed share issuance
to settle UAW VEBA Note B 91
---
Net Income for EPS $2,793
======
Denominator
-----------
Average shares outstanding*** 3,411 3,411
Net issuable shares, primarily warrants and
restricted stock units 198 198
Convertible notes 372 372
Convertible trust preferred securities 163 163
--- ---
Average Shares for Operating EPS 4,144 4,144
=====
UAW VEBA Note B 466
Average Shares for Net Income EPS 4,610
=====
EPS $0.61 $0.68
TOTAL COMPANY CALCULATION OF EARNINGS PER
SHARE
First Half 2010
---------------
Net
(in millions) Income After-Tax
Attributable Operating
to Ford* Results
-------- Excluding
Special
Items**
--------
Numerator
---------
After-Tax Results $4,684 $4,465
Impact on income from assumed exchange of
convertible notes and convertible trust
preferred securities 204 204
--- ---
After-Tax Operating Results for EPS $4,888 $4,669
======
Impact on income from assumed share issuance
to settle UAW VEBA Note B 182
---
Net Income for EPS $5,070
======
Denominator
-----------
Average shares outstanding*** 3,388 3,388
Net issuable shares, primarily warrants and
restricted stock units 202 202
Convertible notes 372 372
Convertible trust preferred securities 163 163
--- ---
Average Shares for Operating EPS 4,125 4,125
=====
UAW VEBA Note B 465
Average Shares for Net Income EPS 4,590
=====
EPS $1.10 $1.13
* As disclosed, our UAW VEBA Note B allows us to elect to satisfy
each scheduled payment by delivering cash, Ford Common Stock, or a
combination of cash and Common Stock. For purposes of disclosing the
maximum potential dilution to our shares that could occur over time,
we
present our diluted EPS calculation assuming we were to elect to
satisfy each scheduled payment on Note B over time in shares rather
than
cash, holding constant the 30-day volume-weighted average price per
share for the Second Quarter period-end as calculated pursuant to
the
terms of Note B. Using this assumption, our diluted EPS includes 466
million and 465 million potential dilutive shares in the Second
Quarter and
First Half, respectively, related to Note B, which reduced our Second
Quarter and First Half diluted EPS by 5 cents per share and 8 cents
per
share, respectively. As previously disclosed, we will use our
discretion in determining which form of payment makes sense at the
time of each
required payment, balancing liquidity needs and preservation of
shareholder value. We made our December 31, 2009 and June 30, 2010
scheduled payments on Note B in cash. As announced, the terms of
Note B recently have been amended, subject to regulatory approval,
to
provide us greater flexibility through mid-2013 to pre-pay more
frequently (i.e., at each month end except May and June) all or a
portion of the
remaining Note B obligation in cash at a discount. Pre-payments may
be made in cash at a 5% discount prior to 2012, and at a 4% discount
during 2012-2013.
** Excludes Income/(Loss) attributable to non-controlling interests
and the effect of discontinued operations; special items detailed
above.
*** Shares are net of the restricted and uncommitted ESOP shares.
U.S GAAP RECONCILIATION OF AUTOMOTIVE GROSS CASH
June 30, Dec 31, Mar 31, June 30,
(in billions) 2009 * 2009* 2010 2010
-------- ------- -------- ---------
Cash and Cash
Equivalents $11.2 $9.7 $12.8 $8.7
Marketable Securities ** 9.7 15.2 12.5 13.2
--- ---- ---- ----
Total Cash and
Marketable Securities $20.9 $24.9 $25.3 $21.9
Securities-In-Transit
*** (0.1) - - -
UAW-Ford TAA/Other **** (0.4) - - -
----
Gross Cash $20.4 $24.9 $25.3 $21.9
===== ===== ===== =====
* Adjusted to reflect the new accounting standard on VIE
consolidation
** Included at June 30, 2010 are Ford Credit debt securities that we
purchased, which are reflected in the
table at a carrying value of $314 million; the estimated fair value
of these securities is $310 million.
Also included are Mazda marketable securities with a fair value of
$463 million. For similar datapoints
for the other periods listed here, see our prior period SEC reports.
*** The purchase or sale of marketable securities for which the cash
settlement was not made by period
end and for which there was a payable or receivable recorded on the
balance sheet at period end.
**** Amount transferred to UAW-Ford TAA that, due to consolidation,
was shown in cash and marketable
securities.
U.S. GAAP RECONCILIATION OF AUTOMOTIVE OPERATING-RELATED CASH FLOWS
(in billions) 2010
----
Second
Quarter O/(U) First O/(U)
------- 2009* Half 2009*
----- ---- -----
Cash Flows from Operating Activities
of Continuing Operations** $2.9 $3.3 $2.9 $6.2
Items Included in Operating-Related
Cash Flows:
Capital Expenditures (1.0) - (1.9) 0.2
Net Cash Flows from Non-Designated
Derivatives (0.1) 0.1 (0.2) (0.2)
Items Not Included in Operating-
Related Cash Flows:
Cash Impact of Job Security Benefits
& Personnel Reduction Program 0.1 (0.1) 0.2 (0.3)
Pension Contributions 0.4 0.1 0.7 -
Tax Refunds and Tax Payments from
Affiliates - - - 0.3
Other*** 0.3 0.5 0.8 1.1
--- --- --- ---
Operating-Related Cash Flows $2.6 $3.9 $2.5 $7.3
==== ==== ==== ====
* Adjusted to reflect the new accounting standard on VIE consolidation
** Adjusted to reflect the reallocation of amounts previously
displayed in "Net change in intersector receivables/payables and
other liabilities" on our Sector Statement of Cash Flows. These
amounts are being reallocated from a single line item to
the individual cash flow line items within operating, investing, and
financing activities of continuing operations on our
Sector Statement of Cash Flows.
*** 2010 includes cash flows for held-for-sale operations.