Ford Reports Industry-Record Operating Income of $7.2 Billion In 1999
26 January 2000
Ford Motor Company Reports Industry-Record Operating Income of $7.2 Billion In 1999 and Record Fourth Quarter Earnings of $1.8 Billion
DEARBORN, Mich., Jan. 26 -- Ford Motor Company
earned $7.2 billion in 1999, more than any other automotive company in
history, and also established a new company record for annual revenue, which
was $163 billion, up 13 percent.
"Ford had an outstanding year in 1999 by most measures and we achieved
industry-record earnings, but what truly set the company apart was our
consumer-focused business strategy," said President and CEO Jac Nasser. "We
made tremendous progress toward strengthening our brands and transforming the
way all the people of Ford connect with consumers. This holistic approach is
improving our core automotive business and enhancing shareholder value."
Ford reported full-year earnings of $7,237 million or $5.86 per diluted
share of common and Class B stock. In 1998, Ford reported earnings of $22,071
million or $17.76 per share, including a non-cash gain of $15,955 million that
resulted from Ford's spin-off of Associates First Capital .
Fourth-quarter 1999 earnings were $1,806 million or $1.47 per share on
revenue of $44 billion. In the fourth quarter of 1998, Ford earned $1,043
million or 84 cents per share on revenue of $38 billion. The fourth quarter
of 1998 included a charge of $631 million or 51 cents per share primarily for
employee separation programs in North America, Europe and South America.
As highlights of 1999, Nasser pointed to:
-- Ford's acquisition of Volvo Car and the creation of the Premier
Automotive Group, which is comprised of Volvo, Jaguar, Lincoln and Aston
Martin, to drive growth in higher margin vehicle segments.
-- The acquisitions of Kwik-Fit, Automobile Protection Corporation (APCO)
and other businesses to accelerate Ford's growth in automotive consumer
services.
-- The development of e-business partnerships with Microsoft's CarPoint,
Oracle, TeleTech, Yahoo! (announced in January 2000) and others to better
connect with consumers and drive operating efficiencies at Ford, among its
dealers and with supplier companies.
Ford also launched several highly successful products, including the Ford
Focus, Mercury Sable and Ford Taurus in North America, as well as the Volvo
S40/V40, Lincoln LS, Jaguar S-TYPE and Ford Excursion. In India, Ford
launched the new IKON.
The Focus was the first vehicle to be named Car of the Year by journalists
in both North America and Europe, and the Lincoln LS was named Motor Trend's
Car of the Year.
AUTOMOTIVE OPERATIONS
Full-year 1999 earnings from automotive operations were a record $5,721
million on record revenue of $137 billion; after-tax return on sales (ROS) was
4.2 percent. In 1998, earnings from automotive operations were $4,752 million
on revenue of $119 billion; ROS was 4.0 percent.
Worldwide factory unit sales of 7.2 million vehicles in 1999 exceeded the
previous record of 7.0 million established in 1997. Ford also reduced its
total costs in 1999 by $1 billion at constant volume and mix, bringing total
cost reductions to more than $6 billion since 1996.
Net income from automotive operations in the fourth quarter of 1999 was a
record $1,449 million on revenue of $38 billion, compared with fourth-quarter
1998 earnings of $820 million on revenue of $32 billion.
Up-front lump-sum payments of $103 million or eight cents per share
associated with the ratification of the company's new contracts with the
United Auto Workers (UAW) and Canadian Auto Workers (CAW) unions are included
in automotive results in the North America region for the quarter.
"In North America, our momentum is very strong and our results in the
region show the fundamental strength of our brands when the products are right
and the cost is right," Nasser said. "Our results in Europe and South America
are unacceptable, but we are making product investments that will deliver more
hits such as the Ford Focus. At the same time, we are rigorously addressing
costs."
North America: Full-year 1999 earnings in North America were a record
$6,137 million on record revenue of $100 billion; ROS was 6.2 percent. Full-
year 1998 earnings in North America were $4,612 million on revenue of $87
billion; ROS was 5.3 percent.
Fourth-quarter 1999 earnings in North America were a record $1,576 million
on record revenue of $27 billion. Fourth-quarter 1998 earnings were $1,047
million on revenue of $24 billion. Compared with 1998, Ford's fourth-quarter
1999 earnings reflect the non-recurrence of the charge for employee separation
costs, lower costs, higher volume and a more favorable vehicle mix.
Europe: Full-year 1999 earnings in Europe were $28 million on revenue of
$30 billion. Full-year 1998 earnings in Europe were $193 million on revenue
of $24 billion.
Fourth-quarter 1999 results in Europe improved to a loss of $55 million on
revenue of $9 billion. Fourth-quarter 1998 results were a loss of $74 million
on revenue of $7 billion. Compared with 1998, Ford's fourth-quarter 1999
results reflect the non-recurrence of the charge for employee separation
costs, the addition of Volvo Car and lower taxes, offset by lower volumes and
market share of Ford-brand vehicles, primarily the Ka, Fiesta and Mondeo.
South America: Full-year 1999 results in South America were a loss of $452
million on revenue of $2 billion. In 1998, Ford lost $226 million in South
America on revenue of $4 billion.
Fourth-quarter 1999 results in South America improved to a loss of $95
million on revenue of $547 million. Fourth-quarter 1998 results were a loss
of $151 million on revenue of $725 million. Compared with 1998, Ford's
fourth-quarter 1999 results primarily reflect lower costs and the non-
recurrence of the charge for employee separation costs, partially offset by
lower revenue.
Other Markets
Full-year 1999 earnings in Ford's other markets, which include Australia,
Japan, Thailand, India and other Asia-Pacific countries, were $133 million on
revenue of $5 billion. In 1998, Ford earned $173 million in the region on
revenue of $4 billion.
Fourth-quarter 1999 earnings in the region were $23 million on revenue of
$1 billion. In the same period in 1998, Ford lost $2 million on revenue of
$815 million. These results reflect primarily Ford's share of the profit
improvement at Mazda Motor Corp.
VISTEON AUTOMOTIVE SYSTEMS
The earnings of Visteon Automotive Systems are included in the company's
automotive results. In 1999, Visteon earned $735 million, compared with $703
million in 1998.
In the fourth quarter of 1999, Visteon earned $95 million, compared with
$129 million in fourth quarter of 1998. Compared with 1998, the decline in
fourth-quarter 1999 earnings reflected the impact of negotiated price
reductions, the labor agreement in North America and currency-related costs,
offset partially by cost efficiencies and improved volume.
Ford and Visteon are close to completing a market-pricing review begun in
1999 of various carry-over components and systems Ford purchases from Visteon.
When the review is completed and both parties agree to a final pricing level,
it is expected that Visteon will reduce prices to Ford.
FORD CREDIT
Full-year 1999 earnings at Ford Credit were $1,261 million, up 16 percent
compared with 1998 earnings of $1,084 million. Return on equity was 11.5
percent, up 0.9 points.
In the fourth quarter of 1999, Ford Credit earned $309 million compared
with earnings of $234 million in the fourth-quarter of 1998. Compared with
1998, the increase in fourth-quarter 1999 earnings reflects improved credit
loss performance and a higher level of finance receivables, offset partially
by higher operating costs.
HERTZ
The Hertz Corporation reported its sixth consecutive year of
record earnings in 1999, and eighth consecutive year of increased earnings.
Full-year net income was $336 million, up 21 percent compared with earnings of
$277 million in 1998. Ford's share of Hertz' 1999 earnings was $273 million.
In the fourth quarter of 1999, Hertz earned a record $60 million, up 26
percent compared with earnings of $48 million in the same period a year ago.
Ford's share of Hertz' fourth-quarter 1999 earnings was $50 million.
2000 OUTLOOK AND MILESTONES
Earlier in January, Ford established financial milestones for 2000 to
deliver record earnings in North America, improve results in Europe, South
America and the rest of the world, grow total company revenue by $5 billion
and reduce total costs by $1 billion. Ford Credit's milestone is to grow
earnings by 10 percent while improving returns. The milestone for Hertz is to
achieve record earnings (ninth year of increased earnings). The milestone for
Visteon Automotive Systems is to achieve independence.
"We have great brands, innovative products in the market and in the
pipeline, growing financial and consumer services businesses and an e-commerce
strategy that will be a real competitive advantage. These are powerful
platforms for growth," Nasser said. "I'm proud of what the Ford team
accomplished in 1999, and our people are energized to deliver even greater
value to consumers and shareholders in 2000."
Ford Motor Company and Subsidiaries
HIGHLIGHTS
Fourth Quarter Full Year
1999 1998 1999 1998
(unaudited)
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- North America 1,280 1,197 4,787 4,370
- Outside North America 639 617 2,433 2,453
Total 1,919 1,814 7,220 6,823
Sales and revenues (in millions)
- Automotive $ 37,781 $ 32,204 $ 136,973 $ 119,083
- Financial Services 6,637 5,699 25,585 25,333
Total $ 44,418 $ 37,903 $ 162,558 $ 144,416
Net income (in millions)
- Automotive $ 1,449 $ 820 $ 5,721 $ 4,752
- Financial Services
(excl. The Associates) 357 223 1,516 1,187
- The Associates - - - 177
- Gain on spin-off of
The Associates - - - 15,955
Total $ 1,806 $ 1,043 $ 7,237 $ 22,071
Capital expenditures (in millions)
- Automotive $ 2,921 $ 2,445 $ 7,945 $ 8,113
- Financial Services 155 106 590 504
Total $ 3,076 $ 2,551 $ 8,535 $ 8,617
Automotive capital expenditures as a
percentage of sales 7.7% 7.6% 5.8% 6.8%
Stockholders' equity at December 31
- Total (in millions) $ 27,537 $ 23,409 $ 27,537 $ 23,409
- After-tax return on Common and
Class B stockholders'
equity 26.6% 17.8% 28.1% 25.4%
Automotive net cash at December 31
(in millions)
- Cash and marketable
securities $ 23,585 $ 23,805 $ 23,585 $ 23,805
- Debt 12,144 9,834 12,144 9,834
Automotive net cash $ 11,441 $ 13,971 $ 11,441 $ 13,971
After-tax return on sales
- North American Automotive 5.8% 4.5% 6.2% 5.3%
- Total Automotive 3.9% 2.6% 4.2% 4.0%
Shares of Common and Class B Stock
(in millions)
- Average number outstanding 1,207 1,210 1,210 1,211
- Number outstanding at
December 31 1,207 1,209 1,207 1,209
Common Stock price (per share)
(adjusted to reflect The Associates
spin-off)
- High $54-7/8 $59-7/8 $67-7/8 $61-7/16
- Low 48-1/2 38-13/16 46-1/4 28-15/32
AMOUNTS PER SHARE OF COMMON AND CLASS B
STOCK AFTER PREFERRED STOCK DIVIDENDS
Income assuming dilution
- Automotive $ 1.18 $ 0.66 $ 4.63 $ 3.76
- Financial Services (excl.
The Associates) 0.29 0.18 1.23 0.96
- The Associates - - - 0.14
- Gain on spin-off of
The Associates - - - 12.90
Total $ 1.47 $ 0.84 $ 5.86 $ 17.76
Cash dividends $ 0.50 $ 0.46 $ 1.88 $ 1.72
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
For the Periods Ended December 31, 1999 and 1998
(in thousands)
Fourth Quarter Full Year
1999 1998 1999 1998
(unaudited) (unaudited)
North America
United States
Cars 497 428 1,725 1,563
Trucks 646 654 2,660 2,425
Total United States 1,143 1,082 4,385 3,988
Canada 100 87 288 279
Mexico 37 28 114 103
Total North America 1,280 1,197 4,787 4,370
Europe
Britain 122 102 518 498
Germany 80 143 353 444
Italy 59 56 209 205
Spain 45 46 180 155
France 44 54 172 171
Other countries 175 95 528 377
Total Europe 525 496 1,960 1,850
Other international
Australia 30 35 125 133
Brazil 26 34 117 178
Argentina 16 16 60 97
Taiwan 11 12 56 77
Japan 8 5 32 25
Other countries 23 19 83 93
Total other
international 114 121 473 603
Total worldwide vehicle
unit sales 1,919 1,814 7,220 6,823
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 were restated to correct reported unit sales.
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Years Ended December 31, 1999, 1998 and 1997
(in millions, except amounts per share)
1999 1998 1997
AUTOMOTIVE
Sales $136,973 $119,083 $122,935
Costs and expenses:
Costs of sales 119,046 103,905 107,994
Selling, administrative and
other expenses 9,548 8,493 7,995
Total costs and expenses 128,594 112,398 115,989
Operating income 8,379 6,685 6,946
Interest income 1,428 1,331 1,116
Interest expense 1,397 829 788
Net interest income 31 502 328
Equity in net income/(loss)
of affiliated companies 82 (38) (88)
Net expense from transactions with
Financial Services (45) (191) (104)
Income before income taxes -
Automotive 8,447 6,958 7,082
FINANCIAL SERVICES
Revenues 25,585 25,333 30,692
Costs and expenses:
Interest expense 7,679 8,036 9,712
Depreciation 9,254 8,589 7,645
Operating and other expenses 4,653 4,618 6,621
Provision for credit and
insurance losses 1,465 1,798 3,230
Total costs and expenses 23,051 23,041 27,208
Net revenue from transactions with
Automotive 45 191 104
Gain on spin-off of The
Associates - 15,955 -
Gain on sale of Common Stock
of a subsidiary - - 269
Income before income taxes - Financial
Services 2,579 18,438 3,857
TOTAL COMPANY
Income before income taxes 11,026 25,396 10,939
Provision for income taxes 3,670 3,176 3,741
Income before minority
interests 7,356 22,220 7,198
Minority interests in net
income of subsidiaries 119 149 278
Net income $ 7,237 $ 22,071 $ 6,920
Income attributable to Common
and Class B Stock
after preferred stock
dividends $ 7,222 $ 21,964 $ 6,866
Average number of shares of Common and
Class B Stock outstanding 1,210 1,211 1,195
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic income $ 5.99 $ 18.17 $ 5.75
Diluted income $ 5.86 $ 17.76 $ 5.62
Cash dividends $ 1.88 $ 1.72 $ 1.645
Prior period costs of sales and selling, administrative and other expenses
were reclassified.
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
December 31, December 31,
1999 1998
ASSETS
Automotive
Cash and cash equivalents $ 4,642 $ 3,685
Marketable securities 18,943 20,120
Total cash and marketable securities 23,585 23,805
Receivables 3,769 2,604
Inventories 6,435 5,656
Deferred income taxes 3,872 3,239
Other current assets 4,126 3,405
Current receivable from Financial Services 2,304 0
Total current assets 44,091 38,709
Equity in net assets of affiliated companies 2,744 2,401
Net property 42,317 37,320
Deferred income taxes 2,816 3,175
Other assets 13,213 7,139
Total Automotive assets 105,181 88,744
Financial Services
Cash and cash equivalents 1,588 1,151
Investments in securities 733 968
Finance receivables 113,298 97,176
Net investment in operating leases 42,471 41,173
Other assets 11,123 7,445
Receivable from Automotive 1,835 888
Total Financial Services assets 171,048 148,801
Total assets $276,229 $237,545
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 14,450 $ 13,368
Other payables 4,156 2,755
Accrued liabilities 19,321 16,925
Income taxes payable 1,862 1,404
Debt payable within one year 1,602 1,121
Current payable to Financial Services 0 70
Total current liabilities 41,391 35,643
Long-term debt 10,542 8,713
Other liabilities 33,247 30,133
Deferred income taxes 1,376 751
Payable to Financial Services 1,835 818
Total Automotive liabilities 88,391 76,058
Financial Services
Payables 3,550 3,555
Debt 139,919 122,324
Deferred income taxes 7,078 5,488
Other liabilities and deferred income 6,775 6,034
Payable to Automotive 2,304 0
Total Financial Services liabilities 159,626 137,401
Company-obligated mandatorily redeemable
preferred securities of a subsidiary trust
holding solely junior subordinated
debentures of the Company 675 677
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per
share (aggregate liquidation preference
of $177 million) * *
Common Stock, par value $1.00 per
share (1,151 million shares issued) 1,151 1,151
Class B Stock, par value $1.00 per
share (71 million shares issued) 71 71
Capital in excess of par value of stock 5,049 5,283
Accumulated other comprehensive income (1,923) (1,670)
ESOP loan and treasury stock (1,417) (1,085)
Earnings retained for use in business 24,606 19,659
Total stockholders' equity 27,537 23,409
Total liabilities and stockholders'
equity $276,229 $237,545
- - - -
*Less than $1 million
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1999, 1998 and 1997
(in millions)
1999 1998 1997
Financial Financial Financial
Auto- Services Auto- Services Auto- Services
motive motive motive
Cash and cash equivalents
at January 1 $3,685 $1,151 $6,316 $1,618 $3,578 $3,689
Cash flows from operating
activities 16,500 12,540 9,622 13,478 13,984 13,650
Cash flows from investing activities
Capital
expenditures (7,945) (590) (8,113) (504) (8,142) (575)
Purchase of leased
assets - - (110) - (332) -
Acquisitions of other
companies (6,342) (144) - (344) - (40)
Acquisitions of receivables
and lease investments - (80,422) - (78,863) - (117,895)
Collections of receivables and lease
investments - 46,646 - 49,303 - 86,842
Net acquisitions of daily
rental vehicles - (1,739) - (1,790) - (958)
Purchases of
securities (2,838) (900) (758) (2,102) (43) (3,067)
Sales and maturities of
securities 2,352 1,100 590 2,271 13 3,520
Proceeds from sales of receivables and
lease investments - 9,931 - 8,413 - 5,197
Net investing activity with
Financial Services 1,329 - 642 - 258 -
Other (68) 119 (468) (463) (285) (569)
Net cash used in
investing
activities (13,512) (25,999) (8,217) (24,079) (8,531) (27,545)
Cash flows from financing activities
Cash dividends (2,290) - (5,348) - (2,020) -
Issuance of Common
Stock 336 - 157 - 310 -
Issuance of Common Stock
of a subsidiary - - - - - 453
Purchase of Ford
Treasury Stock (707) - (669) - (15) -
Preferred stock - Series B repurchase,
Series A redemption - - (420) - - -
Changes in short-term
debt 64 5,547 497 7,475 (430) 6,210
Proceeds from issuance of
other debt 3,428 37,184 2,403 21,776 1,100 22,923
Principal payments on
other debt (1,182) (28,672) (1,434) (16,797) (668) (18,215)
Net financing activity
with Automotive - (1,329) - (642) - (258)
Spin-off of The
Associates cash - - - (508) - -
Other (254) 88 (472) (12) 16 (206)
Net cash (used in)/provided by
financing
activities (605) 12,818 (5,286) 11,292 (1,707) 10,907
Effect of exchange rate
changes on cash (69) (279) (54) 146 (119) 28
Net transactions with Automotive/
Financial Services (1,357) 1,357 1,304 (1,304) (889) 889
Net (decrease)/increase in cash and
cash equivalents 957 437 (2,631) (467) 2,738 (2,071)
Cash and cash equivalents
at December 31 $4,642 $1,588 $3,685 $1,151 $6,316 $1,618