Ford Earns $2.7 Billion Before Charges in Second Quarter
19 July 2000
17th Consecutive Quarter of Operating Earnings Improvement New Records for Operating Profits, Revenues and Vehicle Sales
DEARBORN, Mich. - Ford Motor Company posted its 17th consecutive quarter of
improved operating earnings in the second quarter with a record $2.7 billion, or
$2.20 per diluted share of common and Class B stock, up 10 percent. The results
compare with second quarter operating earnings in 1999 of $2.48 billion, or
$2.00 per diluted share.
As previously announced, Ford posted after-tax one-time charges in the
second quarter for asset impairments and restructuring costs in Europe
totaling $1 billion (83 cents per share) and the spin-off of Visteon totaling
$2.3 billion ($1.84 per share). Including these charges, Ford's after-tax net
result was a loss of $577 million, or 47 cents per share. During the same
period in 1999, Ford took an after-tax one-time charge of $146 million, or
11 cents a share, related to the acquisition of Volvo Car. Including this
charge, Ford's second quarter 1999 net income totaled $2.34 billion or $1.89 a
share.
Second-quarter revenues were a record $44.5 billion, up 6 percent from
$41.9 billion in the second quarter of 1999.
"A strong overall product lineup and new hit products are driving our
strong operating earnings momentum," said Jac Nasser, Ford Motor Company
president and chief executive officer. "In addition, we are accelerating the
transformation of Ford Motor Company, evidenced by the deployment of consumer-
driven Six Sigma, our many e-business initiatives, our purchase of Land Rover,
the difficult but decisive actions in Europe and the spin-off of Visteon
Corporation."
On June 28, Visteon Corporation became an independent company
through a 100 percent distribution of Visteon stock to Ford shareholders.
Visteon's second quarter earnings were reported separately yesterday and are
included in Ford Motor Company's overall results as a discontinued operation,
but excluded from the company's automotive results.
AUTOMOTIVE OPERATIONS
Ford Motor Company's worldwide automotive operating earnings were
$2.1 billion in the second quarter, up 15 percent from the same period a year
ago. Worldwide automotive revenues in the second quarter were $37.4 billion,
up 5 percent compared with a year ago. Operating after-tax return on sales
(ROS) was 5.6 percent, up half a point from last year's second quarter.
Worldwide vehicle unit sales were a record 1.99 million, compared with
1.93 million a year ago. Automotive cash was a record $25.6 billion at the
end of the quarter, up $3.2 billion from the same period last year, excluding
Visteon. Net cash was $14.8 billion, up $3.5 billion from a year ago.
North America: Automotive operations in North America earned an operating
record $1.8 billion in the second quarter of 2000, up $127 million from the
same period a year ago. After-tax ROS was 6.7 percent.
Total Ford Motor Company factory unit sales in the United States during
the second quarter were up 5 percent from the same period a year ago to a
record 1.19 million units. The strong sales pace was aided by the continued
strong performance of the Ford Focus, Ford F-Series, Ford Explorer, Ford
Expedition, Lincoln LS, Jaguar S-Type, Volvo S40 and Volvo V70.
Overseas Operations: Second quarter automotive operating earnings in Ford
Motor Company's overseas operations, including Europe, South America and Asia-
Pacific, totaled $228 million, up $147 million from the same period a year
ago.
Excluding one-time charges, automotive operating earnings in Europe in the
second quarter were $156 million, compared with $206 million in the same
period a year ago.
"With our plan in place to improve efficiency, reduce capacity and fixed
costs, and accelerate our product offensive with 45 significant new products
over the next five years, we are confident our European operations are driving
toward sustained profitable growth," said Nasser.
FORD CREDIT: Ford Credit earned $388 million in the second quarter, up
16 percent from the second quarter of 1999. Return on equity was 13.4
percent, up 1.1 percentage points from a year ago.
HERTZ: On July 14, the Hertz Corporation announced record
earnings of $104 million in the second quarter, up 18 percent. Ford Motor
Company's share of Hertz' second-quarter earnings was $84 million.
DELIVERING SHAREHOLDER VALUE: "We have laid the groundwork for continued
growth and success with our consumer focus, major product initiatives and
restructuring actions," said Nasser. "This along with our strong earnings and
cash flow momentum will allow the Company to continue to reward its
shareholders."
In August, Ford Motor Company shareholders will vote on the company's
Value Enhancement Plan (VEP). Under the VEP, Ford shareholders will exchange
their current Ford common or Class B shares for new common or Class B shares,
plus additional new Ford shares or cash up to $10 billion total.
Ford Motor Company and Subsidiaries
HIGHLIGHTS
Second Quarter First Half
2000 1999 2000 1999
(unaudited) (unaudited)
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- North America 1,304 1,237 2,613 2,457
- Outside North America 687 691 1,289 1,246
Total 1,991 1,928 3,902 3,703
Sales and revenues (in millions)
- Automotive $37,366 $35,546 $73,541 $67,143
- Financial Services 7,153 6,361 13,872 12,313
Total $44,519 $41,907 $87,413 $79,456
Net income (loss) (in millions)
- Automotive $1,052 $1,651 $2,604 $3,097
- Financial Services 461 407 841 735
Income from continuing
operations 1,513 2,058 3,445 3,832
- Discontinued operation
(Visteon) 162 280 309 485
- Loss on spin-off of Visteon (2,252) - (2,252) -
Total $(577) $2,338 $1,502 $4,317
Capital expenditures (in millions)
- Automotive $1,453 $1,566 $2,952 $2,709
- Financial Services 158 140 464 284
Total $1,611 $1,706 $3,416 $2,993
Automotive capital expenditures as a
percentage of sales 3.9% 4.4% 4.0% 4.0%
Stockholders' equity at June 30
- Total (in millions) $24,643 $26,327 $24,643 $26,327
- Annualized after-tax return on Common
and Class B stockholders'
equity 26.6% 38.7% 22.0% 35.0%
Automotive net cash at June 30
(in millions)
- Cash and marketable
securities $25,557 $22,395 $25,557 $22,395
- Debt 10,804 11,177 10,804 11,177
Automotive net cash $14,753 $11,218 $14,753 $11,218
After-tax return on sales
- North American Automotive 6.7% 6.7% 6.4% 6.2%
- Total Automotive 2.9% 4.7% 3.6% 4.7%
Shares of Common and Class B Stock
(in millions)
- Average number outstanding 1,205 1,211 1,206 1,211
- Number outstanding at June 30 1,205 1,210 1,205 1,210
Common Stock price (per share)
(adjusted to reflect Visteon spin-off)
- High $55 $65-1/4 $55 $65-1/4
- Low 40-3/8 50-1/2 39-3/8 50-1/2
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income assuming dilution
- Automotive $0.86 $1.33 $2.12 $2.50
- Financial Services 0.38 0.33 0.69 0.59
Subtotal 1.24 1.66 2.81 3.09
- Discontinued operation
(Visteon) 0.13 0.23 0.25 0.39
- Loss on spin-off of Visteon (1.84) - (1.84) -
Total $(0.47) $1.89 $1.22 $3.48
Cash dividends $0.50 $0.46 $1.00 $0.92