UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- ----- AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
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or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-3950
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FORD MOTOR COMPANY
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(Exact name of registrant as specified in its charter)
Incorporated in Delaware 38-0549190
---------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One American Road, Dearborn, Michigan 48126
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
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Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| . No .
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date: As of March 31, 2001, the Registrant had outstanding 1,758,725,872 shares
of Common Stock and 70,852,076 shares of Class B Stock.
Exhibit index located on sequential page number 22
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-1-
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
First Quarter
-------------------------------
2001 2000
-------------- --------------
Worldwide vehicle unit sales of cars and trucks
(in thousands)
- - North America 1,104 1,312
- - Outside North America 701 602
----- -----
Total 1,805 1,914
===== =====
Sales and revenues (in millions)
- - Automotive $34,650 $36,175
- - Financial Services 7,711 6,719
------- -------
Total $42,361 $42,894
======= =======
Net income (in millions)
- - Automotive $ 689 $ 1,552
- - Financial Services 370 380
------- -------
Income from continuing operations 1,059 1,932
- - Discontinued operation - 147
------- -------
Total $ 1,059 $ 2,079
======= =======
Capital expenditures (in millions)
- - Automotive $ 1,357 $ 1,500
- - Financial Services 131 306
------- -------
Total $ 1,488 $ 1,806
======= =======
Automotive capital expenditures as a
percentage of sales 3.9% 4.1%
Stockholders' equity at March 31
- - Total (in millions) $16,069 $28,419
- - Annualized after-tax return on Common and
Class B stockholders' equity 25.7% 27.7%
Automotive net cash at March 31
(in millions)
- - Cash and marketable securities $15,767 $22,848
- - Debt 12,036 10,753
------- -------
Automotive net cash $ 3,731 $12,095
======= =======
After-tax return on sales
- - North American Automotive 3.0% 6.2%
- - Total Automotive 2.0% 4.3%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,840 1,206
- - Number outstanding at March 31 1,830 1,205
Common Stock price (per share)
- - High $ 31.37 $ 30.33
- - Low 23.75 22.12
AMOUNTS PER SHARE OF COMMON AND CLASS B
STOCK AFTER PREFERRED STOCK DIVIDENDS
Income assuming dilution
- - Automotive $ 0.36 $ 1.27
- - Financial Services 0.20 0.31
------- -------
Total continuing operations 0.56 1.58
- - Discontinued operation - 0.12
------- -------
Total $ 0.56 $ 1.70
======= =======
Cash dividends $ 0.30 $ 0.50
-2-
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
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For the Periods Ended March 31, 2001 and 2000
(in thousands)
First Quarter
-----------------------------
2001 2000
------------- -------------
North America
United States
Cars 363 481
Trucks 653 724
----- -----
Total United States 1,016 1,205
Canada 52 79
Mexico 36 28
----- -----
Total North America 1,104 1,312
Europe
Britain 180 115
Germany 106 91
Italy 64 49
France 42 42
Spain 40 40
Sweden 28 28
Other countries 116 112
----- -----
Total Europe 576 477
South America
Brazil 35 28
Argentina 8 15
Other countries 7 6
----- -----
Total South America 50 49
Other international
Australia 26 24
Taiwan 17 22
Other countries 32 30
----- -----
Total other international 75 76
----- -----
Total worldwide vehicle unit sales 1,805 1,914
===== =====
Vehicle unit sales generally are reported worldwide on a "where sold" basis and
include sales of all Ford Motor Company units, as well as units manufactured by
Ford and sold to other manufacturers.
-3-
Part I. Financial Statements
----------------------------
Item 1. Financial Statements
- -----------------------------
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended March 31, 2001 and 2000
(in millions)
First Quarter
-----------------------------
2001 2000
-------------- -------------
AUTOMOTIVE
Sales $34,650 $36,175
Costs and expenses (Note 2)
Cost of sales (Note 3) 30,730 31,578
Selling, administrative and other expenses 2,506 2,265
------- -------
Total costs and expenses 33,236 33,843
Operating income 1,414 2,332
Interest income 255 368
Interest expense 367 318
------- -------
Net interest income/(expense) (112) 50
Equity in net income/(loss) of affiliated companies (178) (32)
Net expense from transactions with
Financial Services (85) (10)
------- -------
Income before income taxes - Automotive 1,039 2,340
FINANCIAL SERVICES
Revenues 7,711 6,719
Costs and expenses
Interest expense 2,560 2,213
Depreciation 2,519 2,208
Operating and other expenses (Note 3) 1,437 1,211
Provision for credit and insurance losses 686 454
------- -------
Total costs and expenses 7,202 6,086
Net revenue from transactions with Automotive 85 10
------- -------
Income before income taxes - Financial Services 594 643
------- -------
TOTAL COMPANY
Income before income taxes 1,633 2,983
Provision for income taxes 571 1,022
------- -------
Income before minority interests 1,062 1,961
Minority interests in net income of subsidiaries 3 29
------- -------
Income from continuing operations $ 1,059 $ 1,932
Income from discontinued operation (Note 4) - 147
------- -------
Net income $ 1,059 $ 2,079
======= =======
Income attributable to Common and Class B Stock
after preferred stock dividends $ 1,055 $ 2,075
Average number of shares of Common and Class B
Stock outstanding 1,840 1,206
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Notes 5 and 6)
Basic income
Income from continuing operations $ 0.58 $ 1.61
Net income $ 0.58 $ 1.73
Diluted income
Income from continuing operations $ 0.56 $ 1.58
Net income $ 0.56 $ 1.70
Cash dividends $ 0.30 $ 0.50
The accompanying notes are part of the financial statements.
-4-
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
March 31, December 31,
2001 2000
--------------- ----------------
ASSETS
Automotive
Cash and cash equivalents $ 3,953 $ 3,374
Marketable securities 11,814 13,116
-------- --------
Total cash and marketable securities 15,767 16,490
Receivables 4,069 4,685
Inventories (Note 7) 7,664 7,514
Deferred income taxes 2,674 2,239
Other current assets 5,683 5,318
Current receivable from Financial Services 2,538 1,587
-------- --------
Total current assets 38,395 37,833
Equity in net assets of affiliated companies 3,003 2,949
Net property 36,133 37,508
Deferred income taxes 3,235 3,342
Other assets 13,045 13,711
-------- --------
Total Automotive assets 93,811 95,343
Financial Services
Cash and cash equivalents 1,429 1,477
Investments in securities 662 817
Finance receivables, net 126,279 125,164
Net investment in operating leases 47,575 46,593
Other assets 12,194 12,390
Receivable from Automotive 2,637 2,637
-------- --------
Total Financial Services assets 190,776 189,078
-------- --------
Total assets $284,587 $284,421
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 15,794 $ 15,075
Other payables 4,443 4,011
Accrued liabilities 22,773 23,515
Income taxes payable 447 449
Debt payable within one year 249 277
-------- --------
Total current liabilities 43,706 43,327
Long-term debt 11,787 11,769
Other liabilities 30,895 30,495
Deferred income taxes 296 353
Payable to Financial Services 2,637 2,637
-------- --------
Total Automotive liabilities 89,321 88,581
Financial Services
Payables 5,194 5,297
Debt 155,329 153,510
Deferred income taxes 8,626 8,677
Other liabilities and deferred income 6,837 7,486
Payable to Automotive 2,538 1,587
-------- --------
Total Financial Services liabilities 178,524 176,557
Company-obligated mandatorily redeemable preferred securities of a subsidiary
trust holding solely junior subordinated debentures of the Company (Note 8) 673 673
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate liquidation preference
of $177 million) * *
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 6,035 6,174
Accumulated other comprehensive income (Notes 3 and 9) (5,768) (3,432)
ESOP loan and treasury stock (2,603) (2,035)
Earnings retained for use in business 18,386 17,884
-------- --------
Total stockholders' equity 16,069 18,610
-------- --------
Total liabilities and stockholders' equity $284,587 $284,421
======== ========
- - - - - -
*Less than $1 million
The accompanying notes are part of the financial statements.
-5-
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended March 31, 2001 and 2000
(in millions)
First Quarter 2001 First Quarter 2000
--------------------------- ---------------------------
Financial Financial
Automotive Services Automotive Services
------------- ------------- ------------- -------------
Cash and cash equivalents at January 1 $ 3,374 $ 1,477 $ 2,793 $ 1,588
Cash flows from operating activities before securities trading 3,385 1,903 3,443 5,342
Net sales of trading securities 1,362 (6) 22 73
------- -------- ------- --------
Net cash flows from operating activities 4,747 1,897 3,465 5,415
Cash flows from investing activities
Capital expenditures (1,357) (131) (1,500) (306)
Acquisitions of receivables and lease investments - (23,772) - (24,585)
Collections of receivables and lease investments - 13,249 - 15,389
Net acquisitions of daily rental vehicles - (1,118) - (1,035)
Purchases of securities (6,713) (204) (1,133) (142)
Sales and maturities of securities 6,654 199 1,100 123
Proceeds from sales of receivables and lease investments - 7,174 - 2,807
Net investing activity with Financial Services (674) - 35 -
Cash paid for acquisitions (Note 10) (122) (743) (206) (49)
Other 342 9 (56) 240
------- -------- ------- --------
Net cash used in investing activities (1,870) (5,337) (1,760) (7,558)
Cash flows from financing activities
Cash dividends (557) - (607) -
Net purchases of Common Stock (801) - (78) -
Changes in short-term debt (28) (4,861) (736) (3,891)
Proceeds from issuance of other debt 79 14,386 156 11,610
Principal payments on other debt (61) (7,691) (389) (3,672)
Net financing activity with Automotive - 674 - (35)
Net cash distribution to Ford from discontinued operation - - 17 -
Other 84 44 21 (549)
------- ------- ------- -------
Net cash (used in)/provided by financing activities (1,284) 2,552 (1,616) 3,463
Effect of exchange rate changes on cash (63) (111) 48 (80)
Net transactions with Automotive/Financial Services (951) 951 945 (945)
------- ------- ------- -------
Net increase/(decrease) in cash and cash equivalents 579 (48) 1,082 295
------- ------- ------- -------
Cash and cash equivalents at March 31 $ 3,953 $ 1,429 $ 3,875 $ 1,883
======= ======= ======= =======
The accompanying notes are part of the financial statements.
-6-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. Financial Statements - The financial data presented herein are unaudited,
but in the opinion of management reflect those adjustments necessary for a
fair presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference should
be made to the financial statements contained in the registrant's Annual
Report on Form 10-K (the "10-K Report") for the year ended December 31,
2000. For purposes of this report, "Ford", the "Company", "we", "our", "us"
or similar references means Ford Motor Company and its majority owned
subsidiaries unless the context requires otherwise. Certain amounts for
prior periods were reclassified to conform with present period
presentation.
2. Selected Automotive Costs and Expenses are summarized as follows (in
millions):
First Quarter
----------------------------
2001 2000
------------ ------------
Depreciation $675 $694
Amortization of special tools 726 574
Pension expense/(benefits) (85) 64
3. SFAS 133 - Ford Motor Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS No. 137 and SFAS No. 138, on January
1, 2001. The Company operates in many countries worldwide and is exposed to
market risks, including the effect of changes in foreign currency exchange
rates, commodity prices, and interest rates. These financial exposures are
monitored and managed by the Company as an integral part of its overall
risk management program, which recognizes the unpredictability of financial
markets and seeks to reduce the potentially adverse effect on results. The
Company uses derivative financial instruments to manage the exposures to
fluctuations in exchange rates, commodity prices, and interest rates.
Exchange rate risk is managed by use of foreign currency agreements,
including forward contracts, swaps, and options. Commodity price risk is
managed by use of forward price contracts and options. Exchange rate and
commodity risk derivatives are primarily accounted for as cash flow hedges
and generally mature in 3 years or less, with a maximum maturity of 7
years. Interest rate risk is managed by entering into interest rate swap
agreements to change the interest rate characteristics of Ford's debt
(primarily used in the Financial Services sector) to match the interest
rate characteristics of related assets. These interest rate derivatives are
designated as either cash flow or fair-value hedges. In addition, Ford uses
forward contracts to hedge certain net investments in foreign operations
and holds other derivatives that presently do not qualify for hedge
accounting treatment under SFAS No. 133. Derivatives accounted for as cash
flow hedges comprise most of the balance of SFAS No. 133 activity reported
as a part of stockholders' equity.
Ford's strategy is to use derivatives to manage specific economic risks to
changes in exchange rates, commodity prices, and interest rates. Ford does
not use derivatives for speculative purposes. For more information on
Ford's derivative strategy, see Item 7A. "Quantitative and Qualitative
Disclosures About Market Risk" and Note 1 of the Notes to Consolidated
Financial Statements in the 10-K Report.
Adverse adjustments to income (not material to total Company results) and
to stockholders' equity in the first quarter, including transition
adjustment, were (in millions):
Financial Total
Automotive Services Company
-------------- ------------ ---------------
Income before income taxes $(90)* $(20)** $ (110)
Net income (59) (13) (72)
Stockholders' equity (1,225)***
* Recorded in Automotive cost of sales
** Recorded in Financial Services operating and other expenses
*** Recorded inaccumulated other comprehensive income
Of the $1,225 million reduction recorded in stockholders' equity (including
$550 million transition adjustment on January 1), about $400 million ($170
million of which relates to transition adjustment) is expected to be
reclassified to net income during the next twelve months as the related
underlying transactions occur. The amount reclassified from equity to
earnings in the first quarter of 2001 reduced earnings by about $80
million. Consistent with the Company's
-7-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
comprehensive, non-speculative risk-management practices, neither these nor
future reclassifications are anticipated to have a material effect on net
Company earnings, as they should be substantially offset by the opposite
effects on related underlying transactions.
4. Discontinued Operation - On June 28, 2000, Ford distributed 130 million
shares of Visteon Corporation ("Visteon"), which represented its 100%
ownership interest, by means of a tax-free spin-off in the form of a
dividend on Ford Common and Class B Stock. Ford's financial statements
reflect Visteon as a "discontinued operation" for all periods prior to July
1, 2000.
5. Value Enhancement Plan - On August 7, 2000, the Company announced the final
results of its recapitalization, known as the Value Enhancement Plan
("VEP"). Under the VEP, Ford shareholders exchanged each of their old Ford
Common or Class B shares for one new Ford Common or Class B share, as the
case may be, plus, at their election, either $20 in cash, 0.748 additional
new Ford Common shares, or a combination of $5.17 in cash and 0.555
additional new Ford Common shares. As a result of the elections made by
shareholders under the VEP, the total cash elected was $5.7 billion and the
total number of new Ford Common and Class B shares that became issued and
outstanding was 1.893 billion. As a result of the VEP, approximately $1.2
billion was transferred from capital stock to capital in excess of par
value of stock. In accordance with generally accepted accounting
principles, prior period shares and earnings per share amounts were not
adjusted.
6. Income Per Share of Common and Class B Stock - Basic income per share of
Common and Class B Stock is calculated by dividing the income attributable
to Common and Class B Stock by the average number of shares of Common and
Class B Stock outstanding during the applicable period, adjusted for shares
issuable under employee savings and compensation plans.
The calculation of diluted income per share of Common and Class B Stock
takes into account the effect of dilutive potential common stock, such as
stock options.
Income per share of Common and Class B Stock from continuing operations was
as follows (in millions, except per share amounts):
First Quarter 2001 First Quarter 2000
----------------------------- --------------------------
Income Shares Income Shares
-------------- ------------- ----------- -------------
Income from continuing operations and shares $1,059 1,840 $1,932 1,206
Preferred stock dividend requirements (4) - (4) -
Issuable and uncommitted ESOP shares - (12) - (7)
------ ------ ------ ------
Basic continuing income and shares $1,055 1,828 $1,928 1,199
Basic income per share from continuing operations $ 0.58 $ 1.61
Basic income per share from discontinued operation - 0.12
------ ------
Basic income per share $ 0.58 $ 1.73
Basic continuing income and shares $1,055 1,828 $1,928 1,199
Net dilutive effect of options - 40 - 23
------ ----- ------ -----
Diluted continuing income and shares $1,055 1,868 $1,928 1,222
Diluted income per share from continuing operations $ 0.56 $ 1.58
Diluted income per share from discontinued operation - 0.12
------ ------
Diluted income per share $ 0.56 $ 1.70
7. Automotive Inventories are summarized as follows (in millions):
March 31, December 31,
2001 2000
---------------- -----------------
Raw materials, work in process and supplies $2,837 $2,798
Finished products 4,827 4,716
------ ------
Total inventories $7,664 $7,514
====== ======
8. Company-Obligated Mandatorily Redeemable Preferred Securities of a
Subsidiary Trust - The sole asset of Ford Motor Company Capital Trust I
(the "Trust"), which is the obligor on the Preferred Securities of such
Trust, is $632 million principal amount of 9% Junior Subordinated
Debentures due 2025 of Ford Motor Company.
-8-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
9. Comprehensive Income - Other comprehensive income primarily reflects
foreign currency translation adjustments and adjustments related to SFAS
133 (Note 3). Total comprehensive income is summarized as follows (in
millions):
First Quarter
-----------------------------------
2001 2000
----------------- ----------------
Net income $ 1,059 $2,079
Other comprehensive income (2,336) (596)
------- ------
Total comprehensive income $(1,277) $1,483
======= ======
10. Acquisitions
Hertz Purchase - In March 2001, through a tender offer and a merger
transaction, Ford acquired (for a total price of $735 million) the common
stock of Hertz that it did not own, which represented about 18% of the
economic interest in Hertz.
Purchase of Land Rover Business - On June 30, 2000, Ford purchased the Land
Rover business from the BMW Group for approximately three billion euros.
Approximately two-thirds of the purchase price (equivalent of $1.9 billion
at June 30, 2000) was paid at time of closing; the remainder will be paid
in 2005. The acquisition involves the entire Land Rover line of products,
and related assembly and engineering facilities. It does not include
Rover's passenger car business or financial services business.
11. Segment Information - Ford's business is divided into two business sectors
- Automotive and Financial Services (including Ford Credit and Hertz);
detail is summarized as follows (in millions):
Financial Services Sector
-----------------------------------------
First Quarter Auto Ford Other Elims/
Sector Credit Hertz Fin Svcs Other Total
------------- ------------- ------------ ------------- ------------ -------------
2001
----
Revenues
External customer $ 34,650 $ 6,348 $ 1,176 $ 179 $ 8 $ 42,361
Intersegment 1,228 122 8 27 (1,385) -
-------- -------- ------- ------ ------- --------
Total Revenues $ 35,878 $ 6,470 $ 1,184 $ 206 $(1,377) $ 42,361
======== ======== ======= ====== ======= ========
Net income $ 689 $ 393 $ (4) $ (15) $ (4) $ 1,059
Total assets $ 97,414 $175,156 $11,339 $7,476 $(6,798) $284,587
2000
----
Revenues
External customer $ 36,175 $ 5,491 $ 1,131 $ 98 $ (1) $ 42,894
Intersegment 1,158 39 8 42 (1,247) -
-------- -------- ------- ------ ------- --------
Total Revenues $ 37,333 $ 5,530 $ 1,139 $ 140 $(1,248) $ 42,894
======== ======== ======= ====== ======= ========
Income from continuing
Operations $ 1,552 $ 353 $ 56 $ (11) $ (18) $ 1,932
Total assets a/ $102,146 $161,735 $10,360 $8,108 $(7,325) $275,024
- - - - -
a/ Net assets from discontinued operations of $1,644 million as
of March 31, 2000 are included in Auto Sector total assets.
"Other Financial Services" data is an aggregation of miscellaneous smaller
Financial Services Sector business components, including Ford Motor Land
Development Corporation, Ford Leasing Development Company, Ford Leasing
Corporation and Granite Management Corporation.
"Eliminations/Other" data includes intersegment eliminations and minority
interests. Interest income for the operating segments in the Financial
Services Sector is reported as "Revenue".
-9-
Report of Independent Accountants
To the Board of Directors and Stockholders
Ford Motor Company
We have reviewed the accompanying consolidated balance sheet of Ford Motor
Company and its subsidiaries as of March 31, 2001, and the related consolidated
statement of income for each of the three-month periods ended March 31, 2001 and
2000 and the condensed consolidated statement of cash flows for the three-month
periods ended March 31, 2001 and 2000. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with accounting principles generally accepted in the United
States of America.
We previously audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 2000, and the related consolidated statements of income, stockholders'
equity and of cash flows for the year then ended (not presented herein), and in
our report dated January 18, 2001, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet as of December 31, 2000, is fairly
stated in all material respects in relation to the consolidated balance sheet
from which it has been derived.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Detroit, Michigan
April 18, 2001
-10-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
In addition to specific explanations discussed below, comparisons between
Ford's first quarter 2001 and 2000 results are influenced by three important
events:
o On August 7, 2000, we announced the final results of our
recapitalization, known as our Value Enhancement Plan ("VEP"), which
became effective on August 2, 2000. Under the VEP, Ford shareholders
exchanged each of their old Ford Common or Class B shares for one new
Ford Common or Class B share, as the case may be, plus, at their
election, either $20 in cash, 0.748 additional new Ford Common shares,
or a combination of $5.17 in cash and 0.555 additional new Ford Common
shares. As a result of the elections made by shareholders under the
VEP, the total cash elected was $5.7 billion and the total number of
new Ford Common and Class B shares that became issued and outstanding
was 1.893 billion. See Note 5 of our Notes to Financial Statements for
a description of the effect of the VEP on earnings per share.
o On June 30, 2000, we purchased the Land Rover business from the BMW
Group. Land Rover's results and financial condition are included in
our financial statements on a consolidated basis beginning in the
third quarter of 2000.
o On June 28, 2000, we distributed 130 million shares of Visteon
Corporation (our former automotive systems and components division),
which represented our 100% ownership interest, by means of a tax-free
spin-off in the form of a dividend on Ford Common and Class B Stock.
Visteon has been reflected as a discontinued operation through June
30, 2000.
FIRST QUARTER RESULTS OF OPERATIONS
Worldwide net income was $1,059 million in the first quarter of 2001, or
$0.56 per diluted share of Common and Class B Stock. This compares with first
quarter earnings from continuing operations in 2000 of $1,932 million, or $1.58
per diluted share. Worldwide sales revenue was $42.4 billion in the first
quarter of 2001, down $0.5 billion from a year ago. Unit sales of cars and
trucks were 1,805,000, down 109,000 units.
Results by business sector for the first quarter of 2001 and 2000 are shown
below (in millions).
First Quarter
Net Income
------------------------------------------------
2001
Over/(Under)
2001 2000 2000
------------- -------------- ----------------
Automotive Sector $ 689 $1,552 $ (863)
Financial Services Sector 370 380 (10)
------ ------ -------
Total continuing operations 1,059 1,932 (873)
Discontinued operation - Visteon 0 147 (147)
------ ------ -------
Total Company $1,059 $2,079 $(1,020)
====== ====== =======
-11-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations(Continued)
- ------------------------
Automotive Sector
- -----------------
Worldwide earnings for our Automotive sector were $689 million in the first
quarter of 2001, on sales of $34.7 billion. Earnings in the first quarter of
2000 were $1,552 million, on sales of $36.2 billion. Adjusted for constant
volume and mix, total automotive costs were unchanged compared with the first
quarter of 2000.
Details of first quarter Automotive sector earnings from continuing
operations are shown below (in millions).
First Quarter
Net Income/(Loss)
--------------------------------------------
2001
Over/(Under)
2001 2000 2000
------------ ----------- -----------------
North American Automotive $ 695 $1,667 $(972)
Automotive outside North America
- Europe 88 (3) 91
- South America (53) (82) 29
- Rest of World (41) (30) (11)
----- ------ -----
Total Automotive outside North
America (6) (115) 109
----- ------ -----
Total Automotive Sector $ 689 $1,552 $(863)
===== ====== =====
Automotive sector earnings in North America were $695 million in the first
quarter of 2001, on sales of $23.7 billion. In the first quarter of 2000,
earnings were $1,667 million, on sales of $27.2 billion. The decrease in
earnings reflected primarily lower vehicle sales volume (unit sales down 208,000
units, or 16% from a year ago). The after-tax return on sales for our Automotive
sector in North America was 3.0% in the first quarter of 2001. Excluding the
effect of SFAS 133 as described below, the after-tax return on sales for our
Automotive sector in North America would have been 3.2%, down 3 percentage
points from a year ago.
In the first quarter of 2001, approximately 4.2 million new cars and trucks
were sold in the United States, down 300,000 units from a year ago. Our share of
those unit sales was 22.6% in the first quarter of 2001, down 1.4 percentage
points from a year ago. The decline in market share reflected in part low
availability of new Ford Explorer and Mercury Mountaineer models.
Our Automotive sector earnings in Europe were $88 million in the first
quarter of 2001, compared with losses of $3 million a year ago. The improvement
in earnings is explained by increased vehicle sales volume and lower costs at
Ford brand operations. Other factors (including lower volume at Volvo, higher
launch costs at Jaguar, and gains on sales of certain assets) were largely
offsetting.
In the first quarter of 2001, approximately 4.8 million new cars and trucks
were sold in our nineteen primary European markets, down 279,000 units from a
year ago. Our share of those unit sales was 11.1% in the first quarter of 2001,
up 1.3 percentage points from a year ago. Our market share increase reflected
strong sales performance of the new Ford Mondeo and Transit models and the
addition of Land Rover.
Our Automotive sector in South America had losses of $53 million in the
first quarter of 2001, compared with losses of $82 million a year ago. The
improved results reflected improved margins.
-12-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations (Continued)
- -------------------------
In the first quarter of 2001, approximately 415,000 new cars and trucks
were sold in Brazil, compared with 310,000 a year ago. Our share of those unit
sales was 8.6% in the first quarter of 2001, down 9/10 of a percentage point
from a year ago.
Automotive sector losses outside North America, Europe and South America
("Rest of World") were $41 million in the first quarter of 2001, compared with
losses of $30 million in the first quarter of 2000. The decline in results were
more than explained by Ford's share of increased losses at Mazda.
Financial Services Sector
- -------------------------
Our Financial Services sector consists primarily of two segments, Ford
Credit and Hertz. Details of first quarter Financial Services sector earnings
are shown below (in millions).
First Quarter
Net Income/(Loss)
--------------------------------------------
2001
Over/(Under)
2001 2000 2000
------------ ---------- ----------------
Ford Credit $393 $353 $ 40
Hertz (4) 56 (60)
Minority interests, eliminations,
and other (19) (29) 10
---- ---- ----
Total Financial Services Sector $370 $380 $(10)
==== ==== ====
Memo: Ford's share of earnings in Hertz $ 0 $ 46 $(46)
Ford Credit's consolidated net income for the first quarter of 2001 was
$393 million, up $40 million or 11% from the first quarter of 2000. Compared
with 2000, the increase in first quarter earnings reflected primarily
improvements in investment and other income (primarily the result of gains on
the sale of receivables related to securitization transactions) and higher
financing volumes, partially offset by higher credit losses and lower net
financing margins.
In the first quarter of 2001, Hertz had losses of $4 million, compared with
earnings of $56 million (of which $46 million was Ford's share) a year ago. The
decrease in earnings reflected primarily pricing pressure, a combination of a
slowing U.S. economy and its impact on rental transaction volume and cost
structure, higher 2001 model year vehicle holding costs, and lower vehicle and
equipment residual values.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Sector
- -----------------
At March 31, 2001, our Automotive sector had $15.8 billion of cash and
marketable securities, down $0.7 billion from December 31, 2000. The decline was
more than explained by share repurchases ($800 million) and our acquisition of
the minority interest in Hertz ($735 million), offset partially by positive
operating cash flow. Automotive gross cash was $19.1 billion at March 31, 2001,
including $3.3 billion of prefunding of certain employee health benefit
obligations through a Voluntary Employee Beneficiary Association trust. (Early
in the second quarter of 2001, we incurred a cash outlay of $1.6 billion for the
final payment to AB Volvo for our acquisition of Volvo Car.)
Automotive capital expenditures were $1.4 billion in the first quarter of
2001, down $100 million from a year ago.
-13-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations (Continued)
- -------------------------
Our stockholders' equity was $16.1 billion at March 31, 2001, down $2.5
billion from December 31, 2000. This decrease reflected primarily non-cash
adjustments related to the adoption of SFAS 133 (as described below) and foreign
currency translation (reflecting primarily the strengthening of the U.S. dollar
relative to European currencies).
At March 31, 2001, our Automotive sector had total debt of $12 billion,
unchanged from December 31, 2000.
Financial Services Sector
- -------------------------
At March 31, 2001, our Financial Services sector had cash and cash
equivalents of $1.4 billion, down $48 million from December 31, 2000. Finance
receivables and net investments in operating leases were $174 billion at March
31, 2001, up from $172 billion at December 31, 2000.
Total debt was $155 billion at March 31, 2001, up $2 billion from December
31, 2000. Outstanding commercial paper at March 31, 2001 totaled $34 billion at
Ford Credit, and $2 billion at Hertz, with an average remaining maturity of 32
days and 20 days, respectively.
HERTZ PURCHASE
In March 2001, through a tender offer and a merger transaction, we acquired
(for a total price of $735 million) the common stock of Hertz that we did not
own, which represented about 18% of the economic interest in Hertz. As a result,
Hertz has become an indirect, wholly-owned subsidiary.
NEW ACCOUNTING STANDARD
We adopted Statement of Financial Accounting Standards (SFAS) 133
"Accounting for Derivative Instruments and Hedging" on January 1, 2001. Adverse
adjustments to income and to stockholders' equity included in first quarter
results were (in millions):
Financial Total
Automotive Services Company
-------------- ------------- -------------
Income before income taxes $(90) $(20) $ (110)
Net income (59) (13) (72)
Stockholders' equity (1,225)
For a further discussion of SFAS 133, see note 3 of our Notes to Financial
Statements.
OTHER FINANCIAL INFORMATION
PricewaterhouseCoopers LLP, our independent accountants, performed a
limited review of the financial data presented on pages 4 through 9 inclusive.
The review was performed in accordance with standards for such reviews
established by the American Institute of Certified Public Accountants. The
review did not constitute an audit; accordingly, PricewaterhouseCoopers LLP did
not express an opinion on the aforementioned data. The financial data include
any material adjustments or disclosures proposed by PricewaterhouseCoopers LLP
as a result of their review.
-14-
Part II. Other Information
Item 1. Legal Proceedings
- --------------------------
Firestone Matters (Previously discussed beginning on page 20 of Ford's
Annual Report on Form 10-K for the year ended December 31, 2000 (the "10-K
Report").) As previously reported, on August 9, 2000, Bridgestone/Firestone,
Inc. ("Firestone") announced a recall of all Firestone ATX and ATX II tires
(P235/75R15) produced in North America since 1991 and Wilderness AT tires of
that same size manufactured at Firestone's Decatur, Illinois plant. Firestone
estimated that about 6.5 million of the affected tires were still in service on
the date the recall was announced. The recall was announced following an
analysis by Ford and Firestone that identified a statistically significant
incidence of tread separation occurring in the affected tires. Most of the
affected tires were installed as original equipment on Ford Explorer sport
utility vehicles. The recall has been substantially completed. Ford incurred
substantial costs in connection with the recall, including the costs of the
recall itself and costs associated with production interruptions to permit
production tires to be diverted to the recall.
Also as previously reported, we are continuing to work with the Safety
Administration in its investigation of the Firestone tire recall to attempt to
assess the root cause of tread separation in the recalled tires and to determine
whether the recall should be expanded to include other Firestone tires. The root
cause assessment by the Safety Administration and our own analysis of root cause
includes tires not subject to the original recall that have been installed as
original equipment on several Ford models, including Ford Explorer and Mercury
Mountaineer models. The conclusions reached by the Safety Administration or Ford
in these studies, which at present are incomplete, could result in the recall
and/or replacement of additional Firestone tires and additional substantial
costs to the Company.
We have accrued expenses in accordance with generally accepted accounting
principles for the estimated losses from currently pending personal injury cases
in which plaintiffs allege that their injuries were caused by defects in a
vehicle tire that caused it to lose its tread and/or by defects in the vehicle
(primarily Ford Explorer models) that caused it to roll over. These accruals are
reflected in our financial statements. We periodically assess the anticipated
costs of this litigation and additional accruals, which could be substantial,
may be necessary in the future.
The securities fraud class actions have been consolidated and an amended
complaint has been filed. The amended complaint alleges that Ford's
misrepresentations and omissions began in March 1998 (rather than early 1999, as
alleged in the initial complaint).
Class Actions
- -------------
TFI Module Class Action. (Previously discussed on page 23 and 24 of the
10-K Report.) The class action in Missouri has been withdrawn. The trial court
in the Howard case has ruled on the nature of the recall. Pursuant to this
ruling, Ford will be ordered to replace all distributor-mounted TFI modules on
vehicles in the class with new distributor-mounted TFI modules of the latest
design. In addition, the Plaintiffs in Howard moved for immediate judgment on
the remaining claims, including statutory damages, arguing that a retrial is not
necessary because all of the dispositive factual issues have already been
resolved by the trial judge. The trial court denied this motion and Plaintiffs
are attempting to appeal that ruling. Unless the appellate court intervenes, the
retrial in Howard will begin in September 2001.
Throttle Body Assemblies Class Action. (Previously discussed on page 25 of
the 10-K Report.) This action has been successfully removed to federal court.
Ford Credit Debt Collection Class Action. (Previously discussed on page 26
of the 10-K Report.) The trial in the Molloy case is scheduled to begin on May
10, 2001 in the bankruptcy court on the named plaintiff's case only.
-15-
Item 1. Legal Proceedings (Continued)
- --------------------------------------
Performance Management Process Class Action. (Previously discussed on page
26 of the 10-K Report.) The plaintiffs allege both intentional discrimination
and disparate impact relating to the Performance Management Process. Although
the case is still in the early stages of litigation, Ford has filed a motion to
dismiss the disparate impact claims. This motion is scheduled to be heard
simultaneously with a similar motion filed in the Reverse Discrimination Class
Action on May 30, 2001.
Reverse Discrimination Class Action. (Previously discussed on page 26 of
the 10-K Report.) Plaintiffs withdrew the initial case that was filed in the
federal district court for the Eastern District of Michigan. On March 6, 2001,
four plaintiffs filed a new purported class action in state court of Michigan
against Ford and Mr. Nasser. This suit alleges reverse race, reverse gender and
age discrimination. Specifically, the purported class claims that the Company's
diversity initiatives discriminate against older white males. The suit alleges
that the Company's Performance Management Process was intended to support the
diversity initiatives by driving out the older white males. The suit alleges
both intentional discrimination as well as disparate impact. Ford has filed a
motion to dismiss all of the disparate impact claims. This motion is scheduled
to be heard simultaneously with a similar motion filed in the Performance
Management Process Class Action on May 30, 2001.
F-150 Radiators Class Actions. In April 2001, two purported class actions
were filed alleging that the Company defrauded purchasers of 1999-2001 model
year Ford F-150 trucks by falsely representing that certain option packages
included "upgraded" radiators. Plaintiffs allege that approximately 400,000
trucks that were intended to have larger radiators were actually built with
standard radiators. One of the cases, filed in state court in New York, purports
to represent a nationwide class, and seeks an order requiring installation of
larger radiators and other damages. The second case, filed in state court in
Texas, purports to represent purchasers in Texas, and seeks unspecified damages.
Both cases allege breach of warranty and violation of state consumer protection
laws.
Other Matters
Rouge Powerhouse Insurance Litigation. There are several pending lawsuits
arising out of the February 1, 1999 Rouge Powerhouse explosion. In June 2000,
Ford filed a coverage action against ten property insurance carriers seeking
property damage and business interruption losses attributable to the Powerhouse
explosion. Factory Mutual, one of these insurers, filed a counterclaim in the
lawsuit for claims paid to Rouge Steel Company ("Rouge Steel"). Factory Mutual's
counterclaim alleges that Rouge Steel's damages occurred as a result of Ford's
negligence, gross negligence or willful and wanton misconduct in operating the
Powerhouse and totals approximately $300 million. This counterclaim, and a
similar claim for approximately $25 million by other insurers of Rouge Steel,
has been ordered to arbitration. Additionally, claims related to business
interruption losses incurred by five suppliers to Rouge Steel, totaling
approximately $20 million, also have been added to the arbitration. In addition,
six Ford employees and one Rouge Steel employee also have filed lawsuits seeking
recovery in excess of $100 million in the aggregate for alleged psychological
injuries caused as a result of the explosion.
-16-
Supplemental Schedule
Ford Capital BV and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended March 31, 2001 and 2000
(in millions)
First Quarter
-----------------------------
2001 2000
-------------- -------------
Sales $563 $511
Costs and expenses
Cost of sales (Note 3) 528 475
Selling, administrative and other expenses 28 30
------- -------
Total costs and expenses 556 505
------- -------
Operating income 7 6
Interest income 44 71
Interest expense 37 59
------- -------
Net interest income/(expense) 7 12
------- -------
Income before income taxes 14 18
Provision for income taxes 5 8
------- -------
Income before minority interests 9 10
Minority interests in net income of subsidiaries - 1
------- -------
Net income $ 9 $ 11
======= =======
The accompanying notes are part of the financial statements.
-17-
Ford Capital BV and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
March 31, December 31,
2001 2000
--------------- ----------------
ASSETS
Cash and cash equivalents $ 28 $ 18
Receivables 106 55
Notes receivable, affiliate 414 411
Inventories 59 41
Deferred income taxes 24 24
Other current assets 28 28
------ ------
Total current assets 659 577
Notes receivable, affiliate 1,368 1,391
Net property 15 14
Other assets 74 104
------ ------
Total assets $2,116 $2,086
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade payables $ 104 $ 63
Payables, affiliate and other 42 71
Accrued liabilities 212 156
Income taxes payable 29 31
Debt payable within one year 567 567
------ ------
Total current liabilities 954 888
Long-term debt 900 900
Deferred tax liability 10 16
Other liabilities 24 10
------ ------
Total liabilities 1,888 1,814
Minority interests 1 1
Stockholders' equity
Capital stock, 255,140 shares issued with a par value of $593 and
623,392 shares issued with a par value of $133 each. 236 236
Capital in excess of par value of stock 72 72
Accumulated other comprehensive income (Notes 2 and 3) (69) (15)
Accumulated deficit (12) (22)
------ ------
Total stockholders' equity 227 271
------ ------
Total liabilities and stockholders' equity $2,116 $2,086
====== ======
- - - - - -
The accompanying notes are part of the financial statements.
-18-
Ford Capital BV and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended March 31, 2001 and 2000
(in millions)
First Quarter
--------------------------------
2001 2000
--------------- ---------------
Cash and cash equivalents at January 1 $ 18 $ 49
Cash flows from operating activities (9) 22
Cash flows from investing activities
Changes in notes receivable 20 75
Other (1) (1)
----- -----
Net cash (used in)/provided by investing activities 19 74
Cash flows from financing activities
Principal payments on other debt - (118)
----- -----
Net cash (used in)/provided by financing activities - (118)
Net increase/(decrease) in cash and cash equivalents 10 (22)
----- -----
Cash and cash equivalents at March 31 $ 28 $ 27
===== =====
The accompanying notes are part of the financial statements.
-19-
Ford Capital BV and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. Financial Statements - The financial data presented herein are unaudited,
but in the opinion of management reflect those adjustments necessary for a
fair presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference should
be made to the financial statements contained in the Ford Motor Company's
Annual Report on Form 10-K for the year ended December 31, 2000. For
purposes of this report, "the Company" or similar references mean Ford
Capital BV and its majority owned subsidiaries unless the context requires
otherwise. Certain amounts for prior periods were reclassified, if
required, to conform to present period presentation.
2. SFAS 133 - Ford Capital BV adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No.
138, on January 1, 2001. The company uses cross currency swaps to hedge
foreign currency exchange exposure on notes receivable.
The swaps are accounted for as cash flow hedges. The maximum maturity of
these swaps is nine years. The swaps account for all of the balance of SFAS
No. 133 activity reported as part of stockholders' equity.
Ford Capital BV's strategy is to use derivatives to manage specific
economic risks to changes in exchange rates. The company does not use
derivatives for speculative purposes.
Adoption of SFAS No. 133 had no impact on income. During the first quarter,
a $39 million net reduction was recorded in stockholders' equity as
accumulated other comprehensive income. Of the amount recorded, a $63
million loss pertained to the January 1 transition adjustment. The
remaining amount pertained to a gain from first quarter activity. Ford
Capital BV does not expect to reclassify any gains or losses to earnings
during the next twelve months.
3. Comprehensive Income - Other comprehensive income primarily reflects
foreign currency translation adjustments and adjustments related to SFAS
133 (Note 2). Total comprehensive income is summarized as follows (in
millions):
First Quarter
-----------------------------------
2001 2000
----------------- ----------------
Net income $ 9 $ 11
Other comprehensive income (45) (84)
----- ---
Total comprehensive income $(36) $ 73
==== ====
-20-
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
--------
Please refer to the Exhibit Index on page 22.
(b) Reports on Form 8-K
-------------------
The Registrant filed the following Current Reports on Form 8-K during
the quarter ended March 31, 2001:
Current Report on Form 8-K dated January 3, 2001 included information
relating to Ford's North American Production and Overseas Sales
schedule
Current Report on Form 8-K dated January 11, 2001 included information
relating to our financial milestones for the upcoming 12 months
Current Report on Form 8-K dated January 18, 2001 included information
relating to Consolidated Financial Statements of Ford and Subsidiaries
for the year ended and at December 31, 2000, together with the Report
on Examination thereof by PricewaterhouseCoopers, L.L.P.
Current Report on Form 8-K dated February 1, 2001 included information
relating to U.S. retail sales of Ford vehicles in January 2001 and
Ford's North American Production and Overseas Sales schedule
Current Report on Form 8-K dated March 1, 2001 included information
relating to U.S. retail sales of Ford vehicles in February 2001 and
Ford's North American Production and Overseas Sales schedule
Current Report on Form 8-K dated March 2, 2001 included information
relating to Ford's announcement that Ford is comfortable with the
consensus analysts' earnings estimate for Ford of 51 cents per diluted
share for the first quarter 2001
Current Report on Form 8-K dated March 29, 2001 included information
relating that Ford continues to be comfortable with the consensus
analysts' earnings estimate for Ford of 54 cents per diluted share for
the first quarter 2001
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORD MOTOR COMPANY
---------------------------------------------
(Registrant)
Date: May 11, 2001 By: /s/ L. E. Hansen
------------ ------------------------------------------
L. E. Hansen
Vice President & Controller
(principal accounting officer)
-21-
EXHIBIT INDEX
-------------
Designation Description
----------- ---------------------------------------------------------------------------
Exhibit 12 Ford Motor Company and Subsidiaries Calculation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
Exhibit 15 Letter of PricewaterhouseCoopers LLP, Independent Accountants, dated
May 11, 2001, relating to Financial Information.
-22-