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 EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994 OR
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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)
The American Road, Dearborn, Michigan 48121
- -----------------------------------------------------------------
(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 June 30, 1994,
the Registrant had outstanding 938,141,210 shares of Common Stock
and 70,852,076 shares of Class B Stock.
Page 1 of 23
Exhibit index located on sequential page number 18
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
Second Quarter First Half
------------------------- ---------------------------
1994 1993 1994 1993
-------- -------- --------- -------
Worldwide factory sales of cars
and trucks (in thousands)
- - United States 1,125 1,102 2,209 2,024
- - Outside United States 686 573 1,274 1,182
------- ------- ------- -------
Total 1,811 1,675 3,483 3,206
======= ======= ======= =======
Sales and revenues (in millions)
- - Automotive $28,375 $25,264 $54,445 $47,950
- - Financial Services 5,397 4,155 9,729 8,232
------- ------- ------- -------
Total $33,772 $29,419 $64,174 $56,182
======= ======= ======= =======
Net income (in millions)
- - Automotive $ 1,183 $ 395 $ 2,138 $ 571
- - Financial Services 528 380 477* 776
------- ------- ------- -------
Total $ 1,711 $ 775 $ 2,615 $ 1,347
======= ======= ======= =======
Capital expenditures (in millions)
- - Automotive $ 1,839 $ 1,634 $ 3,480 $ 2,904
- - Financial Services 62 23 121 42
------- ------- ------- -------
Total $ 1,901 $ 1,657 $ 3,601 $ 2,946
======= ======= ======= =======
Stockholders' equity at June 30
- - Total (in millions) $18,422 $15,683 $18,422 $15,683
- - After-tax return on Common and
Class B stockholders' equity 46.6% 23.4% 37.0% 20.4%
Automotive cash, cash equivalents,
and marketable securities at
June 30 (in millions) $13,665 $ 9,319 $13,665 $ 9,319
Automotive debt at June 30
(in millions) $ 7,263 $ 7,880 $ 7,263 $ 7,880
Automotive after-tax return on sales 4.2% 1.7% 4.0% 1.3%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,005 982 1,002 982
- - Number outstanding at June 30 1,009 984 1,009 984
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income
- - Automotive $ 1.10 $ 0.33 $ 1.99 $ 0.44
- - Financial Services 0.53 0.39 0.48 0.79
------- ------- ------- -------
Total $ 1.63 $ 0.72 $ 2.47 $ 1.23
======= ======= ======= =======
Income assuming full dilution $ 1.44 $ 0.65 $ 2.20 $ 1.13
Cash dividends per share of Common
and Class B Stock $ 0.225 $ 0.20 $ 0.425 $ 0.40
- - - - - -
*Includes a loss of $440 million related to the disposition
of First Nationwide Financial Corporation.
Share data have been restated to reflect the 2-for-1 stock split
that became effective June 6, 1994.
-2-
Ford Motor Company and Subsidiaries
VEHICLE FACTORY SALES
---------------------
For the Periods Ended June 30, 1994 and 1993
Second Quarter First Half
------------------------- --------------------------
1994 1993 1994 1993
--------- --------- -------- ----------
North America
Cars - U.S. 538,823 566,164 1,060,631 1,052,421
- Canada 37,625 45,124 70,930 70,446
- Mexico 13,750 11,211 25,405 30,854
--------- -------- --------- ---------
Total cars 590,198 622,499 1,156,966 1,153,721
Trucks - U.S. 586,182 535,239 1,148,685 971,443
- Canada 48,058 34,421 78,102 58,879
- Mexico 11,315 8,365 19,486 20,565
--------- --------- --------- ---------
Total trucks 645,555 578,025 1,246,273 1,050,887
--------- --------- --------- ---------
Total North America 1,235,753 1,200,524 2,403,239 2,204,608
Outside North America
Germany 279,341 219,185 522,016 455,962
Britain 130,958 117,405 239,654 235,441
Spain 86,971 57,000 163,702 138,309
Australia 33,606 31,402 60,601 59,160
Taiwan 22,100 31,518 51,422 68,342
Japan 10,686 11,284 22,838 29,170
Other countries 11,535 7,411 19,910 16,148
--------- --------- --------- ---------
Total outside North America 575,197 475,205 1,080,143 1,002,532
--------- --------- --------- ---------
Total worldwide vehicle
factory sales 1,810,950 1,675,729 3,483,382 3,207,140
========= ========= ========= =========
Includes units manufactured by other companies and sold by Ford.
Factory sales are shown by source of manufacture, except within North
America. In North America, U.S. sales include exports from Canada,
Mexico, and Australia. Canadian sales include exports from the U.S.
and Mexico. Mexican sales include exports from the U.S. and Canada.
-3-
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
- -----------------------------
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended June 30, 1994 and 1993
(in millions)
Second Quarter First Half
----------------------- ------------------------
1994 1993 1994 1993
-------- ------- -------- --------
(unaudited) (unaudited)
AUTOMOTIVE
Sales $28,375 $25,264 $54,445 $47,950
Costs and expenses (Note 2)
Costs of sales 24,997 23,179 48,349 44,263
Selling, administrative, and
other expenses 1,412 1,298 2,571 2,395
-------- ------- ------- --------
Total costs and expenses 26,409 24,477 50,920 46,658
Operating income 1,966 787 3,525 1,292
Interest income 163 155 291 286
Interest expense 163 202 339 436
-------- ------- ------- -------
Net interest expense 0 (47) (48) (150)
Equity in net income of
affiliated companies 42 10 109 11
Net expense from transactions with
Financial Services 11 10 19 17
-------- ------- ------- -------
Income before income taxes - Automotive 1,997 740 3,567 1,136
FINANCIAL SERVICES
Revenues 5,397 4,155 9,729 8,232
Costs and expenses
Interest expense 1,668 1,611 3,266 3,233
Operating and other expenses 1,223 811 2,047 1,535
Provision for credit and insurance losses 409 383 753 777
Depreciation 1,197 706 2,100 1,380
Loss on disposition of First Nationwide
Financial Corp. (Note 4) - - 475 -
------- ------- ------- -------
Total costs and expenses 4,497 3,511 8,641 6,925
Net revenue from transactions
with Automotive 11 10 19 17
------- ------- ------- -------
Income before income taxes
- Financial Services 911 654 1,107 1,324
------- ------- ------- ---------
TOTAL COMPANY
Income before income taxes 2,908 1,394 4,674 2,460
Provision for income taxes 1,161 570 1,986 1,038
------- ------- ------- ---------
Income before minority interests 1,747 824 2,688 1,422
Minority interests in net
income of subsidiaries 36 49 73 75
------- ------- ------- ---------
Net income 1,711 775 2,615 1,347
Preferred stock dividend requirements 72 72 144 144
------- ------- ------- --------
Income attributable to Common
and Class B Stock $ 1,639 $ 703 $ 2,471 $ 1,203
======= ======= ======= =======
Average number of shares of Common
and Class B Stock outstanding (Note 5) 1,005 982 1,002 982
AMOUNTS PER SHARE OF COMMON
STOCK AND CLASS B STOCK AFTER
PREFERRED STOCK DIVIDENDS
Income $ 1.63 $ 0.72 $ 2.47 $ 1.23
======= ======= ======= =======
Income assuming full dilution $ 1.44 $ 0.65 $ 2.20 $ 1.13
Cash dividends $ 0.225 $ 0.20 $ 0.425 $ 0.40
- - - - - -
The accompanying notes are part of the financial statements.
Share data have been restated to reflect the 2-for-1 stock split
that became effective June 6, 1994.
-4-
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
---------------------------
(in millions)
June 30, December 31,
1994 1993
---------- ------------
ASSETS (unaudited)
Automotive
Cash and cash equivalents $ 8,414 $ 5,667
Marketable securities 5,251 4,085
-------- --------
Total cash, cash equivalents, and marketable securities 13,665 9,752
Receivables 2,373 2,302
Inventories (Note 3) 5,704 5,538
Deferred income taxes 2,880 2,830
Other current assets 1,604 1,226
Net current receivable from Financial Services 1,247 834
-------- --------
Total current assets 27,473 22,482
Equity in net assets of affiliated companies 3,058 3,002
Net property 24,678 23,059
Deferred income taxes 4,988 5,427
Other assets 7,772 7,691
Net noncurrent receivable from Financial Services 79 76
-------- --------
Total Automotive assets 68,048 61,737
Financial Services (Note 4)
Cash and cash equivalents 2,442 2,555
Investments in securities 5,763 8,219
Net receivables and lease investments 120,897 119,535
Other assets 12,929 6,892
-------- --------
Total Financial Services assets 142,031 137,201
-------- --------
Total assets $210,079 $198,938
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 10,373 $ 8,769
Other payables 2,503 1,976
Accrued liabilities 11,787 10,815
Income taxes payable 662 160
Debt payable within one year 156 932
-------- --------
Total current liabilities 25,481 22,652
Long-term debt 7,107 7,084
Other liabilities 27,065 25,911
Deferred income taxes 1,051 1,089
-------- --------
Total Automotive liabilities 60,704 56,736
Financial Services (Note 4)
Payables 2,259 1,881
Debt 116,312 103,960
Deposit accounts 0 10,549
Deferred income taxes 2,710 2,287
Other liabilities and deferred income 6,880 5,583
Net payable to Automotive 1,326 910
-------- --------
Total Financial Services liabilities 129,487 125,170
Preferred stockholders' equity in subsidiary companies 1,466 1,458
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate
liquidation preference of $3.4 billion) * *
Common Stock, par value $1.00 per share (938 and 464 million shares issued) 938 464
Class B Stock, par value $1.00 per share (71 and 35 million shares issued) 71 35
Capital in excess of par value of stock 4,867 5,082
Foreign currency translation adjustments and other (115) (678)
Minimum pension liability adjustment (456) (400)
Earnings retained for use in business 13,117 11,071
-------- --------
Total stockholders' equity 18,422 15,574
-------- --------
Total liabilities and stockholders' equity $210,079 $198,938
======== ========
- - - - - -
*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 June 30, 1994 and 1993
(in millions)
First Half 1994 First Half 1993
--------------------- ---------------------
Financial Financial
Automotive Services Automotive Services
---------- --------- ---------- ---------
(unaudited) (unaudited)
Cash and cash equivalents at January 1 $ 5,667 $ 2,555 $ 3,504 $ 3,182
Cash flows from operating activities before securities trading 8,134 4,532 5,212 3,795
Net (purchases)/sales of trading securities (Note 6) (1,279) 180 - -
-------- -------- -------- --------
Net cash flows from operating activities 6,855 4,712 5,212 3,795
Cash flows from investing activities
Capital expenditures (3,480) (121) (2,904) (42)
Acquisitions of other companies 0 0 0 (86)
Acquisitions of receivables and lease investments - (98,778) - (81,062)
Collections of receivables and lease investments - 82,687 - 69,048
Acquisitions of daily rental vehicles, net of disposals - (1,134) - 0
Purchases of securities (Note 6) (113) (6,395) (39,781) (6,799)
Sales of securities (Note 6) 235 6,247 41,305 5,834
Proceeds from sales of receivables - 1,530 - 2,449
Loans originated net of principal payments - (204) - (489)
Investing activity with Financial Services 15 - (339) -
Other 228 (262) (160) 469
-------- -------- -------- --------
Net cash used in investing activities (3,115) (16,430) (1,879) (10,678)
Cash flows from financing activities
Cash dividends (569) - (545) -
Issuance of Common Stock 294 - 101 -
Changes in short-term debt (735) 7,010 (344) 1,866
Proceeds from issuance of other debt 128 11,234 322 12,114
Principal payments on other debt (41) (7,156) (277) (6,436)
Financing activity with Automotive - (15) - 339
Changes in customers' deposits, excluding
interest credited - (422) - (2,116)
Receipts from annuity contracts - 519 - 447
Redemption of Hertz common and preferred stock (Note 7) - (145) - -
Issuance of subsidiary company preferred stock - 1 - 174
Other 0 14 40 53
-------- -------- -------- --------
Net cash (used in)/provided by financing
activities (923) 11,040 (703) 6,441
Effect of exchange rate changes on cash 346 149 156 119
Net transactions with Automotive/
Financial Services (416) 416 (975) 975
-------- -------- -------- --------
Net increase/(decrease) in cash and cash
equivalents 2,747 (113) 1,811 652
-------- -------- -------- --------
Cash and cash equivalents at June 30 $ 8,414* $ 2,442 $ 5,315* $ 3,834
========= ========= ======== ========
Total cash and cash equivalents $10,856 $9,149
======== =======
- - - - - -
*Automotive cash, cash equivalents, and marketable securities
at June 30 were as follows (in millions): 1994 - $13,665; 1993 - $9,319
The accompanying notes are part of the financial statements.
-6-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
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, 1993. For
purposes hereof, "Ford" or the "Company" means Ford Motor Company
and its majority-owned subsidiaries unless the context requires otherwise.
2. Selected Automotive costs and expenses are summarized as follows
(in millions):
Second Quarter First Half
---------------------- ----------------------
1994 1993 1994 1993
------ ----- ------ ------
Depreciation $ 564 $ 607 $1,145 $1,217
Amortization 582 534 1,124 1,068
3. Inventories are summarized as follows (in millions):
-----------
June 30, December 31,
1994 1993
-------- ------------
Raw materials, work in process and supplies $2,710 $2,937
Finished products 2,994 2,601
------- ------
Inventories - Automotive $5,704 $5,538
====== ======
Inventories - U.S. Automotive $2,356 $2,575
4. Sale of First Nationwide Bank
-----------------------------
On April 14, 1994, an agreement was entered into between First
Nationwide Bank, a Federal Savings Bank (the "Bank") and First
Madison Bank, FSB ("First Madison") for the sale of substantially
all of the Bank's assets to, and the assumption of substantially
all of the Bank's liabilities by, First Madison. The Bank is a
wholly-owned subsidiary of First Nationwide Financial Corporation
("FNFC"), which in turn is a wholly-owned subsidiary of Ford.
The transaction, which is subject to federal regulatory
approvals, is expected to be completed in the fourth quarter of
1994.
The Company recognized in First Quarter 1994 earnings a pre-tax
charge of $475 million and an after-tax charge of $440 million
related to the disposition of FNFC, reflecting the non-recovery
of goodwill and reserves for estimated losses on assets to be
retained or repurchased by FNFC. These assets will be liquidated
over time as market conditions permit. The tax effect of this
transaction takes into account differences between the book and
tax basis of certain assets for which deferred taxes were not
required to be provided under Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes". The
Company's income statement includes the results of operations of
FNFC through March 31, 1994. The net assets of FNFC at March 31,
1994 are included in the balance sheet under Financial Services -
Other Assets. Historically, FNFC (including the Bank) has not
had a significant effect on Ford's operating results.
-7-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
5. Stock Split
-----------
On April 14, 1994, the Company's Board of Directors declared a 2-
for-1 stock split in the form of a 100% stock dividend on the
Company's Common Stock and Class B Stock. The stock split became
effective June 6, 1994, and share data have been restated to
reflect the 2-for-1 stock split.
6. Consolidated Statement of Cash Flows
------------------------------------
Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities". Accordingly, the purchases and sales of trading
securities are included in cash flows from operating activities.
Financial statements for the prior period were not restated.
7. Acquisition of The Hertz Corporation
------------------------------------
On March 8, 1994, Ford purchased from Commerzbank
Aktiengesellschaft, a German bank, additional shares of common
stock of Hertz aggregating 5% of the total outstanding voting
stock, thereby bringing Ford's ownership of the total voting
stock of Hertz to 54% from 49%. On April 29, 1994, Ford acquired
20% of Hertz' common stock from Park Ridge Limited Partnership,
and Hertz redeemed the common stock (26%) and preferred stock of
Hertz owned by AB Volvo for $145 million; these transactions
resulted in Hertz becoming a wholly-owned subsidiary of Ford. In
addition, a $150 million subordinated promissory note of Hertz
held by Ford Credit was exchanged for $150 million of preferred
stock of Hertz. Hertz earned $26 million in the second quarter
of 1994, compared with $6 million a year ago (reflected in Ford's
results on an equity basis).
-8-
Coopers certified public accountants
& Lybrand
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Motor Company
We have reviewed the consolidated balance sheet of Ford Motor
Company and Subsidiaries at June 30, 1994 and the related
consolidated statement of income and condensed consolidated
statement of cash flows for the periods set forth in Form 10-Q for
the quarter ended June 30, 1994. 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 financial statements referred to above
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet at December 31,
1993 and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated February 1, 1994, we
expressed an unqualified opinion on those consolidated financial
statements.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
July 27, 1994
-9-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- ----------------------------------------------------------
RESULTS OF OPERATIONS: SECOND QUARTER 1994 COMPARED WITH SECOND
QUARTER 1993
Overview
- --------
Ford Motor Company earned $1,711 million, or $1.63 per share of
Common and Class B stock, in the second quarter of 1994. This
compares with $775 million, or $0.72 per share, in the second
quarter of 1993. Fully diluted earnings per share were $1.44 in
the second quarter of 1994, compared with $0.65 a year ago. The
Company's worldwide sales and revenues were $33.8 billion, up
$4.4 billion from a year ago. Worldwide factory unit sales of cars
and trucks were 1,811,000, up 136,000 units or 8%. Stockholders'
equity was $18.4 billion at June 30, 1994.
On June 6, 1994, a 2-for-1 stock split in the form of a 100% stock
dividend on the Company's outstanding Common and Class B stock
became effective. Earnings per share for prior periods have been
restated to reflect the stock split.
Automotive Operations
- ---------------------
Ford's worldwide Automotive operations earned $1,183 million in the
second quarter of 1994 on sales of $28.4 billion, compared with
earnings of $395 million on sales of $25.3 billion a year ago.
In the U.S., Ford's Automotive operations earned $907 million,
compared with $367 million a year ago. The improvement reflected
higher unit volume (as a result of higher truck sales) and improved
margins.
In the second quarter of 1994, the seasonally-adjusted annual
selling rate for the U.S. car and truck industry was 15.3 million
units compared with 14.6 million in the second quarter of 1993.
Ford's car market share was 21.5% in the second quarter of 1994, up
1/10 of a point from a year ago. Ford's truck share was 30%, down
2/10 of a point from a year ago. Ford's combined car and truck
share was 25%, unchanged from a year ago.
Outside the U.S., Automotive operations earned $276 million in the
second quarter of 1994, compared with $28 million a year ago. The
improvement reflected primarily higher unit volume in Europe, where
Automotive operations (excluding Jaguar) earned $244 million in the
second quarter of 1994, compared with a loss of $66 million a year
ago. Earnings were lower in Latin America, where business
conditions historically have been volatile and subject to rapid
change.
In the second quarter of 1994, the seasonally-adjusted annual
selling rate for the European car and truck industry was
13.1 million units, compared with 12.3 million a year ago. Ford's
car share was 11.6% in the second quarter of 1994, up 5/10 of a
point from a year ago. Ford's truck share was 14.8%, up 2.1
points.
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned $528 million in
the second quarter of 1994, compared with $380 million in the
second quarter of 1993. The increase resulted primarily from
improved results at Ford Credit and The Associates, the
consolidation of results for Hertz, and non-recurrence of losses at
First Nationwide.
Ford Credit's consolidated net income was $368 million in the
second quarter of 1994, compared with $306 million a year ago, and
included income from its financing operations and its equity in the
net income of affiliated companies, primarily Ford Holdings. Ford
Credit's financing operations earned $317 million in the second
quarter of 1994, compared with $268 million a year ago. The
improvement reflected higher levels of earning assets, gain on sale
of an interest in Manheim Auctions (an auto auction company), and
lower credit losses, offset partially by lower net interest
margins. Depreciation costs increased as a result of
continued growth in operating leases; the related lease revenues
more than offset the increased depreciation. In addition,
-10-
international operations managed by Ford Credit earned $50 million
in the second quarter of 1994, equal to a year ago.
The Associates earned $121 million in the U.S. in the second
quarter of 1994, compared with $111 million a year ago. The
increase reflected higher levels of earning assets and improved net
interest margins. In addition, international operations managed by
The Associates earned $21 million in the second quarter of 1994,
compared with $10 million a year ago.
On March 8, 1994, Ford purchased from Commerzbank
Aktiengesellschaft, a German bank, additional shares of common
stock of Hertz aggregating 5% of the total outstanding voting
stock, thereby bringing Ford's ownership of the total voting stock
of Hertz to 54% from 49%. On April 29, 1994, Ford acquired 20% of
Hertz' common stock from Park Ridge Limited Partnership, and Hertz
redeemed the common stock (26%) and preferred stock of Hertz owned
by AB Volvo for $145 million; these transactions resulted in Hertz
becoming a wholly-owned subsidiary of Ford. In addition, a
$150 million subordinated promissory note of Hertz held by Ford
Credit was exchanged for $150 million of preferred stock of Hertz.
Hertz earned $26 million in the second quarter of 1994, compared
with $6 million a year ago (reflected in Ford's results on an
equity basis).
USL Capital earned $27 million in the second quarter of 1994,
compared with $20 million a year ago. American Road earned
$13 million in the second quarter of 1994, compared with
$16 million in the same period in 1993.
On April 14, 1994, an agreement was entered into for the sale of
substantially all of the assets of First Nationwide Bank to First
Madison Bank, referred to in the second through fourth paragraphs
on page 10 of the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1994 (the "First Quarter 10-Q Report"). The
transaction, which is subject to federal regulatory approvals, is
expected to be completed in the fourth quarter of 1994. In the
second quarter of 1993, First Nationwide incurred a loss of
$18 million.
FIRST HALF 1994 COMPARED WITH FIRST HALF 1993
Overview
- --------
Ford earned $2,615 million, or $2.47 per share of Common and Class
B Stock, in the first half of 1994. Results included a charge to
net income of $440 million related to the sale of First Nationwide
Bank to First Madison Bank (discussed above). In the first half of
1993, the Company earned $1,347 million, or $1.23 per share. Fully
diluted earnings per share were $2.20, compared with $1.13 a year
ago. The Company's worldwide sales and revenues were $64.2 billion
in the first half of 1994, up $8 billion from a year ago.
Worldwide factory unit sales of cars and trucks were 3,483,000, up
277,000 or 8%.
Automotive Operations
- ---------------------
Ford's worldwide Automotive operations earned $2,138 million in the
first half of 1994, compared with $571 million in first half of
1993. In the U.S., Ford's Automotive operations earned
$1,742 million, compared with $480 million a year ago. The
improvement reflected higher unit volume (as a result of higher
industry sales) and improved margins.
In the first half of 1994, the seasonally-adjusted annual selling
rate for the U.S. car and truck industry was 15.5 million units,
compared with 14 million a year ago. Ford's car share was 21.6% in
the first half of 1994, down 7/10 of a point from a year ago. The
decline from a year ago reflected lower shares for Tempo and Topaz.
Ford's truck share was 29.7%, unchanged from a year ago. Ford's
combined car and truck share was 24.9%, down 4/10 of a point. For
the full year, Ford projects U.S. industry sales of about
15.5 million cars and trucks in 1994, compared with 14.2 million
units in 1993.
-11-
Outside the U.S., Automotive operations earned $396 million in the
first half of 1994, compared with $91 million a year ago. The
improvement reflected primarily higher unit volume, lower
manufacturing costs, and improved margins in Europe. Ford's
European Automotive operations (excluding Jaguar) earned
$352 million in the first half of 1994, compared with a loss of
$47 million a year ago.
In the first half of 1994, the seasonally-adjusted annual selling
rate for the European car and truck industry was 13.1 million
units, compared with 12.4 million units a year ago. Ford's car
share was 11.8%, up 3/10 of a point from a year ago. Ford's truck
share was 14.7%, down 1/10 of a point from a year ago. For the
full year, Ford projects European industry sales of about
13.3 million units in 1994, compared with 12.5 million units in
1993.
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned $477 million in
the first half of 1994, compared with $776 million in the first
half of 1993. The decline was more than explained by the charge to
net income of $440 million related to the sale of First Nationwide
Bank. Higher earnings at Ford Credit and The Associates and the
consolidation of results for Hertz were partial offsets.
Ford Credit's consolidated net income was $667 million in the first
half of 1994, compared with $621 million a year ago. Net income
from financing operations was $562 million, compared with
$534 million a year ago. The improvement reflected primarily the
same factors as those described in the discussion of second quarter
results of operations. International operations managed by Ford
Credit earned $113 million in the first half of 1994, compared with
$97 million a year ago.
The Associates earned $249 million in the U.S. in the first half of
1994, compared with $222 million a year ago. The improvement
reflected primarily the same factors as those described in the
discussion of second quarter results of operations. In addition,
international operations managed by The Associates earned
$39 million in the first half of 1994, compared with $20 million a
year ago.
Hertz earned $25 million in the first half of 1994, compared with
$3 million a year ago (reflected in Ford's results on an equity
basis).
USL Capital's net income in the first half of 1994 was $48 million,
compared with $37 million a year ago. American Road earned $30
million in the first half of 1994, compared with $39 million a year
ago.
First Nationwide incurred a loss of $484 million in the first half
of 1994, including a charge of $440 million related to the sale of
First Nationwide Bank. First Nationwide incurred a loss of
$35 million in the first half of 1993.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
- ---------------------
Cash and marketable securities of the Company's Automotive
operations were $13.7 billion at June 30, 1994, up $3.9 billion
from December 31, 1993. The amount of cash and marketable
securities is expected to decline during the second half of the
year because of normal new-model changeover and launch and higher
capital spending (discussed below). The Company paid $569 million
in cash dividends on its Common Stock, Class B stock, and Preferred
Stock during the first six months of 1994.
Automotive capital expenditures were $3.5 billion in the first six
months of 1994, compared with $2.9 billion a year ago. Automotive
capital spending is projected to increase further during the second
half of the year as a result of increases in both product and non-
product spending.
-12-
The higher product spending reflects a record pace of new-model
introductions, while non-product spending reflects efforts to
improve efficiency and quality and increase capacity for selected
components and vehicles.
Automotive debt at June 30, 1994 totaled $7.3 billion, which was
28% of total capitalization (stockholders' equity and Automotive
debt), compared with $8 billion, or 34% of total capitalization, at
year-end 1993. The decrease in total debt is primarily the result
of lower levels of short-term borrowings.
At June 30, 1994, Ford had long-term contractually committed credit
agreements in the U.S. under which $4.8 billion is available from
various banks at least through June 30, 1999. The entire
$4.8 billion may be used, at Ford's option, by either Ford or Ford
Credit. As of June 30, 1994, these facilities were unused. At
July 1, 1994, these credit agreements were increased to
$5.9 billion.
Outside the U.S., Ford has additional long-term contractually
committed credit-line facilities of approximately $2.4 billion.
These facilities are available in varying amounts from 1994 through
1999; less than 1% was used at June 30, 1994.
Financial Services Operations
- -----------------------------
Financial Services' cash and investments in securities totaled
$8.2 billion at June 30, 1994, down $2.6 billion from December 31,
1993. The decline reflected primarily the reclassification of
First Nationwide's net assets to "other assets" as a result of the
pending sale.
Net receivables and lease investments were $120.9 billion at June
30, 1994, up $1.4 billion from December 31, 1993. The increase
reflected continued growth in earning assets at Ford Credit and The
Associates, offset partially by the reclassification of First
Nationwide's net assets.
Total debt was $116.3 billion at June 30, 1994, up $12.3 billion
from December 31, 1993. The increase resulted from higher debt
levels required to finance growth in earning assets at Ford Credit
and The Associates, as well as the consolidation of Hertz; the
reclassification of First Nationwide's net assets was a partial
offset.
At June 30, 1994, Financial Services had approximately
$27.8 billion of support facilities available for use in the U.S.
(including $4.8 billion of Ford bank lines that may be used by Ford
Credit at Ford's option), 98% of which were contractually
committed; less than 2% of these facilities were in use at that
date. An additional $17.5 billion of support facilities were
available outside the U.S., 47% of which were contractually
committed; approximately $7.2 billion of these support facilities
were in use at June 30, 1994.
-13-
Part II. Other Information
---------------------------
Item 1. Legal Proceedings
- --------------------------
Product Matters
- ---------------
With respect to the lawsuits for damages arising out of automobile
accidents where plaintiffs claim that the injuries resulted from
(or were aggravated by) alleged defects in the occupant restraint
systems in vehicle lines of various model years, referred to in the
third paragraph on page 27 of the 10-K Report and on page 13 of the
First Quarter 10-Q Report, the damages specified by the plaintiffs
in these actions, including both actual and punitive damages,
aggregated approximately $905 million at June 30, 1994.
With respect to the lawsuits for damages involving the alleged
propensity of Bronco II utility vehicles to roll over, referred to
in the fourth paragraph on page 27 of the 10-K Report and on page
13 of the First Quarter 10-Q Report, the damages specified in these
actions, including both actual and punitive damages, aggregated
approximately $1.2 billion at June 30, 1994.
With respect to the lawsuits for damages involving asbestos,
referred to in the sixth paragraph on page 27 of the 10-K Report
and on page 13 of the First Quarter 10-Q Report, the damages
specified by plaintiffs in these actions, including both actual and
punitive damages, aggregated approximately $213 million at June 30,
1994.
Environmental Matters
- ---------------------
In addition to the notice from the government environmental
enforcement agency, potentially involving monetary sanctions
exceeding $100,000, referred to on page 13 of the First Quarter
10-Q Report, in a separate matter potentially involving monetary
sanctions exceeding $100,000, Ford has received a notice that a
government environmental enforcement agency believes a Ford
facility may have violated waste handling or disposal requirements.
Other Matters
- -------------
With respect to the challenge by a French manufacturer of the
antitrust approval by the European Commission of the joint venture
between Ford of Germany and Volkswagen AG to produce a multi-
purpose vehicle, referred to in the third paragraph on page 29 of
the 10-K Report, on July 15, 1994, the European Court of First
Instance rejected the French manufacturer's complaint against the
European Commission's decision to grant antitrust approval of the
joint venture. The French manufacturer can, however, appeal this
decision to the European Court of Justice.
Item 4. Submission of Matters to a Vote of Security-Holders
- ------------------------------------------------------------
On May 12, 1994, the 1994 Annual Meeting of Stockholders of the
Company was held. Following is a brief description of the matters
voted upon at the meeting and a tabulation of the voting therefor:
Election of Directors. The following persons were elected
directors of the Company based on the number of votes set forth
opposite their respective names:
Number of Votes
-----------------------------------------
Nominee For Not For
------------------ ----------- ---------
Colby H. Chandler 685,603,731 2,564,059
Michael D. Dingman 685,704,381 2,463,409
Edsel B. Ford II 685,204,213 2,963,577
William C. Ford 685,260,889 2,906,901
William C. Ford, Jr. 685,561,603 2,606,187
Allan D. Gilmour 685,092,197 3,075,593
Roberto C. Goizueta 685,639,007 2,528,783
Irvine O. Hockaday, Jr. 685,669,230 2,498,560
Drew Lewis 685,711,419 2,456,371
Ellen R. Marram 685,517,232 2,650,558
Kenneth H. Olsen 685,374,941 2,792,849
Carl E. Reichardt 685,750,361 2,417,429
Louis R. Ross 685,087,349 3,080,441
Stanley A. Seneker 685,584,512 2,583,278
Alex Trotman 685,485,544 2,682,246
Clifton R. Wharton, Jr. 685,048,774 3,119,016
-14-
There were no broker non-votes with respect to the election of
directors.
Proposal 1 Ratification of Selection of Independent Public
Accountants. A proposal to ratify the selection of Coopers &
Lybrand as independent public accountants to audit the books of
account and other corporate records of the Company for 1994 was
adopted, with 683,565,722 votes cast for, 1,786,393 votes cast
against, 2,814,910 votes abstained and 765 broker non-votes.
Proposal 2 Approval of an Amendment to the Certificate of
Incorporation to Increase the Authorized Common Stock and Class B
Stock of the Company. A proposal to amend the Company's
Certificate of Incorporation to increase the authorized number of
shares of Common Stock and Class B Stock to 3,000,000,000 shares
and 265,058,688 shares, respectively, was adopted. Votes by
holders of Common Stock and Class B Stock, voting as separate
classes, were as follows:
Common Stock Class B Stock
------------ -------------
Votes cast for 325,527,629* 35,400,079**
Votes cast against 49,534,219 -0-
Votes abstained 3,016,312 -0-
Broker non-votes 268,139 -0-
- - - - -
*Represented 70% of the total votes that could have been cast
by the holders of Common Stock issued and outstanding at the
close of business on March 14, 1994
*Represented 99.93% of the total votes that could have been
cast by the holders of Class B Stock issued and outstanding
at the close of business on March 14, 1994
Votes by holders of Common Stock and Class B Stock, voting together
without regard to class, were 635,349,120 votes cast for
(representing 81.97% of the total votes that could have been cast
by holders of Common Stock and Class B Stock issued and outstanding
at the close of business on March 14, 1994), 49,534, 219 votes cast
against, 3,016,312 votes abstained and 268,139 broker non-votes.
Proposal 3 Relating to Rotation of the Annual Meeting Location. A
proposal relating to rotating the location of the Annual Meeting of
Stockholders of the Company was rejected, with 611,048,745 votes
cast against, 25,526,136 votes cast for, 14,696,761 votes abstained
and 36,896,148 broker non-votes.
Proposal 4 Relating to a Report on Maquiladora Operations in
Mexico. A proposal requiring the Company to conduct a review and
prepare a report on the Company's maquiladora operations was
rejected, with 588,599,301 votes cast against, 36,499,329 votes
cast for, 25,268,342 votes abstained and 37,800,818 broker non-
votes.
Item 5. Other Information
- --------------------------
Governmental Standards
- ----------------------
Mobile Source Emissions Control -- The Clean Air Act requires the
EPA to promulgate a federal implementation plan ("FIP") for any
state failing to adopt a state plan compliant with Clean Air Act
standards. Pursuant to a court order, the EPA must promulgate an
FIP for California by February 1995. The EPA recently proposed an
FIP for California that includes more stringent motor vehicle
requirements than those now in effect and could adversely affect
Ford's sales volumes and profits. The proposed FIP contemplates
stringent motor vehicle inspection and maintenance and in-use
testing procedures which would make manufacturers responsible for
certain repairs necessitated by consumer neglect. Implementation
of this FIP could require Ford to accelerate implementation of
costly and unproven low-emission technology and incur additional
recall and warranty expense. It could preclude the sale in
California of some Ford medium and heavy-duty truck engines.
-15-
Supplemental Schedule
Ford Motor Company
CONDENSED FINANCIAL INFORMATION OF SUBSIDIARY
---------------------------------------------
FORD CAPITAL B.V.
-----------------
(in millions)
June 30, December 31,
1994 1993
---------- ------------
(unaudited)
Current assets $1,033 $ 919
Noncurrent assets 5,133 5,205
------ ------
Total assets $6,166 $6,124
====== ======
Current liabilities $ 443 $ 434
Noncurrent liabilities 5,185 5,245
Minority interests in net
assets of subsidiaries 13 7
Stockholder's equity 525 438
------ ------
Total liabilities and
stockholder's equity $6,166 $6,124
====== ======
Second Quarter Second Quarter First Half First Half
1994 1993 1994 1993
-------------- -------------- ---------- -----------
(unaudited) (unaudited)
Sales and other revenue $640 $440 $1,203 $969
Operating income 50 5 97 2
Income before income taxes 51 4 96 4
Net income/(loss) 39 1 78 (2)
Ford Capital B.V., a wholly-owned subsidiary of Ford Motor Company,
was established on February 2, 1990 primarily for the purpose of
raising funds through the issuance of commercial paper and debt
securities. It also holds Ford Motor Company's ownership interest
in Ford Nederland B.V. (Netherlands), Ford Motor Company (Belgium)
N.V., Ford Motor Company A/S (Denmark), Ford Motor Norge A/S
(Norway), Ford Poland S.A., and Ford (Poland) Distribution Sp.
zo.o. Substantially all of the assets of Ford Capital B.V., other
than its ownership interests in subsidiaries, represent receivables
from Ford Motor Company or its consolidated subsidiaries.
-16-
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please refer to the Exhibit Index on page 18.
(b) Reports on Form 8-K
The Registrant filed the following Current Reports on Form 8-K
during the quarter ended June 30, 1994:
Current Report on Form 8-K dated April 14, 1994 included
information relating to the 2-for-1 stock split in the form
of a 100% stock dividend on the Company's outstanding Common
and Class B stock, second quarter dividends, the sale of
First Nationwide Bank and the acquisition of the remaining
outstanding shares of Hertz.
Current Report on Form 8-K dated April 21, 1994 included
information relating to the Company's intention to realign
its worldwide automotive business.
Current Report on Form 8-K dated April 29, 1994 included
information relating to Ford's 1994 first quarter financial
results.
Current Report on Form 8-K dated June 27, 1994 included
information relating to the expected financial performance of
Ford's European automotive operations for 1994.
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: July 29, 1994 By: /s/ M. L. Reichenstein
-------------- -------------------------------
M. L. Reichenstein
Vice President - Controller,
Ford Automotive Operations
(principal accounting officer)
-17-
EXHIBIT INDEX
Sequential
Page Number
Designation Description at Which Found
- ----------- --------------------------------------------- ---------------
Exhibit 10 Description of Select Retirement Plan adopted 19
on June 9, 1994*
Exhibit 11 Ford Motor Company and Subsidiaries 20 and 21
Computation of Primary and Fully Diluted
Earnings Per Share in Accordance with
Opinion 15 of the Accounting Principles
Board
Exhibit 12 Ford Motor Company and Subsidiaries 22
Calculation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock
Dividends
Exhibit 15 Letter of Coopers & Lybrand, Independent 23
Public Accountants, dated July 29, 1994
relating to Financial Information
- - - - - -
*Management contract or compensatory plan or arrangement
-18-