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 September 30, 1994 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
- --- THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to_________
Commission file number 1-3950
----------------
Ford Motor Company
------------------------------------------------------
(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
------------
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
September 30, 1994, the Registrant had outstanding
1,017,050,068 shares of Common Stock and 70,852,076 shares
of Class B Stock.
Page 1 of 24
Exhibit index located on sequential page number 17
Ford Motor Company and Subsidiaries
HIGHLIGHTS
--------------
Third Quarter Nine Months
------------------- --------------------
1994 1993 1994 1993
------- -------- ------ ---------
Worldwide factory sales of cars
and trucks (in thousands)
- - United States 1,004 859 3,213 2,883
- - Outside United States 522 447 1,788 1,630
----- ----- ----- -----
Total 1,526 1,306 5,001 4,513
===== ===== ===== =====
Sales and revenues (in millions)
- - Automotive $24,926 $20,107 $79,371 $68,057
- - Financial Services 5,696 4,391 15,425 12,623
------- ------- ------- -------
Total $30,622 $24,498 $94,796 $80,680
======= ======= ======= =======
Net income (in millions)
- - Automotive $ 601 $ 72 $ 2,739 643
- - Financial Services 523 391 1,000* 1,167
------- ------- ------- -------
Total $ 1,124 $ 463 $ 3,739 $ 1,810
======= ======= ======= =======
Capital expenditures
(in millions)
- - Automotive $ 2,426 $ 1,807 $ 5,906 $ 4,712
- - Financial Services 50 25 171 67
------- ------- ------- -------
Total $ 2,476 $ 1,832 $ 6,077 $ 4,779
======= ======= ======= =======
Stockholders' equity at
September 30
- - Total (in millions) $19,985 $15,827 $19,985 $15,827
- - After-tax return on Common and
Class B stockholders' equity 26.7% 12.7% 33.1% 17.8%
Automotive cash, cash equivalents,
and marketable securities at
September 30 (in millions) $13,915 $ 9,284 $13,915 $ 9,284
Automotive debt at September 30
(in millions) $ 7,233 $ 7,887 $ 7,233 $ 7,887
Automotive after-tax return
on sales 2.4% 0.4% 3.5% 1.0%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,014 988 1,006 984
- - Number outstanding at
September 30 1,017 994 1,017 994
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income
- - Automotive $ 0.52 $ 0 $ 2.51 $ 0.43
- - Financial Services 0.52 0.40 0.99 1.19
------- ------- ------- -------
Total $ 1.04 $ 0.40 $ 3.50 $ 1.62
======= ======= ======= =======
Income assuming full dilution $ 0.93 $ 0.38 $ 3.13 $ 1.51
Cash dividends per share of Common
and Class B Stock $ 0.225 $ 0.20 $ 0.65 $ 0.60
- - - - - -
*Includes a loss of $440 million related to the disposition of Granite
Managment Corporation (formerly 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 September 30, 1994 and 1993
Third Quarter Nine Months
------------------------- -------------------------
1994 1993 1994 1993
--------- ---------- --------- ---------
North America
Cars - U.S. 479,272 439,394 1,539,903 1,491,815
- Canada 27,650 24,444 98,580 94,890
- Mexico 9,227 8,448 34,632 39,302
-------- -------- ---------- ---------
Total cars 516,149 472,286 1,673,115 1,626,007
Trucks - U.S. 524,658 420,047 1,673,343 1,391,490
- Canada 36,186 25,256 114,288 84,135
- Mexico 11,223 8,414 30,709 28,979
-------- -------- ---------- ---------
Total trucks 572,067 453,717 1,818,340 1,504,604
-------- -------- ---------- ---------
Total North America 1,088,216 926,003 3,491,455 3,130,611
Outside North America
Germany 199,963 182,691 721,979 638,653
Britain 110,107 88,352 346,927 323,793
Spain 60,986 24,896 224,688 163,205
Australia 31,641 34,066 92,242 93,226
Taiwan 18,006 26,638 69,428 94,980
Japan 8,694 12,910 25,596 42,080
Other countries 8,518 10,027 28,428 26,175
--------- -------- --------- ---------
Total outside North America 437,915 379,580 1,509,288 1,382,112
--------- -------- --------- ---------
Total worldwide vehicle
factory sales 1,526,131 1,305,583 5,000,743 4,512,723
========= ========= ========= =========
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 September 30, 1994 and 1993
(in millions)
Third Quarter Nine Months
------------------------ --------------------------
1994 1993 1994 1993
---------- --------- ---------- ---------
(unaudited) (unaudited)
AUTOMOTIVE
Sales $24,926 $20,107 $79,371 $68,057
Costs and expenses (Note 2)
Costs of sales 22,745 19,263 71,094 63,526
Selling, administrative, and other expenses 1,192 1,086 3,763 3,481
------- ------- ------- -------
Total costs and expenses 23,937 20,349 74,857 67,007
Operating income/(loss) 989 (242) 4,514 1,050
Interest income 126 127 417 413
Interest expense 190 214 529 650
------- ------ ------- -------
Net interest expense (64) (87) (112) (237)
Equity in net income of affiliated companies 84 133 193 144
Net expense from transactions with
Financial Services 9 10 28 27
------- ------ ------- -------
Income/(loss) before income taxes - Automotive 1,000 (206) 4,567 930
FINANCIAL SERVICES
Revenues 5,696 4,391 15,425 12,623
Costs and expenses
Interest expense 1,774 1,626 5,040 4,859
Operating and other expenses 1,245 807 3,292 2,342
Provision for credit and insurance losses 400 409 1,153 1,186
Depreciation 1,390 827 3,490 2,207
Loss on disposition of Granite Management
(First Nationwide)(Note 4) - - 475 -
------ ------ ------- -------
Total costs and expenses 4,809 3,669 13,450 10,594
Net revenue from transactions with Automotive 9 10 28 27
------ ------ ------- -------
Income before income taxes - Financial Services 896 732 2,003 2,056
------ ------ ------- --------
TOTAL COMPANY
Income before income taxes 1,896 526 6,570 2,986
Provision for income taxes (Note 5) 737 32 2,723 1,070
------ ------ ------- --------
Income before minority interests 1,159 494 3,847 1,916
Minority interests in net income of subsidiaries 35 31 108 106
------ ------ ------- --------
Net income 1,124 463 3,739 1,810
Preferred stock dividend requirements 72 72 216 216
------ ------ ------- -------
Income attributable to Common and
Class B Stock $ 1,052 $ 391 $ 3,523 $ 1,594
======= ======= ======= =======
Average number of shares of Common and Class B
Stock outstanding (Note 6) 1,014 988 1,006 984
AMOUNTS PER SHARE OF COMMON STOCK AND CLASS B
STOCK AFTER PREFERRED STOCK DIVIDENDS
Income $ 1.04 $ 0.40 $ 3.50 $ 1.62
======= ======= ======= =======
Income assuming full dilution $ 0.93 $ 0.38 $ 3.13 $ 1.51
Cash dividends $ 0.225 $ 0.20 $ 0.65 $ 0.60
- - - - - -
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)
September 30, December 31,
1994 1993
------------- ------------
(unaudited)
ASSETS
Automotive
Cash and cash equivalents $ 7,193 $ 5,667
Marketable securities 6,722 4,085
-------- --------
Total cash, cash equivalents, and marketable securities 13,915 9,752
Receivables 2,552 2,302
Inventories (Note 3) 6,394 5,538
Deferred income taxes 2,781 2,830
Other current assets 1,499 1,226
Net current receivable from Financial Services 1,150 834
---------- ------
Total current assets 28,291 22,482
Equity in net assets of affiliated companies 3,244 3,002
Net property 25,989 23,059
Deferred income taxes 4,992 5,427
Other assets 6,484 7,691
Net noncurrent receivable from Financial Services 81 76
---------- ------
Total Automotive assets 69,081 61,737
Financial Services (Note 4)
Cash and cash equivalents 2,042 2,555
Investments in securities 6,328 8,219
Net receivables and lease investments 124,832 119,535
Other assets 12,536 6,892
------------ ----
Total Financial Services assets 145,738 137,201
------------ ----
Total assets $214,819 $198,938
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 10,954 $ 8,769
Other payables 2,212 1,976
Accrued liabilities 12,835 10,815
Income taxes payable 474 160
Debt payable within one year 96 932
------------ ----
Total current liabilities 26,571 22,652
Long-term debt 7,137 7,084
Other liabilities 25,769 25,911
Deferred income taxes 1,009 1,089
------------ ----
Total Automotive liabilities 60,486 56,736
Financial Services (Note 4)
Payables 2,359 1,881
Debt 119,056 103,960
Deposit accounts 0 10,549
Deferred income taxes 2,891 2,287
Other liabilities and deferred income 7,152 5,583
Net payable to Automotive 1,231 910
------------ ----
Total Financial Services liabilities 132,689 125,170
Preferred stockholders' equity in subsidiary companies 1,659 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 (947 and 464 million shares issued) 947 464
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 5,139 5,082
Foreign currency translation adjustments and other 268 (678)
Minimum pension liability adjustment (381) (400)
Earnings retained for use in business 13,941 11,071
------------ -----------
Total stockholders' equity 19,985 15,574
------------ -----------
Total liabilities and stockholders' equity $214,819 $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 September 30, 1994 and 1993
(in millions)
Nine Months 1994 Nine Months 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 10,717 6,852 6,158 5,453
Net (purchases)/sales of trading securities (Note 7) (2,765) (18) - -
-------- -------- -------- --------
Net cash flows from operating activities 7,952 6,834 6,158 5,453
Cash flows from investing activities
Capital expenditures (5,906) (172) (4,711) (67)
Proceeds from sale and leaseback of fixed assets 0 - 729 -
Acquisitions of other companies - (426) - (336)
Acquisitions of receivables and lease investments - (148,595) - (119,717)
Collections of receivables and lease investments - 127,419 - 104,727
Acquisitions of daily rental vehicles, net of disposals - (1,013) - 0
Purchases of securities (Note 7) (116) (9,515) (66,511) (11,423)
Sales of securities (Note 7) 252 8,970 66,073 10,114
Proceeds from sales of receivables - 2,526 - 4,207
Loans originated net of principal payments - (207) - (949)
Investing activity with Financial Services 9 - (174) -
Other 407 (328) (72) 230
------ -------- ------- --------
Net cash used in investing activities (5,354) (21,341) (4,666) (13,214)
Cash flows from financing activities
Cash dividends (869) - (814) -
Issuance of Common Stock 375 - 305 -
Changes in short-term debt (795) 8,024 (356) 2,295
Proceeds from issuance of other debt 158 15,265 401 17,299
Principal payments on other debt (41) (10,262) (292) (10,257)
Financing activity with Automotive - (9) - 174
Changes in customers' deposits, excluding
interest credited - (422) - (3,505)
Receipts from annuity contracts - 875 - 629
Redemption of Hertz common and preferred stock (Note 8) - (145) - -
Issuance of subsidiary company preferred stock - 202 - 375
Other (20) (24) (142) 36
------ ------ ------ -------
Net cash (used in)/provided by financing activities (1,192) 13,504 (898) 7,046
Effect of exchange rate changes on cash 441 169 120 125
Net transactions with Automotive/Financial Services (321) 321 (899) 899
------ ------ ------ -------
Net increase/(decrease) in cash and cash
equivalents 1,526 (513) (185) 309
------ ------ ------ -------
Cash and cash equivalents at September 30 $ 7,193* $ 2,042 $ 3,319* $ 3,491
======== ======== ======== ========
Total cash and cash equivalents $9,235 $6,810
====== ======
- - - - - -
*Automotive cash, cash equivalents, and marketable securities at
September 30 were as follows (in millions): 1994 - $13,915; 1993 - $9,284
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):
Third Quarter Nine Months
-------------- ------------
1994 1993 1994 1993
------ ------ ------ -----
Depreciation $ 555 $ 592 $1,700 $1,809
Amortization 408 409 1,532 1,477
3. Inventories are summarized as follows (in millions):
September 30, December 31,
1994 1993
-------------- ------------
Raw materials, work in process
and supplies $3,050 $2,937
Finished products 3,344 2,601
------ ------
Inventories - Automotive $6,394 $5,538
====== ======
Inventories - U.S. Automotive $2,892 $2,575
4. Sale of Granite Savings Bank (formerly First Nationwide Bank)
-------------------------------------------------------------
On April 14, 1994, an agreement was entered into between
Granite Savings Bank (formerly 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 Granite Management
Corporation (formerly First Nationwide Financial
Corporation)("Granite"), which in turn is a wholly-owned
subsidiary of Ford. The transaction was completed on
September 30, 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 Granite,
reflecting the non-recovery of goodwill and reserves for
estimated losses on assets to be retained or repurchased
by Granite. 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 Granite
through March 31, 1994. The net assets of Granite at
September 30, 1994 are included in the balance sheet under
Financial Services - Other Assets. Historically, Granite
(including the Bank) has not had a significant effect on
Ford's operating results.
-7-
5. Income Taxes
------------
On August 10, 1993 the Omnibus Budget Reconciliation Act
of 1993 was enacted in the U.S. Among other changes, the
Act increased the federal income tax rate for corporations
by one percentage point to 35% effective January 1, 1993.
Net income in the third quarter of 1993 included a
reduction of $140 million in the provision for income
taxes as a result of restating U.S. deferred tax balances.
The favorable effect reflected the higher tax rate applied
to net deferred tax assets in the U.S.
6. 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.
7. 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.
8. 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' earnings included in Financial Services
results for the third quarter and nine months ended
September 30, 1994 were $61 million and $88 million
respectively, compared with $19 million and $22 million
included in Automotive results for the same periods a year
ago (reflecting Ford's prior equity interest in Hertz).
-8-
Coopers & 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 September 30, 1994 and the related
consolidated statement of income and condensed consolidated
statement of cash flows for the period set forth in Form 10-Q
for the quarter ended September 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.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
October 26, 1994
-9-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
RESULTS OF OPERATIONS: THIRD QUARTER 1994 COMPARED WITH
THIRD QUARTER 1993
Overview
- --------
Ford Motor Company earned $1,124 million, or $1.04 per share
of Common and Class B Stock, in the third quarter of 1994.
This compares with $463 million, or $0.40 per share, in the
third quarter of 1993. Fully diluted earnings per share
were $0.93 in the third quarter of 1994, compared with $0.38
a year ago. The Company's worldwide sales and revenues were
$30.6 billion, up $6.1 billion from a year ago. Worldwide
factory unit sales of cars and trucks were 1,526,000, up
220,000 units or 17%. Stockholders' equity was $20 billion
at September 30, 1994.
In August 1993, the Omnibus Budget Reconciliation Act was
enacted in the United States. Ford's results in the third
quarter of 1993 were favorably affected by a reduction of
$140 million in the provision for income taxes to reflect
restatement of deferred tax balances.
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 $601 million
in the third quarter of 1994 on sales of $24.9 billion,
compared with earnings of $72 million on sales of
$20.1 billion a year ago.
In the U.S., Ford's automotive operations earned
$578 million, compared with $333 million a year ago. The
improvement reflected higher unit volume (as a result of
higher truck sales) and improved margins offset partially by
the non-recurrence of the favorable one-time effect in 1993
of tax legislation in the U.S. ($171 million).
In the third quarter of 1994, the seasonally-adjusted annual
selling rate for the U.S. car and truck industry was
14.8 million units compared with 13.9 million in the third
quarter of 1993. Ford's car market share was 21.0% in the
third quarter of 1994, down 9/10 of a point from a year ago,
reflecting primarily lower shares for Tempo and Topaz.
Ford's truck share was 31.2%, equal to a year ago. Ford's
combined car and truck share was 25.2%, down 5/10 of a point
from a year ago.
Outside the U.S., Automotive operations earned $23 million
in the third quarter of 1994, compared with a loss of
$261 million a year ago. The improvement reflected
primarily higher unit volume in Europe, where Automotive
operations (excluding Jaguar) earned $25 million in the
third quarter of 1994, compared with a loss of $217 million
a year ago.
In the third quarter of 1994, the seasonally-adjusted annual
selling rate for the European car and truck industry was
13.1 million units, compared with 12.7 million a year ago.
Ford's car share was 12.6% in the third quarter of 1994, up
2/10 of a point from a year ago. Ford's truck share was
14.3%, equal to a year ago.
Ford and Volkswagen are conducting a joint study of their
Autolatina joint venture, which has operations in Brazil and
Argentina. Since it was formed in 1987, the joint venture
has been a successful and profitable participant in these
volatile markets. Recent industry volume growth in Brazil
and Argentina, however, has resulted in somewhat lower
Autolatina market shares -- primarily because of capacity
limitations and increased competitive actions. The joint
study is to determine how best to respond to protect the
interests of both Ford and Volkswagen, but no agreement has
been reached on a course of action. It is not known at this
time what effect, if any, actions that may result from the
joint study will have on Ford's future earnings.
Historically, Autolatina has represented a significant
portion of Ford's automotive earnings outside the U.S.
and Europe.
-10-
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned
$523 million in the third quarter of 1994, compared with
$391 million in the third quarter of 1993. The increase
resulted primarily from improved results at Ford Credit, The
Associates, and USL Capital, consolidation of results for
Hertz, non-recurrence of losses at Granite Management
Corporation (formerly First Nationwide) ("Granite") and non-
recurrence of the one-time unfavorable effect in 1993 of tax
legislation in the U.S. ($31 million).
Ford Credit's consolidated net income was $315 million in
the third quarter of 1994, compared with $275 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 $254 million in the third quarter of 1994, compared
with $222 million a year ago. The improvement reflected
higher levels of earning assets, lower credit losses, and
non-recurrence of the one-time adjustment in 1993 for
increased U.S. tax rates, partially offset by lower net
interest margins and the non-recurrence of a gain from the
sale of receivables. In addition, international operations
managed by Ford Credit earned $62 million in the third
quarter of 1994, compared with $57 million a year ago.
The Associates earned $151 million in the U.S. in the third
quarter of 1994, compared with $121 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 $17 million in
the third quarter of 1994, compared with $2 million a year
ago.
USL Capital earned $27 million in the third quarter of 1994,
compared with $16 million a year ago. The increase
reflected higher earning assets and lower operating costs.
American Road earned $14 million in the third quarter of
1994, compared with $27 million in the same period in 1993.
The decrease resulted primarily from reduced investment
income.
In the first half of 1994, Ford acquired the remaining
common stock of Hertz, and Hertz became a wholly-owned
subsidiary of Ford. Financial Services results included
Hertz earnings of $61 million in the third quarter of 1994.
Automotive results included Hertz earnings of $19 million a
year ago (reflecting Ford's prior equity interest in Hertz).
On April 14, 1994, an agreement was entered into for the
sale of substantially all of the assets of Granite Savings
Bank (formerly 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 was completed on September 30,
1994. In the third quarter of 1993, Granite incurred a loss
of $7 million.
FIRST NINE MONTHS 1994 COMPARED WITH FIRST NINE MONTHS 1993
Overview
- --------
Ford earned $3,739 million, or $3.50 per share of Common and
Class B Stock, in the first nine months of 1994. Results
included a charge to net income of $440 million related to
the sale of Granite Savings Bank to First Madison Bank
(discussed above). In the first nine months of 1993, the
Company earned $1,810 million, or $1.62 per share, including
the favorable one-time effect ($140 million) of tax
legislation in the U.S. Fully diluted earnings per share
were $3.13, compared with $1.51 a year ago. The Company's
worldwide sales and revenues were $94.8 billion in the first
nine months of 1994, up $14.1 billion from a year ago.
Worldwide factory unit sales of cars and trucks were
5,001,000, up 488,000 or 11%.
-11-
Automotive Operations
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Ford's worldwide Automotive operations earned $2,739 million
in the first nine months of 1994, compared with $643 million
in first nine months of 1993. In the U.S., Ford's
Automotive operations earned $2,320 million, compared with
$813 million a year ago. The improvement reflected higher
unit volume (as a result of higher industry sales) and
improved margins.
In the first nine months of 1994, the seasonally-adjusted
annual selling rate for the U.S. car and truck industry was
15.2 million units, compared with 14 million a year ago.
Ford's car share was 21.4% in the first nine months of 1994,
down 8/10 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 30.2%, equal to a year ago. Ford's combined
car and truck share was 25%, down 3/10 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.
Outside the U.S., Automotive operations earned $419 million
in the first nine months of 1994, compared with a loss of
$170 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 $377 million in the
first nine months of 1994, compared with a loss of
$264 million a year ago.
In the first nine months of 1994, the seasonally-adjusted
annual selling rate for the European car and truck industry
was 13.2 million units, compared with 12.5 million units a
year ago. Ford's car share was 12.0%, up 2/10 of a point
from a year ago. Ford's truck share was 14.6%, equal to 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
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The Company's Financial Services operations earned
$1,000 million in the first nine months of 1994, compared
with $1,167 million in the first nine months of 1993. The
decline was more than explained by the charge to net income
of $440 million related to the sale of Granite Savings Bank.
Higher earnings at Ford Credit, The Associates, USL Capital,
and the consolidation of results for Hertz were partial
offsets.
Ford Credit's consolidated net income was $982 million in
the first nine months of 1994, compared with $896 million a
year ago. Net income from financing operations was
$816 million, compared with $756 million a year ago. The
improvement reflected primarily the same factors as those
described in the discussion of third quarter results of
operations, as well as the one-time effect of the gain on
sale of an interest in Manheim Auctions (an auto auction
company). International operations managed by Ford Credit
earned $175 million in the first nine months of 1994,
compared with $154 million a year ago.
The Associates earned $400 million in the U.S. in the first
nine months of 1994 compared with $343 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 $56 million in
the first nine months of 1994, compared with $22 million a
year ago.
USL Capital's net income in the first nine months of 1994
was $75 million, compared with $53 million a year ago. The
increase reflected higher earning assets and lower operating
costs. American Road earned $44 million in the first nine
months of 1994, compared with $67 million a year ago. The
decrease resulted primarily from reduced investment income,
partially offset by improved underwriting experience in
extended service plans.
Hertz earnings of $88 million in the first nine months of
1994 were included in Financial Services results. Earnings
of $22 million a year ago were included in Automotive
results (reflecting Ford's prior equity interest).
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Granite incurred a loss of $484 million in the first nine
months of 1994, including a charge of $440 million related
to the sale of Granite Savings Bank. Granite incurred a
loss of $42 million in the first nine months of 1993.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
- ---------------------
Cash and marketable securities of the Company's Automotive
operations were $13.9 billion at September 30, 1994, up
$4.1 billion from December 31, 1993. The amount of cash and
marketable securities is expected to decline during the
fourth quarter because of normal new-model changeover and
launch and higher capital spending (discussed below). The
Company paid $869 million in cash dividends on its Common
Stock, Class B Stock, and Preferred Stock during the first
nine months of 1994.
Automotive capital expenditures were $5.9 billion in the
first nine months of 1994, compared with $4.7 billion a year
ago. The rate of automotive capital spending is projected
to increase during the fourth quarter as a result of
increases in both product and non-product spending. 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 September 30, 1994 totaled $7.2 billion,
which was 26% of total capitalization (stockholders' equity
and Automotive debt), compared with $7.9 billion, or 33% of
total capitalization, at year-end 1993. The decrease in
total debt is primarily the result of lower levels of short-
term borrowings.
At September 30, 1994, Ford had long-term contractually
committed credit agreements in the U.S. under which $5.9
billion is available from various banks at least through
June 30, 1999. The entire $5.9 billion may be used, at
Ford's option, by either Ford or Ford Credit. As of
September 30, 1994, these facilities were unused.
Outside the U.S., Ford has additional long-term
contractually committed credit-line facilities of
approximately $2.5 billion. These facilities are available
in varying amounts from 1994 through 1999; less than 1% was
used at September 30, 1994.
Financial Services Operations
- -----------------------------
Financial Services' cash and investments in securities
totaled $8.4 billion at September 30, 1994, down
$2.4 billion from December 31, 1993. The decline reflected
primarily the reclassification of Granite's net assets to
"other assets" as a result of the sale.
Net receivables and lease investments were $124.8 billion at
September 30, 1994, up $5.3 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 Granite's net assets.
Total debt was $119.1 billion at September 30, 1994, up
$15.1 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
Granite's net assets was a partial offset.
At September 30, 1994, Financial Services had approximately
$33.3 billion of support facilities available for use in the
U.S. (including $5.9 billion of Ford bank lines that may be
used by Ford Credit at Ford's option), 98% of which were
contractually committed; less than 1% of these facilities
were in use at that date. An additional $20.5 billion of
support facilities were available outside the U.S., 46% of
which were contractually committed; approximately
$6.1 billion of these support facilities were in use at
September 30, 1994.
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Other Financial Information
- ---------------------------
Coopers & Lybrand L.L.P., Ford's independent public
accountants, performed a limited review of the financial
data presented on pages 4 through 8 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, Coopers & Lybrand L.L.P. did not express an
opinion on the aforementioned data. The financial data
include any material adjustments or disclosures proposed by
Coopers & Lybrand L.L.P. as a result of their review.
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, on page 13 of the First
Quarter 10-Q Report and on page 14 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 (the "Second Quarter 10-Q Report"), the damages
specified by the plaintiffs in these actions, including both
actual and punitive damages, aggregated approximately $929
million at September 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, on page 13 of the First Quarter 10-Q Report and
on page 14 of the Second Quarter 10-Q Report, the damages
specified by the plaintiffs in these actions, including both
actual and punitive damages, aggregated approximately $1.1
billion at September 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, on page 13 of the First Quarter 10-Q Report and on
page 14 of the Second Quarter 10-Q Report, the damages
specified by the plaintiffs in these actions, including both
actual and punitive damages, aggregated approximately $197
million at September 30, 1994.
Other Matters
- -------------
With respect to the private purported class action lawsuits
seeking economic damages on behalf of Bronco II owners
relating to the alleged propensity of such vehicles to roll
over, referred to in the second paragraph on page 29 of the
10-K Report, a settlement has been reached, subject to final
court approval.
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Supplemental Schedule
Ford Motor Company
CONDENSED FINANCIAL INFORMATION OF SUBSIDIARY
---------------------------------------------
FORD CAPITAL B.V.
-----------------
(in millions)
September 30, December 31,
1994 1993
------------- ------------
(unaudited)
Current assets $1,053 $ 919
Noncurrent assets 5,136 5,205
------ ------
Total assets $6,189 $6,124
====== ======
Current liabilities $ 471 $ 434
Noncurrent liabilities 5,161 5,245
Minority interests in net
assets of subsidiaries 12 7
Stockholder's equity 545 438
------ ------
Total liabilities and
stockholder's equity $6,189 $6,124
====== ======
Third Quarter Third Quarter Nine Months Nine Months
1994 1993 1994 1993
------------- ------------- ----------- -----------
(unaudited) (unaudited)
Sales and other revenue $543 $439 $1,746 $1,408
Operating income 40 27 137 29
Income before income taxes 18 24 114 28
Net income 13 20 91 18
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.
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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 September 30, 1994:
Current Report on Form 8-K dated July 27, 1994 included
information relating to Ford's 1994 second quarter financial
results.
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: November 3, 1994 By: /s/ M. L. Reichenstein
M. L. Reichenstein
Vice President - Controller,
Ford Automotive Operations
(principal accounting officer)
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EXHIBIT INDEX
-------------
Sequential
Page Number
Designation Description at Which Found
- ----------- ----------------------------------------- --------------
Exhibit 11 Ford Motor Company and Subsidiaries 18 and 19
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 20
Calculation of Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends
Exhibit 15 Letter of Coopers & Lybrand, Independent 21
Public Accountants, dated October 31, 1994
relating to Financial Information
Exhibit 27.1 Financial Data Schedule - Automotive 22
Segment
Exhibit 27.2 Financial Data Schedule - Financial 23
Services Segment
Exhibit 27.3 Financial Data Schedule - Conglomerate 24
Totals
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