Global News Communications Ford Motor Company The American Road Room 904 Dearborn, MI 48121 Telephone: (313)322-9600 Fax: (313)845-0570 (313)337-1764 FOR RELEASE AT 8 A.M. (EASTERN) WEDNESDAY, OCT. 18 Contact: Media Inquiries Broadcast Media Stockholder Inquiries Terry Bresnihan Brenda Hines Stockholder Relations (313) 322-9600 (313) 322-9600 (313) 845-8540 FORD EARNS $357 MILLION IN THIRD QUARTER; BRINGS NET TO $3.5 BILLION FOR NINE MONTHS DEARBORN, Mich., Oct. 18 -- Ford earned $357 million or $0.28 per share of common and Class B stock in the third quarter of 1995, compared with earnings of $1.12 billion or $1.04 per share for the third quarter of 1994. In the first nine months of this year, Ford earned $3.5 billion, compared with $3.7 billion through the first nine months of last year. Earnings per share for nine months were $3.13, compared with $3.50 through nine months last year. In the third quarter, lower production volumes, primarily in the United States, had the single biggest impact on the company's results. Ford's sales to dealers in the U.S. were 869,000 units, down 123,000 units, or 12 percent, from the third quarter of 1994. The decrease reflected unusually high production in the year-ago period as well as units lost this quarter because of major new model launches and component shortages. The Financial Services Group achieved record earnings in Ford Credit, The Associates and USL Capital. Hertz, a wholly owned subsidiary of Ford, also posted record profitability in the third quarter. -2- SUMMARY OF THIRD-QUARTER 1995 COMPARED WITH 1994 Overview - -------- - - Total earnings were $357 million, compared with $1.12 billion. - - Earnings per share were $0.28, compared with $1.04. - - Worldwide sales and revenues were $31.4 billion, compared with $30.6 billion. Automotive - ---------- - - Worldwide automotive operations lost $201 million, compared with a profit of $619 million. - - Net income from U.S. automotive operations was $187 million, compared with $553 million. - - Automotive operations outside the U.S. lost $388 million, compared with a profit of $66 million. Financial Services Group - ------------------------ - - The Financial Services Group earned $558 million, compared with $505 million. - - Ford Credit earned $357 million, compared with $315 million. - - The Associates Corp. of North America earned $188 million, compared with $162 million. - - USL Capital earned $31 million, compared with $27 million. - - Hertz earned $65 million, compared with $61 million. Sales and Market Share - ---------------------- - - Worldwide vehicle unit sales were 1,435,000, compared with 1,576,000. - - Combined car and truck share in the U.S. was 24.8 percent, compared with 25.2 percent. - - Combined car and truck share in Europe was 12.9 percent, compared with 12.8 percent. Balance Sheet - ------------- - - Stockholders' equity was $25 billion, compared with $20 billion. - - Automotive cash and marketable securities were $12.2 billion, compared with $13.9 billion. - - Automotive debt was $6.8 billion, compared with $7.2 billion. - - Automotive net cash was $5.4 billion, compared with $6.7 billion. - - Capital spending was $2.3 billion, compared with $2.5 billion. -3- AUTOMOTIVE OPERATIONS "This is clearly a transitional period for Ford in the near term," said Alex Trotman, chairman and chief executive officer. "We are in the process of launching a record wave of industry- leading new products, including the Ford Taurus and Mercury Sable and the replacement of the F-150 pick-up truck -- our highest volume vehicle. In Europe, we are launching our all-new Galaxy minivan and we are ramping up production of our new Fiesta. Early feedback on customer reaction to these new products is very positive." Ford's worldwide automotive operations experienced a loss of $201 million in the third quarter of 1995. This compares with earnings of $619 million in the third quarter of last year. In the U.S., Ford earned $187 million for the quarter, down $366 million from a year earlier. The drop in production volumes and costs associated with introducing new models accounted for the decrease in earnings. Cost efficiencies partially offset these factors. In Europe, there was a loss of $320 million in automotive operations, compared with a loss of $37 million a year earlier. Europe's results were affected by lower volume and higher marketing costs, the cost of introducing new models and currency changes. Outside of Europe and the U.S., Ford posted a loss of $68 million, compared with a profit of $103 million a year earlier. The decline is primarily attributable to Brazil, where higher import duties and a market shift to small cars have resulted in excess inventories and higher marketing costs. "Third-quarter results in our automotive operations were weak but not unexpected," Trotman said. "Still, we are confident about the future. Ford is in the midst of putting its most impressive vehicle line-up ever on the streets, ready to compete efficiently and effectively." From now through early next year, the company is launching the new Ford Taurus, Mercury Sable, F-150 pick-up truck, Ford Escort and Mercury Tracer in North America, and the Ford Fiesta and Galaxy in Europe. -4- In the U.S., the new products will represent about 35 percent of Ford's volume compared to more typical years when new products represent about 10 to 15 percent of volume. And in Europe, Fiesta is Ford's highest volume product. "There will be costs associated with this record launch of new models, but their introduction into what we believe will be healthy industries in 1996 and 1997 will increase our competitiveness in the highest volume segments in the business," Trotman said. "Every indication is that these core products will do very well in their respective markets and contribute significantly to our performance." FINANCIAL SERVICES Ford's Financial Services Group earned a record $558 million in the third quarter of 1995, up $53 million from the year earlier period. Each of the major businesses in the Group set third-quarter records. Ford Credit's profit of $357 million was up $42 million from a year earlier. The Associates earned $188 million, up $26 million from a year earlier. USL Capital earned $31 million, up $4 million from a year earlier. "The Financial Services Group set an any-quarter earnings record," Trotman said. "Even with intense pressure on margins and the fierce competition in the financial services industry, our Financial Services Group continues to be a powerful contributor." REENGINEERING OF COMPANY ON TRACK Trotman said that Ford 2000 is progressing well on both product and cost initiatives. "New processes and state-of-the- art technology in product development will help us bring more new vehicles to market at a much more cost-effective level than in the past," he said. The company will also continue to apply new manufacturing technologies to its worldwide production system to ensure even higher levels of quality and bring more cost savings. Trotman said that Ford is working cooperatively with suppliers to help drive costs down. "There's much work to be done in this area, but as we develop even closer associations both our suppliers and Ford will benefit through improved efficiency." -5- He also noted that the company's growth strategy saw some impressive progress during the third quarter with initiatives in a number of key emerging markets, including China, India, Korea, Thailand and Vietnam. "Our objective is enhancing value. We must give customers more value for their money and our stockholders more value for their investment," Trotman said. "The fundamentals and longer- term prospects for Ford to achieve this objective remain excellent." # # # 10-18-95 Ford Motor Company and Subsidiaries HIGHLIGHTS ---------- Third Quarter Nine Months ------------------------- ------------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Worldwide vehicle unit sales of cars and trucks (in thousands) - - United States 869 992 3,038 3,167 - - Outside United States 566 584 1,978 1,979 ----- ----- ----- ----- Total 1,435 1,576 5,016 5,146 ===== ===== ===== ===== Sales and revenues (in millions) - - Automotive $24,437 $24,926 $ 82,899 $79,371 - - Financial Services 6,981 5,696 19,691 15,425 ------- ------- -------- ------- Total $31,418 $30,622 $102,590 $94,796 ======= ======= ======== ======= Net income/(loss) (in millions) - - Automotive $ (201) $ 619 $ 2,040 $ 2,794 - - Financial Services 558 505 1,439 945* ------- ------- -------- ------- Total $ 357 $ 1,124 $ 3,479 $ 3,739 ======= ======= ======== ======= Capital expenditures (in millions) - - Automotive $ 2,254 $ 2,426 $ 6,204 $ 5,906 - - Financial Services 76 50 223 171 ------- ------- -------- ------- Total $ 2,330 $ 2,476 $ 6,427 $ 6,077 ======= ======= ======== ======= Stockholders' equity at September 30 - - Total (in millions) $24,955 $19,985 $ 24,955 $19,985 - - After-tax return on Common and Class B stockholders' equity 5.4% 26.7% 20.9% 33.1% Automotive cash, cash equivalents, and marketable securities at September 30 (in millions) $12,241 $13,915 $ 12,241 $13,915 Automotive debt at September 30 (in millions) $ 6,829 $ 7,233 $ 6,829 $ 7,233 Automotive after-tax return on sales ** 2.5% 2.5% 3.5% Shares of Common and Class B Stock (in millions) - - Average number outstanding 1,083 1,014 1,049 1,006 - - Number outstanding at September 30 1,090 1,017 1,090 1,017 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK AFTER PREFERRED STOCK DIVIDENDS Income/(Loss) - - Automotive $ (0.24) $ 0.54 $ 1.76 $ 2.56 - - Financial Services 0.52 0.50 1.37 0.94 ------- ------- -------- ------- Total $ 0.28 $ 1.04 $ 3.13 $ 3.50 ======= ======= ======== ======= Income assuming full dilution $ 0.27 $ 0.93 $ 2.85 $ 3.13 Cash dividends per share of Common and Class B Stock $ 0.31 $ 0.225 $ 0.88 $ 0.65 - - - - - - *Includes a loss of $440 million related to the disposition of Granite Savings Bank (formerly First Nationwide Bank) **Results in this period were a loss Segment results for 1994 have been adjusted to reflect reclassification of certain tax amounts to conform with the 1995 presentation. Ford Motor Company and Subsidiaries UNIT SALES ---------- For the Periods Ended September 30, 1995 and 1994 (in thousands) Third Quarter Nine Months --------------------------- ------------------------ 1995 1994 1995 1994 ---------- ---------- ---------- -------- North America United States Cars 377 470 1,333 1,506 Trucks 492 522 1,705 1,661 ----- ----- ----- ----- Total United States 869 992 3,038 3,167 Canada 46 56 178 206 Mexico 3 20 21 65 ----- ----- ----- ----- Total North America 918 1,068 3,237 3,438 Europe Britain 105 122 371 411 Germany 93 73 325 282 France 40 41 124 135 Spain 33 40 129 122 Italy 31 34 139 140 Other countries 58 60 212 210 ----- ----- ----- ----- Total Europe 360 370 1,300 1,300 Other international Brazil 45 44 153 121 Australia 41 30 107 87 Taiwan 27 20 90 76 Japan 14 13 44 37 Argentina 13 17 34 41 Other countries 17 14 51 46 ----- ----- ----- ----- Total other international 157 138 479 408 ----- ----- ----- ----- Total worldwide vehicle unit sales 1,435 1,576 5,016 5,146 ===== ===== ===== ===== Vehicle unit sales are reported worldwide on a "where sold" basis and include sales of all Ford-badged units, as well as units manufactured by Ford and sold to other manufacturers. Third Quarter 1994 and Nine Months 1994 unit sales have been restated to reflect the country where sold and to include sales of all Ford-badged units. Previously, factory unit sales were reported in North America on a "where sold" basis and overseas on a "where produced" basis. Also, Ford-badged unit sales of certain unconsolidated subsidiaries (primarily Autolatina -- Brazil and Argentina) were not previously reported. Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME -------------------------------- For the Periods Ended September 30, 1995 and 1994 (in millions) Third Quarter Nine Months ------------------------- ------------------------- 1995 1994 1995 1994 -------- -------- -------- -------- (unaudited) (unaudited) AUTOMOTIVE Sales $24,437 $24,926 $82,899 $79,371 Costs and expenses (Note 2) Costs of sales 23,260 22,800 75,129 71,019 Selling, administrative, and other expenses 1,381 1,137 4,418 3,838 ------- ------- ------- ------- Total costs and expenses 24,641 23,937 79,547 74,857 Operating (loss)/income (204) 989 3,352 4,514 Interest income 171 126 594 417 Interest expense 151 190 491 529 ------- ------- ------- ------- Net interest income/(expense) 20 (64) 103 (112) Equity in net (loss)/income of affiliated companies (190) 84 (151) 193 Net expense from transactions with Financial Services (42) (9) (101) (28) ------- ------- ------- ------- (Loss)/Income before income taxes - Automotive (416) 1,000 3,203 4,567 FINANCIAL SERVICES Revenues 6,981 5,696 19,691 15,425 Costs and expenses Interest expense 2,437 1,774 6,948 5,040 Depreciation 1,715 1,390 4,836 3,490 Operating and other expenses 1,421 1,245 4,049 3,292 Provision for credit and insurance losses 472 400 1,337 1,153 Loss on disposition of Granite Savings Bank (formerly First Nationwide Bank) - - - 475 ------- ------- ------- ------- Total costs and expenses 6,045 4,809 17,170 13,450 Net revenue from transactions with Automotive 42 9 101 28 ------- ------- ------- ------- Income before income taxes - Financial Services 978 896 2,622 2,003 ------- ------- ------- ------- TOTAL COMPANY Income before income taxes 562 1,896 5,825 6,570 Provision for income taxes 157 737 2,198 2,723 ------- ------- ------- ------- Income before minority interests 405 1,159 3,627 3,847 Minority interests in net income of subsidiaries 48 35 148 108 ------- ------- ------- ------- Net income 357 1,124 3,479 3,739 Preferred stock dividend requirements 55 72 196 216 ------- ------- ------- ------- Income attributable to Common and Class B Stock $ 302 $ 1,052 $ 3,283 $ 3,523 ======= ======= ======= ======= Average number of shares of Common and Class B Stock outstanding 1,083 1,014 1,049 1,006 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK AFTER PREFERRED STOCK DIVIDENDS Income $ 0.28 $ 1.04 $ 3.13 $ 3.50 ======= ======= ======= ======= Income assuming full dilution $ 0.27 $ 0.93 $ 2.85 $ 3.13 Cash dividends $ 0.31 $ 0.225 $ 0.88 $ 0.65 The accompanying notes are part of the financial statements. Ford Motor Company and Subsidiaries CONSOLIDATED BALANCE SHEET -------------------------- (in millions) September 30, December 31, 1995 1994 ------------- ------------ ASSETS (unaudited) Automotive Cash and cash equivalents $ 6,621 $ 4,481 Marketable securities 5,620 7,602 -------- -------- Total cash, cash equivalents, and marketable securities 12,241 12,083 Receivables 2,886 2,548 Inventories (Note 3) 6,845 6,487 Deferred income taxes 2,980 3,062 Other current assets 1,917 2,006 Net current receivable from Financial Services 283 677 -------- -------- Total current assets 27,152 26,863 Equity in net assets of affiliated companies 3,454 3,554 Net property 29,972 27,048 Deferred income taxes 4,088 4,414 Other assets 7,149 6,760 -------- -------- Total Automotive assets 71,815 68,639 Financial Services Cash and cash equivalents 1,943 1,739 Investments in securities 7,187 6,105 Net receivables and lease investments 144,117 130,356 Other assets 13,514 12,783 -------- -------- Total Financial Services assets 166,761 150,983 -------- -------- Total assets $238,576 $219,622 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $ 10,637 $ 10,777 Other payables 1,994 2,280 Accrued liabilities 13,170 11,943 Income taxes payable 431 316 Debt payable within one year 793 155 -------- -------- Total current liabilities 27,025 25,471 Long-term debt 6,036 7,103 Other liabilities 25,706 24,920 Deferred income taxes 1,166 1,216 -------- -------- Total Automotive liabilities 59,933 58,710 Financial Services Payables 2,953 2,361 Debt 135,912 123,713 Deferred income taxes 3,735 2,958 Other liabilities and deferred income 8,829 7,669 Net payable to Automotive 283 677 -------- -------- Total Financial Services liabilities 151,712 137,378 Preferred stockholders' equity in a subsidiary company 1,976 1,875 Stockholders' equity Capital stock Preferred Stock, par value $1.00 per share (aggregate liquidation preference of $2.6 billion and $3.4 billion) * * Common Stock, par value $1.00 per share (1,020 and 952 million shares issued) 1,020 952 Class B Stock, par value $1.00 per share (71 million shares issued) 71 71 Capital in excess of par value of stock 5,531 5,273 Foreign currency translation adjustments and other 800 189 Earnings retained for use in business 17,533 15,174 -------- -------- Total stockholders' equity 24,955 21,659 -------- -------- Total liabilities and stockholders' equity $238,576 $219,622 ======== ======== - - - - - - *Less than $1 million The accompanying notes are part of the financial statements. Ford Motor Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- For the Periods Ended September 30, 1995 and 1994 (in millions) Nine Months 1995 Nine Months 1994 ---------------------- --------------------- Financial Financial Automotive Services Automotive Services ---------- --------- ---------- --------- (unaudited) (unaudited) Cash and cash equivalents at January 1 $ 4,481 $ 1,739 $ 5,667 $ 2,555 Cash flows from operating activities before securities trading 6,796 9,171 10,717 6,852 Net sales/(purchases) of trading securities 1,982 256 (2,765) (18) -------- -------- -------- -------- Net cash flows from operating activities 8,778 9,427 7,952 6,834 Cash flows from investing activities Capital expenditures (6,204) (223) (5,906) (171) Acquisitions of other companies - - - (426) Acquisitions of receivables and lease investments - (71,414) - (64,310) Collections of receivables and lease investments - 51,210 - 43,134 Proceeds from sales of receivables and lease investments - 2,728 - 2,526 Net acquisitions of daily rental vehicles - (1,672) - (1,013) Purchases of securities (47) (4,748) (116) (9,515) Sales and maturities of securities 50 3,748 252 8,970 Investing activity with Financial Services (237) - 9 - Other (400) (171) 407 (536) -------- -------- -------- -------- Net cash used in investing activities (6,838) (20,542) (5,354) (21,341) Cash flows from financing activities Cash dividends (1,120) - (869) - Issuance of Common Stock 326 - 375 - Changes in short-term debt 665 2,481 (795) 8,024 Proceeds from issuance of other debt 0 16,532 158 15,265 Principal payments on other debt (207) (7,931) (41) (10,262) Financing activity with Automotive - 237 - (9) Receipts from annuity contracts - 276 - 875 Other 6 139 (20) (389) -------- -------- -------- ------- Net cash (used in)/provided by financing activities (330) 11,734 (1,192) 13,504 Effect of exchange rate changes on cash 136 (21) 441 169 Net transactions with Automotive/Financial Services 394 (394) (321) 321 -------- -------- -------- -------- Net increase/(decrease) in cash and cash equivalents 2,140 204 1,526 (513) -------- -------- -------- -------- Cash and cash equivalents at September 30 $ 6,621 $ 1,943 $ 7,193 $ 2,042 ======== ======== ======== ======== The accompanying notes are part of the financial statements. 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, 1994. For purposes hereof, "Ford" or the "Company" means Ford Motor Company and its majority-owned subsidiaries unless the context requires otherwise. Certain amounts for prior periods have been reclassified to conform with presentations adopted in 1995. 2.Selected Automotive costs and expenses are summarized as follows (in millions): Third Quarter Nine Months ----------------------- ----------------------- 1995 1994 1995 1994 ------ ------ ------ ------ Depreciation $622 $555 $1,816 $1,700 Amortization 731 408 2,072 1,532 3. Automotive inventories are summarized as follows (in millions): September 30, December 31, 1995 1994 ------------- ------------ Raw materials, work in process and supplies $3,426 $3,192 Finished products 3,419 3,295 ------ ------ Total inventories $6,845 $6,487 ====== ====== U.S. inventories $2,987 $2,917