Global News Public Affairs Ford Motor Company The American Road Room 904 Dearborn, Michigan 48121 Telephone: (313)322-9600 Fax: (313)845-0570 (313)337-1764 NEWS IMMEDIATE RELEASE Contact: Media Inquiries: Broadcast Media: Stockholder Inquiries: Christian Vinyard Roseanne Cerra (313) 845-8540 (313) 322-9600 (313) 322-9600 Ford Earns $1.903 Billion in Second Quarter DEARBORN, Mich., July 17 -- Improving results from automotive operations, combined with another record profit from financial services, contributed to a solid operating performance for Ford Motor Company in the second quarter. Ford earned $1.903 billion in the second quarter, including a one-time net gain of $213 million, compared with $1.572 billion earned in the second quarter a year ago. Net income from automotive operations was $1.108 billion, and financial services posted net income of $795 million. On a fully diluted basis, earnings per share of common and Class B stock were $1.56 in the second quarter, including the one-time net gain of 18 cents a share announced on July 11. Earnings per share in the second quarter of 1995 were $1.30. "We're on track," said Chairman and Chief Executive Officer Alex Trotman. "We're delivering what we said we would. With the concurrent high- volume launches in Europe and North America mostly behind us, and savings coming from improved efficiencies and cost reductions, a strong second half should lie ahead, assuming industry volumes remain in line with expectations," Trotman said. -2- Trotman also noted the success of new products. "Customer demand for the new F-Series is red hot. In a few weeks, two more plants will be coming on stream. Taurus and Sable production has been running at maximum overtime on two shifts at both plants, and Fiesta's reception has been tremendous," he said. Early reaction to the new Escort and Tracer, with dealer orders of about three months worth of production, also has been enthusiastic. Job One occurs next week for the new Expedition and F-250. "With these new vehicles, along with those recently introduced," Trotman said, "we're well positioned for the rest of the year and will have the strongest product line-up in our history." For 1996, Ford continues to see U.S. industry sales at about 15.5 million vehicles. LOOKING AHEAD The focus at Ford remains on building value for both customers and shareholders by improving automotive margins and profitability while launching top-quality, high-value products around the world. "We still have a lot to do," Trotman said. "Automotive profitability is improving but is not where we want it to be. Substantial progress has been achieved this year, and we fully expect more efficiencies will be realized throughout our business in the coming quarters," he said. AUTOMOTIVE OPERATIONS EARN $1.108 BILLION Net income from worldwide automotive operations was $1.108 billion in the second quarter, up $8 million from the second quarter of 1995. U.S. automotive operations earned $697 million, up $34 million from a year ago, despite a small decline in unit sales. While launch costs continued, overall profitability rose due to an ongoing focus on higher margin business and improved cost efficiencies. In total, automotive operations outside the U.S. earned $411 million, down $26 million from a year ago. Lower results in Europe and Brazil were offset partially by improvements in most other markets. -3- In the U.S., Ford set its 41st monthly truck sales record in the past 42 months. During the first six months of 1996, U.S. truck volume reflected 55 percent of Ford's product mix. Cumulative sales for the Ford F-Series were up 18 percent during the first six months over 1995. The Ford Explorer continues to dominate its segment and set a record for the first half. Ford Taurus remains the best-selling car in America, and in the first half, the Ford Contour and Mercury Mystique set a sales record. BALANCE SHEET STRENGTHENS; FINANCIAL SERVICES POSTS RECORD Ford took a number of actions in the second quarter to improve shareholder value and strengthen the balance sheet. Among them were the initial public offering of part of The Associates, a write-down of loans and preferred shares related to Budget Rent a Car Corporation, and the sale of USL Capital's business units. On July 11, Ford announced that second-quarter results would reflect a one-time after-tax net gain of $213 million, including a gain of $650 million from the initial public offering of 19.3 percent of The Associates common stock and a charge of $437 million for the write-down of Ford's investment in preferred stock and debt of Budget Rent a Car. Ford intends to acquire the common stock of Budget, giving it control of the company. Agreements also were reached to sell USL Capital's Rail Services and Fleet Services businesses as well as a major portion of the Municipal and Corporate Financing assets. Discussions continue on USL Capital's other businesses. These transactions and the sale of the other businesses are expected to close in the second half. In the second quarter, the Financial Services Group earned a record $795 million, compared with a $472 million profit in the second quarter of 1995. Without the one-time net gain, the group's operating profits were a record $582 million. Ford Credit earned $332 million, compared with $341 million in last year's second quarter. USL Capital had record profits of $41 million, compared with $30 million in the second quarter last year. On July 16, The Associates reported record earnings of $200 million in the second quarter; as the majority shareholder, Ford's share was $177 million. In 1995's second quarter, The Associates earned $162 million. # # # -4- SUMMARY OF SECOND-QUARTER 1996 COMPARED WITH 1995 Overview - -------- - - Total earnings were $1.903 billion, compared with $1.572 billion in the second quarter of 1995. Without the one-time gain of $213 million, or 18 cents a share, total earnings were $1.69 billion. - - Fully diluted earnings were $1.56 per share, compared with $1.30 per share. - - Worldwide sales and revenues were $37.9 billion, compared with $36.4 billion. - - Stockholders' equity was $25.8 billion, compared with $25.2 billion. Automotive - ---------- - - Net income from worldwide automotive operations was $1.108 billion, compared with $1.100 billion. Return on automotive sales was 3.7 percent. - - Net income from U.S. automotive operations was $697 million, compared with $663 million. - - Net income from automotive operations outside the U.S. was $411 million, compared with $437 million. In Europe, Ford earned $196 million, down $123 million from last year. - - Worldwide vehicle unit sales were 1,810,000, compared with 1,811,000 units. - - Combined car and truck share in the U.S. was 24.8 percent, compared with 26.2 percent. - - Combined car and truck share in Europe was 12.0 percent, compared with 12.2 percent. Financial Services Group - ------------------------ - - Financial Services Group earned a record $795 million, including a one- time net gain of $213 million related to the initial public offering of 19.3 percent of The Associates and a write-down of debt and preferred shares relating to Budget Rent a Car Corporation. Second-quarter results for 1995 were $472 million. Without the one-time gain, earnings were a record $582 million. - - Ford Credit earned $332 million, compared with $341 million. - - The Associates earned a record $200 million, compared with $162 million. - - USL Capital earned a record $41 million, compared with $30 million. Automotive Balance Sheet - ------------------------ - - Net cash was $8.4 billion, compared with $7.1 billion. - - Cash and marketable securities were $15.2 billion, compared with $14 billion. - - Debt was $6.8 billion, compared with $6.9 billion. - - Capital spending was $1.8 billion, about equal to a year ago. Ford Motor Company and Subsidiaries HIGHLIGHTS ---------- Second Quarter First Half ----------------------- ----------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (unaudited) (unaudited) Worldwide vehicle unit sales of cars and trucks (in thousands) - - United States 1,067 1,082 2,007 2,169 - - Outside United States 743 729 1,441 1,412 ----- ----- ----- ----- Total 1,810 1,811 3,448 3,581 ===== ===== ===== ===== Sales and revenues (in millions) - - Automotive $30,726 $29,861 $60,059 $58,462 - - Financial Services 7,211 6,528 14,139 12,710 ------- ------- ------- ------- Total $37,937 $36,389 $74,198 $71,172 ======= ======= ======= ======= Net income (in millions) - - Automotive $ 1,108 $ 1,100 $ 1,250 $ 2,241 - - Financial Services 795 472 1,306 881 ------- ------- ------- ------- Total $ 1,903 $ 1,572 $ 2,556 $ 3,122 ======= ======= ======= ======= Capital expenditures (in millions) - - Automotive $ 1,779 $ 1,819 $ 3,568 $ 3,950 - - Financial Services 87 80 200 147 ------- ------- ------- ------- Total $ 1,866 $ 1,899 $ 3,768 $ 4,097 ======= ======= ======= ======= Stockholders' equity at June 30 - - Total (in millions) $25,840 $25,240 $25,840 $25,240 - - After-tax return on Common and Class B stockholders' equity 30.9% 28.3% 21.0% 29.5% Automotive cash and marketable securities at June 30 (in millions) $15,240 $14,011 $15,240 $14,011 Automotive debt at June 30 (in millions) $ 6,828 $ 6,866 $ 6,828 $ 6,866 Automotive after-tax return on sales 3.7% 3.7% 2.1% 3.9% Shares of Common and Class B Stock (in millions) - - Average number outstanding 1,178 1,040 1,173 1,033 - - Number outstanding at June 30 1,182 1,074 1,182 1,074 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK AFTER PREFERRED STOCK DIVIDENDS Income $ 1.60 $ 1.45 $ 2.15 $ 2.89 Income assuming full dilution - - Automotive $ 0.91 $ 0.90 $ 1.02 $ 1.85 - - Financial Services 0.65 0.40 1.08 0.74 ------- ------- ------- ------- Total $ 1.56 $ 1.30 $ 2.10 $ 2.59 ======= ======= ======= ======= Cash dividends $ 0.35 $ 0.31 $ 0.70 $ 0.57 FS-1 Ford Motor Company and Subsidiaries VEHICLE UNIT SALES ------------------ For the Periods Ended June 30, 1996 and 1995 (in thousands) Second Quarter First Half ----------------------------- ---------------------------- 1996 1995 1996 1995 ---------- ---------- ---------- -------- (unaudited) (unaudited) North America United States Cars 463 447 841 956 Trucks 604 635 1,166 1,213 ----- ----- ----- ----- Total United States 1,067 1,082 2,007 2,169 Canada 72 67 122 132 Mexico 14 7 26 18 ----- ----- ----- ----- Total North America 1,153 1,156 2,155 2,319 Europe Britain 158 162 276 266 Germany 128 114 246 232 France 54 40 105 84 Italy 43 56 99 108 Spain 39 48 87 96 Other countries 85 77 169 154 ----- ----- ----- ----- Total Europe 507 497 982 940 Other international Brazil 46 46 93 108 Australia 35 35 67 66 Taiwan 21 35 52 63 Japan 12 14 28 30 Argentina 15 11 31 21 Other countries 21 17 40 34 ----- ----- ----- ----- Total other international 150 158 311 322 ----- ----- ----- ----- Total worldwide vehicle unit sales 1,810 1,811 3,448 3,581 ===== ===== ===== ===== 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. FS-2 Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME -------------------------------- For the Periods Ended June 30, 1996 and 1995 (in millions) Second Quarter First Half ------------------------- -------------------------- 1996 1995 1996 1995 -------- ------- -------- -------- (unaudited) (unaudited) AUTOMOTIVE Sales $30,726 $29,861 $60,059 $58,462 Costs and expenses (Note 2) Costs of sales 27,469 26,452 55,015 51,883 Selling, administrative and other expenses 1,633 1,635 3,105 3,023 ------- ------- ------- ------- Total costs and expenses 29,102 28,087 58,120 54,906 Operating income 1,624 1,774 1,939 3,556 Interest income 217 216 401 423 Interest expense 210 174 382 340 ------- ------- ------- ------- Net interest income 7 42 19 83 Equity in net income of affiliated companies 77 19 25 39 Net expense from transactions with Financial Services (17) (36) (37) (59) ------- ------- ------- ------- Income before income taxes - Automotive 1,691 1,799 1,946 3,619 FINANCIAL SERVICES Revenues 7,211 6,528 14,139 12,710 Costs and expenses Interest expense 2,439 2,344 4,860 4,511 Depreciation 1,675 1,600 3,366 3,121 Operating and other expenses 1,507 1,292 2,935 2,628 Provision for credit and insurance losses 610 443 1,186 865 Write-down of investment in Budget Rent a Car Corporation (Note 3) 700 - 700 - ------- ------- ------- ------- Total costs and expenses 6,931 5,679 13,047 11,125 Net revenue from transactions with Automotive 17 36 37 59 Gain on sale of The Associates' common stock (Note 4) 650 - 650 - ------- ------- ------- ------- Income before income taxes - Financial Services 947 885 1,779 1,644 ------- ------- ------- ------- TOTAL COMPANY Income before income taxes 2,638 2,684 3,725 5,263 Provision for income taxes 694 1,053 1,107 2,041 ------- ------- ------- ------- Income before minority interests 1,944 1,631 2,618 3,222 Minority interests in net income of subsidiaries 41 59 62 100 ------- ------- ------- ------- Net income $ 1,903 $ 1,572 $ 2,556 $ 3,122 ======= ======= ======= ======= Income attributable to Common and Class B Stock after preferred stock dividends $ 1,887 $ 1,503 $ 2,521 $ 2,981 Average number of shares of Common and Class B Stock outstanding 1,178 1,040 1,173 1,033 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Income $ 1.60 $ 1.45 $ 2.15 $ 2.89 Income assuming full dilution $ 1.56 $ 1.30 $ 2.10 $ 2.59 Cash dividends $ 0.35 $ 0.31 $ 0.70 $ 0.57 The accompanying notes are part of the financial statements. FS-3 Ford Motor Company and Subsidiaries CONSOLIDATED BALANCE SHEET -------------------------- (in millions) June 30, December 31, 1996 1995 ------------ ------------ ASSETS (unaudited) Automotive Cash and cash equivalents $ 6,499 $ 5,750 Marketable securities 8,741 6,656 -------- -------- Total cash and marketable securities 15,240 12,406 Receivables 3,104 3,321 Inventories (Note 5) 6,908 7,162 Deferred income taxes 3,091 2,709 Other current assets 3,164 1,483 Net current receivable from Financial Services 455 200 -------- -------- Total current assets 31,962 27,281 Equity in net assets of affiliated companies 2,542 2,248 Net property 31,768 31,273 Deferred income taxes 4,590 4,802 Other assets 7,004 7,168 -------- -------- Total Automotive assets 77,866 72,772 Financial Services Cash and cash equivalents 2,654 2,690 Investments in securities 3,602 4,553 Net receivables and lease investments 162,490 149,694 Other assets 13,954 13,574 -------- -------- Total Financial Services assets 182,700 170,511 -------- -------- Total assets $260,566 $243,283 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $ 12,241 $ 11,260 Other payables 1,867 1,976 Accrued liabilities 16,687 13,392 Income taxes payable 608 316 Debt payable within one year 1,913 1,832 -------- -------- Total current liabilities 33,316 28,776 Long-term debt 4,915 5,475 Other liabilities 26,676 25,677 Deferred income taxes 1,078 1,186 -------- -------- Total Automotive liabilities 65,985 61,114 Financial Services Payables 3,716 5,476 Debt 151,866 141,317 Deferred income taxes 4,283 3,831 Other liabilities and deferred income 7,740 6,116 Net payable to Automotive 455 200 -------- -------- Total Financial Services liabilities 168,060 156,940 Company-obligated mandatorily redeemable preferred securities of a subsidiary trust holding solely junior subordinated debentures of the Company (Note 6) 681 682 Stockholders' equity Capital stock Preferred Stock, par value $1.00 per share (aggregate liquidation preference of $770 million and $1,042 million) * * Common Stock, par value $1.00 per share (1,112 and 1,089 million shares issued) 1,112 1,089 Class B Stock, par value $1.00 per share (71 million shares issued) 71 71 Capital in excess of par value of stock 5,198 5,105 Foreign currency translation adjustments and other 72 594 Earnings retained for use in business 19,387 17,688 -------- -------- Total stockholders' equity 25,840 24,547 -------- -------- Total liabilities and stockholders' equity $260,566 $243,283 ======== ======== - - - - - - *Less than $1 million The accompanying notes are part of the financial statements. FS-4 Ford Motor Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- For the Periods Ended June 30, 1996 and 1995 (in million) First Half 1996 First Half 1995 ---------------------- ----------------------- Financial Financial Automotive Services Automotive Services ---------- --------- ---------- --------- (unaudited) (unaudited) Cash and cash equivalents at January 1 $ 5,750 $ 2,690 $ 4,481 $ 1,739 Cash flows from operating activities before securities trading 8,497 6,236 6,058 6,373 Net (purchases)/sales of trading securities (2,085) (242) 1,980 285 ------- -------- ------- -------- Net cash flows from operating activities 6,412 5,994 8,038 6,658 Cash flows from investing activities Capital expenditures (3,568) (200) (3,950) (147) Acquisitions of receivables and lease investments - (57,024) - (51,051) Collections of receivables and lease investments - 39,628 - 35,105 Net acquisitions of daily rental vehicles - (1,946) - (1,824) Purchases of securities (6) (4,757) (41) (3,533) Sales and maturities of securities 7 4,327 33 2,713 Proceeds from sales of receivables and lease investments - 2,764 - 634 Net investing activity with Financial Services 9 - (839) - Other (557) 96 179 (109) ------- -------- ------- -------- Net cash used in investing activities (4,115) (17,112) (4,618) (18,212) Cash flows from financing activities Cash dividends (857) - (729) - Issuance of Common Stock 116 - 218 - Issuance of Common Stock of a subsidiary (Note 4) - 1,897 - - Changes in short-term debt 176 4,890 696 4,207 Proceeds from issuance of other debt 0 11,239 0 12,301 Principal payments on other debt (651) (7,051) (207) (5,531) Net financing activity with Automotive - (9) - 839 Other (13) 29 6 365 ------- -------- ------- -------- Net cash (used in)/provided by financing activities (1,229) 10,995 (16) 12,181 Effect of exchange rate changes on cash (64) (168) 166 209 Net transactions with Automotive/Financial Services (255) 255 330 (330) ------- -------- ------- -------- Net increase/(decrease) in cash and cash equivalents 749 (36) 3,900 506 ------- -------- ------- -------- Cash and cash equivalents at June 30 $ 6,499 $ 2,654 $ 8,381 $ 2,245 ======= ======== ======= ======== The accompanying notes are part of the financial statements. FS-5 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, 1995. 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. 2. Selected Automotive costs and expenses are summarized as follows (in millions): Second Quarter First Half ----------------------- ----------------------- 1996 1995 1996 1995 ------ ------ ------ ------ Depreciation $643 $605 $1,279 $1,194 Amortization 686 629 1,450 1,341 3. Write-down of Investment in Budget Rent a Car Corporation - The Company recorded a pre-tax charge in the second quarter of 1996 totaling $700 million ($437 million after taxes) to recognize the estimated value of its outstanding notes receivable from, and preferred stock investment in, Budget Rent a Car Corporation ("BRAC"). The write-down resulted from conclusions reached in a recent study of Ford's rental car business strategy. In accordance with SFAS 114, the notes receivable write-down reflected primarily the unsecured portion of vehicle financing provided to BRAC by Ford. The preferred stock write-down reflected recognition of the fair value of Ford's investment. Subject to governmental review, the Company also intends to acquire all of the outstanding common stock of BRAC at a future date. 4. Sale of The Associates' Common Stock - During May 1996, The Associates completed an initial public offering (the "IPO") of its common stock representing a 19.3% economic interest in The Associates. The Company recorded in the second quarter of 1996 a non-operating gain of $650 million resulting from the IPO, to recognize the excess of the net proceeds from the IPO over the proportionate share of the Company's investment in The Associates. The gain was not subject to income taxes. 5. Automotive inventories are summarized as follows (in millions): June 30, December 31, 1996 1995 --------- ------------ Raw materials, work in process and supplies $3,355 $3,717 Finished products 3,553 3,445 ------ ------ Total inventories $6,908 $7,162 ====== ====== U.S. inventories $2,338 $2,662 6. Company-Obligated Mandatorily Redeemable Preferred Securities of a Subsidiary Trust - The sole asset of Ford Motor Company Capital Trust I (the "Trust") that is the obligor on the Preferred Securities of such Trust is $632 million principal amount of 9% Junior Subordinated Debentures due 2025 of Ford Motor Company. FS-6