Global News, The American Road, P.O. Box 1899, Dearborn, MI 48121-1899 Telephone: 313-322-9600; Fax: 313-845-0570 E-Mail: jcain1@ford.com; Internet: http://media.ford.com Contact: Media Inquiries Securities Analysts Shareholder Inquiries Jim Cain Mike Holland (800) 555-5259 or 313-322-3428 313-323-8221 (313) 845-8540 FORD EARNS $6.6 BILLION BEFORE CHARGES IN 1998, UP 10 PERCENT Momentum Continues with 11th Consecutive Quarter of Improved Operating Earnings DEARBORN, January 21, 1999 -- Ford Motor Company [NYSE: F] earned $5,939 million in 1998, or $4.72 per diluted common and Class B share, excluding earnings from The Associates [NYSE: AFS] and the gain that resulted from Ford's spin-off of that company. Excluding these and other one-time factors, Ford's operating earnings were $6,570 million, up $582 million, or 10 percent on a comparable basis; earnings per share were $5.30 per share, up $0.44 per share. "The transformation of Ford continued to gain momentum in 1998," said Jacques Nasser, president and chief executive officer. "Our quality is the best it has ever been, we improved our operating efficiency and our products continue to be well received by customers. As a result, we were able to achieve our eleventh consecutive quarter of improved operating earnings. "We delivered a total return to investors of 89 percent, which placed the performance of Ford stock in the top quartile of S&P 500 companies for the second year in a row," Nasser added. "Maintaining this level of performance for shareholders over time is one of our financial milestones. To continue to deliver, we know we must increase our consumer focus, strengthen our brands, provide the best total value to consumers, develop leaders at all levels of the company and be responsible in corporate citizenship." Ford's 1998 operating earnings of $6,570 million exclude previously announced one-time charges for employee separation programs and asset write-downs totaling $631 million ($0.51 per share), earnings from The Associates of $177 million ($0.14 per share), the one-time gain resulting from The Associates spin-off of $15,955 million ($12.90 per share) and a one-time earnings per share reduction ($0.07) for the premium paid to repurchase Ford's Series B preferred stock. -2- Ford's reported 1997 earnings were $6,920 million ($5.62 per share). Comparable 1997 operating results were $5,988 million ($4.86 per share). This excludes Ford's share of earnings of The Associates, which were $832 million ($0.68 per share), and a net gain of $100 million ($0.08 per share) for one-time actions. FOURTH QUARTER 1998 Ford reported earnings of $1,043 million ($0.84 per share) in the fourth quarter of 1998. Excluding one-time charges, Ford earned $1,674 million ($1.35 per share) -- Ford's eleventh consecutive quarter of year-over-year operating improvement. Net income for the fourth quarter of 1997, excluding The Associates, was $1,572 million ($1.27 per share). AUTOMOTIVE OPERATIONS Reported full-year 1998 earnings from automotive operations were $4,752 million. Excluding one-time charges, earnings were $5,377 million, up $494 million. Ford's reported automotive after-tax return on sales (ROS) was 4 percent in 1998. Excluding one-time charges, ROS was 4.6 percent, up 0.6 points. For the full-year, total costs were down $2.2 billion at constant volume and mix. This exceeded Ford's full-year milestone, which was to lower total costs by $1 billion. Reported net income from automotive operations in the fourth quarter of 1998 was $820 million. Excluding one-time charges, earnings were $1,445 million, up $104 million. Reported ROS was 2.6 percent in the fourth quarter of 1998. Excluding one-time charges, ROS was 4.5 percent, up 0.3 points. North America: Reported full-year 1998 automotive earnings in North America were $4,612 million. Excluding one-time charges of $363 million, earnings were $4,975 million, up $416 million. Reported full-year ROS was 5.3 percent. Ford's full-year 1998 milestone was to earn a 5 percent ROS in North America. Excluding charges, ROS was 5.8 percent, up 0.6 points. The earnings improvement for the full year was driven by improved quality, lower costs and favorable product mix, offset partially by higher marketing costs and the fourth quarter charges. -3- Reported fourth quarter 1998 automotive earnings in North America were $1,047 million. Excluding one-time charges, earnings were $1,410 million, up $57 million. Reported ROS in North America was 4.5 percent. Excluding charges, ROS was 6.0 percent, up 0.1 points. "In 1998, Ford posted its best retail sales in the United States in 20 years, and all-time U.S. sales records at Ford Division and Jaguar," Nasser said. "Our outlook for 1999 is for another strong U.S. market. We expect industry volumes will range between 15 million and 15.5 million units, the sixth year in a row of industry volumes greater than 15 million units." Europe: Reported full-year earnings for Europe in 1998 were $193 million. Excluding charges of $137 million, earnings were $330 million, up $13 million. Ford's 1998 full-year milestone was to be profitable. Ford's 1999 full-year milestone for Europe is to grow earnings. Ford reported a loss of $74 million in the fourth quarter of 1998. Excluding charges, Ford earned $63 million, down $95 million from a year ago. The decline in fourth quarter earnings reflects lower volumes, lower export sales and launch costs for the Ford Focus, offset partially by cost reductions. "We are determined to improve our results in Europe by continuing to lower our costs, improve our quality and grow the business with new vehicles such as the Ford Focus," said Nasser. "The Focus, which is now in production, has received numerous accolades for its styling, packaging, value and driving dynamics, and was named European Car of the Year." South America: Reported full-year 1998 results in South America were a loss of $226 million. Excluding charges of $81 million, full-year automotive results were a loss of $145 million, down $185 million. Ford disclosed in the third quarter that it did not expect to achieve its milestone of breaking even in South America in 1998 as a result of significantly lower volumes. In Brazil, Ford's largest market in the region, industry volumes in 1998 were down about 20 percent from 1997. In the fourth quarter of 1998, Ford reported a loss of $151 million in South America. Excluding charges, Ford lost $70 million, up $1 million from the prior year. -4- "Economic and market conditions in Brazil continue to be difficult," Nasser said. "For 1999, we have established a milestone of improving our operating results in South America, but we are not expecting to be profitable there." Visteon: The earnings of Visteon Automotive Systems, Ford's automotive components enterprise, are included in the company's automotive results. In 1998, Visteon reported earnings of $712 million, up $194 million, or 37 percent, from 1997. In the fourth quarter of 1998, Visteon earned $132 million, compared with $48 million a year ago. Visteon's milestone for 1999 is to grow its earnings and obtain $2 billion in new business. FORD CREDIT Reported earnings in 1998 were $1,084 million, up $53 million or 5 percent, which was below the 1998 milestone of achieving 10 percent earnings growth. Excluding charges of $6 million, earnings were $1,090 million, up $59 million. The increase in full-year earnings reflects improved credit loss performance, lower taxes and higher financing volumes, offset partially by higher depreciation expense on leased vehicles. In the fourth quarter of 1998, Ford Credit reported earnings of $234 million, up 7 percent. Excluding charges, earnings were $240 million, up $22 million or 10 percent. "We believe Ford Credit can improve on the earnings momentum it showed in the fourth quarter and achieve its 1999 full-year milestone of 10 percent earnings growth," Nasser said. HERTZ The Hertz Corporation [NYSE: HRZ] reported its fifth consecutive year of record earnings and seventh consecutive year of increased earnings. Net income was $277 million in 1998, up 37 percent, compared with earnings of $202 million in 1997. Ford's share of Hertz' 1998 earnings was $224 million. In the fourth quarter of 1998, Hertz earned a record $48 million, up 37 percent compared with earnings of $35 million in the same period a year ago. Ford's share of Hertz' fourth quarter 1998 earnings was $39 million. The Hertz 1999 full-year milestone is for the company to deliver record earnings. # # # Ford Motor Company and Subsidiaries HIGHLIGHTS ---------- Fourth Quarter Full Year ---------------------------- --------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ------------ (unaudited) Worldwide vehicle unit sales of cars and trucks (in thousands) - - North America 1,197 1,118 4,370 4,432 - - Outside North America 617 673 2.453 2,515 ----- ----- ----- ----- Total 1,814 1,791 6,823 6,947 ===== ===== ===== ===== Sales and revenues (in millions) - - Automotive $32,204 $31,897 $119,083 $122,935 - - Financial Services 5,699 8,055 25,333 30,692 ------- ------- -------- -------- Total $37,903 $39,952 $144,416 $153,627 ======= ======= ======== ======== Net income (in millions) - - Automotive $ 820 $ 1,341 $ 4,752 $ 4,714 - - Financial Services (excl. The Associates) 223 231 1,187 1,374 --------- ------- -------- -------- Subtotal 1,043 1,572 5,939 6,088 - - The Associates - 224 177 832 - - Gain on spin-off of The Associates - - 15,955 - ------- ------- -------- -------- Total $ 1,043 $ 1,796 $ 22,071 $ 6,920 ======= ======= ======== ======== Capital expenditures (in millions) - - Automotive $ 2,445 $ 2,389 $ 8,113 $ 8,142 - - Financial Services 106 162 504 575 ------- ------- -------- -------- Total $ 2,551 $ 2,551 $ 8,617 $ 8,717 ======= ======= ======== ======== Automotive capital expenditures as a percentage of sales 7.6% 7.5% 6.8% 6.6% Stockholders' equity at December 31 - - Total (in millions) $23,409 $30,734 $ 23,409 $ 30,734 - - After-tax return on Common and Class B stockholders' equity 17.8% 24.1% 25.4% 24.4% Automotive net cash at December 31 (in millions) - - Cash and marketable securities $23,805 $20,835 $ 23,805 $ 20,835 - - Debt 9,834 8,176 9,834 8,176 ------- ------- -------- -------- Automotive net cash $13,971 $12,659 $ 13,971 $ 12,659 ======= ======= ======== ======== After-tax return on sales - - North American Automotive 4.5% 5.9% 5.3% 5.1% - - Total Automotive 2.6% 4.2% 4.0% 3.9% Shares of Common and Class B Stock (in millions) - - Average number outstanding 1,210 1,201 1,211 1,195 - - Number outstanding at December 31 1,209 1,202 1,209 1,202 Common Stock price (per share) (adjusted to reflect The Associates spin-off) - - High $59-7/8 $33-9/16 $61-7/16 $33 9/16 - - Low 38-13/16 27 23/32 28-15/32 20 3/64 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK AFTER PREFERRED STOCK DIVIDENDS Income assuming dilution - - Automotive $ 0.66 $ 1.08 $ 3.76 $ 3.82 - - Financial Services (excl. The Associates) 0.18 0.19 0.96 1.12 ------- ------- ------- -------- Subtotal 0.84 1.27 4.72 4.94 - - The Associates - 0.18 0.14 0.68 - - Gain on spin-off of The Associates - - 12.90 - ------- ------- ------- -------- Total $ 0.84 $ 1.45 $ 17.76 $ 5.62 ======= ======= ======= ======== Cash dividends $ 0.46 $ 0.42 $ 1.72 $ 1.645 FS-1 Ford Motor Company and Subsidiaries VEHICLE UNIT SALES ------------------ For the Periods Ended December 31, 1998 and 1997 (in thousands) Fourth Quarter Full Year ------------------------ -------------------------- 1998 1997 1998 1997 -------- -------- -------- -------- (unaudited) (unaudited) North America United States Cars 428 409 1,563 1,614 Trucks 654 578 2,425 2,402 ----- ----- ----- ----- Total United States 1,082 987 3,988 4,016 Canada 87 91 279 319 Mexico 28 40 103 97 ----- ----- ----- ----- Total North America 1,197 1,118 4,370 4,432 Europe Britain 102 124 498 466 Germany 143 137 444 460 Italy 56 70 205 248 France 54 41 171 153 Spain 46 43 155 155 Other 95 91 377 318 ----- ----- ----- ----- Total Europe 496 506 1,850 1,800 Other international Brazil 34 49 178 214 Australia 35 31 133 132 Argentina 16 35 97 147 Taiwan 12 17 77 79 Japan 5 10 25 40 Other 19 25 93 103 ----- ----- ----- ----- Total other international 121 167 603 715 ----- ----- ----- ----- Total worldwide vehicle unit sales 1,814 1,791 6,823 6,947 ===== ===== ===== ===== 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. Prior periods restated to correct reported unit sales. FS-2 Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME -------------------------------- For the Years Ended December 31, 1998, 1997 and 1996 (in millions, except amounts per share) 1998 1997 1996 ------------ ----------- ----------- AUTOMOTIVE Sales $119,083 $122,935 $118,023 Costs and expenses Costs of sales 104,782 108,907 108,882 Selling, administrative and other expenses 7,616 7,082 6,625 -------- -------- -------- Total costs and expenses 112,398 115,989 115,507 Operating income 6,685 6,946 2,516 Interest income 1,331 1,116 841 Interest expense 829 788 695 -------- -------- -------- Net interest income 502 328 146 Equity in net loss of affiliated companies (38) (88) (6) Net expense from transactions with Financial Services (191) (104) (85) --------- -------- -------- Income before income taxes - Automotive 6,958 7,082 2,571 FINANCIAL SERVICES Revenues 25,333 30,692 28,968 Costs and expenses Interest expense 8,036 9,712 9,704 Depreciation 8,589 7,645 6,875 Operating and other expenses 4,618 6,621 6,217 Provision for credit and insurance losses 1,798 3,230 2,564 Asset write-downs and dispositions - - 121 -------- -------- -------- Total costs and expenses 23,041 27,208 25,481 Net revenue from transactions with Automotive 191 104 85 Gain on spin-off of The Associates 15,955 - - Gain on sale of Common Stock of a subsidiary - 269 650 -------- -------- -------- Income before income taxes - Financial Services 18,438 3,857 4,222 -------- -------- -------- TOTAL COMPANY Income before income taxes 25,396 10,939 6,793 Provision for income taxes 3,176 3,741 2,166 -------- -------- -------- Income before minority interests 22,220 7,198 4,627 Minority interests in net income of subsidiaries 149 278 181 -------- -------- -------- Net income $ 22,071 $ 6,920 $ 4,446 ======== ======== ======== Income attributable to Common and Class B Stock after preferred stock dividends $ 21,964 $ 6,866 $ 4,381 Average number of shares of Common and Class B Stock outstanding 1,211 1,195 1,179 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income $ 18.17 $ 5.75 $ 3.73 Diluted income $ 17.76 $ 5.62 $ 3.64 Cash dividends $ 1.72 $ 1.645 $ 1.47 FS-3 Ford Motor Company and Subsidiaries CONSOLIDATED BALANCE SHEET -------------------------- (in millions) December 31, December 31, 1998 1997 -------------- -------------- ASSETS Automotive Cash and cash equivalents $ 3,685 $ 6,316 Marketable securities 20,120 14,519 -------- -------- Total cash and marketable securities 23,805 20,835 Receivables 2,604 3,097 Inventories 5,656 5,468 Deferred income taxes 3,239 3,249 Other current assets 3,405 3,782 Net current receivable from Financial Services 0 416 -------- -------- Total current assets 38,709 36,847 Equity in net assets of affiliated companies 2,401 1,951 Net property 37,320 34,594 Deferred income taxes 3,175 3,712 Other assets 7,139 7,975 -------- -------- Total Automotive assets 88,744 85,079 Financial Services Cash and cash equivalents 1,151 1,618 Investments in securities 968 2,207 Net receivables and lease investments 132,567 175,417 Other assets 13,227 14,776 Net receivable from Automotive 888 0 -------- -------- Total Financial Services assets 148,801 194,018 -------- -------- Total assets $237,545 $279,097 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $ 13,368 $ 11,997 Other payables 2,755 2,557 Accrued liabilities 17,432 16,250 Income taxes payable 1,404 1,358 Debt payable within one year 1,121 1,129 Net current payable to Financial Services 70 0 -------- -------- Total current liabilities 36,150 33,291 Long-term debt 8,713 7,047 Other liabilities 29,626 28,899 Deferred income taxes 751 1,210 Net payable to Financial Services 818 0 -------- -------- Total Automotive liabilities 76,058 70,447 Financial Services Payables 3,555 4,539 Debt 122,324 160,071 Deferred income taxes 5,488 4,347 Other liabilities and deferred income 6,034 7,865 Net payable to Automotive 0 416 -------- -------- Total Financial Services liabilities 137,401 177,238 Company-obligated mandatorily redeemable preferred securities of a subsidiary trust holding solely junior subordinated debentures of the Company 677 678 Stockholders' equity Capital stock Preferred Stock, par value $1.00 per share (aggregate liquidation preference of $177 million and $637 million) * * Common Stock, par value $1.00 per share (1,151 and 1,132 million shares issued) 1,151 1,132 Class B Stock, par value $1.00 per share (71 million shares issued) 71 71 Capital in excess of par value of stock 5,283 5,564 Accumulated other comprehensive income (1,670) (1,228) ESOP loan and treasury stock (1,085) (39) Earnings retained for use in business 19,659 25,234 -------- -------- Total stockholders' equity 23,409 30,734 -------- -------- Total liabilities and stockholders' equity $237,545 $279,097 ======== ======== - - - - - *Less than $500,000 FS-4 Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ For the Years Ended December 31, 1998, 1997 and 1996 (in millions) 1998 1997 1996 ---------------------------- ---------------------------- ---------------------------- Financial Financial Financial Automotive Services Automotive Services Automotive Services -------------- ------------ ------------- ------------ ------------- ------------ Cash and cash equivalents at January 1 $ 6,316 $ 1,618 $ 3,578 $ 3,689 $ 5,750 $ 2,690 Cash flows from operating activities 9,622 13,478 13,984 13,650 6,576 12,681 Cash flows from investing activities Capital expenditures (8,113) (504) (8,142) (8,209) (442) Purchase of leased assets (110) - (332) - (195) - Acquisitions of other companies 0 (344) 0 (40) 0 (166) Acquisitions of receivables and lease investments - (78,863) - (117,895) - (109,087) Collections of receivables and lease investments - 49,303 - 86,842 - 82,398 Net acquisitions of daily rental vehicles - (1,790) - (958) - (1,759) Net proceeds from USL Capital asset sales - - - - - 1,157 Purchases of securities (758) (2,102) (43) (3,067) (6) (8,020) Sales and maturities of securities 590 2,271 13 3,520 7 9,863 Proceeds from sales of receivables and lease investments - 8,413 5,197 - 2,867 Net investing activity with Financial Services 642 - 258 - 416 - Other (468) (463) (285) (569) (586) (45) ------- -------- ------- --------- ------- --------- Net cash used in investing activities (8,217) (24,079) (8,531) (27,545) (8,573) (23,234) Cash flows from financing activities Cash dividends (5,348) - (2,020) - (1,800) - Issuance of Common Stock 157 - 310 - 192 - Issuance of Common Stock of a subsidiary - - - 453 - 1,897 Purchase of Ford Treasury Stock (669) - (15) - - - Preferred stock - Series B repurchase, - Series A redemption (420) - - - - - Changes in short-term debt 497 7,475 (430) 6,210 151 3,474 Proceeds from issuance of other debt 2,403 21,776 1,100 22,923 1,688 22,342 Principal payments on other debt (1,434) (16,797) (668) (18,215) (1,031) (14,428) Net financing activity with Automotive - (642) - (258) - (416) Spin-off of The Associates cash - (508) - - - - Other (472) (12) 16 (206) 37 (528) ------- -------- ------- --------- ------- --------- Net cash (used in)/provided by financing activities (5,286) 11,292 (1,707) 10,907 (763) 12,341 Effect of exchange rate changes on cash (54) 146 (119) 28 (85) (116) Net transactions with Automotive/ Financial Services 1,304 (1,304) (889) 889 673 (673) ------- ---------- ------- --------- ------- --------- Net (decrease)/increase in cash and cash equivalents (2,631) (467) 2,738 (2,071) (2,172) 999 ------- -------- ------- --------- ------- --------- Cash and cash equivalents at December 31 $ 3,685 $ 1,151 $ 6,316 $ 1,618 $ 3,578 $ 3,689 ======= ======== ======= ========= ======= ========= FS-5