Exhibit 99
SECTIONS OF PART I, SECTIONS OF ITEM 1 OF PART II AND EXHIBIT 12 OF
FORD MOTOR COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2002. THIS EXHIBIT 99 EXCLUDES INFORMATION DIRECTLY CONCERNING
FORD CREDIT THAT IS ALREADY DISCLOSED IN FORD CREDIT'S QUARTERLY REPORT ON
FORM 10-Q. ALL REFERENCES TO WE, OUR AND US IN THIS EXHIBIT 99 REFER TO
FORD MOTOR COMPANY AND ALL REFERENCES TO THE 10-K REPORT IN THIS EXHIBIT 99
REFER TO FORD MOTOR COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2001.
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended March 31, 2002 and 2001
(in millions, except per share amounts)
First Quarter
------------------------------
2002 2001
-------------- --------------
(unaudited)
<s> <c> <c>
AUTOMOTIVE
Sales $32,321 $34,650
Costs and expenses (Note 2)
Cost of sales (Note 3) 30,074 30,815
Selling, administrative and other expenses 2,336 2,506
------- -------
Total costs and expenses 32,410 33,321
Operating income/(loss) (89) 1,329
Interest income 112 255
Interest expense 362 367
------- -------
Net interest expense (250) (112)
Equity in net loss of affiliated companies (61) (178)
------- -------
Income/(loss) before income taxes - Automotive (400) 1,039
FINANCIAL SERVICES
Revenues (Note 3) 7,536 7,796
Costs and expenses
Interest expense 1,996 2,560
Depreciation 2,666 2,519
Operating and other expenses 1,559 1,437
Provision for credit and insurance losses 961 686
------- -------
Total costs and expenses 7,182 7,202
------- -------
Income before income taxes - Financial Services 354 594
------- -------
TOTAL COMPANY
Income/(loss) before income taxes (46) 1,633
Provision/(credit) for income taxes (26) 571
------- -------
Income/(loss) before minority interests (20) 1,062
Minority interests in net income of subsidiaries 72 3
------- -------
Income/(loss) before cumulative effect of change in
accounting principle (92) 1,059
Cumulative effect of change in accounting principle (Note 4) (708) -
------- -------
Net income/(loss) $ (800) $ 1,059
======= =======
Income/(loss) attributable to Common and Class B Stock
after preferred stock dividends $ (804) $ 1,055
Average number of shares of Common and Class B
Stock outstanding 1,807 1,840
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Notes 4 and 5)
Basic income
Income/(loss) before cumulative effect of change in
accounting principle $ (0.05) $ 0.58
Cumulative effect of change in accounting principle (0.40) -
------- -------
Net income/(loss) $ (0.45) $ 0.58
Diluted income
Income/(loss) before cumulative effect of change in
accounting principle $ (0.05) $ 0.56
Cumulative effect of change in accounting principle (0.40) -
------- -------
Net income/(loss) $ (0.45) $ 0.56
Cash dividends $ 0.10 $ 0.30
The accompanying notes are part of the financial statements.
-1-
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
March 31, December 31,
2002 2001
---------------- --------------
(unaudited)
<s> <c> <c>
ASSETS
Automotive
Cash and cash equivalents $ 8,073 $ 4,079
Marketable securities 11,433 10,949
-------- --------
Total cash and marketable securities 19,506 15,028
Receivables 2,321 2,214
Inventories (Note 6) 7,068 6,191
Deferred income taxes 2,734 2,595
Other current assets 5,880 6,155
Current receivable from Financial Services 1,349 938
-------- --------
Total current assets 38,858 33,121
Equity in net assets of affiliated companies 2,399 2,450
Net property 33,537 33,121
Deferred income taxes 7,592 5,996
Goodwill (Note 4) 4,481 5,283
Other intangible assets (Note 4) 1,036 1,194
Other assets 6,514 7,154
-------- --------
Total Automotive assets 94,417 88,319
Financial Services
Cash and cash equivalents 7,947 3,139
Investments in securities 598 628
Finance receivables, net 103,905 111,958
Net investment in operating leases 46,486 47,262
Retained interest in sold receivables 9,575 12,548
Goodwill and other intangible assets (Note 4) 1,352 1,353
Other assets 7,656 7,624
Receivable from Automotive 3,712 3,712
-------- --------
Total Financial Services assets 181,231 188,224
-------- --------
Total assets $275,648 $276,543
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 16,191 $ 15,677
Other payables 3,649 4,227
Accrued liabilities 24,306 24,340
Debt payable within one year 235 302
-------- --------
Total current liabilities 44,381 44,546
Long-term debt 13,681 13,492
Other liabilities 33,281 30,868
Deferred income taxes 275 362
Payable to Financial Services 3,712 3,712
-------- --------
Total Automotive liabilities 95,330 92,980
Financial Services
Payables 3,347 3,095
Debt 145,301 153,543
Deferred income taxes 9,922 9,703
Other liabilities and deferred income 7,308 7,826
Payable to Automotive 1,349 938
-------- --------
Total Financial Services liabilities 167,227 175,105
Company-obligated mandatorily redeemable preferred and mandatorily redeemable
convertible preferred securities of subsidiary trusts holding solely junior
subordinated debentures of the Company (Note 7) 5,672 672
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate liquidation
preference of $177 million) * *
Common Stock, par value $0.01 per share (1,837 million shares issued) 18 18
Class B Stock, par value $0.01 per share (71 million shares issued) 1 1
Capital in excess of par value of stock 6,008 6,001
Accumulated other comprehensive income (Notes 3 and 8) (5,253) (5,913)
ESOP loan and treasury stock (2,873) (2,823)
Earnings retained for use in business 9,518 10,502
-------- --------
Total stockholders' equity 7,419 7,786
-------- --------
Total liabilities and stockholders' equity $275,648 $276,543
======== ========
The accompanying notes are part of the financial statements.
-2-
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended March 31, 2002 and 2001
(in millions)
First Quarter 2002 First Quarter 2001
---------------------------- -----------------------------
Financial Financial
Automotive Services Automotive Services
------------- -------------- ------------- ---------------
(unaudited) (unaudited)
<s> <c> <c> <c> <c>
Cash and cash equivalents at January 1 $ 4,079 $ 3,139 $ 3,374 $ 1,477
Cash flows from operating activities before
securities trading 2,338 3,831 3,122 1,903
Net sales/(purchases) of trading securities (437) (25) 119 (6)
------- -------- ------- --------
Net cash flows from operating activities 1,901 3,806 3,241 1,897
Cash flows from investing activities
Capital expenditures (1,537) (181) (1,357) (131)
Acquisitions of receivables and lease investments - (21,295) - (23,772)
Collections of receivables and lease investments - 15,318 - 13,249
Net acquisitions of daily rental vehicles - (794) - (1,118)
Purchases of securities (537) (185) (6,713) (204)
Sales and maturities of securities 452 139 8,053 199
Proceeds from sales of receivables and lease investments - 15,399 - 7,174
Net investing activity with Financial Services (427) - (674) -
Cash paid for acquisitions (Note 9) (37) - (122) (743)
Other - 228 342 9
------- -------- ------- --------
Net cash used in investing activities (2,086) 8,629 (471) (5,337)
Cash flows from financing activities
Cash dividends (184) - (557) -
Net purchases of Common Stock (57) - (801) -
Proceeds from mandatorily redeemable convertible
preferred securities (Note 7) 4,900 - - -
Changes in short-term debt (93) (7,402) (28) (4,861)
Proceeds from issuance of other debt 107 8,143 201 14,386
Principal payments on other debt (60) (8,944) (76) (7,691)
Net financing activity with Automotive - 427 - 674
Other (5) (231) 84 44
------- -------- ------- --------
Net cash (used in)/provided by financing activities 4,608 (8,007) (1,177) 2,552
Effect of exchange rate changes on cash (18) (31) (63) (111)
Net transactions with Automotive/Financial Services (411) 411 (951) 951
------- -------- ------- --------
Net increase/(decrease) in cash and cash equivalents 3,994 4,808 579 (48)
------- -------- ------- --------
Cash and cash equivalents at March 31 $ 8,073 $ 7,947 $ 3,953 $ 1,429
======= ======== ======= ========
The accompanying notes are part of the financial statements.
-3-
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, 2001. For purposes of this report, "Ford", the "Company",
"we", "our", "us" or similar references means Ford Motor Company and its
majority-owned subsidiaries unless the context requires otherwise. Certain
amounts for prior periods were reclassified to conform with current period
presentation.
2. Selected Automotive Costs and Expenses are summarized as follows
(in millions):
First Quarter
----------------------------
2002 2001
------------ ------------
Depreciation $590 $675
Amortization of special tools 572 726
Postretirement expense 488 377
3. Derivative Instruments and Hedges - Ford adopted Statement of Financial
Accounting Standards ("SFAS") No. 133 on January 1, 2001. For further
discussion on SFAS No. 133, refer to Note 14 in the 10-K Report. Non-cash
benefits/(charges) recorded to income and to stockholders' equity for the
first quarter of 2002 and 2001 were (in millions):
First Quarter 2002 First Quarter 2001
------------------------------------ -------------------------------------
Financial Total Financial Total
Automotive Services Company Automotive Services Company
------------- ----------- ---------- ------------ ------------ ----------
<s> <c> <c> <c> <c> <c>
Income before income taxes a/ $ 2 $ 23 $ 25 $(90) $(20) $ (110)
Net income 2 14 16 (59) (13) (72)
Stockholders' equity b/ 483 (1,225)
- - - - -
a/ Automotive recorded in cost of sales; Financial Services recorded in revenues.
b/ Recorded in accumulated other comprehensive income.
4. Goodwill and Other Intangibles - Effective January 1, 2002, Ford adopted
SFAS Nos. 141 and 142. SFAS No. 142 eliminates amortization of goodwill
and certain other intangible assets, but requires annual testing for
impairment (comparison of estimated fair value to carrying value). Fair
value is estimated using the present value of expected future cash flows
and other measures. The transitional impairment test for the Automotive
sector resulted in an after-tax, non-cash charge of $708 million in the
first quarter of 2002 related to Kwik-Fit and other investments. The
transitional impairment test for our Financial Services sector is still in
progress; the outcome is uncertain.
If SFAS No. 142 had been in effect in 2001, Company earnings would have
been improved because of reduced amortization, as described below:
First Quarter 2001
-------------------------------------------------------------------
Basic Earnings Diluted Earnings
Net Income Per Share Per Share
--------------------- --------------------- ---------------------
(millions)
<s> <c> <c> <c>
Reported net income $1,059 $0.58 $0.56
Add: amortization 57 * 0.03 0.03
------ ----- -----
Adjusted net income $1,116 $0.61 $0.59
====== ===== =====
-----
* $49 million Automotive and $8 million Financial Services.
SFAS No. 141 specifies the types of acquired intangible assets to be
reported separately from goodwill and those to be included in goodwill.
Certain Company intangible assets, primarily acquired distribution networks
and technology, continue to be amortized over their useful lives, with no
significant residual value. Changes to Automotive goodwill and other
intangible assets were as follows (in millions):
Goodwill Intangibles
--------------- ---------------------------------------
Amortizable Non-amortizable
----------- ---------------
<s> <c> <c> <c>
December 31, 2001 balance $ 5,283 $ 1,194 $ -
Impairment (pre-tax) (1,041) - -
Tradenames reclassification - (618) 618
Workforce reclassification 126 (126) -
Currency translation & other 113 (32) -
------- ------ -----
March 31, 2002 balance $ 4,481 a/ $ 418 b/ $ 618
======== ====== =====
-----
a/ In addition, equity in net assets of affiliated companies included goodwill of $462 million.
b/ Gross balance of $516 million, net of accumulated amortization and other adjustments of
$98 million.
Company pre-tax amortization expense for intangible assets, excluding
goodwill, in the first quarter 2002 and 2001 was $6 million and
$15 million, respectively. Intangibles amortization is forecasted about
$10-$20 million per year for the next 5 years.
-4-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
5. Income Per Share of Common and Class B Stock - The calculation of diluted
income per share of Common and Class B Stock takes into account the effect
of obligations, such as stock options, considered to be potentially
dilutive. Basic and diluted income per share were calculated using the
following (in millions):
First Quarter
-----------------------------------
2002 2001
---------------- ---------------
<s> <c> <c>
Average shares outstanding 1,807 1,840
Issuable and uncommitted ESOP shares (1) (12)
----- -----
Basic shares 1,806 1,828
Contingently issuable shares (1) -
Net dilutive effect of options - * 40
Convertible preferred securities - * -
----- -----
Diluted shares 1,805 1,868
===== =====
- - - - -
* Not included in calculation of diluted earnings per share due to their
antidilutive effect (17 million shares related to options and 282 million
shares related to convertible securities).
6. Automotive Inventories are summarized as follows (in millions):
March 31, December 31,
2002 2001
---------------- ---------------
<s> <c> <c>
Raw materials, work in process and supplies $2,730 $2,436
Finished products 5,283 4,660
------ ------
Total inventories at FIFO 8,013 7,096
Less LIFO adjustment (945) (905)
------ ------
Total inventories $7,068 $6,191
====== ======
7. Company-Obligated Mandatorily Redeemable Preferred and Mandatorily
Redeemable Convertible Preferred Securities of Subsidiary Trusts - The sole
assets of Ford Motor Company Capital Trust I ("Trust I"), which is the
obligor on the preferred securities of Trust I issued in 1995, are $632
million principal amount of 9% Junior Subordinated Debentures due 2025 of
Ford Motor Company.
In January 2002, Ford Motor Company Capital Trust II, a subsidiary trust
of the Company ("Trust II"), issued 100 million shares of 6.5% Cumulative
Convertible Trust Preferred Securities, each with a liquidation preference
of $50 per share. At the option of the holder, each preferred security is
convertible at any time on or before January 15, 2032 into shares of Ford
Common Stock at a rate of 2.8249 shares for each preferred security. The
sole assets of Trust II are $5,155 million principal amount of 6.5% Junior
Subordinated Debentures due 2032 of Ford Motor Company.
8. Comprehensive Income - Other comprehensive income primarily reflects
foreign currency translation adjustments and adjustments related to
SFAS No. 133 (See Note 3). Total comprehensive income is summarized as
follows (in millions):
First Quarter
-----------------------------------
2002 2001
----------------- ----------------
<s> <c> <c>
Net income/(loss) $ (800) $ 1,059
Other comprehensive income/(loss) 660 (2,336)
------- -------
Total comprehensive loss $ (140) $(1,277)
======= =======
9. Acquisitions
Hertz Purchase - In March 2001, through a tender offer and a merger
transaction, Ford acquired (for a total price of $735 million) the common
stock of Hertz that it did not own, which represented about 18% of the
economic interest in Hertz.
-5-
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
10. Segment Information - Ford's business is divided into two business sectors
- Automotive and Financial Services (including Ford Credit and Hertz);
detail is summarized as follows (in millions):
Financial Services Sector
-----------------------------------------
First Quarter Auto Ford Other Elims/
Sector Credit Hertz Fin Svcs Other Total
------------- ------------- ----------- --------------- ---------- -------------
<s> <c> <c> <c> <c> <c> <c>
2002
- ----
Revenues
External customer $ 32,321 $ 6,023 $ 1,083 $ 430 $ - $ 39,857
Intersegment 1,067 85 7 22 (1,181) -
-------- -------- -------- -------- -------- --------
Total Revenues $ 33,388 $ 6,108 $ 1,090 $ 452 $ (1,181) $ 39,857
======== ======== ======== ======== ======== ========
Net income/(loss)
before cumulative
effect of change in
accounting principle $ (308) $ 256 $ (48) $ 8 $ - $ (92)
Total assets at March 31 $ 94,417 $165,356 $ 10,944 $ 4,931 $ - $275,648
2001
- ----
Revenues
External customer $ 34,650 $ 6,348 $ 1,176 $ 272 $ - $ 42,446
Intersegment 1,228 122 8 19 (1,377) -
-------- -------- ------- ------ ------- --------
Total Revenues $ 35,878 $ 6,470 $ 1,184 $ 291 $(1,377) $ 42,446
======== ======== ======= ====== ======= ========
Net income $ 689 $ 393 $ (4) $ (19) $ - $ 1,059
Total assets at March 31 $ 93,811 $175,156 $11,339 $4,281 $ - $284,587
"Other Financial Services" data is an aggregation of miscellaneous smaller Financial Services
Sector business components.
"Elims/Other" data includes intersegment eliminations.
-6-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------
FIRST QUARTER RESULTS OF OPERATIONS
Our worldwide losses were $800 million in the first quarter of 2002, or
$0.45 per diluted share of Common and Class B Stock. In the first quarter of
2001, earnings were $1,059 million, or $0.56 per share. First quarter 2002
losses include an after-tax, non-cash charge of $708 million resulting from
recording an impairment of goodwill in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 142 and an after-tax, non-cash benefit of
$16 million related to hedging and derivatives activities recorded in
accordance with SFAS No. 133. First quarter 2001 results included a charge of
$72 million for SFAS No. 133. For further discussions regarding SFAS Nos. 133
and 142, see Notes 3 and 4 of the Notes to our Consolidated Financial
Statements. Worldwide sales and revenues were $39.9 billion in the first quarter
of 2002, down $2.6 billion from a year ago, reflecting primarily lower vehicle
sales volume and increased marketing costs. Unit sales of cars and trucks were
1,678,000 units, down 127,000 units.
Results by business sector for the first quarter of 2002 and 2001 are
shown below (in millions):
First Quarter Net Income/(Loss)
----------------------------------------
2002
Over/(Under)
2002 2001 2001
----------------------------------------
<s> <c> <c> <c>
Automotive sector $(308) $ 689 $ (997)
Financial Services sector 216 370 (154)
----- ------ -------
Income/(loss) before cumulative effect
of change in accounting principle (92) 1,059 (1,151)
Cumulative effect of change in
accounting principle (708) - (708)
----- ------ -------
Total Company net income/(loss) $(800) $1,059 $(1,859)
===== ====== =======
Automotive Sector
- -----------------
Worldwide losses, including cumulative effect of change in accounting
principle, for our Automotive sector were $1,016 million in the first quarter of
2002. Excluding cumulative effect of change in accounting principle charges of
$708 million, Automotive sector losses were $308 million, on sales of $32.3
billion. Earnings in the first quarter of 2001 were $689 million, on sales of
$34.7 billion.
Details of first quarter Automotive sector results before cumulative
effect of change in accounting principle are shown below (in millions).
First Quarter
Net Income/(Loss)
------------------------------------------
2002
Over/(Under)
2002 2001 2001
------------ ----------- ---------------
<s> <c> <c> <c>
North American Automotive $(428) $ 695 $(1,123)
Automotive outside North America
- Europe 117 88 29
- South America (51) (53) 2
- Rest of World 54 (41) 95
----- ----- -------
Total Automotive outside
North America 120 (6) 126
----- ----- -------
Total Automotive Sector $(308) $ 689 $ (997)
===== ===== =======
Automotive sector losses before cumulative effect of change in
accounting principle in North America were $428 million in the first quarter of
2002, on sales of $23.1 billion. In the first quarter of 2001, earnings were
$695 million, on sales of $23.7 billion. The decrease in earnings reflected
primarily increased marketing costs (U.S. marketing costs for Ford, Lincoln and
Mercury brands as a percent of their sales revenue was up 3.5 percentage points,
to 15.7%), increased warranty and other costs associated with customer
satisfaction initiatives, higher net interest expense, and lower volume.
-7-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
In the first quarter of 2002, 4.0 million new cars and trucks were
sold in the United States, down 200,000 units from a year ago. Our U.S. market
share was 20.7% in the first quarter of 2002, down 1.9 percentage points from a
year ago, reflecting primarily lower demand by fleet customers and increased
price and product competition.
Our Automotive sector earnings before cumulative effect of change in
accounting principle in Europe were $117 million in the first quarter of 2002,
compared with earnings of $88 million a year ago. Continued cost reductions, the
elimination of goodwill amortization in accordance with SFAS No. 142
($36 million) and other factors were largely offset by lower vehicle sales due
to lower industry demand and the production ramp-up for the new Ford Fiesta.
In the first quarter of 2002, 4.6 million new cars and trucks were sold
in our nineteen primary European markets, down 200,000 units from a year ago.
Our European market share was 11.3%, up 0.2 percentage points.
Our Automotive sector in South America had losses of $51 million in the
first quarter of 2002, compared with losses of $53 million a year ago. Cost
reductions were offset by costs to launch our new plant in Bahia and weak
economic conditions in Brazil and Argentina.
In the first quarter of 2002, 354,000 new cars and trucks were sold in
Brazil, compared with 415,000 a year ago. Our share of those unit sales was
8.7%, down 0.3 percentage points, reflecting a more competitive environment.
Automotive sector earnings before cumulative effect of change in
accounting principle outside North America, Europe, and South America ("Rest of
World") were $54 million in the first quarter of 2002, compared with losses of
$41 million in the first quarter of 2001. The improvement in results was
explained by Ford's share of smaller losses at Mazda, lower costs, and higher
vehicle sales volumes in Asia-Pacific.
Financial Services Sector
- -------------------------
Our Financial Services sector consists primarily of two segments, Ford
Credit and Hertz. Details of first quarter Financial Services sector earnings
are shown below (in millions).
First Quarter
Net Income/(Loss)
------------------------------------------
2002
Over/(Under)
2002 2001 2001
------------ ---------- --------------
<s> <c> <c> <c>
Ford Credit $256 $393 $(137)
Hertz (48) (4) (44)
Minority interests and other 8 (19) 27
---- ---- ----
Total Financial Services sector $216 $370 $(154)
==== ==== =====
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
Ford Credit - not included.
In the first quarter of 2002, Hertz had losses of $48 million, compared
with losses of $4 million a year ago. The higher losses reflected continued
lower rental volumes after the terrorist attacks of September 11, 2001 and
overall economic conditions, which have negatively impacted corporate spending
levels.
Hertz believes that business travel and equipment rentals will remain at
diminished levels throughout 2002, reflecting reduced corporate spending in the
United States. As the economy gradually improves, Hertz' full year 2002 income
is expected to exceed 2001 income, but be substantially below recent historical
levels.
On April 15, 2002, it was announced that we are evaluating the possible
sale or partial disposition of Hertz' industrial and construction equipment
rental business, which operates in the United States, Canada, France and Spain.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Sector
- -----------------
For the Automotive sector, liquidity and capital resources include cash
generated from operations, gross cash balances, our ability to raise funds in
capital markets and committed credit lines.
Gross Cash - Automotive gross cash includes cash and marketable
securities and assets contained in a Voluntary Employee Beneficiary Association
("VEBA") trust, which reflect financial assets available to fund the business
and pay future obligations in the near term, as summarized below (in billions):
2002 2001
-------------------------- --------------------------
March 31 January 1 March 31 January 1
------------ ------------- ------------ ------------
<s> <c> <c> <c> <c>
Cash and cash equivalents $ 8.1 $ 4.1 $ 4.0 $ 3.4
Marketable securities 11.4 10.9 11.8 13.1
VEBA 2.0 2.7 3.3 3.7
------ ------ ------ ------
Gross cash $ 21.5 $ 17.7 $ 19.1 $ 20.2
====== ====== ====== ======
-9-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
In managing our business, we classify changes in gross cash in three
categories: operating related (including capital expenditures and capital
transactions with the Financial Services sector), acquisitions and divestitures,
and financing related. Changes for the first quarter of 2002 and 2001 are
summarized below (in billions):
2002 2001
---------- ---------
<s> <c> <c>
Gross cash at March 31 $21.5 $19.1
Gross cash at January 1 17.7 20.2
----- -----
March 31 over/(under) January 1 $ 3.8 $(1.1)
===== =====
Operating related cash flows
Automotive net income/(loss) $(1.0) $ 0.7
Impairment charges (SFAS No. 142 - Goodwill) 0.7 -
Capital expenditures (1.5) (1.4)
Depreciation and special tools amortization 1.2 1.4
Capital transactions with Financial Services sector a/ (0.7) 0.4
Changes in working capital b/ (1.4) (0.9)
All other 1.5 0.5
----- -----
Total operating related (1.2) 0.7
Cash paid for acquisitions - (0.8)
Divestitures and asset sales 0.3 0.4
----- -----
Total acquisitions and divestitures 0.3 (0.4)
Financing related
Convertible preferred securities 4.9 -
Dividends to shareholders (0.2) (0.6)
Net purchase of common stock (0.1) (0.8)
Changes in total Automotive sector debt 0.1 -
----- -----
Total financing related 4.7 (1.4)
----- -----
Total change in gross cash $ 3.8 $(1.1)
===== =====
- ----------
a/ Reflects operating related flows (i.e. dividends, capital contributions, loans, and loan repayments).
b/ Working capital includes current assets (excluding cash and marketable securities) less
current liabilities (excluding the current portion of long-term debt).
In the first quarter of 2002, we spent $1.5 billion for capital goods,
such as machinery, equipment, tooling, and facilities, used in our Automotive
sector, compared with $1.4 billion a year ago.
In January 2002, $700 million of cash was contributed from Ford to Ford
Credit as additional equity, which lowered Ford Credit's debt-to-equity ratio to
13.7 to 1 at March 31, 2002 (calculated on a basis that treats proceeds from
securitized funding as debt).
Working capital and all other operating related changes improved cash
by net $100 million in the first quarter of 2002; changes in working capital
($1.4 billion unfavorable, primarily higher inventories) and all other
(favorable $1.5 billion, primarily non-current liabilities) largely reflected
seasonal factors and normal accrual versus payment timing differences.
In the first quarter of 2002, we received proceeds of $300 million
primarily from the sale by the Financial Services sector of land assets in
California and of a corporate aircraft.
Debt and Net Cash - At March 31, 2002, our Automotive sector had total
debt of $13.9 billion, up $100 million from December 31, 2001. At March 31,
2002, our Automotive sector had net cash (defined as gross cash less total debt)
of $7.6 billion, compared with $3.9 billion at December 31, 2001.
-10-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
Cumulative Convertible Trust Preferred Securities - On January 30, 2002, we sold
100 million shares of Cumulative Convertible Trust Preferred Securities to the
public at a price of $50 per share, for net proceeds (after underwriting
commissions, but before expenses) of $4.9 billion. The proceeds will be used for
general corporate purposes. The preferred securities were issued by Ford Motor
Company Capital Trust II, the sole assets of which are the junior subordinated
convertible debentures due January 15, 2032 of Ford Motor Company. The preferred
securities can be converted into shares of Ford common stock at any time at a
conversion price of $17.70 per share. If converted, the aggregate amount of
additional shares of Ford common stock that would be outstanding would be about
282 million shares.
Financial Services Sector
- -------------------------
Ford Credit - not included.
Hertz
Debt and Cash - Hertz' total debt was $6.5 billion at March 31, 2002,
up $200 million from December 31, 2001. Outstanding commercial paper at
March 31, 2002 totaled $1.3 billion at Hertz, with an average remaining maturity
of 27 days compared with $1 billion at December 31, 2001. At March 31, 2002,
Hertz had cash and cash equivalents of $187 million, up from $120 million at
December 31, 2001.
Total Company
- -------------
Stockholders' Equity - Our stockholders' equity was $7.4 billion at
March 31, 2002, down $400 million compared with December 31, 2001. The decrease
was more than explained by net losses of $800 million and dividend payments of
about $200 million, offset partially by a net benefit to equity on derivative
financial instruments in accordance with SFAS No. 133 of about $500 million.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
NEW ACCOUNTING STANDARDS
We adopted SFAS No. 142, "Goodwill and Other Intangible Assets" on
January 1, 2002. Goodwill and certain intangible assets will no longer be
amortized, but will be subject to an annual impairment test. Goodwill and
indefinite-lived intangible asset amortization of about $250 million was charged
to income in 2001. In the first quarter of 2002, we took an after-tax, non-cash
impairment charge of $708 million for Kwik-Fit (our European vehicle repair
business) and other investments in the Automotive sector. We will complete the
transition to SFAS No. 142 for Financial Services in the second quarter of 2002;
the outcome is uncertain. For a further discussion of SFAS No. 142, see Note 4
of our Notes to Financial Statements.
OTHER FINANCIAL INFORMATION
The interim financial information included in this 10-Q Report has not
been audited by PricewaterhouseCoopers LLP ("PwC"). In reviewing such
information, PwC has applied limited procedures in accordance with professional
standards for reviews of interim financial information. Accordingly, you should
restrict your reliance on their reports on such information. PwC is not subject
to the liability provisions of Section 11 of the Securities Act of 1933 for
their reports on the interim financial information because such reports do not
constitute "reports" or "parts" of the registration statements prepared or
certified by PwC within the meaning of Sections 7 and 11 of the Securities Act
of 1933.
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Part II. Other Information
Item 1. Legal Proceedings
- --------------------------
Firestone Matters (Previously discussed beginning on page 22 of Ford's
Annual Report on Form 10-K for the year ended December 31, 2001
(the "10-K Report").
Recall and National Highway Traffic Safety Administration Matters. As
previously reported, we announced on May 22, 2001 that we would replace all 15,
16, and 17-inch Firestone Wilderness AT tires installed as original equipment on
our vehicles that were not included in the original Bridgestone/Firestone, Inc.
recall (about 13 million tires). This action was substantially completed on
March 31, 2002.
Firestone Tire Related Litigation. On May 2, 2002, the United States
Court of Appeals for the Seventh Circuit reversed the trial court order of
November 28, 2001 that certified a class. The plaintiffs have filed a motion
for re-hearing of this decision en banc in the Seventh Circuit Court of Appeals.
Class Actions
- -------------
Paint Class Actions. (Previously discussed beginning on page 25 of the
10-K Report.) We filed a motion to dismiss the Phillips case and that motion
was denied. Plaintiffs' class certification motion is pending.
TFI Module Class Actions. (Previously discussed on page 26 of the
10-K Report.) The federal district court in Illinois has denied plaintiff's
motion to certify a class in the seventh case (Lilly v. Ford).
Windstar Transmission Class Actions. (Previously discussed beginning on
page 27 of the 10-K Report.) On April 15, 2002, the United States Court of
Appeals for the Third Circuit affirmed the dismissal of the third case
(Werwinski v. Ford).
Fair Lending Class Action. Not included.
F-150 Radiator Class Actions. (Previously discussed on page 28 of the
10-K Report.) In an order dated March 28, 2002, the trial court in Texas
amended its ruling to expand the class from Texas to nationwide. We are
appealing this ruling to the Texas Court of Appeals.
Focus Fuel Delivery Module Class Action. On April 17, 2002, a
purported nationwide class action was filed against Ford in state court in New
Jersey on behalf of all persons who own or lease 2000-2002 Ford Focus vehicles.
The complaint alleges that the fuel delivery module in these vehicles is
defective and causes a loss of power on acceleration and stalling. The
complaint alleges consumer fraud, breach of warranty and unjust enrichment.
Plaintiffs seek rescission of their contracts, compensatory damages, punitive
damages, an injunction, and attorney fees.
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Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
- ----------------------------------------------------------------------------------------
(in millions)
First
Quarter For the Years Ended December 31
-------------------------------------------------------
2002 2001 2000 1999 1998 1997
---------- --------- ---------- ----------- ----------- ----------
<s> <c> <c> <c> <c> <c> <c>
Earnings
Income before income taxes $ (46) $(7,548) $ 8,234 $ 9,854 $24,280 $10,124
Equity in net (income)/loss of affiliates
plus dividends from affiliates 66 857 99 (12) 87 141
Adjusted fixed charges a/ 2,515 11,257 11,300 9,381 9,161 10,896
- ------ ------- ------- ------- ------- -------
Earnings $2,535 $ 4,530 $19,633 $19,223 $33,528 $21,161
====== ======= ======= ======= ======= =======
Combined Fixed Charges and
Preferred Stock Dividends
Interest expense b/ $2,365 $10,894 $10,937 $ 9,065 $ 8,881 $10,559
-
Interest portion of rental expense c/ 80 317 302 258 228 297
-
Preferred stock dividend requirements of
majority owned subsidiaries and trusts 68 55 55 55 55 55
------ ------- ------- ------- ------- -------
Fixed charges 2,513 11,266 11,294 9,378 9,164 10,911
Ford preferred stock dividend requirements d/ 6 22 22 22 121 85
- ------ ------- ------- ------- ------- -------
Total combined fixed charges
and preferred stock dividends $2,519 $11,288 $11,316 $ 9,400 $ 9,285 $10,996
====== ======= ======= ======= ======= =======
Ratios
Ratio of earnings to fixed charges 1.0 f/ 1.7 2.0 3.7e/ 1.9
-
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.0 f/ 1.7 2.0 3.6e/ 1.9
-
- - - - - -
a/ Fixed charges, as shown above, adjusted to exclude the amount of interest
capitalized during the period and preferred stock dividend requirements of
majority owned subsidiaries and trusts.
b/ Includes interest, whether expensed or capitalized, and amortization of debt
expense and discount or premium relating to any indebtedness.
c/ One-third of all rental expense is deemed to be interest.
d/ Preferred stock dividend requirements of Ford Motor Company increased to an
amount representing the pre-tax earnings which would be required to cover
such dividend requirements based on Ford Motor Company's effective income
tax rates.
e/ Earnings used in calculation of this ratio include the $15,955 million gain
on the spin-off of The Associates. Excluding this gain, the ratio is 1.9.
f/ Earnings for the year ended December 31, 2001 were inadequate to cover
fixed charges. The coverage deficiency was $6.7 billion for ratio of
earnings to fixed charges and $6.8 billion for ratio of earnings to
combined fixed charges and preferred stock dividends.
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