form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
T
|
QUARTERLY REPORT PURSUANT TO
SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
For
the quarterly period ended March 31,
2008
£
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transition period from
________________ to
________________
Commission
File Number: 1-3950
FORD
MOTOR COMPANY
(Exact
name of registrant as specified in its charter)
1-3950
|
38-0549190
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
|
|
One American Road,
Dearborn, Michigan
|
48126
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(313)
322-3000
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
T Yes £ No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated
filer" and "smaller reporting company in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer T
|
Accelerated
filer £
|
Non-accelerated
filer £
|
Smaller
reporting company £
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
£ Yes T No
As of May
1 2008, the registrant had outstanding 2,171,147,986 shares of Common Stock
and 70,852,076 shares of Class B Stock.
Exhibit
index located on page number 46.
PART
I. FINANCIAL INFORMATION
ITEM
1. Financial
Statements.
FORD
MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF INCOME
For
the Periods Ended March 31, 2008 and 2007
(in
millions, except per share amounts)
|
|
First Quarter
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(unaudited)
|
|
Sales
and revenues
|
|
|
|
|
|
|
Automotive
sales
|
|
$ |
39,117 |
|
|
$ |
38,630 |
|
Financial
Services revenues
|
|
|
4,396 |
|
|
|
4,375 |
|
Total
sales and revenues
|
|
|
43,513 |
|
|
|
43,005 |
|
|
|
|
|
|
|
|
|
|
Costs
and expenses
|
|
|
|
|
|
|
|
|
Automotive
cost of sales
|
|
|
35,455 |
|
|
|
34,716 |
|
Selling,
administrative and other expenses
|
|
|
5,081 |
|
|
|
5,964 |
|
Interest
expense
|
|
|
2,542 |
|
|
|
2,714 |
|
Financial
Services provision for credit and insurance losses
|
|
|
343 |
|
|
|
58 |
|
Total
costs and expenses
|
|
|
43,421 |
|
|
|
43,452 |
|
|
|
|
|
|
|
|
|
|
Automotive
interest income and other non-operating income/(expense),
net
|
|
|
92 |
|
|
|
329 |
|
Automotive
equity in net income/(loss) of affiliated companies
|
|
|
136 |
|
|
|
72 |
|
Income/(Loss)
before income taxes
|
|
|
320 |
|
|
|
(46 |
) |
Provision
for/(benefit from) income taxes
|
|
|
97 |
|
|
|
181 |
|
Income/(Loss)
before minority interests
|
|
|
223 |
|
|
|
(227 |
) |
Minority
interests in net income/(loss) of subsidiaries
|
|
|
122 |
|
|
|
58 |
|
Income/(Loss)
from continuing operations
|
|
|
101 |
|
|
|
(285 |
) |
Income/(Loss)
from discontinued operations (Note 8)
|
|
|
(1 |
) |
|
|
3 |
|
Net
income/(loss)
|
|
$ |
100 |
|
|
$ |
(282 |
) |
|
|
|
|
|
|
|
|
|
AMOUNTS
PER SHARE OF COMMON AND CLASS B STOCK (Note 9)
|
|
|
|
|
|
|
|
|
Basic
income/(loss)
|
|
|
|
|
|
|
|
|
Income/(Loss)
from continuing operations
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
Income/(Loss)
from discontinued operations
|
|
|
— |
|
|
|
— |
|
Net
income/(loss)
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
Diluted
income/(loss)
|
|
|
|
|
|
|
|
|
Income/(Loss)
from continuing operations
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
Income/(Loss)
from discontinued operations
|
|
|
— |
|
|
|
— |
|
Net
income/(loss)
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
|
|
|
|
|
|
|
|
|
Cash
dividends
|
|
$ |
— |
|
|
$ |
— |
|
The
accompanying notes are part of the financial statements
Item
1. Financial Statements (Continued)
FORD
MOTOR COMPANY AND SUBSIDIARIES
SECTOR
STATEMENT OF INCOME
For
the Periods Ended March 31, 2008 and 2007
(in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
AUTOMOTIVE
|
|
|
|
|
|
|
Sales
|
|
$ |
39,117 |
|
|
$ |
38,630 |
|
Costs
and expenses
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
35,455 |
|
|
|
34,716 |
|
Selling,
administrative and other expenses
|
|
|
3,109 |
|
|
|
4,074 |
|
Total
costs and expenses
|
|
|
38,564 |
|
|
|
38,790 |
|
Operating
income/(loss)
|
|
|
553 |
|
|
|
(160 |
) |
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
528 |
|
|
|
580 |
|
|
|
|
|
|
|
|
|
|
Interest
income and other non-operating income/(expense), net
|
|
|
92 |
|
|
|
329 |
|
Equity
in net income/(loss) of affiliated companies
|
|
|
136 |
|
|
|
72 |
|
Income/(Loss)
before income taxes — Automotive
|
|
|
253 |
|
|
|
(339 |
) |
|
|
|
|
|
|
|
|
|
FINANCIAL
SERVICES
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
4,396 |
|
|
|
4,375 |
|
Costs
and expenses
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
2,014 |
|
|
|
2,134 |
|
Depreciation
|
|
|
1,836 |
|
|
|
1,500 |
|
Operating
and other expenses
|
|
|
136 |
|
|
|
390 |
|
Provision
for credit and insurance losses
|
|
|
343 |
|
|
|
58 |
|
Total
costs and expenses
|
|
|
4,329 |
|
|
|
4,082 |
|
Income/(Loss)
before income taxes — Financial Services
|
|
|
67 |
|
|
|
293 |
|
|
|
|
|
|
|
|
|
|
TOTAL
COMPANY
|
|
|
|
|
|
|
|
|
Income/(Loss)
before income taxes
|
|
|
320 |
|
|
|
(46 |
) |
Provision
for/(Benefit from) income taxes
|
|
|
97 |
|
|
|
181 |
|
Income/(Loss)
before minority interests
|
|
|
223 |
|
|
|
(227 |
) |
Minority
interests in net income/(loss) of subsidiaries
|
|
|
122 |
|
|
|
58 |
|
Income/(Loss)
from continuing operations
|
|
|
101 |
|
|
|
(285 |
) |
Income/(Loss)
from discontinued operations (Note 8)
|
|
|
(1 |
) |
|
|
3 |
|
Net
income/(loss)
|
|
$ |
100 |
|
|
$ |
(282 |
) |
|
|
|
|
|
|
|
|
|
AMOUNTS
PER SHARE OF COMMON AND CLASS B STOCK (Note 9)
|
|
|
|
|
|
|
|
|
Basic
income/(loss)
|
|
|
|
|
|
|
|
|
Income/(Loss)
from continuing operations
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
Income/(Loss)
from discontinued operations
|
|
|
— |
|
|
|
— |
|
Net
income/(loss)
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
Diluted
income/(loss)
|
|
|
|
|
|
|
|
|
Income/(Loss)
from continuing operations
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
Income/(Loss)
from discontinued operations
|
|
|
— |
|
|
|
— |
|
Net
income/(loss)
|
|
$ |
0.05 |
|
|
$ |
(0.15 |
) |
|
|
|
|
|
|
|
|
|
Cash
dividends
|
|
$ |
— |
|
|
$ |
— |
|
The
accompanying notes are part of the financial statements
Item
1. Financial Statements (Continued)
FORD
MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEET
(in
millions)
|
|
March 31,
2008
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
33,751 |
|
|
$ |
35,283 |
|
Marketable
securities
|
|
|
8,593 |
|
|
|
5,248 |
|
Loaned
securities
|
|
|
6,746 |
|
|
|
10,267 |
|
Finance
receivables, net
|
|
|
108,858 |
|
|
|
107,454 |
|
Other
receivables, net
|
|
|
8,089 |
|
|
|
8,210 |
|
Net
investment in operating leases
|
|
|
32,493 |
|
|
|
33,255 |
|
Retained
interest in sold receivables
|
|
|
474 |
|
|
|
593 |
|
Inventories (Note
2)
|
|
|
11,721 |
|
|
|
10,121 |
|
Equity
in net assets of affiliated companies
|
|
|
3,120 |
|
|
|
2,853 |
|
Net
property
|
|
|
37,007 |
|
|
|
36,238 |
|
Deferred
income taxes
|
|
|
3,331 |
|
|
|
3,489 |
|
Goodwill
and other net intangible assets (Note 4)
|
|
|
2,064 |
|
|
|
2,060 |
|
Assets
of discontinued/held-for-sale operations (Note 9)
|
|
|
10,002 |
|
|
|
9,221 |
|
Other
assets
|
|
|
16,664 |
|
|
|
14,972 |
|
Total
assets
|
|
$ |
282,913 |
|
|
$ |
279,264 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Payables
|
|
$ |
23,964 |
|
|
$ |
20,794 |
|
Accrued
liabilities and deferred revenue
|
|
|
72,858 |
|
|
|
74,722 |
|
Debt
|
|
|
169,205 |
|
|
|
168,217 |
|
Deferred
income taxes
|
|
|
2,901 |
|
|
|
3,034 |
|
Liabilities
of discontinued/held-for-sale operations (Note 9)
|
|
|
5,408 |
|
|
|
5,448 |
|
Total
liabilities
|
|
|
274,336 |
|
|
|
272,215 |
|
|
|
|
|
|
|
|
|
|
Minority
interests
|
|
|
1,466 |
|
|
|
1,421 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
Capital
stock
|
|
|
|
|
|
|
|
|
Common
Stock, par value $0.01 per share (2,148 million shares
issued)
|
|
|
21 |
|
|
|
21 |
|
Class
B Stock, par value $0.01 per share (71 million shares
issued)
|
|
|
1 |
|
|
|
1 |
|
Capital
in excess of par value of stock
|
|
|
7,988 |
|
|
|
7,834 |
|
Accumulated
other comprehensive income/(loss)
|
|
|
657 |
|
|
|
(558 |
) |
Treasury
stock
|
|
|
(184 |
) |
|
|
(185 |
) |
Retained
earnings/(Accumulated deficit)
|
|
|
(1,372 |
) |
|
|
(1,485 |
) |
Total
stockholders’ equity
|
|
|
7,111 |
|
|
|
5,628 |
|
Total
liabilities and stockholders’ equity
|
|
$ |
282,913 |
|
|
$ |
279,264 |
|
The
accompanying notes are part of the financial statements
Item
1. Financial Statements (Continued)
FORD
MOTOR COMPANY AND SUBSIDIARIES
SECTOR
BALANCE SHEET
(in
millions)
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Automotive
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
18,663 |
|
|
$ |
20,678 |
|
Marketable
securities
|
|
|
6,602 |
|
|
|
2,092 |
|
Loaned
securities
|
|
|
6,746 |
|
|
|
10,267 |
|
Total
cash, marketable and loaned securities
|
|
|
32,011 |
|
|
|
33,037 |
|
Receivables,
net
|
|
|
4,164 |
|
|
|
4,530 |
|
Inventories
(Note 2)
|
|
|
11,721 |
|
|
|
10,121 |
|
Deferred
income taxes
|
|
|
562 |
|
|
|
532 |
|
Other
current assets
|
|
|
6,206 |
|
|
|
5,514 |
|
Current
receivable from Financial Services
|
|
|
225 |
|
|
|
509 |
|
Total
current assets
|
|
|
54,889 |
|
|
|
54,243 |
|
Equity
in net assets of affiliated companies
|
|
|
2,558 |
|
|
|
2,283 |
|
Net
property
|
|
|
36,757 |
|
|
|
35,979 |
|
Deferred
income taxes
|
|
|
8,557 |
|
|
|
9,268 |
|
Goodwill
and other net intangible assets (Note 4)
|
|
|
2,054 |
|
|
|
2,051 |
|
Assets
of discontinued/held-for-sale operations (Note 8)
|
|
|
8,054 |
|
|
|
7,537 |
|
Other
assets
|
|
|
5,966 |
|
|
|
5,614 |
|
Non-current
receivable from Financial Services
|
|
|
2,003 |
|
|
|
1,514 |
|
Total
Automotive assets
|
|
|
120,838 |
|
|
|
118,489 |
|
Financial
Services
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
15,088 |
|
|
|
14,605 |
|
Marketable
securities
|
|
|
1,991 |
|
|
|
3,156 |
|
Finance
receivables, net
|
|
|
112,783 |
|
|
|
111,134 |
|
Net
investment in operating leases
|
|
|
29,962 |
|
|
|
30,309 |
|
Retained
interest in sold receivables
|
|
|
474 |
|
|
|
593 |
|
Equity
in net assets of affiliated companies
|
|
|
562 |
|
|
|
570 |
|
Goodwill
and other net intangible assets (Note 4)
|
|
|
10 |
|
|
|
9 |
|
Assets
of discontinued/held-for-sale operations (Note 8)
|
|
|
1,948 |
|
|
|
1,684 |
|
Other
assets
|
|
|
7,441 |
|
|
|
7,201 |
|
Total
Financial Services assets
|
|
|
170,259 |
|
|
|
169,261 |
|
Intersector
elimination
|
|
|
(2,228 |
) |
|
|
(2,023 |
) |
Total
assets
|
|
$ |
288,869 |
|
|
$ |
285,727 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
$ |
17,692 |
|
|
$ |
15,718 |
|
Other
payables
|
|
|
4,248 |
|
|
|
3,237 |
|
Accrued
liabilities and deferred revenue
|
|
|
26,533 |
|
|
|
27,672 |
|
Deferred
income taxes
|
|
|
2,567 |
|
|
|
2,671 |
|
Debt
payable within one year
|
|
|
1,445 |
|
|
|
1,175 |
|
Total
current liabilities
|
|
|
52,485 |
|
|
|
50,473 |
|
Long-term
debt
|
|
|
25,608 |
|
|
|
25,779 |
|
Other
liabilities
|
|
|
40,714 |
|
|
|
41,676 |
|
Deferred
income taxes
|
|
|
846 |
|
|
|
783 |
|
Liabilities
of discontinued/held-for-sale operations (Note 8)
|
|
|
5,064 |
|
|
|
4,824 |
|
Total
Automotive liabilities
|
|
|
124,717 |
|
|
|
123,535 |
|
Financial
Services
|
|
|
|
|
|
|
|
|
Payables
|
|
|
2,024 |
|
|
|
1,839 |
|
Debt
|
|
|
142,152 |
|
|
|
141,263 |
|
Deferred
income taxes
|
|
|
5,444 |
|
|
|
6,043 |
|
Other
liabilities and deferred income
|
|
|
5,611 |
|
|
|
5,374 |
|
Liabilities
of discontinued/held-for-sale operations (Note 8)
|
|
|
344 |
|
|
|
624 |
|
Payable
to Automotive
|
|
|
2,228 |
|
|
|
2,023 |
|
Total
Financial Services liabilities
|
|
|
157,803 |
|
|
|
157,166 |
|
|
|
|
|
|
|
|
|
|
Minority
interests
|
|
|
1,466 |
|
|
|
1,421 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Capital
stock
|
|
|
|
|
|
|
|
|
Common
Stock, par value $0.01 per share (2,148 million shares
issued)
|
|
|
21 |
|
|
|
21 |
|
Class
B Stock, par value $0.01 per share (71 million shares
issued)
|
|
|
1 |
|
|
|
1 |
|
Capital
in excess of par value of stock
|
|
|
7,988 |
|
|
|
7,834 |
|
Accumulated
other comprehensive income/(loss)
|
|
|
657 |
|
|
|
(558 |
) |
Treasury
stock
|
|
|
(184 |
) |
|
|
(185 |
) |
Retained
earnings/(Accumulated deficit)
|
|
|
(1,372 |
) |
|
|
(1,485 |
) |
Total
stockholders' equity
|
|
|
7,111 |
|
|
|
5,628 |
|
Intersector
elimination
|
|
|
(2,228 |
) |
|
|
(2,023 |
) |
Total
liabilities and stockholders' equity
|
|
$ |
288,869 |
|
|
$ |
285,727 |
|
The
accompanying notes are part of the financial statements.
Item
1. Financial Statements (Continued)
FORD
MOTOR COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
For
the Periods Ended March 31, 2008 and 2007
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Cash
flows from operating activities of continuing operations
|
|
|
|
Net
cash (used in)/provided by operating activities
|
|
$ |
1,027 |
|
|
$ |
979 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities of continuing operations
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(1,490 |
) |
|
|
(1,296 |
) |
Acquisitions
of retail and other finance receivables and operating
leases
|
|
|
(11,872 |
) |
|
|
(12,519 |
) |
Collections
of retail and other finance receivables and operating
leases
|
|
|
10,936 |
|
|
|
10,885 |
|
Purchases
of securities
|
|
|
(13,531 |
) |
|
|
(2,229 |
) |
Sales
and maturities of securities
|
|
|
13,527 |
|
|
|
6,768 |
|
Proceeds
from sales of retail and other finance receivables and operating
leases
|
|
|
— |
|
|
|
697 |
|
Proceeds
from sale of businesses
|
|
|
44 |
|
|
|
35 |
|
Cash
paid for acquisitions
|
|
|
(14 |
) |
|
|
(2 |
) |
Transfer
of cash balances upon disposition of discontinued/held-for-sale
operations
|
|
|
— |
|
|
|
— |
|
Other
|
|
|
621 |
|
|
|
256 |
|
Net
cash (used in)/provided by investing activities
|
|
|
(1,779 |
) |
|
|
2,595 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities of continuing operations
|
|
|
|
|
|
|
|
|
Cash
dividends
|
|
|
— |
|
|
|
— |
|
Sales
of Common Stock
|
|
|
63 |
|
|
|
27 |
|
Purchases
of Common Stock
|
|
|
— |
|
|
|
(31 |
) |
Changes
in short-term debt
|
|
|
(678 |
) |
|
|
389 |
|
Proceeds
from issuance of other debt
|
|
|
11,150 |
|
|
|
4,270 |
|
Principal
payments on other debt
|
|
|
(11,107 |
) |
|
|
(9,748 |
) |
Other
|
|
|
(115 |
) |
|
|
(51 |
) |
Net
cash (used in)/provided by financing activities
|
|
|
(687 |
) |
|
|
(5,144 |
) |
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
316 |
|
|
|
(91 |
) |
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents from continuing
operations
|
|
|
(1,123 |
) |
|
|
(1,661 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from discontinued operations
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities of discontinued operations
|
|
|
29 |
|
|
|
(18 |
) |
Cash
flows from investing activities of discontinued operations
|
|
|
(94 |
) |
|
|
(94 |
) |
Cash
flows from financing activities of discontinued operations
|
|
|
(344 |
) |
|
|
(243 |
) |
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
$ |
(1,532 |
) |
|
$ |
(2,016 |
) |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at January 1
|
|
$ |
35,283 |
|
|
$ |
28,896 |
|
Cash
and cash equivalents of discontinued/held-for-sale operations at January
1
|
|
|
— |
|
|
|
(2 |
) |
Net
increase/(decrease) in cash and cash equivalents
|
|
|
(1,532 |
) |
|
|
(2,016 |
) |
Less:
cash and cash equivalents of discontinued/held-for-sale operations at
March 31
|
|
|
— |
|
|
|
(19 |
) |
Cash
and cash equivalents at March 31
|
|
$ |
33,751 |
|
|
$ |
26,859 |
|
The
accompanying notes are part of the financial statements
Item
1. Financial Statements (Continued)
FORD
MOTOR COMPANY AND SUBSIDIARIES
CONDENSED
SECTOR STATEMENT OF CASH FLOWS
For
the Periods Ended March 31, 2008 and 2007
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Cash
flows from operating activities of continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash (used in)/provided by operating activities
|
|
$ |
685 |
|
|
$ |
2,482 |
|
|
$ |
1,466 |
|
|
$ |
642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(1,449 |
) |
|
|
(41 |
) |
|
|
(1,286 |
) |
|
|
(10 |
) |
Acquisitions
of retail and other finance receivables and operating
leases
|
|
|
— |
|
|
|
(12,166 |
) |
|
|
— |
|
|
|
(12,519 |
) |
Collections
of retail and other finance receivables and operating
leases
|
|
|
— |
|
|
|
10,936 |
|
|
|
— |
|
|
|
10,900 |
|
Net
(increase)/decrease of wholesale receivables
|
|
|
— |
|
|
|
(1,846 |
) |
|
|
— |
|
|
|
(1,144 |
) |
Purchases
of securities
|
|
|
(12,509 |
) |
|
|
(1,022 |
) |
|
|
(480 |
) |
|
|
(1,749 |
) |
Sales
and maturities of securities
|
|
|
11,329 |
|
|
|
2,198 |
|
|
|
463 |
|
|
|
6,305 |
|
Proceeds
from sales of retail and other finance receivables and operating
leases
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
697 |
|
Proceeds
from sale of businesses
|
|
|
44 |
|
|
|
— |
|
|
|
35 |
|
|
|
— |
|
Cash
paid for acquisitions
|
|
|
(14 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Transfer
of cash balances upon disposition of discontinued/held-for-sale
operations
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Investing
activity from Financial Services
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Investing
activity to Financial Services
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
Other
|
|
|
297 |
|
|
|
324 |
|
|
|
177 |
|
|
|
79 |
|
Net
cash (used in)/provided by investing activities
|
|
|
(2,302 |
) |
|
|
(1,617 |
) |
|
|
(1,097 |
) |
|
|
2,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Sales
of Common Stock
|
|
|
63 |
|
|
|
— |
|
|
|
27 |
|
|
|
— |
|
Purchases
of Common Stock
|
|
|
— |
|
|
|
— |
|
|
|
(31 |
) |
|
|
— |
|
Changes
in short-term debt
|
|
|
93 |
|
|
|
(771 |
) |
|
|
(118 |
) |
|
|
507 |
|
Proceeds
from issuance of other debt
|
|
|
57 |
|
|
|
11,093 |
|
|
|
102 |
|
|
|
4,168 |
|
Principal
payments on other debt
|
|
|
(90 |
) |
|
|
(11,017 |
) |
|
|
(150 |
) |
|
|
(9,598 |
) |
Financing
activity from Automotive
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Financing
activity to Automotive
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other
|
|
|
(77 |
) |
|
|
(38 |
) |
|
|
(17 |
) |
|
|
(34 |
) |
Net
cash (used in)/provided by financing activities
|
|
|
46 |
|
|
|
(733 |
) |
|
|
(187 |
) |
|
|
(4,953 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
235 |
|
|
|
81 |
|
|
|
15 |
|
|
|
(106 |
) |
Net
change in intersector receivables/payables and other
liabilities
|
|
|
(679 |
) |
|
|
679 |
|
|
|
(519 |
) |
|
|
519 |
|
Net
increase/(decrease) in cash and cash equivalents from continuing
operations
|
|
|
(2,015 |
) |
|
|
892 |
|
|
|
(322 |
) |
|
|
(1,339 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities of discontinued operations
|
|
|
— |
|
|
|
29 |
|
|
|
5 |
|
|
|
(23 |
) |
Cash
flows from investing activities of discontinued operations
|
|
|
— |
|
|
|
(94 |
) |
|
|
— |
|
|
|
(94 |
) |
Cash
flows from financing activities of discontinued operations
|
|
|
— |
|
|
|
(344 |
) |
|
|
— |
|
|
|
(243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
$ |
(2,015 |
) |
|
$ |
483 |
|
|
$ |
(317 |
) |
|
$ |
(1,699 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at January 1
|
|
$ |
20,678 |
|
|
$ |
14,605 |
|
|
$ |
16,022 |
|
|
$ |
12,874 |
|
Cash
and cash equivalents of discontinued/held-for-sale operations at January
1
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Net
increase/(decrease) in cash and cash equivalents
|
|
|
(2,015 |
) |
|
|
483 |
|
|
|
(317 |
) |
|
|
(1,699 |
) |
Less:
cash and cash equivalents of discontinued/held-for-sale operations at
March 31
|
|
|
— |
|
|
|
— |
|
|
|
(19 |
) |
|
|
— |
|
Cash
and cash equivalents at March 31
|
|
$ |
18,663 |
|
|
$ |
15,088 |
|
|
$ |
15,684 |
|
|
$ |
11,175 |
|
The
accompanying notes are part of the financial statements
Item
1. Financial Statements (Continued)
FORD
MOTOR COMPANY AND SUBSIDIARIES
NOTES
TO THE FINANCIAL STATEMENTS
NOTE
1. FINANCIAL STATEMENTS
The
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") in the United States for
interim financial information and instructions to the Quarterly Report on Form
10-Q and Rule 10-01 of Regulation S-X. In the opinion of management,
these unaudited financial statements reflect a fair statement of the results of
operations and financial condition of Ford Motor Company and its consolidated
subsidiaries and consolidated variable interest entities ("VIEs") of which we
are the primary beneficiary for the periods and at the dates
presented. The operating results for interim periods are not
necessarily indicative of results that may be expected for any other interim
period or for the full year. Reference should be made to the
financial statements contained in our Annual Report on Form 10-K for the year
ended December 31, 2007 ("2007 Form 10-K Report"). For purposes of
this report, "Ford," the "Company," "we," "our," "us" or similar references mean
Ford Motor Company and our consolidated subsidiaries and our consolidated VIEs
of which we are the primary beneficiary, unless the context requires
otherwise.
Presentation
of Cash Flows
Beginning
with our statement of cash flows for the period ended March 31, 2008, we changed
the presentation of cash flows to separately disclose the purchases of trading
securities and the sale and maturities of trading securities as gross amounts
within Cash flows from
investing activities instead of Cash flows from operating activities
of continuing operations. This change is in response to our
election to apply the fair value option to our available-for-sale and
held-to-maturity securities upon adoption of Statement of Financial Accounting
Standards ("SFAS") No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – including an amendment of FASB Statement No.
115 ("SFAS No. 159") on January 1, 2008.
NOTE
2. INVENTORIES
Inventories
are summarized as follows (in millions)*:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
Raw
materials, work-in-process and supplies
|
|
$ |
4,475 |
|
|
$ |
4,360 |
|
Finished
products
|
|
|
8,327 |
|
|
|
6,861 |
|
Total
inventories under first-in, first-out method ("FIFO")
|
|
|
12,802 |
|
|
|
11,221 |
|
Less:
Last-in, first-out method ("LIFO") adjustment
|
|
|
(1,081 |
) |
|
|
(1,100 |
) |
Total
inventories
|
|
$ |
11,721 |
|
|
$ |
10,121 |
|
__________
* Excludes
divested and held-for-sale operations.
Inventories
are stated at lower of cost or market. About one-fourth of
inventories were valued under the LIFO method.
NOTE
3. SIGNIFICANT UNCONSOLIDATED AFFILIATES
Presented
below is summarized financial information for Mazda Motor Corporation
("Mazda"). Mazda is considered to be a significant unconsolidated
affiliate in the first quarter of 2008. Mazda is accounted for under
the equity method.
Mazda-Related
Investments. Included in our Automotive equity in net assets of affiliated
companies at March 31, 2008 and December 31, 2007 was $1.4 billion and
$1.3 billion, respectively, associated with our investment in
Mazda. Our investment in Mazda has $207 million of goodwill included
in Automotive equity in net
assets of affiliated companies at both March 31, 2008 and December 31,
2007. Dividends received from Mazda for the three-month period ended
March 31, 2008 and the twelve-month period ended December 31, 2007 were $0 and
$36 million, respectively.
Item
1. Financial Statements (Continued)
NOTE
3. SIGNIFICANT UNCONSOLIDATED AFFILIATES (Continued)
Summarized
income statement information from Mazda's published financial statements,
prepared in accordance with Japanese GAAP, for the quarters ended
December 31, 2007 and 2006 was as follows (in millions):
|
|
|
|
|
|
|
Net
sales
|
|
$ |
7,369 |
|
|
$ |
6,507 |
|
Cost
and expenses
|
|
|
7,063 |
|
|
|
6,189 |
|
Income
from continuing operations
|
|
|
139 |
|
|
|
151 |
|
Net
income
|
|
|
138 |
|
|
|
126 |
|
Summarized
balance sheet information from Mazda's published financial statements at
December 31, 2007 was as follows (in millions):
|
|
|
|
Total
assets
|
|
$ |
17,761 |
|
Total
liabilities
|
|
|
13,238 |
|
Included
in our Automotive equity in
net income/(loss) of affiliated companies was the following income for
the first quarter (in millions):
|
|
|
|
|
|
|
Ford's
share of Mazda's net income/(loss)
|
|
$ |
52 |
|
|
$ |
22 |
|
Ford's
share of Mazda's net income/(loss) in the table above represents our share of
Mazda's results on a U.S. GAAP basis. We are not aware of any events
at Mazda subsequent to March 31, 2008 that would materially affect our balance
sheet or income statement.
NOTE
4. GOODWILL AND OTHER INTANGIBLES
Changes
in the carrying amount of goodwill are as follows (in millions):
|
|
|
|
|
Financial Services Sector
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at December 31, 2007
|
|
$ |
89 |
|
|
$ |
37 |
|
|
$ |
1,360 |
|
|
$ |
1,486 |
|
|
$ |
9 |
|
|
$ |
1,495 |
|
Changes
in goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
acquired
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other
disposals
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Dealer
goodwill impairment (b)
|
|
|
(88 |
) |
|
|
— |
|
|
|
— |
|
|
|
(88 |
) |
|
|
— |
|
|
|
(88 |
) |
Effect
of foreign currency translation and other
|
|
|
— |
|
|
|
1 |
|
|
|
94 |
|
|
|
95 |
|
|
|
1 |
|
|
|
96 |
|
Balances
at March 31, 2008
|
|
$ |
— |
|
|
$ |
38 |
|
|
$ |
1,454 |
|
|
$ |
1,492 |
|
|
$ |
10 |
|
|
$ |
1,502 |
|
__________
(a)
|
Excludes
divested and held-for-sale
operations.
|
(b)
|
Based
on our planned reduction of our Ford North America dealership base, we
recorded an other-than-temporary impairment of our investment in our
consolidated dealerships. We recorded the $88 million
impairment of our investment in the first quarter of 2008 by writing down
the related goodwill to its fair value of
$0.
|
Item
1. Financial Statements (Continued)
NOTE
4. GOODWILL AND OTHER INTANGIBLES (Continued)
Other
Net Intangibles
The
components of net identifiable intangible assets are as follows (in
millions)*:
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated
Amortization
|
|
|
|
|
|
|
|
|
Less: Accumulated
Amortization
|
|
|
|
|
Automotive
Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
networks
|
|
$ |
358 |
|
|
$ |
(112 |
) |
|
$ |
246 |
|
|
$ |
335 |
|
|
$ |
(103 |
) |
|
$ |
232 |
|
Manufacturing
and production incentive rights
|
|
|
306 |
|
|
|
(95 |
) |
|
|
211 |
|
|
|
297 |
|
|
|
(74 |
) |
|
|
223 |
|
Other
|
|
|
197 |
|
|
|
(92 |
) |
|
|
105 |
|
|
|
199 |
|
|
|
(89 |
) |
|
|
110 |
|
Total
Automotive sector
|
|
|
861 |
|
|
|
(299 |
) |
|
|
562 |
|
|
|
831 |
|
|
|
(266 |
) |
|
|
565 |
|
Total
Financial Services Sector
|
|
|
4 |
|
|
|
(4 |
) |
|
|
— |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
— |
|
Total
|
|
$ |
865 |
|
|
$ |
(303 |
) |
|
$ |
562 |
|
|
$ |
835 |
|
|
$ |
(270 |
) |
|
$ |
565 |
|
__________
* Excludes
divested and held-for-sale operations.
Our
identifiable intangible assets are comprised of distribution networks with a
useful life of 40 years, manufacturing and production incentive rights acquired
in 2006 with a useful life of 4 years, and other intangibles with various
amortization periods (primarily patents, customer contracts, technology, and
land rights). Pre-tax amortization expense, excluding the effects of
foreign currency translation related to these intangible assets, was as follows
(in millions)*:
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
amortization expense
|
|
$ |
24 |
|
|
$ |
21 |
|
__________
* Excludes
divested and held-for-sale operations.
Excluding
the impact of foreign currency translation, intangible asset amortization is
forecasted to range from $95 million to $105 million per year for the next three
years, and $20 million to $30 million per year thereafter.
NOTE
5. VARIABLE INTEREST ENTITIES
We
consolidate VIEs of which we are the primary beneficiary. The
liabilities recognized as a result of consolidating these VIEs do not
necessarily represent additional claims on our general assets; rather, they
represent claims against the specific assets of the consolidated
VIEs. Conversely, assets recognized as a result of consolidating
these VIEs do not necessarily represent additional assets that could be used to
satisfy claims against our general assets.
The total
consolidated VIE assets reflected on our March 31, 2008 and December 31, 2007
balance sheets are as follows (in millions):
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
Automotive
Sector
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
896 |
|
|
$ |
742 |
|
Other
assets
|
|
|
5,242 |
|
|
|
5,599 |
|
Total
assets
|
|
$ |
6,138 |
|
|
$ |
6,341 |
|
|
|
|
|
|
|
|
|
|
Financial
Services Sector
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
5,482 |
|
|
$ |
4,605 |
|
Finance
receivables
|
|
|
65,926 |
|
|
|
60,361 |
|
Net
investment in operating leases
|
|
|
17,824 |
|
|
|
17,461 |
|
Total
assets
|
|
$ |
89,232 |
|
|
$ |
82,427 |
|
We have
several investments in other entities determined to be VIEs of which we are not
the primary beneficiary. The risks and rewards associated with our
interests in these entities are based primarily on ownership
percentages. Our maximum exposure was $374 million and $357 million
for our Automotive sector and $75 million and $76 million for our Financial
Services sector at March 31, 2008 and December 31, 2007,
respectively. Any potential losses associated with these VIEs would
be limited to the value of our invested capital or equity rights and, where
applicable, receivables due from the VIEs.
Item
1. Financial Statements (Continued)
NOTE
5. VARIABLE INTEREST ENTITIES (Continued)
Ford
Motor Credit Company LLC ("Ford Credit") uses special purpose entities ("SPEs")
that are considered VIEs for most of its on-balance sheet
securitizations. Ford Credit also sells finance receivables to
bank-sponsored asset-backed commercial paper issuers that are SPEs of the
sponsor bank; these SPEs are not consolidated by Ford Credit. All of
these sales constitute sales for legal purposes, but some of the sales do not
satisfy the requirements for accounting sale treatment. The
outstanding balance of these finance receivables was approximately $3.5 billion
and $3.4 billion at March 31, 2008 and December 31, 2007,
respectively.
NOTE
6. EMPLOYEE SEPARATION ACTIONS
Automotive
Sector
Job
Security Benefits Reserve
We are
required to pay most idled unionized hourly employees in North America who meet
certain conditions a portion of their wages and benefits for a specified period
of time ("Job Security Benefits") (previously referred to as Jobs Bank
Benefits). We expense Job Security Benefits expected to be provided
to our hourly employees at facilities that will be closed, or, in the case of
some Automotive Components Holdings, LLC ("ACH") plants, sold (see Note 18 of
the Notes to the Financial Statements in our 2007 Form 10-K
Report).
The Job
Security Benefits reserve includes an amount for benefits expected to be
provided in their present form under the current International Union, United
Automobile, Aerospace and Agricultural Implement Workers of America ("UAW") and
National Automobile, Aerospace, Transportation and General Workers Union of
Canada ("CAW") collective bargaining agreements. The Job Security
Benefits provided to our hourly employees are expensed when it becomes probable
that employees will be permanently idled. We have recorded an expense
in Automotive cost of
sales, and the following table summarizes the activity in the related Job
Security Benefits reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
817 |
|
|
$ |
1,036 |
|
|
|
8,316 |
|
|
|
10,728 |
|
Additions
to Job Security Benefits reserve/Transfers from voluntary separation
program (i.e., rescissions)
|
|
|
36 |
|
|
|
232 |
|
|
|
435 |
|
|
|
2,220 |
|
Voluntary
separations and relocations
|
|
|
(131 |
) |
|
|
(311 |
) |
|
|
(1,314 |
) |
|
|
(4,632 |
) |
Benefit
payments and other adjustments
|
|
|
— |
|
|
|
(140 |
) |
|
|
— |
|
|
|
— |
|
Ending
balance
|
|
$ |
722 |
|
|
$ |
817 |
|
|
|
7,437 |
|
|
|
8,316 |
|
The
reserve balance above takes into account several factors: the demographics of
the population at each affected facility, redeployment alternatives, and recent
experience relative to voluntary redeployments. Due to the
complexities inherent in estimating this reserve, our actual costs could differ
materially. We continue to expense costs associated with the small
number of employees who are temporarily idled on an as-incurred
basis.
Separation
Actions
The cost
of voluntary employee separation actions is recorded at the time of an
employee's acceptance, unless the acceptance requires explicit approval by the
Company. The costs of conditional voluntary separations are accrued
when all conditions are satisfied. The costs of involuntary
separation programs are accrued when management has approved the program and the
affected employees are identified.
UAW Voluntary
Separations. During 2006, and in the first quarter of 2008, we
offered voluntary separation packages to our entire UAW hourly workforce,
established a reserve for the costs associated with these actions, and recorded
an expense in Automotive cost
of sales. The following table summarizes the activity in the
related separation reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
225 |
|
|
$ |
2,435 |
|
|
|
1,374 |
|
|
|
26,351 |
|
Voluntary
acceptances
|
|
|
140 |
|
|
|
— |
|
|
|
1,141 |
|
|
|
— |
|
Payments/Terminations
|
|
|
(85 |
) |
|
|
(1,912 |
) |
|
|
(448 |
) |
|
|
(21,587 |
) |
Rescissions
and other adjustments
|
|
|
8 |
|
|
|
(298 |
) |
|
|
(56 |
) |
|
|
(3,390 |
) |
Ending
balance
|
|
$ |
288 |
|
|
$ |
225 |
|
|
|
2,011 |
|
|
|
1,374 |
|
Item
1. Financial Statements (Continued)
NOTE
6. EMPLOYEE SEPARATION ACTIONS (Continued)
The 2008
ending balances shown above represent the cost of separation packages for
employees who accepted packages in the first quarter of 2008 but have not yet
left the Company, as well as employees who accepted a retirement package and
ceased duties, but who will remain on our employment rolls until they reach
retirement eligibility. Excluded from the table above are 2,518
voluntary acceptances of retirement incentive packages during the first quarter
of 2008 that are included in pension and other postretirement employee benefits
("OPEB") separation program costs. See Note 12 for employee
separation costs related to pension and OPEB. In addition, 535 ACH
employees voluntarily accepted offers during the first quarter of 2008 that were
contingent upon the sale of the glass business. At March 31, 2008,
these employees were still included in the Job Security Benefits
reserve. See Note 8 for further discussion of the sale of the glass
business.
Other Employee Separation
Actions. Most salaried employee separations within the United
States were completed by the end of the first quarter of 2007 and were achieved
through early retirements, voluntary separations, and involuntary separations
where necessary. These actions resulted in pre-tax charges of $152
million during the first quarter of 2007, reported in Automotive cost of sales and
Selling, administrative and
other expenses.
The
following table shows pre-tax charges for other hourly and salaried employee
separation actions for the first quarter of 2008 and 2007, respectively (in
millions). These charges are reported in Automotive cost of sales and
Selling, administrative and
other expenses.
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Ford
Canada
|
|
$ |
1 |
|
|
$ |
168 |
|
Ford
Europe
|
|
|
4 |
|
|
|
6 |
|
Volvo
|
|
|
— |
|
|
|
4 |
|
Ford
Asia Pacific Africa
|
|
|
— |
|
|
|
2 |
|
Jaguar
Land Rover
|
|
|
2 |
|
|
|
3 |
|
The
charges above exclude costs for pension and OPEB. See Note 12 for
employee separation costs related to pension and OPEB.
Financial
Services Sector
Separation
Actions
In 2007,
we recognized pre-tax charges of $45 million in Selling, administrative and other
expenses for employee separation actions. The majority of
these actions were associated with Ford Credit's North American business
transformation initiative (i.e., the consolidation of its North American
branches into its seven existing business centers). In the first
quarter of 2008, we released $1 million of the reserve.
These
charges exclude costs for pension and OPEB. See Note 12 for employee
separation costs related to pension and OPEB.
NOTE
7. INCOME TAXES
Generally,
for interim tax reporting, one single tax rate is estimated for tax
jurisdictions not subject to a valuation allowance, which is applied to the
year-to-date ordinary income/loss. However, we manage our operations
by multi-jurisdictional business units and thus are unable to reasonably compute
one overall effective tax rate. Accordingly, our worldwide tax
provision is calculated pursuant to Financial Accounting Standards Board
("FASB") Interpretation No. 18, Accounting for Income Taxes in
Interim Periods, which provides that tax (or benefit) in each foreign
jurisdiction, not subject to valuation allowance, be separately computed as
ordinary income/(loss) occurs within the jurisdiction.
Item
1. Financial Statements (Continued)
NOTE
8. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND
ACQUISITIONS
Automotive
Sector
Discontinued
Operations
Automotive Protection Corporation
("APCO"). Our North American operation APCO was sold in the
second quarter of 2007. First quarter results for this discontinued
operation are shown in the table below (in millions):
|
|
|
|
|
|
|
|
|
|
|
Sales
and revenues
|
|
$ |
— |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
|
|
Operating
income/(loss) from discontinued operations
|
|
$ |
— |
|
|
$ |
3 |
|
Gain/(Loss)
on discontinued operations
|
|
|
— |
|
|
|
— |
|
(Provision
for)/Benefit from income taxes
|
|
|
— |
|
|
|
(1 |
) |
Income/(Loss)
from discontinued operations
|
|
$ |
— |
|
|
$ |
2 |
|
Held-for-Sale
Operations
Jaguar Land
Rover. During 2007, management committed to sell our Jaguar
Land Rover operations in order to focus on our core Automotive operations and to
build liquidity. At December 31, 2007, we classified the assets and
liabilities of these operations as held for sale in our balance sheet and ceased
depreciating the long-lived assets. On March 25, 2008, we entered
into a definitive agreement with Tata Motors Limited (filed as Exhibit 10.2
hereto) pursuant to which we will sell all of our interest in the Jaguar Land
Rover operations for approximately $2.3 billion in cash, subject to customary
purchase price adjustments upon completion (e.g., relating to working capital,
cash, and debt), and have agreed to contribute up to about $600 million to the
Jaguar Land Rover pension plans. In the first quarter of 2008, we
recorded a pre-tax impairment charge of $421 million reported in Automotive cost of sales
related to the disposal of these operations. The impairment charge
reflects the impact on expected proceeds of the purchase price adjustments based
on March 31, 2008 conditions and Jaguar Land Rover's first quarter pre-tax
earnings of $421 million on the held-for-sale assets and
liabilities. We expect to complete the sale in the second quarter of
2008.
As part
of the transaction, we will continue to supply Jaguar Land Rover for differing
periods with powertrains, stampings and other vehicle components. We
also committed to provide engineering support, including research and
development, information technology, accounting and other
services. Ford Credit will provide financing for Jaguar Land Rover
dealers and customers during a transition period, which can vary by market, for
up to 12 months.
The
assets and liabilities of our Jaguar Land Rover operations classified as held
for sale are summarized as follows (in millions):
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Receivables
|
|
$ |
1,327 |
|
|
$ |
758 |
|
Inventories
|
|
|
1,822 |
|
|
|
1,530 |
|
Net
property
|
|
|
2,256 |
|
|
|
2,246 |
|
Goodwill
and other net intangibles
|
|
|
1,986 |
|
|
|
2,010 |
|
Pension
assets
|
|
|
753 |
|
|
|
696 |
|
Other
assets
|
|
|
331 |
|
|
|
297 |
|
Impairment
of carrying value
|
|
|
(421 |
) |
|
|
— |
|
Total
assets of the held-for-sale operations
|
|
$ |
8,054 |
|
|
$ |
7,537 |
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Payables
|
|
$ |
2,534 |
|
|
$ |
2,395 |
|
Pension
liabilities
|
|
|
21 |
|
|
|
19 |
|
Warranty
liabilities
|
|
|
592 |
|
|
|
645 |
|
Other
liabilities
|
|
|
1,917 |
|
|
|
1,765 |
|
Total
liabilities of the held-for-sale operations
|
|
$ |
5,064 |
|
|
$ |
4,824 |
|
Item
1. Financial Statements (Continued)
NOTE
8. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND
ACQUISITIONS (Continued)
Other
Dispositions
ACH. As of March
31, 2008, ACH had entered into non-binding or conditional agreements for the
sale of five of its businesses. The following table lists the
businesses and their primary products:
Sheldon
Road plant
|
Heating,
ventilating and cooling assemblies; heat exchangers; and manual control
panel components
|
|
|
Milan
plant
|
Fuel
tanks and bumper fascias
|
|
|
Nashville,
Tulsa, and VidrioCar (Mexico) plants
|
Automotive
and architectural glass products
|
|
|
Sandusky
plant
|
Lighting
components
|
|
|
Saline
plant
|
Cockpit
module, instrument panel, door trim and floor console
products
|
Each of
these sales is conditional upon reaching agreement on a variety of issues,
including successful negotiation by the prospective buyer of labor terms with
the UAW. As of March 31, 2008, only Zeledyne, LLC., the buyer of the
glass operations, had reached an agreement with the UAW. None of the
businesses were classified as held for sale at March 31, 2008.
On April
14, 2008, ACH completed the sale of its glass business to Zeledyne,
LLC. The sale includes the Nashville, Tulsa, and VidrioCar plants,
along with the research and development, engineering, sales and aftermarket
operations in Tennessee and Michigan. As a result of this
transaction, we expect to realize a pre-tax loss of about $285 million in the
second quarter of 2008. Because financing was not in place on March
31, 2008, our assessment was that a sale was not probable, and, therefore, we
did not classify the glass business as held for sale on our balance
sheet.
Ballard Power Systems Inc.
("Ballard"). On January 25, 2008, we reached an agreement with
Ballard to exchange our entire ownership interest of 12.9 million shares of
Ballard stock for a 30% equity interest in Automotive Fuel Cell Corporation
("AFCC") along with $22 million in cash. AFCC is a joint venture
between Ford (30%), Daimler AG (50.1%) and Ballard (19.9%). It was
created for the development of automotive fuel cells. We have also
agreed to purchase from Ballard its 19.9% equity interest for $65 million plus
interest after five years. As a result of the exchange, we recognized
in Automotive cost of sales
a pre-tax loss of $70 million. Our investment in AFCC is
reported in Automotive equity
in net assets of affiliated companies.
Acquisitions
Automobile Craiova SA ("ACSA").
In March 2008, we acquired 72.4% of the shares of ACSA, a Romanian
carmaker which will be fully integrated into Ford production systems, from
Romania's Authority for State Assets Recovery ("AVAS") for $87
million. Over the next four years, we are required pursuant to the
sale agreement with AVAS to invest €675 million into the operations of the
business. We also plan to acquire the minority shareholder's equity
interest. Based on the continuing significance of AVAS' control
and participation in the operations of ACSA during the four-year investment
period, our investment is reflected in Automotive equity in net assets of
affiliated companies. We anticipate that we will consolidate
the operations upon the cessation of AVAS' control and participation in the
operations.
Financial
Services Sector
Discontinued
Operations
PRIMUS Financial Services Inc.
("PRIMUS"). Prior to the end of the first quarter of 2008,
Ford Credit committed to a plan to sell 96% of its ownership interest in PRIMUS,
its operation in Japan that offers automotive retail and wholesale financing of
Ford and Mazda vehicles. The sale was completed in April
2008. Under the terms of the sale, Ford Credit will continue to
provide certain information technology and risk management services for a
four-year period. The resulting cash flows related to these services
are insignificant.
Item
1. Financial Statements (Continued)
NOTE
8. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND
ACQUISITIONS (Continued)
The
assets and liabilities of PRIMUS classified as discontinued operations are
summarized as follows (in millions):
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Finance
receivables, net
|
|
$ |
1,827 |
|
|
$ |
1,535 |
|
Retained
interest in securitized assets
|
|
|
66 |
|
|
|
60 |
|
Derivative
financial instruments
|
|
|
1 |
|
|
|
3 |
|
Other
assets
|
|
|
21 |
|
|
|
49 |
|
Total
assets of discontinued operations
|
|
$ |
1,915 |
|
|
$ |
1,647 |
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Total
accounts payable
|
|
$ |
50 |
|
|
$ |
37 |
|
Debt
|
|
|
252 |
|
|
|
540 |
|
Derivative
financial instruments
|
|
|
6 |
|
|
|
5 |
|
Other
liabilities
|
|
|
13 |
|
|
|
12 |
|
Total
liabilities of discontinued operations
|
|
$ |
321 |
|
|
$ |
594 |
|
Primus Finance and Leasing, Inc.
("Primus"). Prior to the end of the first quarter of 2008, Ford Credit
committed to a plan to sell its 60% ownership interest in Primus, its operation
in the Philippines that offers automotive retail and wholesale financing of Ford
and Mazda vehicles. The sale was completed in April
2008.
The
assets and liabilities of Primus classified as discontinued operations are
summarized as follows (in millions):
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Finance
receivables, net
|
|
$ |
32 |
|
|
$ |
36 |
|
Notes
and accounts receivable from affiliated companies
|
|
|
— |
|
|
|
1 |
|
Other
assets
|
|
|
1 |
|
|
|
— |
|
Total
assets of discontinued operations
|
|
$ |
33 |
|
|
$ |
37 |
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Debt
|
|
$ |
23 |
|
|
$ |
29 |
|
Other
liabilities
|
|
|
— |
|
|
|
1 |
|
Total
liabilities of discontinued operations
|
|
$ |
23 |
|
|
$ |
30 |
|
The
results of these discontinued operations for the Financial Services sector are
as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
Sales
and revenues
|
|
$ |
16 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
|
|
Operating
income/(loss) from discontinued operations
|
|
$ |
(3 |
) |
|
$ |
1 |
|
Gain/(Loss)
on discontinued operations
|
|
|
1 |
|
|
|
— |
|
(Provision
for)/Benefit from income taxes
|
|
|
1 |
|
|
|
— |
|
Income/(Loss)
from discontinued operations
|
|
$ |
(1 |
) |
|
$ |
1 |
|
Item
1. Financial Statements (Continued)
NOTE
9. AMOUNTS 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 common stock equivalents, such as stock options and
convertible securities, considered to be potentially dilutive. Basic
and diluted income/(loss) per share were calculated using the following (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted Income/(Loss)
|
|
|
|
|
|
|
Basic
income/(loss) from continuing operations
|
|
$ |
101 |
|
|
$ |
(285 |
) |
Effect
of dilutive senior convertible notes
|
|
|
— |
(a) |
|
|
— |
(a) |
Effect
of dilutive 6.50% Cumulative Convertible Trust Preferred Securities
("Trust Preferred Securities")
|
|
|
— |
(b) |
|
|
— |
(b) |
Diluted
income/(loss) from continuing operations
|
|
$ |
101 |
|
|
$ |
(285 |
) |
|
|
|
|
|
|
|
|
|
Basic
and Diluted Shares
|
|
|
|
|
|
|
|
|
Average
shares outstanding
|
|
|
2,189 |
|
|
|
1,894 |
|
Restricted
and uncommitted-ESOP shares
|
|
|
(1 |
) |
|
|
(2 |
) |
Basic
shares
|
|
|
2,188 |
|
|
|
1,892 |
|
|
|
|
|
|
|
|
|
|
Net
dilutive options and restricted and uncommitted-ESOP
shares
|
|
|
20 |
|
|
|
— |
(c) |
Dilutive
senior convertible notes
|
|
|
— |
(a) |
|
|
— |
(a) |
Dilutive
convertible Trust Preferred Securities
|
|
|
— |
(b) |
|
|
— |
(b) |
Diluted
shares
|
|
|
2,208 |
|
|
|
1,892 |
|
__________
Not
included in calculation of diluted earnings per share due to their antidilutive
effect:
|
(a)
|
538
million shares and the related income effect for senior convertible
notes.
|
|
(b)
|
282
million shares and the related income effect for Trust Preferred
Securities through August 2, 2007. As of August 3, 2007,
following the conversion of about 43 million of our Trust Preferred
Securities, 162 million shares and the related income effect are not
included in the calculation. For further discussion of the
conversion, see Note 16 of the Notes to the Financial Statements in our
2007 Form 10-K Report.
|
|
(c)
|
9
million contingently-issuable shares for the first quarter of
2007.
|
NOTE
10. FAIR VALUE MEASUREMENTS
We
adopted SFAS No. 157, Fair
Value Measurements ("SFAS No.157"), on January 1, 2008. SFAS
No. 157 defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. SFAS No. 157
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value should be based on assumptions
that market participants would use, including a consideration of non-performance
risk.
In
determining fair value, we use various valuation techniques and, as required by
SFAS No. 157, prioritize the use of observable inputs. The
availability of observable inputs varies from instrument to instrument and
depends on a variety of factors including the type of instrument, whether the
instrument is actively traded, and other characteristics particular to the
transaction. For many financial instruments, pricing inputs are
readily observable in the market, the valuation methodology used is widely
accepted by market participants, and the valuation does not require significant
management discretion. For other financial instruments, pricing
inputs are less observable in the marketplace and may require management
judgment.
We assess
the inputs used to measure fair value using a three-tier
hierarchy. The hierarchy indicates the extent to which inputs used in
measuring fair value are observable in the market. Level 1 inputs
include quoted prices for identical instruments and are the most
observable. Level 2 inputs include quoted prices for similar assets
and observable inputs such as interest rates, currency exchange rates, commodity
rates, and yield curves. Level 3 inputs are not observable in the
market and include management's own judgments about the assumptions market
participants would use in pricing the asset or liability. The use of
observable and unobservable inputs is reflected in our hierarchy assessment
disclosed in the tables below.
Our fair
value processes include controls that are designed to ensure that fair values
are appropriate. Such controls include model validation, review of
key model inputs, analysis of period-over-period fluctuations, and reviews by
senior management.
Item
1. Financial Statements (Continued)
NOTE
10. FAIR VALUE MEASUREMENTS (Continued)
On
January 1, 2008, we adopted SFAS No. 159. SFAS No. 159 permits
entities to measure certain financial assets and liabilities at fair
value. The fair value option may be elected on an
instrument-by-instrument basis and is irrevocable. Unrealized gains
and losses on items for which the fair value option has been elected are
recognized in earnings at each subsequent reporting date.
We
elected to apply the fair value option to our marketable securities as described
below. This election resulted in a cumulative after-tax increase of
approximately $12 million to the opening balance of Retained
earnings. Prior to the election of SFAS No, 159, the
unrealized gains and losses for available-for-sale securities were recorded in
Accumulated other
comprehensive income/(loss) and the unrealized gains and losses for
held-to-maturity securities were not recognized.
The
following section describes the valuation methodologies used to measure fair
value, key inputs, and significant assumptions:
Cash Equivalents – Financial
Instruments. We classify highly liquid investments, with a
maturity of 90 days or less at the date of purchase, including U.S. Treasury
bills, federal agency securities, and A-1 / P-1 (or higher) rated commercial
paper as cash equivalents. Prior to the adoption of SFAS No. 157, we
carried cash equivalents at amortized cost, which approximates fair
value. Effective January 1, 2008, we measure financial instruments
classified as cash equivalents at fair value. We use quoted prices
where available to determine fair value for U.S. Treasury notes, and
industry-standard valuation models using market-based inputs when quoted prices
are unavailable, such as for government agency securities and corporate
obligations.
Marketable
Securities. Our marketable securities portfolios include
investments in U.S. government and non-U.S. government securities, corporate
obligations and equities, and asset-backed securities with a maturity of greater
than 90 days at the date of purchase. Concurrent with our adoption of
SFAS No. 157, we elected to apply the fair value option under SFAS No. 159 to
our marketable securities. Prior to the adoption, we classified our
marketable securities as trading, available-for-sale, or
held-to-maturity.
Where
available, including for U.S. Treasury notes and equities, we use quoted market
prices to measure fair value. If quoted market prices are not
available, such as for government agency securities, asset-backed securities and
corporate obligations, prices for similar assets and matrix pricing models are
used. In certain cases, where there is limited transparency to
valuation inputs, we may contact securities dealers and obtain dealer
quotes.
Derivative Financial
Instruments. As part of our risk management strategy, we enter
into derivative transactions to mitigate exposures. Our derivative
instruments include interest rate swaps, currency swaps, currency and commodity
forwards, currency and commodity options, and currency futures. The
vast majority of our derivatives are not exchange-traded and are
over-the-counter customized derivative transactions. Substantially
all of our derivative exposures are with counterparties that have long-term
credit ratings of single-A or better.
We
measure derivative fair values assuming that the unit of account is an
individual derivative transaction and that derivatives are sold or transferred
on a stand-alone basis. Therefore, derivative assets and derivative
liabilities are presented on a gross basis, without consideration of master
netting agreements. We estimate the fair value of our derivatives
using industry standard valuation models, including Black-Scholes and Curran's
Approximation. These models project future cash flows and discount
the future amounts to a present value using market-based expectations for
interest rates, foreign exchange rates and commodity prices, and the contractual
terms of the derivative instruments.
In
certain cases, market data is not available and we use management judgment to
develop assumptions which are used to determine fair value. This
includes situations where there is illiquidity for a particular currency or
commodity, or for longer-dated instruments. For longer-dated
instruments for which observable interest rates or foreign exchange rates are
not available for all periods through maturity, we hold the last available data
point constant through maturity. For certain commodity contracts,
observable market data may be limited and, in those cases, we generally survey
brokers and use the average of the surveyed prices in estimating fair
value.
Item
1. Financial Statements (Continued)
NOTE
10. FAIR VALUE MEASUREMENTS (Continued)
Retained Interests in Securitized
Assets. We retain certain interests in receivables sold in
off-balance sheet securitization transactions including residual interest in
securitizations and restricted cash. We estimate the fair value of
retained interests using internal valuation models, market inputs, and our own
assumptions. The three key inputs that affect the valuation of the
residual interest cash flows include credit losses, prepayment speed, and the
discount rate. The fair value of residual interest is estimated based
on the present value of monthly collections on the sold finance receivables in
excess of amounts needed for payment of the debt and other obligations issued or
arising in the securitization transactions. The fair value of the
residual interest in securitizations and the cash reserve account is determined
using a discounted cash flow analysis.
The
following table summarizes the fair values of financial instruments measured at
fair value on a recurring basis at March 31, 2008 (in millions):
|
|
Items Measured at Fair Value on a Recurring
Basis
|
|
|
|
Quoted Price in Active Markets for Identical
Assets (Level 1)
|
|
|
Significant Other Observable Inputs (Level
2)
|
|
|
Significant Unobservable Inputs (Level
3)
|
|
|
Balance as of March 31,
2008
|
|
Automotive
Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
equivalents – financial instruments (a) (b)
|
|
$ |
798 |
|
|
$ |
9,397 |
|
|
$ |
— |
|
|
$ |
10,195 |
|
Marketable
securities (a)
|
|
|
2,963 |
|
|
|
10,046 |
|
|
|
339 |
|
|
|
13,348 |
|
Derivative
financial instruments
|
|
|
— |
|
|
|
1,796 |
|
|
|
391 |
|
|
|
2,187 |
|
Total
assets at fair value
|
|
$ |
3,761 |
|
|
$ |
21,239 |
|
|
$ |
730 |
|
|
$ |
25,730 |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments
|
|
$ |
2 |
|
|
$ |
407 |
|
|
$ |
29 |
|
|
$ |
438 |
|
Total
liabilities at fair value
|
|
$ |
2 |
|
|
$ |
407 |
|
|
$ |
29 |
|
|
$ |
438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
equivalents – financial instruments (a) (b)
|
|
$ |
— |
|
|
$ |
4,184 |
|
|
$ |
— |
|
|
$ |
4,184 |
|
Marketable
securities (a)
|
|
|
784 |
|
|
|
1,207 |
|
|
|
— |
|
|
|
1,991 |
|
Derivative
financial instruments
|
|
|
— |
|
|
|
2,887 |
|
|
|
825 |
|
|
|
3,712 |
|
Retained
interest in securitized assets
|
|
|
— |
|
|
|
— |
|
|
|
474 |
|
|
|
474 |
|
Total
assets at fair value
|
|
$ |
784 |
|
|
$ |
8,278 |
|
|
$ |
1,299 |
|
|
$ |
10,361 |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments
|
|
$ |
— |
|
|
$ |
1,105 |
|
|
$ |
754 |
|
|
$ |
1,859 |
|
Total
liabilities at fair value
|
|
$ |
— |
|
|
$ |
1,105 |
|
|
$ |
754 |
|
|
$ |
1,859 |
|
__________
|
(a)
|
Approximately
90% of Cash equivalents – financial instruments and Marketable securities
presented are U.S. Treasuries, federal agency securities, high-quality
corporate bonds, and A-1/P-1 unsecured commercial
paper. Instruments presented in Level 1 include U.S. Treasuries
and equities. Instruments presented in Level 2 include federal
agency securities, corporate obligations and asset-backed
securities. Instruments presented in Level 3 include certain
corporate obligations and asset-backed
securities.
|
|
(b)
|
Cash
equivalents – financial instruments excludes time deposits, certificates
of deposit, money market accounts, and other cash which are reported
at par value.
|
Item
1. Financial Statements (Continued)
NOTE
10. FAIR VALUE MEASUREMENTS (Continued)
The
following table summarizes the changes in Level 3 financial instruments measured
at fair value on a recurring basis for the period ended March 31, 2008 (in
millions):
|
|
Fair Value Measurements Using Significant
Unobservable Inputs
|
|
|
|
|
|
|
Fair Value at January 1,
2008
|
|
|
Total Realized/ Unrealized Gains/
(Losses)
|
|
|
Net Purchases/ (Settlements)
(a)
|
|
|
Net Transfers Into/ (Out of) Level
3
|
|
|
Fair Value at March 31,
2008
|
|
|
Change In Unrealized Gains/ (Losses) on
Instruments Still Held (b)
|
|
Automotive
Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities (c)
|
|
$ |
201 |
|
|
$ |
— |
|
|
$ |
212 |
|
|
$ |
(74 |
) |
|
$ |
339 |
|
|
$ |
(8 |
) |
Derivative
financial instruments, net (d)
|
|
|
257 |
|
|
|
163 |
|
|
|
(27 |
) |
|
|
(31 |
) |
|
|
362 |
|
|
|
146 |
|
Total
Level 3 fair value
|
|
$ |
458 |
|
|
$ |
163 |
|
|
$ |
185 |
|
|
$ |
(105 |
) |
|
$ |
701 |
|
|
$ |
138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments, net (d)
|
|
$ |
(2 |
) |
|
$ |
72 |
|
|
$ |
32 |
|
|
$ |
(31 |
) |
|
$ |
71 |
|
|
$ |
72 |
|
Retained
interest in securitized assets (e)
|
|
|
593 |
|
|
|
(1 |
) |
|
|
(118 |
) |
|
|
— |
|
|
|
474 |
|
|
|
(16 |
) |
Total
Level 3 fair value
|
|
$ |
591 |
|
|
$ |
71 |
|
|
$ |
(86 |
) |
|
$ |
(31 |
) |
|
$ |
545 |
|
|
$ |
56 |
|
__________
(a)
|
Includes
option premiums (paid)/received on options traded during the
quarter.
|
(b)
|
For
those assets and liabilities still held at March 31,
2008.
|
(c)
|
Changes
in fair value of marketable securities for the period presented are
recorded in Automotive
interest income and other non-operating
income/(expenses), net on the income
statement.
|
(d)
|
Reflects
fair value of derivative assets, net of liabilities. Changes in
fair value of derivative financial instruments for the period presented
are recorded to Automotive cost of
sales, Automotive
interest income and other non-operating income/(expense), net, Interest expense, and
Financial Services revenues on the
income statement. The changes were $163 million, $0, $(1)
million, and $73 million,
respectively.
|
(e)
|
Changes
in fair value of the retained interests in securitized assets for the
period presented are recorded in Financial Services
revenues on the income statement and Accumulated other
comprehensive income/(loss) on the balance sheet. The
changes were $15 million and $(16) million,
respectively.
|
Our
derivative fair value measurements consider assumptions about counterparty and
our own non-performance risk. Generally, we assume that a valuation
that uses LIBOR to convert future values to a present value is appropriate for
derivative assets and liabilities. We monitor counterparty and our
own non-performance risk and in the event that we determine that a party is
unlikely to perform under the terms of the contract, we would adjust the
derivative fair value to reflect the non-performance risk. Our
derivative fair values as presented were valued using unadjusted LIBOR; however,
had we adjusted our derivative asset and derivative liability to reflect credit
default swap spreads for our counterparties (based on the average of A and AA
spreads for financial institutions) and for us at March 31, 2008, our gross
derivative asset and gross derivative liability for the Automotive sector would
have totaled $2,175 million, and $423 million, respectively, resulting in
increased pre-tax earnings of $3 million. For the Financial Services
sector, our gross derivative asset and gross derivative liability would have
totaled $3,668 million and $1,761 million, respectively, resulting in increased
pre-tax earnings of $54 million.
The
following table summarizes the fair values of items measured at fair value on a
nonrecurring basis at March 31, 2008 (in millions):
|
|
Items
Measured at Fair Value on a Nonrecurring Basis
|
|
|
|
Quoted
Price in Active Markets for Identical Assets (Level
1)
|
|
|
Significant
Other Observable Inputs (Level 2)
|
|
|
Significant
Unobservable Inputs (Level 3)
|
|
|
Balance
as of March 31, 2008
|
|
|
|
|
Equity
investment (a)
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
131 |
|
|
$ |
131 |
|
|
$ |
(88 |
) |
Held-for-sale
operations (b)
|
|
|
— |
|
|
|
— |
|
|
|
1,700 |
|
|
|
1,700 |
|
|
|
(421 |
) |
Total
Level 3 fair value
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,831 |
|
|
$ |
1,831 |
|
|
$ |
(509 |
) |
__________
|
(a)
|
We
impaired our investment in our consolidated dealerships. The
fair value measurements used to determine the impairment were based on
liquidation prices of comparable assets. See Note 4 for
additional discussion of this
impairment.
|
|
(b)
|
In
accordance with the provisions of SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets ("SFAS No. 144"), we recorded a
pre-tax impairment of $421 million related to the Jaguar Land Rover
held-for-sale operations. The fair value measurements used to
determine the impairment were based on expected proceeds negotiated with
the buyer. See Note 8 for additional discussion of this
impairment.
|
Item
1. Financial Statements (Continued)
NOTE
11. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Our
operations are exposed to global market risks, including the effect of changes
in foreign currency exchange rates, certain commodity prices and interest
rates. We enter into various derivatives, including interest rate,
foreign currency and commodity forwards, options and swaps, to manage the
financial and operational exposure arising from these risks.
We have
elected to apply hedge accounting to certain derivative
instruments. For the Financial Services sector, beginning in the
first quarter of 2008, we have designated certain receive-fixed, pay-float
interest rate swaps as fair value hedges of fixed-rate debt. The risk
being hedged is the risk of changes in fair value of the hedged item
attributable to changes in the benchmark interest rate. We use
regression analysis to assess fair value hedge effectiveness under the
"long-haul" method. Refer to Note 23 of the Notes to the Financial
Statements in our 2007 Form 10-K Report for a more detailed description of our
derivative instruments and hedge accounting designations.
Income
Statement Effect of Derivative Instruments
The
following table summarizes the estimated pre-tax gains/(losses) for each type of
hedge designation for our Automotive and Financial Services sectors (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement
Classification
|
Automotive
Sector
|
|
|
|
|
|
|
|
Cash
flow hedges:
|
|
|
|
|
|
|
|
Impact
of discontinued hedges
|
|
$ |
1 |
|
|
$ |
9 |
|
Automotive
cost of sales
|
Net
investment hedges:
|
|
|
|
|
|
|
|
|
|
Ineffectiveness
|
|
|
— |
|
|
|
(1 |
) |
Automotive
cost of sales
|
Derivatives
not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Commodities
|
|
|
348 |
|
|
|
32 |
|
Automotive
cost of sales
|
Foreign
currency derivatives on operating exposures *
|
|
|
508 |
|
|
|
8 |
|
Automotive
cost of sales
|
Foreign
currency derivatives on investment portfolios
|
|
|
(34 |
) |
|
|
— |
|
Automotive
interest income and other non-operating income/(expense),
net
|
Other
|
|
|
— |
|
|
|
(54 |
) |
Automotive
cost of sales/Automotive interest income and other non-operating
income/(expense), net
|
|
|
|
|
|
|
|
|
|
|
Financial
Services Sector
|
|
|
|
|
|
|
|
|
|
Fair
value hedges:
|
|
|
|
|
|
|
|
|
|
Ineffectiveness
|
|
$ |
(13 |
) |
|
$ |
— |
|
Financial
Services revenues
|
Net
interest settlements and accruals excluded from the assessment of hedge
effectiveness
|
|
|
21 |
|
|
|
— |
|
Interest
expense
|
Derivatives
not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps
|
|
|
(75 |
) |
|
|
31 |
|
Financial
Services revenues
|
Foreign
currency swaps and forward contracts *
|
|
|
397 |
|
|
|
(7 |
) |
Financial
Services revenues
|
Other
|
|
|
1 |
|
|
|
— |
|
Financial
Services revenues
|
__________
*
|
These
gains/(losses) were related to foreign currency derivatives and were
primarily offset by net revaluation impacts on foreign denominated
intercompany debt, which were recorded to the same income statement line
item as the hedge gains/(losses).
|
Balance
Sheet Effect of Derivative Instruments
The
following table summarizes the estimated fair value of our derivative
instruments (in millions)*:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive
Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow hedges
|
|
$ |
656 |
|
|
$ |
140 |
|
|
$ |
617 |
|
|
$ |
195 |
|
Derivatives
not designated as hedging instruments
|
|
|
1,531 |
|
|
|
298 |
|
|
|
757 |
|
|
|
188 |
|
Total
derivative instruments
|
|
$ |
2,187 |
|
|
$ |
438 |
|
|
$ |
1,374 |
|
|
$ |
383 |
|
Financial
Services Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value hedges
|
|
$ |
320 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Derivatives
not designated as hedging instruments
|
|
|
3,392 |
|
|
|
1,859 |
|
|
|
2,808 |
|
|
|
1,344 |
|
Total
derivative instruments
|
|
$ |
3,712 |
|
|
$ |
1,859 |
|
|
$ |
2,808 |
|
|
$ |
1,344 |
|
__________
* Excludes
divested and held-for-sale operations.
Item
1. Financial Statements (Continued)
NOTE
12. RETIREMENT BENEFITS
Pension
and OPEB expense is summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
94 |
|
|
$ |
121 |
|
|
$ |
123 |
|
|
$ |
160 |
|
|
$ |
78 |
|
|
$ |
94 |
|
Interest
cost
|
|
|
672 |
|
|
|
647 |
|
|
|
443 |
|
|
|
395 |
|
|
|
433 |
|
|
|
446 |
|
Expected
return on assets
|
|
|
(866 |
) |
|
|
(870 |
) |
|
|
(518 |
) |
|
|
(463 |
) |
|
|
(79 |
) |
|
|
(67 |
) |
Amortization
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
service costs/(credits)
|
|
|
94 |
|
|
|
68 |
|
|
|
27 |
|
|
|
26 |
|
|
|
(216 |
) |
|
|
(268 |
) |
(Gains)/Losses
and other
|
|
|
4 |
|
|
|
13 |
|
|
|
51 |
|
|
|
111 |
|
|
|
87 |
|
|
|
190 |
|
Separation
programs
|
|
|
173 |
|
|
|
832 |
|
|
|
24 |
|
|
|
77 |
|
|
|
7 |
|
|
|
22 |
|
(Gain)/Loss
from curtailment
|
|
|
— |
|
|
|
176 |
|
|
|
— |
|
|
|
(14 |
) |
|
|
(11 |
) |
|
|
(960 |
) |
Costs
allocated to Visteon
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
1 |
|
Net
expense/(income)
|
|
$ |
171 |
|
|
$ |
987 |
|
|
$ |
150 |
|
|
$ |
292 |
|
|
$ |
301 |
|
|
$ |
(542 |
) |
__________
* Includes
held-for-sale operations.
Plan
Contributions and Drawdowns
Our
policy for funded plans is to contribute annually, at a minimum, amounts
required by applicable laws, regulations, and union agreements. From
time to time, we make contributions beyond those legally required.
Pension. In the
first quarter of 2008, we contributed about $800 million to our worldwide
pension plans (including Jaguar Land Rover); this amount includes benefit
payments paid directly by the Company for unfunded plans. We expect
to contribute from Automotive cash and cash equivalents an additional $1.5
billion in 2008, for a total of $2.3 billion this year (including Jaguar Land
Rover). Based on current assumptions and regulations, we do not
expect to have a legal requirement to fund our major U.S. pension plans in
2008.
Life
Insurance. During 2008 we expect to withdraw about $90 million
from our Voluntary Employee Beneficiary Association trust ("VEBA") as
reimbursement for U.S. hourly retiree life insurance benefit
payments.
Item
1. Financial Statements (Continued)
NOTE
13. SEGMENT INFORMATION
Our
operating activity consists of two operating sectors, Automotive and Financial
Services. Segment selection is based on the organizational structure
we use to evaluate performance and make decisions on resource allocation, as
well as availability and materiality of separate financial results consistent
with that structure.
Automotive
Sector
In the
first quarter of 2008, we changed the reporting structure of our Automotive
sector to separately disclose the following seven
segments: 1) Ford North America, 2) Ford South America,
3) Ford Europe, 4) Volvo, 5) Ford Asia Pacific Africa,
6) Mazda and Associated Operations, and 7) Jaguar Land Rover and Aston
Martin. Automotive sector prior period information has been
reclassified into these seven segments, and is provided for these segments in
the table below. Included in each segment described below are the
associated costs to design, develop, manufacture, and service vehicles and
parts.
Ford
North America segment includes primarily the sale of Ford, Lincoln and Mercury
brand vehicles and related service parts in North America (the United States,
Canada and Mexico). In the first quarter of 2008, we changed the
reporting structure of this segment to include the sale of Mazda6 vehicles by
our consolidated subsidiary, AutoAlliance International, Inc. ("AAI")
(previously included in the results for Ford Asia Pacific Africa). We
have reclassified prior period information to reflect this structural change to
our segment reporting.
Ford
South America segment includes primarily the sale of Ford-brand vehicles and
related service parts in South America.
Ford
Europe segment includes primarily the sale of Ford-brand vehicles and related
service parts in Europe (including all parts of Turkey and Russia).
The Volvo
segment includes primarily the sale of Volvo-brand vehicles and related service
parts throughout the world (including in North America, South America, Europe,
Asia Pacific, and Africa).
Ford Asia
Pacific Africa segment includes primarily the sale of Ford-brand vehicles and
related service parts in the Asia Pacific region and Africa.
The Mazda
and Associated Operations segment includes our share of the results of Mazda, of
which we owned 33.4% at December 31, 2007, as well as certain of our
Mazda-related investments.
The
Jaguar Land Rover and Aston Martin segment includes primarily the sale of Jaguar
Land Rover brand vehicles and related service parts throughout the world
(including in North America, South America, Europe, Asia Pacific, and
Africa). In May 2007, we completed the sale of our 100% interest in
Aston Martin and, therefore, the sale of Aston Martin-brand vehicles and related
service parts throughout the world are included within this segment up until the
date of sale.
The Other
Automotive component of the Automotive sector consists primarily of
centrally-managed net interest expense and related fair market value
adjustments.
Transactions
among Automotive segments generally are presented on a "where-sold,"
absolute-cost basis, which reflects the profit/(loss) on the sale within the
segment making the ultimate sale to an external entity. This
presentation generally eliminates the effect of legal entity transfer prices
within the Automotive sector for vehicles, components, and product
engineering. Beginning with the first quarter of 2008, income/(loss)
before income taxes on vehicle component sales by Volvo or Jaguar Land Rover to
each other or to any other segment and by the Ford-brand segments to either
Volvo or Jaguar Land Rover will be reflected in the results for the segment
making the vehicle component sale.
Financial
Services Sector
The
Financial Services sector includes the following segments: 1) Ford Credit and 2)
Other Financial Services. Ford Credit provides vehicle-related
financing, leasing, and insurance. Other Financial Services includes
a variety of business including holding companies, real-estate, and the
financing and leasing of Volvo vehicles.
Item
1. Financial Statements (Continued)
NOTE
13. SEGMENT INFORMATION (Continued)
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mazda and Associated
Operations
|
|
|
Jaguar Land Rover and Aston
Martin
|
|
|
|
|
|
|
|
FIRST
QUARTER 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales/Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
customer
|
|
$ |
17,110 |
|
|
$ |
1,842 |
|
|
$ |
10,155 |
|
|
$ |
4,197 |
|
|
$ |
1,668 |
|
|
$ |
— |
|
|
$ |
4,145 |
|
|
$ |
— |
|
|
$ |
39,117 |
|
Intersegment
|
|
|
218 |
|
|
|
— |
|
|
|
226 |
|
|
|
27 |
|
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|
|
512 |
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss)
before income taxes
|
|
|
(445 |
) |
|
|
257 |
|
|
|
728 |
|
|
|
(151 |
) |
|
|
(4 |
) |
|
|
49 |
|
|
|
— |
|
|
|
(181 |
) |
|
|
253 |
|
Total
assets at March 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales/Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
customer
|
|
$ |
18,559 |
|
|
$ |
1,283 |
|
|
$ |
8,632 |
|
|
$ |
4,572 |
|
|
$ |
1,769 |
|
|
$ |
— |
|
|
$ |
3,815 |
|
|
$ |
— |
|
|
$ |
38,630 |
|
Intersegment
|
|
|
252 |
|
|
|
— |
|
|
|
187 |
|
|
|
27 |
|
|
|
— |
|
|
|
— |
|
|
|
36 |
|
|
|
— |
|
|
|
502 |
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss)
before income taxes
|
|
|
(702 |
) |
|
|
113 |
|
|
|
208 |
|
|
|
90 |
|
|
|
(28 |
) |
|
|
21 |
|
|
|
301 |
|
|
|
(342 |
) |
|
|
(339 |
) |
Total
assets at March 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,520 |
|
|
|
Financial Services Sector
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales/Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
customer
|
|
$ |
4,298 |
|
|
$ |
98 |
|
|
$ |
— |
|
|
$ |
4,396 |
|
|
$ |
— |
|
|
$ |
43,513 |
|
Intersegment
|
|
|
238 |
|
|
|
6 |
|
|
|
(1 |
) |
|
|
243 |
|
|
|
(755 |
) |
|
|
— |
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss)
before income taxes
|
|
|
36 |
|
|
|
31 |
|
|
|
— |
|
|
|
67 |
|
|
|
— |
|
|
|
320 |
|
Total
assets at March 31
|
|
|
170,156 |
|
|
|
10,581 |
|
|
|
(10,478 |
) |
|
|
170,259 |
|
|
|
(2,228 |
) |
|
|
288,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales/Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
customer
|
|
$ |
4,305 |
|
|
$ |
70 |
|
|
$ |
— |
|
|
$ |
4,375 |
|
|
$ |
— |
|
|
$ |
43,005 |
|
Intersegment
|
|
|
218 |
|
|
|
6 |
|
|
|
(2 |
) |
|
|
222 |
|
|
|
(724 |
) |
|
|
— |
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss)
before income taxes
|
|
|
293 |
|
|
|
— |
|
|
|
— |
|
|
|
293 |
|
|
|
— |
|
|
|
(46 |
) |
Total
assets at March 31
|
|
|
161,644 |
|
|
|
10,719 |
|
|
|
(10,522 |
) |
|
|
161,841 |
|
|
|
(870 |
) |
|
|
281,491 |
|
__________
(a)
|
Financial
Services sector’s interest income is recorded as Financial Services
revenues.
|
(b)
|
Includes
intersector transactions occurring in the ordinary course of
business.
|
Item
1. Financial Statements (Continued)
NOTE
14. GUARANTEES
The fair
values of guarantees and indemnifications during 2008 and 2007 are recorded in
the financial statements and are de minimis.
At March
31, 2008, the following guarantees were issued and outstanding:
Guarantees related to affiliates and
third parties. We guarantee debt and lease obligations of
certain joint ventures, as well as certain financial obligations of outside
third parties to support our business and economic growth. Expiration
dates vary, and guarantees will terminate on payment and/or cancellation of the
obligation. A payment by us would be triggered by failure of the
guaranteed party to fulfill its obligation covered by the
guarantee. In some circumstances, we are entitled to recover from the
third party amounts paid by us under the guarantee. However, our
ability to enforce these rights is sometimes stayed until the guaranteed party
is paid in full, and may be limited in the event of insolvency of the third
party or other circumstances. The maximum potential payments under
these guarantees total $39 million.
On
December 21, 2005, we completed the sale of The Hertz Corporation
("Hertz"). As part of this transaction, we provided
cash-collateralized letters of credit in an aggregate amount of $200 million to
support the asset-backed portion of the buyer's financing for the transaction
and deferred a portion of the gain recognized on the sale in an amount equal to
the fair value of the guarantee. As of March 31, 2008, the deferred
gain related to the letters of credit was $17 million, which represents the
estimated fair value of our guarantee. For further discussion of
these letters of credit, see Note 28 of the Notes to the Financial Statements in
our 2007 Form 10-K Report.
In 1996,
we issued $500 million of 7.25% Notes due October 1, 2008. In 1999,
we entered into a de-recognition transaction to defease our obligation as
primary obligor with respect to the principal of these notes. As part
of this transaction, we placed certain financial assets into an escrow trust for
the benefit of the noteholders, and the trust became the primary obligor with
respect to the principal (we became secondarily liable for the entire principal
amount).
We also
have guarantees outstanding associated with a subsidiary trust, Ford Motor
Company Capital Trust II. On August 3, 2007, we completed a
conversion offer related to our Trust Preferred Securities. For
further discussion of our Trust Preferred Securities, see Notes 16 and 21 of the
Notes to the Financial Statements in our 2007 Form 10-K Report.
Indemnifications. We
regularly evaluate the probability of having to incur costs associated with
indemnifications contained in contracts to which we are a party, and have
accrued for expected losses that are probable and for which a loss can be
estimated. During the first quarter of 2008, there were no
significant changes to our indemnifications.
Product
Performance
Warranty. Included
in the warranty cost accruals are costs for basic warranty coverages on vehicles
sold. Additional service actions, such as product recalls and other
customer service actions, are not included in the warranty reconciliation below,
but are also accrued for at the time of sale. Estimates for warranty
costs are made based primarily on historical warranty claim
experience. The following is a tabular reconciliation of the product
warranty accruals (in millions)*:
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
4,862 |
|
|
$ |
5,235 |
|
Payments
made during the period
|
|
|
(822 |
) |
|
|
(880 |
) |
Changes
in accrual related to warranties issued during the period
|
|
|
686 |
|
|
|
767 |
|
Changes
in accrual related to pre-existing warranties
|
|
|
(84 |
) |
|
|
(65 |
) |
Foreign
currency translation and other
|
|
|
91 |
|
|
|
23 |
|
Ending
balance
|
|
$ |
4,733 |
|
|
$ |
5,080 |
|
__________
* Excludes
divested and held-for-sale operations.
Item
1. Financial Statements (Continued)
NOTE
15. COMPREHENSIVE INCOME/(LOSS)
Total
comprehensive income/(loss) is summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
Net
income/(loss)
|
|
$ |
100 |
|
|
$ |
(282 |
) |
Other
comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
|
921 |
|
|
|
28 |
|
Employee
benefit related
|
|
|
96 |
|
|
|
(922 |
) |
Gain/(loss)
on derivative instruments
|
|
|
225 |
|
|
|
(329 |
) |
Net
holding gain/(loss)
|
|
|
(27 |
) |
|
|
(37 |
) |
Total
other comprehensive income/(loss)
|
|
|
1,215 |
|
|
|
(1,260 |
) |
Total
comprehensive income/(loss)
|
|
$ |
1,315 |
|
|
$ |
(1,542 |
) |
Report
of Independent Registered Public Accounting Firm
To Board
of Directors and Stockholders
Ford
Motor Company:
We have
reviewed the accompanying consolidated balance sheet of Ford Motor Company and
its subsidiaries as of March 31, 2008 and the related consolidated statements of
income for each of the three-month periods ended March 31, 2008 and 2007 and the
condensed consolidated statement of cash flows for the three-month periods ended
March 31, 2008 and 2007. These interim financial statements are the
responsibility of the Company’s management.
The
accompanying sector balance sheets and the related sector statements of income
and of cash flows are presented for purposes of additional analysis and are not
a required part of the basic financial statements. Such information
has been subjected to the review procedures applied in the review of the basic
financial statements.
We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on
our review, we are not aware of any material modifications that should be made
to the accompanying consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of
America.
We have
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet as of
December 31, 2007, and the related consolidated statements of income, of cash
flows and of stockholders’ equity for the year then ended (not presented
herein), and in our report dated February 27, 2008, we expressed an unqualified
opinion (with explanatory paragraphs relating to changes in the method of
accounting for conditional asset retirement obligations in 2005, the method of
accounting for defined benefit pension and other postretirement plans, the
timing of the annual goodwill and other intangible assets impairment testing,
and the amortization method for special tools in 2006 and the manner in which it
accounts for uncertain tax positions in 2007) on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 31, 2007, which reflects
the reclassification of the assets and liabilities of various operations as
discontinued/held for sale as described in Note 8 to the accompanying
consolidated financial statements, is fairly stated in all material respects in
relation to the consolidated balance sheet from which it has been
derived.
/s/PricewaterhouseCoopers
LLP
PricewaterhouseCoopers
LLP
Detroit,
Michigan
May 7,
2008
ITEM
2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
FIRST
QUARTER RESULTS OF OPERATIONS
Our
worldwide net income was $100 million or $0.05 per share of Common and Class B
Stock in the first quarter of 2008, improved from a loss of $282 million or
$0.15 per share in the first quarter of 2007.
Results
by business sector for the first quarter of 2008 and 2007 are shown below (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss)
before income taxes
|
|
|
|
|
|
|
|
|
|
Automotive
sector
|
|
$ |
253 |
|
|
$ |
(339 |
) |
|
$ |
592 |
|
Financial
Services sector
|
|
|
67 |
|
|
|
293 |
|
|
|
(226 |
) |
Total
Company
|
|
|
320 |
|
|
|
(46 |
) |
|
|
366 |
|
Provision
for/(Benefit from) income taxes
|
|
|
97 |
|
|
|
181 |
|
|
|
(84 |
) |
Minority
interests in net income/(loss) of subsidiaries *
|
|
|
122 |
|
|
|
58 |
|
|
|
64 |
|
Income/(Loss)
from continuing operations
|
|
|
101 |
|
|
|
(285 |
) |
|
|
386 |
|
Income/(Loss)
from discontinued operations
|
|
|
(1 |
) |
|
|
3 |
|
|
|
(4 |
) |
Net
income/(loss)
|
|
$ |
100 |
|
|
$ |
(282 |
) |
|
$ |
382 |
|
*
|
Primarily
related to Ford Europe's consolidated 41%-owned affiliate, Ford
Otosan. The pre-tax results for Ford Otosan were $214 million
and $97 million in the first quarter of 2008 and 2007,
respectively.
|
Included
in Income/(Loss) before income
taxes are items we do not consider indicative of our ongoing operating
activities (“special items”). The following table details the first
quarter 2008 and 2007 special items by segment or business unit (in
millions):
|
|
First Quarter –
Income/(Loss)
|
|
|
|
|
|
|
|
|
Ford
North America
|
|
|
|
|
|
|
Retiree
health care curtailment gain
|
|
$ |
11 |
|
|
$ |
960 |
|
Pension
curtailment charges
|
|
|
— |
|
|
|
(175 |
) |
Gain/(Loss)
on sale of ACH plants/assets
|
|
|
(2 |
) |
|
|
— |
|
Ballard
restructuring
|
|
|
(70 |
) |
|
|
— |
|
U.S.
dealer reductions (including investment write-offs)
|
|
|
(108 |
) |
|
|
— |
|
Job
Security Benefits and personnel-reduction programs
|
|
|
(231 |
) |
|
|
(874 |
) |
Total
Ford North America
|
|
|
(400 |
) |
|
|
(89 |
) |
Ford
Europe
|
|
|
|
|
|
|
|
|
Personnel-reduction
programs
|
|
|
(11 |
) |
|
|
(11 |
) |
Volvo
|
|
|
|
|
|
|
|
|
Personnel-reduction
programs
|
|
|
— |
|
|
|
(4 |
) |
Ford
Asia Pacific Africa
|
|
|
|
|
|
|
|
|
Personnel-reduction
programs
|
|
|
(5 |
) |
|
|
(2 |
) |
Jaguar
Land Rover and Aston Martin
|
|
|
|
|
|
|
|
|
Personnel-reduction
programs
|
|
|
— |
|
|
|
(7 |
) |
Other
Automotive
|
|
|
|
|
|
|
|
|
Gain
on exchange of debt securities for equity
|
|
|
16 |
|
|
|
— |
|
Total
Automotive sector
|
|
$ |
(400 |
) |
|
$ |
(113 |
) |
Included
in Provision for/(Benefit
from) income taxes are tax expenses of $8 million for the first quarter
of 2008 that we consider to be special items. This amount consists of
the tax effects of the pre-tax special items listed above and tax related to law
changes in Canada.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
The
discussion below of Automotive and Financial Services sector results of
operations is on a pre-tax basis. Our results for interim periods are
not necessarily indicative of results for a full year. We believe
that the trends, particularly for year-over-year changes in profitability, cost
changes and market share, generally are important and may be indicative of the
direction of our business unless our disclosures indicate
otherwise.
AUTOMOTIVE
SECTOR
Details
by Automotive segment or business unit of Income/(Loss) before income taxes
for the first quarter of 2008 and 2007 are shown below (in millions),
with our held-for-sale Jaguar Land Rover and Aston Martin segment separated out
from "ongoing" subtotals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
North America
|
|
$ |
(445 |
) |
|
$ |
(702 |
) |
|
$ |
257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
South America
|
|
|
257 |
|
|
|
113 |
|
|
|
144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
Europe
|
|
|
728 |
|
|
|
208 |
|
|
|
520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volvo
|
|
|
(151 |
) |
|
|
90 |
|
|
|
(241 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
Asia Pacific Africa
|
|
|
(4 |
) |
|
|
(28 |
) |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mazda
and Associated Operations
|
|
|
49 |
|
|
|
21 |
|
|
|
28 |
|
Total
ongoing Automotive operations
|
|
|
434 |
|
|
|
(298 |
) |
|
|
732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Automotive
|
|
|
(181 |
) |
|
|
(342 |
) |
|
|
161 |
|
Total
ongoing Automotive
|
|
|
253 |
|
|
|
(640 |
) |
|
|
893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jaguar
Land Rover and Aston Martin
|
|
|
— |
|
|
|
301 |
|
|
|
(301 |
) |
Total
Automotive sector
|
|
$ |
253 |
|
|
$ |
(339 |
) |
|
$ |
592 |
|
Details
by Automotive segment or business unit of sales and wholesale unit volumes for
the first quarter of 2008 and 2007 are shown below:
|
|
|
|
|
|
|
|
|
Wholesales (a) (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
North America (b)
|
|
$ |
17.1 |
|
|
$ |
18.5 |
|
|
$ |
(1.4 |
) |
|
|
(8 |
)% |
|
|
704 |
|
|
|
744 |
|
|
|
(40 |
) |
|
|
(5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
South America
|
|
|
1.8 |
|
|
|
1.3 |
|
|
|
0.5 |
|
|
|
44 |
|
|
|
92 |
|
|
|
84 |
|
|
|
8 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
Europe
|
|
|
10.2 |
|
|
|
8.6 |
|
|
|
1.6 |
|
|
|
18 |
|
|
|
500 |
|
|
|
500 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volvo
|
|
|
4.2 |
|
|
|
4.6 |
|
|
|
(0.4 |
) |
|
|
(8 |
) |
|
|
106 |
|
|
|
128 |
|
|
|
(22 |
) |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
Asia Pacific Africa (c)
|
|
|
1.7 |
|
|
|
1.8 |
|
|
|
(0.1 |
) |
|
|
(6 |
) |
|
|
129 |
|
|
|
126 |
|
|
|
3 |
|
|
|
2 |
|
Total
ongoing Automotive operations
|
|
|
35.0 |
|
|
|
34.8 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
1,531 |
|
|
|
1,582 |
|
|
|
(51 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jaguar
Land Rover and Aston Martin
|
|
|
4.1 |
|
|
|
3.8 |
|
|
|
0.3 |
|
|
|
9 |
|
|
|
74 |
|
|
|
68 |
|
|
|
6 |
|
|
|
9 |
|
Total
Automotive sector
|
|
$ |
39.1 |
|
|
$ |
38.6 |
|
|
$ |
0.5 |
|
|
|
1 |
|
|
|
1,605 |
|
|
|
1,650 |
|
|
|
(45 |
) |
|
|
(3 |
) |
__________
(a)
|
Wholesale
unit volumes generally are reported on a where-sold basis, and include all
Ford-badged units and units manufactured by Ford that are sold to other
manufacturers, as well as units distributed for other
manufacturers. Vehicles sold to daily rental car companies that
are subject to a guaranteed repurchase option, as well as other sales of
finished vehicles for which the recognition of revenue is deferred (e.g.,
consignments), are included in wholesale unit
volumes.
|
(b)
|
Includes
sales of Mazda6 by our consolidated subsidiary
AAI.
|
(c)
|
Included
in wholesale unit volumes of Ford Asia Pacific Africa are Ford-badged
vehicles sold in China and Malaysia by certain unconsolidated affiliates
totaling about 55,000 and 38,000 units in 2008 and 2007,
respectively. "Sales" above does not include revenue from these
units.
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Details
of Automotive sector market share for selected markets for the first quarter of
2008 and 2007, along with the level of dealer stocks as of March 31, 2008 and
2007, are shown below:
|
|
|
|
|
Dealer-Owned Stocks (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States (b)
|
|
|
15.0 |
% |
|
|
15.1 |
% |
|
(0.1
|
)pts. |
|
|
565 |
|
|
|
568 |
|
|
|
(3 |
) |
South
America (b) (c)
|
|
|
9.5 |
|
|
|
11.1 |
|
|
|
(1.6 |
) |
|
|
29 |
|
|
|
27 |
|
|
|
2 |
|
Europe
(b) (d)
|
|
|
8.9 |
|
|
|
9.1 |
|
|
|
(0.2 |
) |
|
|
329 |
|
|
|
337 |
|
|
|
(8 |
) |
Volvo
– United States/ Europe (d)
|
|
|
0.7/1.4 |
|
|
|
0.7/1.5 |
|
|
|
—/(0.1 |
) |
|
|
21/41 |
|
|
|
26/47 |
|
|
|
(5)/(6) |
|
Jaguar
Land Rover – United States/Europe (d)
|
|
|
0.3/0.8 |
|
|
|
0.3/0.9 |
|
|
|
—/(0.1 |
) |
|
|
14/21 |
|
|
|
14/21 |
|
|
|
—/— |
|
Asia
Pacific Africa (b) (e) (f)
|
|
|
2.0 |
|
|
|
2.1 |
|
|
|
(0.1 |
) |
|
|
57 |
|
|
|
50 |
|
|
|
7 |
|
_________
(a)
|
Dealer-owned
stocks represent our estimate of vehicles shipped to our customers
(dealers) and not yet sold by the dealers to their retail customers,
including some vehicles reflected in our
inventory.
|
(b)
|
Includes
only Ford and, in certain markets (primarily United States), Lincoln and
Mercury brands.
|
(c)
|
South
America market share is based, in part, on estimated vehicle registrations
for our six major markets (Argentina, Brazil, Chile, Colombia, Ecuador and
Venezuela).
|
(d)
|
Europe
2008 market share is based, in part, on estimated vehicle registrations
for the 19 European markets we track (described in "Item 1. Business" of
our 2007 Form 10-K Report). Europe 2007 market share is based
on actual vehicle registrations for these
markets.
|
(e)
|
Asia
Pacific Africa market share is based on estimated vehicle retail sales for
our 12 major markets (Australia, China, Japan, India, Indonesia, Malaysia,
New Zealand, Philippines, South Africa, Taiwan, Thailand and
Vietnam).
|
(f)
|
Dealer-owned
stocks for Asia Pacific Africa include primarily Ford-brand vehicles as
well as a small number of units distributed for other
manufacturers.
|
Overall
Automotive Sector
The
improvement in results primarily reflected favorable cost changes ($1.7
billion), lower charges for Job Security Benefits and personnel-reduction
programs in Ford North America (about $600 million), and the non-recurrence of
pension curtailment charges (about $200 million). These factors were
offset partially by lower retiree health care curtailment gains related to our
hourly separation programs (about $900 million), less favorable volume and mix
(about $700 million), and the impact of the held-for-sale status of Jaguar Land
Rover (about $300 million).
The
increase in revenues primarily reflected changes in currency exchange rates and
parts and services revenues, offset partially by lower wholesale
volumes.
The table
below details our first quarter 2008 cost changes at constant volume, mix and
exchange, excluding special items and held-for-sale operations at Jaguar Land
Rover and Aston Martin (in billions):
|
Explanation of Cost
Changes
|
|
2008 Better/(Worse) Than
2007
|
|
Net
product costs
|
Primarily
favorable material cost reductions and favorable mark-to-market
adjustments on commodity hedges in excess of commodity cost increases,
offset partially by added product content
|
|
$ |
0.6 |
|
Manufacturing
and engineering
|
Primarily
hourly and salaried personnel reductions in North America and efficiencies
in our plants and processes, offset partially by higher engineering
expenses
|
|
|
0.3 |
|
Spending-related
|
Primarily
lower levels of accelerated depreciation related to our efforts to reduce
production capacity
|
|
|
0.3 |
|
Warranty-related
|
Primarily
favorable adjustments to Ford Europe warranty reserves
|
|
|
0.2 |
|
Pension
and OPEB
|
Primarily
health care efficiencies
|
|
|
0.1 |
|
Overhead
|
Primarily
salaried personnel reductions
|
|
|
0.1 |
|
Advertising
& sales promotions
|
Primarily
lower costs in North America
|
|
|
0.1 |
|
|
Total
|
|
$ |
1.7 |
|
Ford North America
Segment. The improvement in earnings primarily reflected
favorable cost changes, lower charges for Job Security Benefits and
personnel-reduction programs, and the non-recurrence of pension curtailment
charges, offset partially by lower retiree health care curtailment gains related
to our hourly separation programs, less favorable volume and mix, and lower net
pricing. The favorable cost changes primarily reflected lower net
product costs, manufacturing and engineering costs, spending-related costs,
overhead costs, pension and OPEB costs, and advertising and sales promotion
costs.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Ford South America
Segment. The increase in earnings primarily reflected higher
net revenue and favorable volume and mix, offset partially by unfavorable cost
changes. The unfavorable cost changes primarily reflected higher net
product costs.
Ford Europe
Segment. The increase in earnings primarily reflected
favorable cost changes, higher net pricing, improved profits at Ford Otosan, and
favorable product mix, offset partially by unfavorable changes in currency
exchange rates. The favorable cost changes primarily reflected lower
net product costs, warranty-related costs, and pension costs, offset partially
by higher manufacturing and engineering costs.
Volvo Segment. The
decline in results primarily reflected less favorable volume and mix,
unfavorable changes in currency exchange rates, and lower net pricing, offset
partially by favorable cost changes. The favorable cost changes
primarily reflected lower net product costs, warranty-related costs, and
manufacturing and engineering costs.
Ford Asia Pacific Africa
Segment. The improvement in earnings was more than explained
by favorable cost changes, offset partially by less favorable volume and
mix. The favorable cost changes primarily reflected lower
manufacturing and engineering costs, net product costs, overhead costs, and
warranty-related costs.
Mazda and Associated Operations
Segment. The increase in earnings primarily reflected our
share of the increase in net earnings of Mazda.
Jaguar Land Rover and Aston Martin
Segment. For the first quarter of 2008, pre-tax operating
profits were offset by an impairment charge of the same amount related to the
sale of our Jaguar Land Rover operations. The decrease in earnings
compared with the first quarter of 2007 primarily reflected this impairment
charge, offset partially by favorable cost changes. The favorable
cost changes primarily reflected lower net product costs and pension
costs.
Other
Automotive. The improvement in earnings primarily reflected
mark-to-market adjustments for changes in exchange rates on intercompany loans
and lower interest expense reflecting lower debt levels and rates, offset
partially by lower returns on our cash portfolio and the assets held in the
temporary asset account ("Temporary Asset Account") established pursuant to the
terms of the settlement agreement dated March 28, 2008 among us, the UAW and
class representatives concerning retiree health care obligations for current and
former UAW-represented Ford employees (the "Retiree Health Care Settlement
Agreement"). The Retiree Health Care Settlement Agreement is
described in, and filed as an exhibit to, our Current Report on Form 8-K filed
April 11, 2008, which is incorporated by reference herein.
FINANCIAL
SERVICES SECTOR
Details
of Financial Services sector Income/(Loss) before income taxes
for the first quarter of 2008 and 2007 are shown below (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford
Credit
|
|
$ |
36 |
|
|
$ |
293 |
|
|
$ |
(257 |
) |
Other
Financial Services
|
|
|
31 |
|
|
|
— |
|
|
|
31 |
|
Total
|
|
$ |
67 |
|
|
$ |
293 |
|
|
$ |
(226 |
) |
Ford
Credit
The
decrease in earnings primarily reflected a higher provision for credit losses
mainly attributable to an increase in the allowance for credit losses and higher
charge-offs primarily reflecting higher severity (i.e., average loss per
repossession) (about $300 million), higher depreciation expense for leased
vehicles largely attributable to the overall auction value deterioration in the
used vehicle market (about $200 million), and higher net losses related to
market valuation adjustments from derivatives (about $100
million). These factors were offset partially by lower expenses
primarily related to the non-recurrence of costs associated with Ford Credit's
North American business transformation initiative (about $200 million), and
higher financing margin primarily attributable to lower borrowing costs (about
$100 million).
Other
Financial Services
The
increase in earnings primarily reflected gains related to real estate
sales.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Ford
Credit's net finance receivables and net investment in operating leases are
shown below (in billions):
|
|
|
|
|
|
|
|
|
|
On-balance
sheet (including on-balance sheet securitizations)*
|
|
$ |
140.9 |
|
|
$ |
139.6 |
|
|
$ |
1.3 |
|
Unearned
interest supplements
|
|
|
0.7 |
|
|
|
— |
|
|
|
0.7 |
|
Securitized
off-balance sheet
|
|
|
4.3 |
|
|
|
5.7 |
|
|
|
(1.4 |
) |
Managed
|
|
$ |
145.9 |
|
|
$ |
145.3 |
|
|
$ |
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serviced
|
|
$ |
146.6 |
|
|
$ |
146.2 |
|
|
$ |
0.4 |
|
__________
*
|
At
March 31, 2008 and December 31, 2007, includes finance receivables of
$73.9 billion and $67 billion, respectively, which have been sold for
legal purposes in securitizations that do not satisfy the requirements for
accounting sale treatment. In addition, at March 31, 2008 and
December 31, 2007, includes net investment in operating leases of $19.5
billion and $18.9 billion, respectively, which have been included in
securitizations that do not satisfy the requirements for accounting sale
treatment. These underlying securitized assets are available
only for payment of the debt or other obligations issued or arising in the
securitization transactions; they are not available to pay Ford Credit's
other obligations or the claims of Ford Credit's other
creditors.
|
The
increase in managed receivables from year-end 2007 primarily reflected changes
in currency exchange rates and higher wholesale receivables in Europe, offset
partially by lower U.S. receivables.
The
following table shows worldwide credit losses net of recoveries (which are
referred to as charge-offs) for Ford Credit for the various categories of
financing during the periods indicated. The loss-to-receivables
ratios, which equal charge-offs on an annualized basis divided by the average
amount of receivables outstanding for the period, excluding the allowance for
credit losses and unearned interest supplements related to finance receivables,
are shown below for Ford Credit's on-balance sheet and managed
portfolios.
|
|
|
|
|
|
|
|
|
|
|
|
2008 Over/(Under) 2007
|
|
Charge-offs
(in millions)
|
|
|
|
|
|
|
|
|
|
On-balance
sheet
|
|
$ |
227 |
|
|
$ |
105 |
|
|
$ |
122 |
|
Managed
|
|
|
242 |
|
|
|
123 |
|
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss-to-Receivables
Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
On-balance
sheet
|
|
|
0.65 |
% |
|
|
0.32 |
% |
|
0.33
|
pts. |
Managed
|
|
|
0.66 |
|
|
|
0.34 |
|
|
|
0.32 |
|
The
increases in charge-offs and loss-to-receivable ratios for Ford Credit's
on-balance sheet and managed portfolios, principally in the U.S. retail
installment and lease portfolio, primarily reflected higher loss severity
consistent with an increase in amount financed, a higher mix of 72-month
contracts for vehicles repossessed in its portfolio, and overall auction value
deterioration in the used vehicle market.
Shown
below is an analysis of Ford Credit's allowance for credit losses and its
allowance for credit losses as a percentage of end-of-period receivables
(finance receivables, excluding unearned interest supplements, and net
investment in operating leases, excluding the allowance for credit losses) for
its on-balance sheet portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for credit losses (in millions)
|
|
$ |
1,196 |
|
|
$ |
1,083 |
|
|
$ |
113 |
|
Allowance
as a percentage of end-of-period receivables
|
|
|
0.84 |
% |
|
|
0.77 |
% |
|
0.07
|
pts. |
This
increase in allowance for credit losses is consistent with the increase in
charge-offs described above. The allowance for credit losses is
primarily a function of portfolio quality, historical loss performance, and
receivable levels.
In
purchasing retail finance and lease contracts, Ford Credit uses a proprietary
scoring system that classifies contracts using several factors, such as credit
bureau information, FICO score, employment history, income, amount financed,
vehicle value, and contract term. As of March 31, 2008, about 4% of
the outstanding U.S. retail finance and lease contracts in Ford Credit's
serviced portfolio were classified as high risk at contract inception, about the
same as year-end 2007 and down from about 8% in 2000, consistent with Ford
Credit's efforts to improve the quality of its portfolio.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
LIQUIDITY
AND CAPITAL RESOURCES
Automotive
Sector
Our
strategy is to ensure that we have sufficient funding available with a high
degree of certainty throughout the business cycle. Our long-term goal
is to improve our core Automotive operations so that we have a high degree of
certainty about our capability to generate cash from our
operations. In addition, our strategy includes maintaining large
gross cash balances, having a long-dated debt maturity profile, maintaining
committed credit facilities, and funding long-term liabilities over
time.
Gross
Cash. Automotive gross cash includes cash and cash
equivalents, net marketable securities, and loaned securities. Prior
to 2008, we included in Automotive gross cash those assets contained in a VEBA
trust which may be used to pre-fund certain types of company-paid benefits for
U.S. employees and retirees, that were invested in shorter-duration fixed income
investments and could be used within 18 months to pay for benefits ("short-term
VEBA assets"). Consistent with our UAW agreement, in 2008 we
reclassified out of our gross cash calculation the short-term VEBA assets and
Temporary Asset Account securities. Gross cash is detailed below as
of the dates shown (in billions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
18.7 |
|
|
$ |
20.7 |
|
|
$ |
15.7 |
|
|
$ |
16.0 |
|
Marketable
securities
|
|
|
6.6 |
|
|
|
2.0 |
|
|
|
16.8 |
|
|
|
11.3 |
|
Loaned
securities
|
|
|
6.7 |
|
|
|
10.3 |
|
|
|
0.7 |
|
|
|
5.3 |
|
Total
cash, marketable securities, and loaned securities
|
|
$ |
32.0 |
|
|
|
33.0 |
|
|
|
33.2 |
|
|
|
32.6 |
|
Securities-in-transit
*
|
|
|
(0.7 |
) |
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
UAW-Ford
Temporary Asset Account
|
|
|
(2.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Short-term
VEBA assets
|
|
|
— |
|
|
|
1.9 |
|
|
|
2.2 |
|
|
|
1.8 |
|
Gross
cash
|
|
$ |
28.7 |
|
|
$ |
34.6 |
|
|
$ |
35.2 |
|
|
$ |
33.9 |
|
________
|
*
|
The
purchase or sale of marketable securities for which the cash settlement
was not made by period-end and for which there was a payable or receivable
recorded on the balance sheet at
period-end.
|
In
managing our business, we classify changes in Automotive gross cash into two
categories: operating-related and other (which includes the impact of
certain special items, contributions to funded pension plans, the net effect of
the change in our VEBA on gross cash, tax-related transactions, acquisitions and
divestitures, capital transactions with the Financial Services sector, dividends
paid to shareholders, and other – primarily financing-related). Our
key metrics are operating-related cash flow, which best represents the ability
of our Automotive operations to generate cash, and Automotive gross
cash. We believe the cash flow analysis reflected in the table below
is useful to investors because it includes in operating-related cash flow
elements that we consider to be related to our operating activities (e.g.,
capital spending) and excludes cash flow elements that we do not consider to be
related to the ability of our operations to generate cash (e.g., tax
refunds). This differs from a cash flow statement presented in
accordance with GAAP and differs from Cash flows from operating activities
of continuing operations, the most directly comparable GAAP financial
measure.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Changes
in Automotive gross cash for the first quarter of 2008 and 2007 are summarized
below (in billions):
|
|
|
|
|
|
|
|
|
|
|
Gross
cash at end of period (b)
|
|
$ |
28.7 |
|
|
$ |
35.2 |
|
Gross
cash at beginning of period (b)
|
|
|
34.6 |
|
|
|
33.9 |
|
Total
change in gross cash (b)
|
|
$ |
(5.9 |
) |
|
$ |
1.3 |
|
|
|
|
|
|
|
|
|
|
Operating-related
cash flows
|
|
|
|
|
|
|
|
|
Automotive
income/(loss) before income taxes
|
|
$ |
0.7 |
|
|
$ |
(0.2 |
) |
Capital
expenditures
|
|
|
(1.4 |
) |
|
|
(1.3 |
) |
Depreciation
and special tools amortization
|
|
|
1.5 |
|
|
|
1.8 |
|
Changes
in receivables, inventories and trade payables
|
|
|
0.6 |
|
|
|
0.8 |
|
Other
(c)
|
|
|
(1.9 |
) |
|
|
— |
|
Subtotal
|
|
$ |
(0.5 |
) |
|
$ |
1.1 |
|
Up-front
subvention payments to Ford Credit (b)
|
|
|
(1.0 |
) |
|
|
— |
|
Total
operating-related cash flows
|
|
$ |
(1.5 |
) |
|
$ |
1.1 |
|
|
|
|
|
|
|
|
|
|
Other
changes in cash
|
|
|
|
|
|
|
|
|
Personnel
separation payments
|
|
|
(0.1 |
) |
|
|
(1.2 |
) |
Contributions
to funded pension plans
|
|
|
(0.6 |
) |
|
|
(0.9 |
) |
Net
effect of VEBA on cash
|
|
|
(4.5 |
) |
|
|
0.4 |
|
Tax
refunds and tax payments from affiliates
|
|
|
0.9 |
|
|
|
2.0 |
|
Acquisitions
and divestitures
|
|
|
0.1 |
|
|
|
— |
|
Capital
transactions with the Financial Services sector
|
|
|
— |
|
|
|
— |
|
Other
(d)
|
|
|
(0.2 |
) |
|
|
(0.1 |
) |
Total
change in gross cash
|
|
$ |
(5.9 |
) |
|
$ |
1.3 |
|
__________
|
(a)
|
Except
as noted (see note (b) below), 2008 data exclude Jaguar Land Rover,
reflecting the operations' held-for-sale
status.
|
|
(b)
|
Includes
Jaguar Land Rover.
|
|
(c)
|
In
the first quarter of 2008, Other Operating cash flows were primarily
driven by timing differences between the expensing of marketing, warranty
and other accrued liabilities and the payment of those
expenses.
|
|
(d)
|
In
the first quarter of 2008, Other primarily reflects a cash deposit
associated with a capital spending commitment, offset partially by
financing-related proceeds.
|
Shown in
the table below is a reconciliation between financial statement Cash flows from operating activities
of continuing operations and operating-related cash flows (calculated as
shown in the table above) for the first quarter of 2008 and 2007 (in
billions):
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities of continuing operations
(b)
|
|
$ |
0.7 |
|
|
$ |
1.5 |
|
Items
included in operating-related cash flows
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(1.4 |
) |
|
|
(1.3 |
) |
Net
transactions between Automotive and Financial Services sectors
(c)
|
|
|
(0.7 |
) |
|
|
(0.5 |
) |
Net
cash flows from non-designated derivatives
|
|
|
0.3 |
|
|
|
0.2 |
|
Items
not included in operating-related cash flows
|
|
|
|
|
|
|
|
|
Cash
impact of personnel-reduction programs and Job Security Benefits
accrual
|
|
|
0.1 |
|
|
|
1.2 |
|
Net
(sales)/purchases of trading securities
|
|
|
— |
|
|
|
0.8 |
|
Contributions
to funded pension plans
|
|
|
0.6 |
|
|
|
0.9 |
|
VEBA
cash flows (reimbursements for benefits paid)
|
|
|
— |
|
|
|
— |
|
Tax
refunds, tax payments, and tax receipts from affiliates
|
|
|
(0.9 |
) |
|
|
(2.0 |
) |
Other
(b)
|
|
|
(0.2 |
) |
|
|
0.3 |
|
Operating-related
cash flows
|
|
$ |
(1.5 |
) |
|
$ |
1.1 |
|
__________
|
(a)
|
Except
as noted (see note (b) below), 2008 data exclude Jaguar Land Rover,
reflecting the operations' held-for-sale
status.
|
|
(b)
|
Includes
Jaguar Land Rover.
|
|
(c)
|
Primarily
payables and receivables between the Automotive and Financial Services
sectors in the normal course of business. For example, vehicle
wholesale loans that are made by Ford Credit to Ford-owned
dealers.
|
Debt and Net
Cash. At March 31, 2008, our Automotive sector had total debt
of $27.1 billion, compared with $27 billion at December 31, 2007. At
March 31, 2008, our Automotive sector had net cash (defined as gross cash less
total debt) of $1.6 billion, compared with $7.6 billion at the end of
2007. The $6 billion reduction in net cash reflects a $5.9 billion
reduction in gross cash including $4.5 billion related to the VEBA, and about
$100 million in increased debt.
As
disclosed in our Current Report on Form 8-K filed May 1, 2008, we issued an
aggregate of 37,459,540 shares of Ford Common Stock on April 30, 2008 in
exchange for $360 million principal amount of our outstanding publicly-issued
debt securities beneficially owned by an institutional holder of those debt
securities.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Pursuant
to the Retiree Health Care Settlement Agreement, on April 9, 2008 we issued to a
wholly-owned subsidiary $3.3 billion principal amount of our 5.75% Senior
Convertible Note Due 2013 (the "Convertible Note") and $3 billion principal
amount of our 9.50% Guaranteed Secured Note Due January 1, 2018 (the "Second
Lien Note"). Upon the required transfer of the Convertible Note and
Second Lien Note to a new external VEBA established pursuant to the Retiree
Health Care Settlement Agreement, which is expected to occur at or shortly after
December 31, 2009, our Automotive sector debt will increase, and our net cash
will decrease, by about $6.3 billion as a result of the Convertible Note and
Second Lien Note becoming outstanding at that time for financial reporting
purposes. The Convertible Note, or a portion thereof, could become
outstanding prior to December 31, 2009, if we and the UAW decide to monetize all
or a portion of it prior to its transfer to the new external VEBA.
Credit Facilities.* At March 31,
2008, we had $13.2 billion of contractually-committed credit facilities with
financial institutions, including $11.5 billion pursuant to a senior secured
credit facility (the "Credit Agreement") established in December 2006, $1.1
billion of global Automotive unsecured credit facilities, and about $600 million
of local credit facilities available to foreign Automotive
affiliates. At March 31, 2008, $11.9 billion of these facilities were
available for use. Of the lines available for use, 95% (or $11.3
billion) are committed through December 15, 2011, and the remainder are
committed for a shorter period of time. For further discussion of our
committed credit facilities, see Note 16 of the Notes to the Financial
Statements in our 2007 Form 10-K Report.
Financial
Services Sector
Ford
Credit
Debt. At March 31,
2008, unsecured long-term debt (including notes payable within one year) was
$58.2 billion, down about $4 billion from year-end 2007, primarily reflecting
about $6 billion of debt maturities. These maturities were offset
partially by an increase of about $2 billion, primarily reflecting changes in
currency exchange rates and a cash collateral deposit of $389 million by Ford
Motor Company Limited, our U.K. subsidiary, for a guarantee to support our
obligations in Romania. Asset-backed long-term debt (including notes
payable within one year) at March 31, 2008 was $55.3 billion, up about $6
billion from year-end 2007, reflecting asset-backed long-term debt issuance in
excess of amortization of asset-backed debt. Securitized off-balance
sheet funding was $3.8 billion at March 31, 2008, down about $1 billion from
year-end 2007, primarily reflecting the amortization of previous
securitizations.
Funding
Strategy. As a result of lower credit ratings over the past
few years, Ford Credit's unsecured funding costs have increased over
time. While it continues to access the unsecured debt market when it
makes sense to do so, Ford Credit has increased its use of securitization
funding as it is presently more cost effective than unsecured funding and allows
Ford Credit access to a broad investor base. Ford Credit plans to
meet a significant portion of its 2008 funding requirements through
securitizations, and to continue to diversify its asset-backed funding by asset
class and region. In addition, Ford Credit has various alternative
business arrangements for select products and markets that reduce its funding
requirements while allowing it to support us (e.g., Ford Credit's partnering in
Brazil for retail financing and FCE Bank plc's ("FCE") partnering with various
institutions in Europe for full service leasing and retail
financing). Ford Credit is continuing to explore and execute such
alternative business arrangements.
Consistent
with the overall market, Ford Credit has been impacted by volatility in the
asset-backed securities markets beginning in August 2007. Since then,
Ford Credit has experienced higher credit spreads and, in certain circumstances,
shorter maturities in its public and private securitization
issuances. In addition, committed liquidity program renewals have
come at a higher cost and with higher spreads. Given present market
conditions, Ford Credit expects that its credit spreads and the cost of renewing
its committed liquidity programs will continue to be higher in 2008 than prior
to August 2007. About 45% of Ford Credit's committed capacity is up
for renewal during the remainder of 2008. Given the nature of its
asset-backed committed facilities, Ford Credit has the ability to obtain term
funding up to the time that the facilities mature. Any outstanding
debt at the maturity of the facilities remains outstanding through the term of
the underlying assets.
Ford
Credit's funding plan is subject to risks and uncertainties, many of which are
beyond its control. If credit markets continue to constrain term
securitization funding, or there are reductions in the market capacity for the
types of asset-backed securities used in Ford Credit's asset-backed funding,
there could be increased risk to its funding plan. As a result, Ford
Credit may need to reduce the amount of receivables and operating leases it
purchases or originates. A significant reduction in Ford Credit's
managed receivables would reduce its ongoing profits, and could adversely affect
its ability to support the sale of Ford vehicles.
________________________________
* Credit facilities of our VIEs are
excluded as we do not control their use.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Term Funding
Plan. The following table shows Ford Credit's completed public
and private term funding issuances in 2007 and through May 5, 2008, and its
planned issuances for full-year 2008 (in billions):
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public
Transactions
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
$ |
1 – 3
|
|
|
$ |
1 |
|
|
$ |
6 |
|
Securitizations
(a)
|
|
|
8 – 13 |
|
|
|
4 |
|
|
|
6 |
|
Total
public transactions
|
|
$ |
9 – 16 |
|
|
$ |
5 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Transactions
(b)
|
|
$ |
15
– 22 |
|
|
$ |
9 |
|
|
$ |
28 |
|
__________
(a)
|
Reflects
new issuance; excludes whole-loan sales and other structured
financings.
|
(b)
|
Includes
private term debt, securitizations, other structured financings and
whole-loan sales; excludes sales to Ford Credit's on-balance sheet
asset-backed commercial paper
programs.
|
Through
May 5, 2008, Ford Credit completed about $5 billion of public term funding
transactions, including about $1 billion of unsecured long-term debt, about $3.6
billion of retail asset-backed securitizations in the United States, and the
remainder consisting of a retail asset-backed securitization in
Germany. Ford Credit expects full-year 2008 public term funding
requirements to be between $9 billion and $16 billion.
Through
May 5, 2008, Ford Credit completed about $9 billion of private term funding
transactions (excluding its on-balance sheet asset-backed commercial paper
programs and proceeds from revolving transactions) in several
markets. These private transactions included lease, wholesale and
retail asset-backed securitizations and unsecured term debt.
Through
May 5, 2008, Ford Credit has completed about $14 billion of public and private
term funding, which is more than one-third of its full-year plan.
Liquidity. The
following table illustrates the various sources of Ford Credit's liquidity as of
the dates shown (in billions):
|
|
|
|
|
|
|
Cash,
cash equivalents and marketable securities*
|
|
$ |
15.9 |
|
|
$ |
16.7 |
|
|
|
|
|
|
|
|
|
|
Committed
liquidity programs
|
|
|
36.1 |
|
|
|
36.8 |
|
Asset-backed
commercial paper (FCAR)
|
|
|
16.9 |
|
|
|
16.9 |
|
Credit
facilities
|
|
|
3.0 |
|
|
|
3.0 |
|
Committed
capacity
|
|
|
56.0 |
|
|
|
56.7 |
|
Committed
capacity and cash
|
|
|
71.9 |
|
|
|
73.4 |
|
Less:
Capacity in excess of eligible receivables
|
|
|
(3.4 |
) |
|
|
(4.7 |
) |
Less:
Cash to support on-balance sheet securitizations
|
|
|
(5.7 |
) |
|
|
(4.7 |
) |
Liquidity
|
|
|
62.8 |
|
|
|
64.0 |
|
Less:
Utilization
|
|
|
(38.9 |
) |
|
|
(36.1 |
) |
Liquidity
available for use
|
|
$ |
23.9 |
|
|
$ |
27.9 |
|
__________
*
|
Excluding
marketable securities related to insurance
activities.
|
At March
31, 2008, the capacity of Ford Credit's liquidity sources (which include
committed liquidity programs, its asset-backed commercial paper program, and
credit facilities) and its cash totaled $71.9 billion. Of this
amount, Ford Credit could utilize $62.8 billion (after adjusting for capacity in
excess of eligible receivables of $3.4 billion and cash required to support
on-balance sheet securitizations of $5.7 billion), of which $38.9 billion was
utilized as of March 31, 2008, leaving $23.9 billion (including $10.2 billion of
cash, cash equivalents, and marketable securities and excluding marketable
securities related to insurance activities) available for use. In
addition to the $23.9 billion of liquidity available for use, the $3.4 billion
of capacity in excess of eligible receivables provides an incremental funding
source for future originations.
Cash, Cash Equivalents and
Marketable Securities. At March 31, 2008, Ford Credit's cash,
cash equivalents, and marketable securities (excluding marketable securities
related to insurance activities) totaled $15.9 billion (including $5.7 billion
to be used only to support on-balance sheet securitizations), compared with
$16.7 billion at year-end 2007. In the normal course of its funding
activities, Ford Credit may generate more proceeds than are required for its
immediate funding needs. These excess amounts are maintained
primarily as highly liquid investments, which provide liquidity for Ford
Credit’s short-term funding needs and give Ford Credit flexibility in the use of
its other funding programs.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Committed Liquidity Programs.
Ford Credit and its subsidiaries, including FCE, have entered into
agreements with a number of bank-sponsored asset-backed commercial paper
conduits ("conduits") and other financial institutions whereby such parties are
contractually committed, at Ford Credit's option, to purchase from Ford Credit
eligible retail or wholesale assets, or to purchase or make advances under
asset-backed securities backed by retail or wholesale assets for proceeds of up
to $30.1 billion at March 31, 2008 ($17.9 billion retail and $12.2 billion
wholesale), of which $10.6 billion are commitments to FCE. These
committed liquidity programs have varying maturity dates, with $20.6 billion
having maturities within the next twelve months (of which $3.6 billion relates
to FCE commitments), and the balance having maturities between August 2009 and
September 2011. As a result of the continued asset-backed securities
market volatility that began in August 2007, there is a risk to the renewal of
some of these committed liquidity programs, which could lead to a reduction in
the size of these programs and/or higher costs. Ford Credit's ability
to obtain funding under these programs is subject to having a sufficient amount
of assets eligible for these programs. At March 31, 2008, $19.6
billion of these commitments were in use. These programs are
extremely liquid funding sources, as Ford Credit is able to obtain funding from
available capacity generally within two days. These programs are free
of material adverse change clauses, restrictive financial covenants (for
example, debt-to-equity limitations and minimum net worth requirements) and
credit rating triggers that could limit Ford Credit's ability to obtain
funding. However, the unused portion of these commitments may be
terminated if the performance of the underlying assets deteriorates beyond
specified levels. Based on Ford Credit's experience and knowledge as
servicer of the related assets, Ford Credit does not expect any of these
programs to be terminated due to such events.
In
addition, Ford Credit has a committed liquidity program for the purchase of up
to $6 billion of unrated asset-backed securities, of which $4 billion is
committed through 2009. At its option, this program can be supported
with retail, wholesale, or lease assets. Ford Credit's ability to
obtain funding under this program is subject to having a sufficient amount of
assets available to issue the securities. This program is also free
of material adverse change clauses, restrictive financial covenants and credit
rating triggers that could limit Ford Credit's ability to obtain
funding. At March 31, 2008, Ford Credit had $3.2 billion of
outstanding funding in this program.
Credit
Facilities. At March 31, 2008, Ford Credit and its
subsidiaries, including FCE, had $3 billion of contractually-committed unsecured
credit facilities with financial institutions, of which $2.1 billion were
available for use. Of the lines available for use, 59% (or about $1.3
billion) are committed through at least June 30, 2009, including 20% (or about
$400 million) of which are committed through December 31, 2011. Of
the $3 billion, about $500 million constitute Ford Credit bank lines (of which
about $200 million are worldwide) and $2.5 billion are FCE bank lines (of which
$2.4 billion are worldwide). The Ford Credit worldwide credit
facilities may be used, at Ford Credit's option, by any of its direct or
indirect majority-owned subsidiaries. Similarly, the FCE worldwide
credit facilities may be used, at FCE's option, by any of FCE's direct or
indirect majority-owned subsidiaries. Ford Credit or FCE, as the case
may be, will guarantee any such borrowings. All of the worldwide
credit facilities are free of material adverse change clauses, restrictive
financial covenants and credit rating triggers that could limit Ford Credit's
ability to obtain funding.
In
addition, at March 31, 2008, banks provided $16.9 billion of
contractually-committed liquidity facilities to support Ford Credit's retail
securitization program ("FCAR") on-balance sheet, asset-backed commercial
paper. Of the contractually-committed liquidity facilities, 47% (or
about $7.9 billion) are committed through June 30, 2012, and the remainder are
committed for a shorter period of time. Utilization of these
facilities is subject to conditions specific to the FCAR program and Ford Credit
having a sufficient amount of eligible assets for securitization. The
FCAR program must be supported by liquidity facilities equal to at least 100% of
its outstanding balance. At March 31, 2008, $16.5 billion of FCAR's
bank liquidity facilities were available to support FCAR's asset-backed
commercial paper, subordinated debt or FCAR's purchase of Ford Credit's
asset-backed securities, and the remaining $400 million of FCAR's bank liquidity
facilities were available to support FCAR's purchase of Ford Credit's
asset-backed securities. At March 31, 2008, the outstanding balance
for the FCAR program was $14.8 billion.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Leverage. Ford
Credit uses leverage, or the debt-to-equity ratio, to make various business
decisions, including establishing pricing for retail, wholesale and lease
financing, and assessing its capital structure. Ford Credit refers to
its shareholder's interest as equity. Ford Credit calculates leverage
on a financial statement basis and on a managed basis.
The
following table illustrates the calculation of Ford Credit’s financial statement
leverage (in billions, except for ratios):
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
debt
|
|
$ |
140.0 |
|
|
$ |
138.8 |
|
Total
equity
|
|
|
13.7 |
|
|
|
13.4 |
|
Debt-to-equity
ratio (to 1)
|
|
|
10.2 |
|
|
|
10.4 |
|
The
following table illustrates the calculation of Ford Credit’s managed leverage
(in billions, except for ratios):
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
debt
|
|
$ |
140.0 |
|
|
$ |
138.8 |
|
Securitized
off-balance sheet receivables outstanding
|
|
|
4.3 |
|
|
|
5.7 |
|
Retained
interest in securitized off-balance sheet receivables
|
|
|
(0.5 |
) |
|
|
(0.6 |
) |
Adjustments
for cash, cash equivalents, and marketable securities (a)
|
|
|
(15.9 |
) |
|
|
(16.7 |
) |
Adjustments
for hedge accounting (b)
|
|
|
(0.3 |
) |
|
|
— |
|
Total
adjusted debt
|
|
$ |
127.6 |
|
|
$ |
127.2 |
|
|
|
|
|
|
|
|
|
|
Total
equity (including minority interest)
|
|
$ |
13.7 |
|
|
$ |
13.4 |
|
Adjustments
for hedge accounting (b)
|
|
|
(0.2 |
) |
|
|
(0.3 |
) |
Total
adjusted equity
|
|
$ |
13.5 |
|
|
$ |
13.1 |
|
|
|
|
|
|
|
|
|
|
Managed
debt-to-equity ratio (to 1)
|
|
|
9.4 |
|
|
|
9.7 |
|
__________
(a)
|
Excludes
marketable securities related to insurance
activities.
|
(b)
|
Primarily
related to market valuation adjustments for derivatives due to movements
in interest rates.
|
Ford
Credit plans its managed leverage by considering prevailing market conditions
and the risk characteristics of its business. At March 31, 2008, Ford
Credit's managed leverage was 9.4 to 1, compared with 9.7 to 1 at December 31,
2007. We believe that Ford Credit has more than sufficient equity
given the quality of its asset portfolio. To maintain funding
flexibility, however, Ford Credit did not pay any distributions in the first
quarter of 2008.
Total
Company
Stockholders'
Equity. Our stockholders' equity was $7.1 billion at March 31,
2008, improved by about $1.5 billion compared with December 31,
2007. This improvement primarily reflected favorable changes in Accumulated other comprehensive
income/(loss) (see Note 15 of the Notes to the Financial Statements for
details of Other comprehensive income/(loss)), favorable changes in additional
paid-in capital resulting from issuance of new stock and conversion of debt to
equity, and favorable net income from the first quarter of 2008.
OFF-BALANCE
SHEET ARRANGEMENTS
In the
first quarter of 2008, Ford Credit did not enter into any off-balance sheet
arrangements (off-balance sheet securitization transactions and whole-loan sale
transactions), consistent with its plan to fund securitizations through
on-balance sheet transactions. At March 31, 2008 and December 31, 2007,
the total outstanding principal amount of receivables sold by Ford Credit in
off-balance sheet securitizations was $4.3 billion and $5.7 billion,
respectively. At March 31, 2008 and December 31, 2007, Ford Credit's
retained interests in such sold receivables were $474 million and $593 million,
respectively.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
OUTLOOK
Our
current projection of second quarter 2008 vehicle production for certain
segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Ford
North America
|
|
|
710 |
|
|
|
(101 |
) |
Ford
Europe
|
|
|
565 |
|
|
|
53 |
|
Volvo
|
|
|
116 |
|
|
|
– |
|
We have
set and communicated the following 2008 planning assumptions and operational
metrics:
Planning
Assumptions
|
|
Full-Year
Plan
|
|
|
First
Quarter
|
|
|
Full-Year
Outlook
|
|
Industry
Volume (SAAR incl. heavy trucks):
|
|
|
|
|
|
|
|
|
|
–U.S.
(million units)
|
|
16.0
|
|
|
15.6
|
|
|
15.3
– 15.6
|
|
–Europe
(million units) (a)
|
|
17.6
|
|
|
18.0
|
|
|
17.6
– 18.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
Compared
with 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
--Quality
|
|
Improve
|
|
|
Improved
|
|
|
On
Track
|
|
--Automotive
Costs (b)
|
|
Improve
by about $3 Billion
|
|
|
Improved
by $1.7 Billion
|
|
|
On
Track
|
|
Absolute
Amount:
|
|
|
|
|
|
|
|
|
|
|
|
|
--U.S.
Market Share (Ford Lincoln Mercury)
|
|
Low
End of 14%-15% Range
|
|
|
15.0%
|
|
|
On
Track
|
|
--Operating-Related
Cash Flow
|
|
Negative
|
|
|
$(1.5)
Billion
|
|
|
On
Track
|
|
--Capital
Spending
|
|
About
$6 Billion
|
|
|
$1.4
Billion
|
|
|
On
Track
|
|
__________
(a)
|
For
the 19 markets we track in Europe.
|
(b)
|
At
constant volume, mix and exchange; excluding special
items.
|
As
indicated above, we remain on track to meet our operational metrics for
2008. In recent years, our results generally have been stronger in
the first half of the year, with the first quarter being the strongest, and we
expect that to be the case in 2008. We expect Ford North America's
rate of improvement for the remainder of the year to be somewhat less than in
the first quarter, due in part to the continuing shift in vehicle mix toward
smaller vehicles, the absence of commodity hedging gains (which were about $200
million in the first quarter of 2008), and the non-recurrence of increases in
dealer inventory. In particular, second quarter results for Ford
North America will be adversely impacted by decreased production
levels. We also expect smaller year-over-year improvement during the
remainder of 2008 at Ford Europe, where we do not expect the hedging gains
(about $100 million) and favorable warranty adjustments (about $100 million)
from the first quarter of 2008 to be repeated. We expect Volvo to
improve sequentially through the balance of the year.
As
previously reported, we are developing plans to improve results at
Volvo. These plans include successful launch of the new XC60 small
crossover utility vehicle; restructuring of Volvo's North America sales company
and distribution network, focusing on improved margins at lower volume;
continuing efficiency programs to reduce costs; and continuing to pursue growth
in emerging markets. In addition, dealer stock reductions implemented
during the first quarter by Volvo are not expected to be repeated during the
rest of 2008. Volvo, however, remains exposed to exchange rate and
raw material cost variability.
Nonetheless,
we remain committed to our key business objectives despite the economic
challenges for the U.S. automotive industry, which are primarily associated with
the following three factors: significant declines in homebuilding,
home sales, and home prices; further increases in oil and gasoline prices; and
subprime mortgage contraction and associated contraction in other types of
credit market activity. Sales of full-size pickup trucks are closely
correlated with the strength of the housing sector, so as the housing sector
continues to slow, we anticipate lower truck sales. Together, these
adverse macroeconomic factors increase the risk of
recession. Additional concerns include the near-term impact of rising
commodity prices (oil, steel, aluminum, and resins), the ongoing weakness of the
U.S. dollar, and weakening consumer confidence.
We expect
full-year 2008 pre-tax results for our Automotive operations in total to be a
loss, though improved from full-year 2007. The plan to achieve our
profit and cost savings goals includes the following key
elements: continued success in reducing employment levels and
progress reducing our manufacturing capacity; sale or closure of essentially all
of our ACH businesses by the end of 2008; acceleration of global product
development initiatives to leverage our global assets and technologies, as well
as more efficient capital spending and product engineering; efficiencies in
advertising, merchandising, and other overhead costs; and acceleration of
vehicle complexity reductions, which also assist material cost reduction
efforts.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
During
the first quarter of 2008, we achieved $1.2 billion toward our goal of reducing
$5 billion of annual Automotive operating costs in Ford North America by
year-end 2008, as compared with year-end 2005 (at constant volume, mix and
exchange, excluding special items). The following data summarize our
progress to date, and provide additional detail regarding our plan to reduce
North America Automotive operating costs by about $3 billion in total during
2008:
|
|
Operating Cost Reductions (in
billions)
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
2006
|
|
|
2007
|
|
|
First Quarter
|
|
|
Projected Balance of Year
|
|
|
Projected Full-Year
|
|
Net Product
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
Adds
|
|
$ |
(0.9 |
) |
|
$ |
(2.0 |
) |
|
$ |
(0.1 |
) |
|
$ |
|
|
|
|
(0.5
|
) |
|
$ |
|
|
|
|
(0.6 |
) |
Commodities
|
|
|
(0.3 |
) |
|
|
(0.8 |
) |
|
|
0.1 |
|
|
|
(0.5 |
) |
–
|
|
|
(0.7 |
) |
|
|
(0.4 |
) |
-
|
|
|
(0.6 |
) |
Material
Cost Reductions
|
|
|
1.2 |
|
|
|
0.8 |
|
|
|
0.3 |
|
|
|
0.7 |
|
–
|
|
|
1.1 |
|
|
|
1.0 |
|
-
|
|
|
1.4 |
|
Subtotal
|
|
$ |
0 |
|
|
$ |
(2.0 |
) |
|
$ |
0.3 |
|
|
$ |
(0.3 |
) |
–
|
|
|
(0.1 |
) |
|
$ |
0 |
|
-
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural
/ Other
|
|
|
1.5 |
|
|
|
2.6 |
|
|
|
0.9 |
|
|
|
1.7 |
|
–
|
|
|
2.1 |
|
|
|
2.6 |
|
-
|
|
|
3.0 |
|
Total
|
|
$ |
1.5 |
|
|
$ |
0.6 |
|
|
$ |
1.2 |
|
|
$ |
1.4 |
|
–
|
|
|
2.0 |
|
|
$ |
2.6 |
|
-
|
|
|
3.2 |
|
|
|
|
|
|
|
|
|
$5
Billion
|
|
During
the period 2007 through 2009, we expect cumulative Automotive operating-related
cash outflows of $7 billion to $8 billion, and cumulative cash expenditures for
personnel separations of $5 billion to $6 billion. The
operating-related cash outflow primarily reflects the cash impact of
accelerating interest supplement and lease support payments to Ford Credit
beginning this year (about $5 billion) as described in our 2007 Form 10-K
Report, and anticipated operating losses in our Automotive sector through
2008. The cash outflows also reflect our expectation to continue to
invest in new products throughout this period at about the same level as we have
during the past few years (i.e., $6 billion to $7 billion
annually). We do not expect the benefits of our recent labor
agreement with the UAW to begin contributing meaningfully to our cash flow prior
to 2010.
Based on
lower interest income from our cash portfolio reflecting generally lower
interest rates, we now expect net interest expense within Other Automotive to be
in the range of $250 million to $300 million per quarter during
2008. Our forecast of net interest expense is subject to market
volatility, however, particularly as the Temporary Asset Account is largely
invested in equities. See "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations – Liquidity and
Capital Resources" for further discussion of the impact on our debt and net cash
of the Retiree Health Care Settlement Agreement.
Within
our Financial Services sector, we expect Ford Credit to be profitable in 2008,
although at a lower level than in 2007. The lower earnings expected
in 2008 compared with 2007 primarily reflect a higher provision for credit
losses, higher depreciation expense for leased vehicles, higher net losses
related to market valuation adjustments from derivatives, and lower
volume. Ford Credit expects these factors to be offset partially by
the non-recurrence of costs associated with Ford Credit's North American
business transformation initiative, higher financing margin, and reductions in
other operating costs.
Ford
Credit previously planned to pay regular distributions in 2008, but given the
present credit market conditions and to maintain greater flexibility in the
execution of its funding plan we have elected that Ford Credit not reinstate
these distributions until credit market conditions improve. Ford
Credit's managed leverage, which was 9.4 to 1 at March 31, 2008, is not expected
to reach the previously-forecasted 11.5 to 1 by the end of 2008. Ford
Credit anticipates its year-end 2008 managed receivables to be in the range of
$130 billion to $140 billion.
We
continue to expect that execution of the four key priorities of our plan – to
aggressively restructure our business to operate profitably, accelerate product
development, finance our plan and improve our balance sheet, and work together
effectively as one team to leverage our global resources – will keep us on track
to meet our key financial objectives.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Risk
Factors
Statements
included or incorporated by reference herein may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are based on expectations,
forecasts and assumptions by our management and involve a number of risks,
uncertainties, and other factors that could cause actual results to differ
materially from those stated, including, without limitation:
—
|
Continued
decline in market share;
|
—
|
Continued
or increased price competition resulting from industry overcapacity,
currency fluctuations or other
factors;
|
—
|
An
increase in or acceleration of market shift away from sales of trucks,
sport utility vehicles, or other more profitable vehicles, particularly in
the United States;
|
—
|
A
significant decline in industry sales, particularly in the United States
or Europe, resulting from slowing economic growth, geo-political events or
other factors;
|
—
|
Lower-than-anticipated
market acceptance of new or existing
products;
|
—
|
Continued
or increased high prices for or reduced availability of
fuel;
|
—
|
Currency
or commodity price fluctuations;
|
—
|
Adverse
effects from the bankruptcy or insolvency of, change in ownership or
control of, or alliances entered into by a major
competitor;
|
—
|
Economic
distress of suppliers that has in the past and may in the future require
us to provide financial support or take other measures to ensure supplies
of components or materials;
|
—
|
Labor
or other constraints on our ability to restructure our
business;
|
—
|
Work
stoppages at Ford or supplier facilities or other interruptions of
supplies;
|
—
|
Single-source
supply of components or materials;
|
—
|
Substantial
pension and postretirement health care and life insurance liabilities
impairing our liquidity or financial
condition;
|
—
|
Inability
to implement Memorandum of Understanding with UAW to fund and discharge
retiree health care obligations because of failure to obtain court
approval or otherwise;
|
—
|
Worse-than-assumed
economic and demographic experience for our postretirement benefit plans
(e.g., discount rates, investment returns, and health care cost
trends);
|
—
|
The
discovery of defects in vehicles resulting in delays in new model
launches, recall campaigns or increased warranty
costs;
|
—
|
Increased
safety, emissions (e.g., CO2),
fuel economy, or other regulation resulting in higher costs, cash
expenditures, and/or sales
restrictions;
|
—
|
Unusual
or significant litigation or governmental investigations arising out of
alleged defects in our products or
otherwise;
|
—
|
A
change in our requirements for parts or materials where we have entered
into long-term supply arrangements that commit us to purchase minimum or
fixed quantities of certain parts or materials, or to pay a minimum amount
to the seller ("take-or-pay"
contracts);
|
—
|
Adverse
effects on our results from a decrease in or cessation of government
incentives;
|
—
|
Adverse
effects on our operations resulting from certain geo-political or other
events;
|
—
|
Substantial
negative Automotive operating-related cash flows for the near- to
medium-term affecting our ability to meet our obligations, invest in our
business or refinance our debt;
|
—
|
Substantial
levels of Automotive indebtedness adversely affecting our financial
condition or preventing us from fulfilling our debt obligations (which may
grow because we are able to incur substantially more debt, including
additional secured debt);
|
—
|
Inability
of Ford Credit to access debt or securitization markets around the world
at competitive rates or in sufficient amounts due to additional credit
rating downgrades, market volatility, market disruption or
otherwise;
|
—
|
Higher-than-expected
credit losses;
|
—
|
Increased
competition from banks or other financial institutions seeking to increase
their share of financing Ford
vehicles;
|
—
|
Changes
in interest rates;
|
—
|
Collection
and servicing problems related to finance receivables and net investment
in operating leases;
|
—
|
Lower-than-anticipated
residual values or higher-than-expected return volumes for leased
vehicles; and
|
—
|
New
or increased credit, consumer or data protection or other regulations
resulting in higher costs and/or additional financing
restrictions.
|
We cannot
be certain that any expectation, forecast or assumption made by management in
preparing forward-looking statements will prove accurate, or that any projection
will be realized. It is to be expected that there may be differences
between projected and actual results. Our forward-looking statements
speak only as of the date of their initial issuance, and we do not undertake any
obligation to update or revise publicly any forward-looking statement, whether
as a result of new information, future events or otherwise. For
additional discussion of these risks, see "Item 1A. Risk Factors" in our 2007
Form 10-K Report.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
ACCOUNTING
STANDARDS ISSUED BUT NOT YET ADOPTED
In March
2008, the FASB issued Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133 ("SFAS No. 161"). This standard requires enhanced
disclosures about an entity's derivative and hedging activities and thereby
improves the transparency of financial reporting. SFAS No. 161
requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of gains and
losses on derivative instruments, and disclosures about credit-risk-related
contingent features in derivative agreements. This standard is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008 and only requires disclosures for earlier
periods presented for comparative purposes beginning in the first year after the
year of initial adoption. We are assessing the potential impact of
this standard on our financial statement disclosures.
We have
not yet adopted SFAS No. 141R, Business Combinations or SFAS
No. 160, Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our 2007 Form 10-K Report for
further discussion of these standards.
OTHER
FINANCIAL INFORMATION
The
interim financial information included in this Quarterly Report on Form 10-Q for
the periods ended March 31, 2008 and 2007 has not been audited by
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"). In reviewing
such information, PricewaterhouseCoopers has applied limited procedures in
accordance with professional standards for reviews of interim financial
information. Readers should restrict their reliance on
PricewaterhouseCoopers' reports on such information
accordingly. PricewaterhouseCoopers 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
PricewaterhouseCoopers within the meaning of Sections 7 and 11 of the Securities
Act of 1933.
ITEM
3. Quantitative and
Qualitative Disclosures About Market Risk.
Automotive
Sector
Foreign Currency Risk. The
net fair value of foreign exchange forward and option contracts as of March 31,
2008 was $1.2 billion, compared to $632 million as of December 31,
2007. The potential decrease in fair value of foreign exchange
forward and option contracts, assuming a 10% decrease in the underlying foreign
currency exchange rates, would be approximately $2.2 billion at March 31, 2008
and $2 billion at December 31, 2007.
Commodity Price
Risk. The net fair value of commodity forward and option
contracts as of March 31, 2008 was $612 million, compared to $353 million as of
December 31, 2007. The potential decrease in fair value of commodity
forward and option contracts, assuming a 10% decrease in the underlying
commodity prices, would be approximately $180 million at March 31, 2008 and $100
million at December 31, 2007.
Financial
Services Sector
Interest Rate
Risk. To provide a quantitative measure of the sensitivity of
Ford Credit's pre-tax cash flow to changes in interest rates, Ford Credit uses
interest rate scenarios that assume a hypothetical, instantaneous increase or
decrease in interest rates of 100 basis points (or 1%) across all maturities, as
well as a base case that assumes that interest rates remain constant at existing
levels. These interest rate scenarios are purely hypothetical and do
not represent Ford Credit's view of future interest rate movements. The
differences in pre-tax cash flow between these scenarios and the base case over
a twelve-month period represent an estimate of the sensitivity of Ford Credit's
pre-tax cash flow. Under this model, Ford Credit estimates that at March 31,
2008, all else constant, such an increase in interest rates would reduce Ford
Credit's pre-tax cash flow by approximately $5 million over the next twelve
months, compared with $16 million at December 31, 2007. The
sensitivity analysis presented above assumes a one-percentage point interest
rate change to the yield curve that is both instantaneous and
parallel. In reality, interest rate changes are rarely instantaneous
or parallel and rates could move more or less than the one percentage point
assumed in our analysis. As a result, the actual impact to pre-tax
cash flow could be higher or lower than the results detailed above.
ITEM
4. Controls and
Procedures.
Evaluation of Disclosure Controls
and Procedures. Alan Mulally, our Chief Executive Officer
("CEO"), and Donat R. Leclair, Jr., our Chief Financial Officer ("CFO"), have
performed an evaluation of the Company’s disclosure controls and procedures, as
that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934,
as amended (“Exchange Act”), as of March 31, 2008, and each has concluded that
such disclosure controls and procedures are effective to ensure that information
required to be disclosed in our periodic reports filed under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
by SEC rules and forms, and that such information is accumulated and
communicated to the CEO and CFO to allow timely decisions regarding required
disclosures.
Changes in Internal Control over
Financial Reporting. During the first quarter of 2008, we implemented a
new derivative accounting system and resumed long-haul designated hedge
accounting for certain interest rate swaps. We also acquired a
majority stake in Romanian carmaker ACSA, which will be fully integrated into
Ford production systems.
PART
II. OTHER INFORMATION
ITEM
1. Legal
Proceedings.
Environmental
Matters
Sterling Axle
Plant. The Michigan Department of Environmental Quality
("MDEQ") issued a Letter of Violation to the Sterling Axle Plant on April 17,
2008 as a result of the plant's disclosure that certain air pollution control
equipment had not been operating properly during part of 2007. The
Letter of Violation seeks information regarding the causes and duration of
potential violations and steps taken to prevent reoccurrence. We are
working with MDEQ to resolve this matter.
Cleveland Casting
Plant. Federal air regulations (referred to as the MACT
standards) required our Cleveland Casting Plant to make significant changes to
its cupola furnaces and associated pollution control equipment by April
2008. When we announced the plant's 2010 closure, we had already
invested significant resources into the necessary equipment upgrade, but the
upgrade was not yet complete. We have been working with the Ohio
Environmental Protection Agency ("Ohio EPA") to determine whether the plant may
continue operating without fully implementing all of the MACT standards, and
hope to resolve the matter soon. We also are seeking to reduce other
emissions at the plant, where feasible, so that overall emissions continue to
decrease.
Class
Actions
Canadian Export Antitrust Class
Actions (previously reported on p. 32 of our 2007 Form 10-K
Report). In March 2008, the U.S. Court of Appeals for the
First Circuit reversed the previously-reported order certifying a class of all
purchasers of new vehicles in 20 states between January 1, 2001 and April 30,
2003 for damages under various state law theories, and remanded the case to the
district court for further proceedings.
ITEM
2. Unregistered
Sales of Equity Securities and Use of Proceeds.
During
the first quarter of 2008, we purchased shares of Ford Common Stock as
follows:
|
|
Total Number of Shares
Purchased*
|
|
|
Average Price Paid per
Share
|
|
|
Total Number of Shares Purchased as Part of
Publicly- Announced Plans or Programs
|
|
|
Maximum Number (or Approximate Dollar Value) of
Shares that May Yet Be Purchased Under the Plans or
Programs
|
|
January
1, 2008 through January 31, 2008
|
|
|
0 |
|
|
$ |
- |
|
|
|
0 |
|
|
|
** |
|
February
1, 2008 through February 29, 2008
|
|
|
0 |
|
|
|
- |
|
|
|
0 |
|
|
|
** |
|
March
1, 2008 through March 31, 2008
|
|
|
1,877,822 |
|
|
|
6.13 |
|
|
|
0 |
|
|
|
** |
|
Total/Average
|
|
|
1,877,822 |
|
|
$ |
6.13 |
|
|
|
0 |
|
|
|
** |
|
_______
*
|
We
presently have no publicly-announced repurchase program in
place. Shares were acquired from our employees or directors in
accordance with our various compensation plans as a result of share
withholdings to pay income taxes with respect to: (i) the lapse
of restrictions on restricted stock, (ii) the issuance of unrestricted
stock, including issuances as a result of the conversion of restricted
stock equivalents, or (iii) to pay the exercise price and related income
taxes with respect to certain exercises of stock options. There
were no share purchases from the Ford Motor Savings and Stock Investment
Plan for Salaried Employees ("SSIP") or the Tax Efficient Savings Plan for
Hourly Employees ("TESPHE"). Purchase of shares when
participants in those plans elect to sell units in the Ford Stock Fund
ceased as of February 9, 2007.
|
**
|
No
publicly announced repurchase program in
place.
|
ITEM
5. Other
Information.
Governmental
Standards
U.S. Requirements – California and
Other State Emissions Standards. In March 2008, the California
Air Resources Board ("CARB") directed its staff to make a number of significant
modifications to its Zero Emission Vehicle ("ZEV") regulations. For
the 2012-2014 model years, the modifications will allow manufacturers to reduce
the number of fuel cell and/or battery-electric vehicles necessary to satisfy
the regulations by producing plug-in hybrid vehicles instead. For the
2015 model year and beyond, CARB directed a complete overhaul of its ZEV, low
emission vehicle ("LEV"), and greenhouse gas ("GHG")
regulations. Some current elements of the ZEV program (e.g.,
requirements to build low-emissions vehicles with zero evaporative emissions)
will be transferred to the LEV or GHG programs. The ZEV program will
focus exclusively on battery-electric, fuel cell, plug-in hybrid, and hydrogen
internal combustion engine technology, and the regulations are likely to require
manufacturers to produce ever-increasing numbers of vehicles with these
technologies. The modifications requested by CARB will undergo a
notice-and-comment process before they are finalized.
Motor Vehicle Fuel
Economy. In April 2008, the National Highway Traffic Safety
Administration ("NHTSA") issued a proposed rule setting forth Corporate Average
Fuel Economy ("CAFE") standards for cars and light trucks for the 2011-2015
model years. The new standards are based on the "reformed" approach
to CAFE as required by the Energy Independence and Security Act enacted in
December 2007. NHTSA projections suggest that, under the new
proposal, Ford will have to meet a fleet average fuel economy of 35.5 miles per
gallon ("mpg") for its passenger cars and 28.8 mpg for its light trucks by the
2015 model year. This represents a considerably more rapid rate of
increase than past NHTSA rulemakings on CAFE. The proposed rule
contains other new provisions on credit trading, intra-company credit transfers
between fleets, and incentives for the production of flexible fuel vehicles,
among other things. We are in the early stages of reviewing the
proposal; interested parties will have 60 days to comment on the proposed rule,
and a final rule is expected by the end of 2008.
Additionally,
the Environmental Protection Agency ("EPA") has announced its intention to issue
an Advance Notice of Proposed Rulemaking on the subject of regulating greenhouse
gases under the Clean Air Act ("CAA"). The Supreme Court has held
that greenhouse gases are "pollutants" subject to regulation under the
CAA. There are, however, a number of potential problems associated
with trying to regulate greenhouse gases under the CAA. EPA will seek
public comment on these issues before determining how to proceed.
Item
5. Other Information (Continued)
Other
Matters
Retiree Health Care Settlement
Agreement. As reported in our Current Report on Form 8-K filed
April 11, 2008 ("Form 8-K Report"), Ford, the UAW, and the class representatives
of former UAW-represented Ford employees (the "Class") in Int'l Union, UAW, et al. v. Ford
Motor Company, filed for approval the Retiree Health Care Settlement
Agreement with the U.S. District Court for the Eastern District of Michigan on
April 7, 2008. The Form 8-K Report is incorporated herein by
reference, and contains a summary of Ford's funding obligations, a description
of the next steps in the litigation, and a copy of the Retiree Health Care
Settlement Agreement as an exhibit thereto. On April 28, 2008, the
District Court preliminarily approved the Retiree Health Care Settlement
Agreement, and we anticipate a hearing on final approval over the
summer.
Ford of Canada-CAW
Contract. On May 4, 2008, CAW members ratified a new
three-year collective bargaining agreement more than four months ahead of the
expiration date of the current agreement, which as disclosed in our 2007 Form
10-K Report does not expire until September 16, 2008. The new
agreement will be effective September 17, 2008, though certain provisions are
effective immediately. Key elements of the new agreement include
a unique wage rate for new hires, set at 70% of the base wage with a three
- year grow - in to 100% of wages and benefits (effective
immediately); a 16-month suspension of cost of living increases for
current employees (effective immediately) and a 12-month suspension
for retirees; and a 40-hour reduction in paid time off. The
agreement also includes productivity gains at the Oakville Assembly Plant, and
continuation of operations at the St. Thomas Assembly Plant through the term of
the new agreement.
ITEM
6. Exhibits.
Please
see exhibit index below.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
FORD MOTOR COMPANY
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
Date:
May 7,
2008
|
By:
|
/s/ Peter J. Daniel
|
|
|
|
Peter
J. Daniel
|
|
|
|
Senior
Vice President
|
|
|
|
and
Controller
|
|
EXHIBIT
INDEX
|
|
|
|
|
|
|
|
|
|
Exhibit
10.1
|
|
Retiree
Health Care Settlement Agreement
|
|
Filed
as Exhibit 10.1 to our Current Report on Form 8-K filed on April 11,
2008*
|
|
|
|
|
|
|
|
Ford
Motor Company, TML Holdings Limited and Tata Motors Limited Agreement for
the Sale and Purchase of Jaguar and Land Rover dated as of March 25,
2008
|
|
Filed
with this Report
|
|
|
|
|
|
|
|
Ford
Motor Company and Subsidiaries Calculation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
|
|
Filed
with this Report
|
|
|
|
|
|
|
|
Letter
of PricewaterhouseCoopers LLP, Independent Registered Public Accounting
Firm, dated May 7, 2008, relating to Financial Information
|
|
Filed
with this Report
|
|
|
|
|
|
|
|
Rule
15d-14(a) Certification of CEO
|
|
Filed
with this Report
|
|
|
|
|
|
|
|
Rule
15d-14(a) Certification of CFO
|
|
Filed
with this Report
|
|
|
|
|
|
|
|
Section
1350 Certification of CEO
|
|
Furnished
with this Report
|
|
|
|
|
|
|
|
Section
1350 Certification of CFO
|
|
Furnished
with this Report
|
|
|
|
|
|
* Incorporated
by reference as an exhibit to this Report (file number reference
1-3950).
|
46