<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
FORD MOTOR COMPANY
(Name of the Issuer)
------------------
FORD MOTOR COMPANY CAPITAL TRUST I
(Name of Person(s) Filing Statement)
------------------
SERIES B DEPOSITARY SHARES, EACH REPRESENTING
1/2,000 OF A SHARE OF SERIES B CUMULATIVE PREFERRED STOCK
(Title of Class of Securities)
345370 40 7
(CUSIP Number of Class of Securities)
J. M. RINTAMAKI
FORD MOTOR COMPANY
THE AMERICAN ROAD
DEARBORN, MICHIGAN 48121
(313) 322-3000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person Filing Statement)
------------------
Please Address a Copy of All Communications to:
ARBIE R. THALACKER
SHEARMAN & STERLING
599 LEXINGTON AVE.
NEW YORK, NEW YORK 10022
------------------
NOVEMBER 3, 1995
(Date Tender Offer First Published, Sent or Given to Security Holders)
------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
TRANSACTION VALUATION: *$1,206,987,500 AMOUNT OF FILING FEE: $241,397.50
- --------------------------------------------------------------------------------
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $421,011.57
Form or Registration Nos.: S-4 (Registration Nos. 33-62761 and 33-62761-01)
Filing Parties: Ford Motor Company and Ford Motor Company Capital Trust I.
- -------------------------
* For purposes of calculating the filing fee pursuant to Rule 0-11 of the
Securities Exchange Act of 1934, as amended, the market value of the Series B
Depositary Shares, each representing 1/2,000 of a Share of Series B Cumulative
Preferred Stock (the "Depositary Shares") proposed to be acquired was
determined by multiplying $27.0625 (the average of the high and low reported
prices of the Depositary Shares on the New York Stock Exchange on November 2,
1995 by 44,600,000 (the number of Depositary Shares which Ford Motor Company
Capital Trust I has offered to acquire).
- --------------------------------------------------------------------------------
<PAGE> 2
This Issuer Tender Offer Statement (the "Statement") is being filed with
the Securities and Exchange Commission (the "Commission") by Ford Motor Company
Capital Trust I in connection with the filing under the Securities Act of 1933,
as amended, of a registration statement on Form S-4 (the "Registration
Statement") regarding an offer (the "Offer") to holders of Series B Depositary
Shares, each representing 1/2,000 of a share of Series B Cumulative Preferred
Stock (the "Depositary Shares") of Ford Motor Company ("Ford"). A copy of the
Prospectus dated November 3, 1995 (the "Prospectus") contained in the
Registration Statement (Registration Nos. 33-62761 and 33-62761-01) declared
effective by the Commission on November 2, 1995 is incorporated herein by
reference as Exhibit 99.A. Pursuant to General Instruction B to Schedule 13E-4,
certain information contained in the Prospectus is hereby incorporated by
reference in answer to items of this Statement.
References to the Prospectus are identified by the captions set forth in
the Prospectus. Where substantially identical information required by Schedule
13E-4 is included under more than one caption, reference is made to only one
caption of the Prospectus.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Ford Motor Company. The address of its
principal executive office is The American Road, Dearborn, Michigan 48121.
(b) The exact title of the class of securities being sought is Series
B Depositary Shares, each representing 1/2,000 of a share of Series B
Cumulative Preferred Stock, of Ford Motor Company. Reference is made to
"Prospectus Summary" and "The Offer -- Terms of the Offer" and "--
Conditions to the Offer" in the Prospectus, which are incorporated herein
by reference. No Depositary Shares are to be acquired from any officer,
director or affiliate of Ford Motor Company.
(c) Reference is made to "Price Range of Depositary Shares" in the
Prospectus, which is incorporated herein by reference.
(d) The name of the person filing this statement is Ford Motor Company
Capital Trust I (the "Trust"), a newly organized statutory business trust
organized under the laws of the State of Delaware. The address of its
principal office is c/o Ford Motor Company, The American Road, Dearborn,
Michigan 48121. The Trust has been organized by Ford for the purpose of
effecting the Offer. Reference is made to "Prospectus Summary" and "Ford
Motor Company Capital Trust I" in the Prospectus, which are incorporated
herein by reference.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) Reference is made to "The Offer -- Terms of the Offer",
"Description of the Preferred Securities", "Description of the Preferred
Securities Guarantee", "Description of the Junior Subordinated Debentures"
and "Relationship Between the Preferred Securities, the Junior Subordinated
Debentures and the Preferred Securities Guarantee" in the Prospectus, which
are incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Reference is made to "The Offer -- Purpose of the Offer" and "-- Terms of
the Offer" in the Prospectus, which are incorporated herein by reference.
Depositary Shares acquired pursuant to the Offer will be delivered to Ford and
will be retired. See "Description of the Series B Preferred and Depositary
Shares" in the Prospectus, which is incorporated herein by reference.
(a) Ford may acquire various Ford securities from time to time in the
future and expects to issue various Ford securities from time to time, in
each case for general or special corporate purposes.
(b)-(c) Reference is made to "Financial Review of Ford and Recent
Developments" in the Prospectus, which is incorporated herein by reference.
(d) None.
(e) Reference is made to "Capitalization" in the Prospectus, which is
incorporated herein by reference.
(f)-(j) None.
2
<PAGE> 3
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
None.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
None.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is made to "The Offer -- Exchange Agent and Information Agent",
"-- Dealer Managers; Soliciting Dealers" and "Fees and Expenses; Transfer Taxes"
in the Prospectus, which are incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is made to "Capitalization", "Selected Financial Data
and Other Data of Ford", "Ratio of Earnings to Fixed Charges" and
"Incorporation of Certain Documents by Reference" in the Prospectus, which
are incorporated herein by reference.
(b) Inapplicable.
ITEM 8. ADDITIONAL INFORMATION.
(a) None.
(b) There are no applicable regulatory requirements which must be
complied with or approvals which must be obtained in connection with the
Offer other than compliance with the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder including, without limitation, Rule 13e-4 promulgated
thereunder, the Trust Indenture Act of 1939, as amended, and the
requirements of state securities or "blue sky" laws.
(c) Inapplicable.
(d) None.
(e) None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Prospectus dated November 3, 1995 (Exhibit 99.A); Press Releases
issued by the Company on September 19, 1995 and November 3, 1995 (Exhibit
99.B); Form of Newspaper Announcement (Exhibit 99.C); Form of Letter of
Transmittal (Exhibit 99.D); Form of Letter to Clients (Exhibit 99.E); Form
of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees (Exhibit 99.F); Form of Notice of Guaranteed Delivery (Exhibit
99.G); Form of Ford Letter to Holders of 8.25% Preferred Stock, Series B
(Exhibit 99.H); Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (Exhibit 99.I); and Questions and Answers
Regarding Preferred Securities (Exhibit 99.J).
(b) Indenture dated as of December 1, 1995 between Ford and The Bank
of New York, as Trustee (Exhibit 99.K), First Supplemental Indenture dated
as of December 1, 1995 (Exhibit 99.L) and Guarantee Agreement of Ford
(Exhibit 99.M).
(c) None.
(d) Tax Opinion of Dennis E. Ross (Exhibit 99.N).
(e) The Prospectus is included in (a) above.
(f) Form of Dealer Manager Internal Marketing Memorandum (Exhibit
99.O).
3
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 3, 1995
FORD MOTOR COMPANY CAPITAL TRUST I
By: Ford Motor Company,
as Sponsor
By /s/ J. M. RINTAMAKI
-----------------------------------
Name: J. M. Rintamaki
Title: Secretary
4
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE IN
SEQUENTIALLY
EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------------------------------------------------------------------------
<S> <C> <C>
99.A Prospectus dated November 3, 1995 (incorporated by reference to Form
S-4, Registration Nos. 33-62761 and 33-62761-01).......................
99.B Press Releases issued by the Company on September 19, 1995 and November
3, 1995................................................................
99.C Form of Newspaper Announcement (incorporated by reference to Exhibit
99.7 to Form S-4, Registration Nos. 33-62761 and 33-62761-01)..........
99.D Form of Letter of Transmittal (incorporated by reference to Exhibit
99.1 to Form S-4, Registration Nos. 33-62761 and 33-62761-01)..........
99.E Form of Letter to Clients (incorporated by reference to Exhibit 99.4 to
Form S-4, Registration Nos. 33-62761 and 33-62761-01)..................
99.F Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees (incorporated by reference to Exhibit 99.3 to Form
S-4, Registration Nos. 33-62761 and 33-62761-01).......................
99.G Form of Notice of Guaranteed Delivery (incorporated by reference to
Exhibit 99.2 to Form S-4, Registration Nos. 33-62761 and
33-62761-01)...........................................................
99.H Form of Ford Letter to Holders of 8.25% Preferred Stock, Series B
(incorporated by reference to Exhibit 99.8 to Form S-4, Registration
Nos. 33-62761 and 33-62761-01).........................................
99.I Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9....................................................
99.J Questions and Answers Regarding Preferred Securities (incorporated by
reference to Exhibit 99.9 to Form S-4, Registration Nos. 33-62761 and
33-62761-01)...........................................................
99.K Form of Indenture dated as of December 1, 1995 between Ford and The
Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1
to Form S-4, Registration Nos. 33-62761 and 33-62761-01)...............
99.L Form of First Supplemental Indenture dated as of December 1, 1995
between Ford and The Bank of New York, as Trustee (incorporated by
reference to Exhibit 4.2 to Form S-4, Registration Nos. 33-62761 and
33-62761-01)...........................................................
99.M Form of Guarantee Agreement dated as of December 8, 1995 of Ford
(incorporated by reference to Exhibit 4.8 to Form S-4, Registration
Nos. 33-62761 and 33-62761-01).........................................
99.N Tax Opinion of Dennis E. Ross (incorporated by reference to Exhibit 8
to Form S-4, Registration Nos. 33-62761 and 33-62761-01)...............
99.O Form of Dealer Manager Internal Marketing Memorandum...................
99.P Power of Attorney for Ford Motor Company, as sponsor, to sign this
Statement on behalf of Ford Motor Company Capital Trust I (incorporated
by reference to Exhibit 24.2 (included in Exhibit 4.3) to Form S-4,
Registration Nos. 33-62761 and 33-62761-01)............................
</TABLE>
<PAGE> 1
EXHIBIT 99.B
IMMEDIATE RELEASE
FORD ANNOUNCES EXCHANGE OFFER
DEARBORN, Mich., Sept. 19 -- Ford Motor Company Capital Trust I has filed a
registration statement for an offer to exchange newly established Trust
Originated Preferred SecuritiesSM (TOPrS(SM)) for depositary shares of Ford
Series B Cumulative Preferred Stock.
Ford Motor Company Capital Trust I, a Delaware statutory business trust, is
controlled by Ford Motor Company and will exist solely to act as a finance
vehicle for Ford. TOPrS represent preferred undivided beneficial interests in
the assets of the Trust.
Ford will issue, and deposit as assets in the Trust, Junior Subordinated
Debentures, due 2025. Holders of Series B Preferred Stock can receive one TOPrS
for each Series B depositary share. The Trust will accept up to 44.6 million of
the 45.6 million outstanding depositary shares.
The annual rate of cash distributions on the TOPrS, which will be announced
when the exchange offer begins, will exceed the 8.25 percent annual dividend
rate on the Series B Preferred.
The Series B depositary shares each represent 1/2,000th of a share of the
Series B Cumulative Preferred Stock and trade on the New York Stock Exchange
under the symbol F Pr B. Among other conditions, at least 12 million depositary
shares must be validly tendered for the exchange to take place. Any depositary
shares not accepted for exchange because of proration will be returned.
The exchange will allow Ford to achieve tax efficiencies by refinancing
Series B Preferred Stock that is exchanged for TOPrS. Interest paid on the
Junior Subordinated Debentures is deductible, while dividends paid on the Series
B Preferred are not deductible.
The dealer/managers for the exchange offer are Merrill Lynch & Co., Dean
Witter Reynolds Inc., A.G. Edwards & Sons, Inc., Goldman, Sachs & Co., Lehman
Brothers, PaineWebber Incorporated and Smith Barney Inc.
The registration statement relating to the exchange offer has been filed
with the Securities and Exchange Commission but has not yet become effective. No
securities may be sold nor may offers to buy be accepted, and no exchange offer
will be made, prior to the time the registration statement becomes effective.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state. The exchange offer
will be made only by means of a prospectus.
- ---------------
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE> 2
IMMEDIATE RELEASE
FORD LAUNCHES EXCHANGE FOR PREFERRED STOCK
DEARBORN, Mich., Nov. 3 -- Ford Motor Company has commenced an offer to
exchange Trust Originated Preferred Securities ("TOPrS") for up to 44.6 million
of the 45.6 million outstanding depositary shares of its Series B Cumulative
Preferred Stock.
The TOPrS will be issued by Ford Motor Company Capital Trust I, a Delaware
statutory business trust sponsored by Ford Motor Company. TOPrS are preferred
interests in the assets of the Trust.
The annual dividend rate of the TOPrS will be 9 percent or $2.25 annually
per share, compared with 8.25 percent or $2.0625 annually per depositary share
of the Series B Preferred. The TOPrS, after issuance, will be listed on the New
York Stock Exchange under the symbol "F Pr T."
Concurrent with the issuance of the TOPrS, Ford Motor Company will issue
and deposit in the Trust as trust assets its 9% Junior Subordinated Debentures
due 2025.
The exchange will allow Ford Motor Company to refinance the Series B
Preferred with the TOPrS to achieve tax efficiencies, since interest paid on the
Junior Subordinated Debentures is deductible, while dividends paid on the Series
B Preferred are not.
Exchanges will be made on the basis of one TOPrS for each Series B
depositary share validly tendered and accepted for exchange in the offer. Among
other conditions, there must be a minimum of 400 holders of at least 1 million
TOPrS outstanding upon completion of the exchange. Any depositary shares not
accepted for exchange because of proration will be returned. The Series B
depositary shares each represent 1/2,000th of a share of the Series B Cumulative
Preferred Stock and trade on the New York Stock Exchange under the symbol "F Pr
B."
The exchange offer will expire at midnight (Eastern time) on December 8,
unless extended.
The dealer managers for the exchange offer are Merrill Lynch & Co., Dean
Witter Reynolds Inc., A.G. Edwards & Sons, Inc., Goldman, Sachs & Co., Lehman
Brothers, PaineWebber Incorporated and Smith Barney Inc. The information agent
is Georgeson & Company Inc., at (800) 223-2064.
The exchange offer will be made only by means of a prospectus and related
documents that will be forwarded to the holders of the Series B depositary
shares as soon as practical. This communication does not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities law of any
such state.
"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE> 1
EXHIBIT 99.I
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------
GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY
ACCOUNT: NUMBER OF--
- -------------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals(joint account or, if combined
account) funds, the first
individual on the
account(1)
3. Husband and The actual owner of the
wife(joint account) account or, if joint
funds, the first
individual on the
account(1)
4. Custodian account The minor(2)
of a minor (Uniform
Gift to Minors Act)
5. Adult and The adult or, if the
minor(joint minor is the only
account) contributor, the
minor(1)
6. Account in the name The ward, minor or
of guardian or incompetent person(3)
committee for a
designated ward,
minor or
incompetent person
7. a. The usual The grantor-trustee(1)
revocable
savings trust
account (grantor
is also trustee)
b. So-called trust The actual owner(2)
account that is
not a legal or
valid trust
under State law
<CAPTION>
- -------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER OF--
- -------------------------------------------------
<S> <C>
- -------------------------------------------------
8. Sole proprietorship The owner(4)
account
9. A valid trust, Legal entity (Do not
estate or pension furnish the identifying
trust number of the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Association, club, The organization
religious,
charitable,
educational or
other tax-exempt
organization
account
12. Partnership account The partnership
13. A broker or The broker or nominee
registered nominee
14. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or
prison) that
receives
agricultural
program payments
- -------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
HOW TO OBTAIN A TIN
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments by the
Payer include the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable reminder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade of business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE
"EXEMPT" ON THE FACE OF THE FORM IN PART II, SIGN AND DATE THE FORM, AND RETURN
IT TO THE PAYER.
Certain payments, other than interest, dividends and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE.--Section 6019 requires most recipients of dividend, interest
or other payments to give their correct taxpayer identification numbers to
payers who must report the payments to IRS. IRS uses the numbers for
identification purposes and to help verify the accuracy of tax returns. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Payers must generally withhold 31% of taxable interest, dividend and
certain other payments to a payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.
PENALTIES
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT 99.O
PREFERRED STOCK
EXCHANGE OFFER
November 3, 1995
FORD MOTOR COMPANY CAPITAL TRUST I
OFFER TO EXCHANGE ITS 9% TRUST ORIGINATED PREFERRED SECURITIES (SM)
("TOPRS (SM)")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY FORD MOTOR COMPANY)
FOR UP TO 44,600,000 OUTSTANDING SERIES B DEPOSITARY SHARES (THE "DEPOSITARY
SHARES"),
EACH REPRESENTING 1/2,000 OF A SHARE OF
SERIES B CUMULATIVE PREFERRED STOCK (THE "OFFER")
OF
FORD MOTOR COMPANY
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 8, 1995, UNLESS THE OFFER IS EXTENDED.
SUMMARY HIGHLIGHTS
* SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO THE OFFER"
IN THE PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE
PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS
ON THE JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES
MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
* HOLDERS OF THE DEPOSITARY SHARES SHOULD BE ADVISED OF THE FOLLOWING:
FORD MOTOR COMPANY ("FORD") WILL PAY THE DEALER MANAGERS A FEE FOR EACH
DEPOSITARY SHARE VALIDLY TENDERED AND ACCEPTED FOR EXCHANGE PURSUANT
TO THE OFFER.
* A solicitation fee of $.50 for each Depositary Share validly tendered
and accepted for exchange pursuant to the Offer will be paid by Ford to
soliciting dealers designated by the record or beneficial owner, as
appropriate, of Depositary Shares. Soliciting dealers are not
entitled to a solicitation fee for Depositary Shares beneficially
owned by such soliciting dealer.
* The TOPrS have been rated "a2"/A. The Series B Cumulative Preferred
Stock is Rated: "a2"/A.
* The cash distributions rate on the TOPrS will be 75 basis points
greater than the dividend rate on the Depositary Shares (9% vs. 8.25%).
* Exchanges will be made on the basis of one TOPrS for each Depositary
Share validly tendered and accepted for exchange in the Offer. To
participate in the Offer, holders of Depositary Shares must submit a
Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions in the Prospectus and
the Letter of Transmittal prior to the Expiration Date.
* The Offer will allow Ford to achieve certain tax efficiencies because,
in contrast to dividend payments on the Depositary Shares which are not
deductible by Ford, the exchange will allow Ford to deduct interest
payments on the Junior Subordinated Debentures (which are the sole
asset of the Trust issuing the TOPrS) for federal income tax purposes.
* The TOPrS payments and distributions are guaranteed by Ford (to the
extent payments have been made by Ford under the Junior Subordinated
Debentures) on a subordinated basis to Senior Indebtedness. The
obligations of Ford under such guarantee will rank senior to all
capital stock now or hereafter issued by Ford, including the
Depositary Shares.
* Cash distribution payment dates on the TOPrS will be the last day of
March, June, September and December of each year.
* While no dividends are required to be paid with respect to the
Depositary Shares, distributions on the TOPrS may not be deferred for
more than 20 consecutive quarters. During an Extension Period,
distributions on the TOPrS will be deferred, but the Trust will
continue to accrue interest on the Junior Subordinated Debentures.
As a result, for tax purposes, beneficial owners of TOPrS during an
Extension Period will include their pro rata share of such interest in
their gross income in advance of the receipt of cash.
* Holders who tender Depositary Shares in the Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the
exchange of Depositary Shares pursuant to the Offer.
* Participation in the Offer will be a taxable event for holders of the
Depositary Shares.
* It is anticipated that persons who hold TOPrS as nominees for beneficial
holders will report the required tax information to beneficial holders
on Form 1099.
* To the extent Depositary Shares are tendered and accepted in the Offer,
the liquidity and trading market for the Depositary Shares outstanding
following the Offer could be adversely affected.
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
FOR INTERNAL USE ONLY
THIS MEMORANDUM RELATES TO AN EXCHANGE OFFER. IT IS MERELY A SUMMARY FOR
INFORMATIONAL PURPOSES FOR DEALER/MANAGER PERSONNEL; IT SHOULD BE READ WITH AND
IS QUALIFIED IN ITS ENTIRETY BY THE OFFERING DOCUMENT(S). UNDER NO
CIRCUMSTANCES MAY A COPY OF THIS REPORT BE SHOWN, QUOTED OR GIVEN TO ANY MEMBER
OF THE PUBLIC. UNDER NO CIRCUMSTANCES IS IT TO BE USED OR CONSIDERED AS A
RECOMMENDATION TO BUY OR SELL ANY SECURITY AND IS NOT TO BE USED TO SOLICIT
TENDERS OF SHARES. ALL FINANCIAL CONSULTANTS SHOULD READ THE PROSPECTUS AND THE
ACCOMPANYING LETTER OF TRANSMITTAL BEFORE DISCUSSING THE EXCHANGE OFFER WITH
SHAREHOLDERS.
<PAGE> 2
THE OFFER
This summary information does not purport to be complete and is to be read
with and is qualified in its entirety by the more detailed information and
financial data contained in, or incorporated by reference in, the Prospectus.
The capitalized terms used herein and not otherwise defined, are as defined in
the Prospectus.
<TABLE>
<S> <C>
The Offeror......................................... Ford Motor Company Capital Trust I (the "Trust").
Securities to be Issued............................. 9% Trust Originated Preferred Securities ("TOPrS(SM)) or "Preferred
Securities").
The Guarantor....................................... Ford Motor Company ("Ford").
The Depositary Shares............................... Series B Depositary Shares, each representing 1/2,000 of a share
of Series B Cumulative Preferred Stock of Ford, having a
liquidation preference of $25.00 per Depositary Share.
Depositary Shares Sought............................ Up to 44,600,000. (There are 45,600,000 Depositary Shares
currently outstanding.)
Ticker/Listing - Depositary Shares.................. F Pr B/NYSE.
Ticker/Listing - TOPrS.............................. F Pr T/NYSE.
Purpose of the Offer................................ The purpose of the Offer is to refinance the Depositary Shares
with the TOPrS to achieve certain tax efficiencies while
preserving Ford's flexibility with respect to future financings.
This refinancing will permit Ford to deduct interest payable on
the Junior Subordinated Debentures for United States federal
income tax purposes; dividends payable on the Depositary Shares
are not deductible.
Terms of the Offer.................................. Upon the terms and subject to the conditions set forth in the
Prospectus and in the Letter of Transmittal, the Trust will
exchange its TOPrS for up to 44,600,000 of the outstanding
Depositary Shares of Ford. The Offer will be effected on the
basis of one TOPrS for each Depositary Share validly tendered and
accepted for exchange in the Offer.
Expiration Date..................................... The Offer will expire at 12:00 midnight, New York City time, on
December 8, 1995, unless the Offer is extended.
Withdrawal Rights................................... Tenders of Depositary Shares pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless
accepted for exchange by the Trust, may be withdrawn at any time
after 40 Business Days after the date of the Prospectus.
Extensions; Amendments; Termination................. The Trust expressly reserves the right in its sole discretion,
subject to applicable law, to (i) extend, amend or modify the
terms of the Offer in any manner and (ii) withdraw or terminate
the Offer and not accept for exchange any Depositary Shares, upon
the failure of any of the conditions specified in the Prospectus,
including (without limitation) if fewer than 12,000,000 Depositary
Shares are tendered. However, the Trust will terminate the Offer
and not accept Depositary Shares validly tendered in the Offer if,
as of the Expiration Date, there are less than 400 record or
beneficial holders of less than 1,000,000 TOPrS to be issued in
exchange for such Depositary Shares (the "Minimum Distribution
Condition"), which condition may not be waived.
Procedures for Tendering............................ See "The Offer - Procedures for Tendering" in the Prospectus or
"Procedures for Tendering" herein.
Acceptance of Shares and Proration.................. Upon the terms and subject to the conditions of the Offer,
including the Minimum Distribution Condition, if 44,600,000 or
fewer Depositary Shares have been validly tendered and not
withdrawn prior to the Expiration Date, the Trust will accept
for exchange all such Depositary Shares. Upon the terms and
subject to the conditions
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
of the Offer, if more than 44,600,000 Depositary Shares (or, if decreased as
described in the Prospectus, such lesser number as the Trust may elect to
purchase pursuant to the Offer) have been validly tendered and not withdrawn
prior to the Expiration Date, the Trust will accept for exchange Depositary
Shares from each tendering Holder on a pro rata basis, subject to adjustment to
avoid the acceptance for exchange of fractional shares.
All Depositary Shares not accepted pursuant to the Offer, including shares
not purchased because of proration, will be returned to the tendering Holders at
the Trust's expense as promptly as practicable following the Expiration Date.
Solicitation Fee................................... A solicitation fee of $.50 for each Depositary Share validly tendered and
accepted for exchange pursuant to the Offer will be paid by Ford to
soliciting dealers designated by the record or beneficial owner, as appropriate,
of Depositary Shares. Soliciting dealers are not entitled to a solicitation fee
for Depositary Shares beneficially owned by such soliciting dealer.
Holders of Depositary Shares should be advised of the following: Ford will
pay the Dealer Managers a fee for each Depositary Share validly tendered and
accepted for exchange pursuant to the Offer.
Stock Transfer Tax................................. None, except as provided in the Instructions of the Letter of Transmittal.
Exchange Agent..................................... Chemical Bank has been appointed as Exchange Agent in connection with the Offer.
Information Agent.................................. Georgeson & Company Inc. has been retained by Ford and the Trust to act as
Information Agent for the Offer. Questions and requests for assistance,
requests for additional copies of the Prospectus and of the Letter of
Transmittal and requests for copies of the Notice of Guaranteed Delivery should
be directed to Georgeson & Company Inc., Wall Street Plaza, New York, New York
10005, telephone (for bankers and brokers) (212) 440-9800 (Call Collect) or (for
all others) (800) 223-2064 (Toll Free).
Dealer Managers.................................... Merrill Lynch & Co., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc.,
Goldman, Sachs & Co., Lehman Brothers, PaineWebber Incorporated and Smith
Barney Inc. have been retained as Dealer Managers in connection with the Offer.
</TABLE>
<PAGE> 4
TRUST ORIGINATED PREFERRED SECURITIES
("TOPRS(SM) OR "PREFERRED SECURITIES")
<TABLE>
<S> <C>
Issuer........................... Ford Motor Company Capital Trust I.
Maturity/Mandatory and
Optional Redemption.............. The TOPrS will be redeemed upon the maturity or earlier redemption of the Junior
Subordinated Debentures, at a redemption price equal to $25 per TOPrS, plus accrued and
unpaid dividends, if any. Ford will deposit in the Trust as trust assets its 9% Junior
Subordinated Debentures due 2025 (the "Junior Subordinated Debentures"), having an
aggregate principal amount equal to the aggregate stated liquidation amount of the
TOPrS and the proceeds received upon issuance of the Common Securities to be issued by
the Trust to Ford (the "Common Securities", and, together with the TOPrS, the "Trust
Securities"). The Junior Subordinated Debentures have a final maturity of December 31,
2025. The Junior Subordinated Debentures are redeemable at the option of Ford, in whole
or in part, on or after December 1, 2002, upon not less than 10 nor more than 60 days'
notice, at $25 per Junior Subordinated Debenture plus accrued and unpaid interest
thereon to the date of redemption, including interest accrued as a result of Ford's
election to defer payments of interest on the Junior Subordinated Debentures, payable
in cash.
In addition, upon the occurrence and during the continuation of a Tax Event or an
Investment Company Event (each a "Special Event" and as defined in the Prospectus)
arising from a change in law or a change in legal interpretation or certain other
specified circumstances, the Trust shall, unless the Junior Subordinated Debentures are
redeemed in the limited circumstances described in the Prospectus, be dissolved with
the result that the Junior Subordinated Debentures will be distributed to the holders
of the TOPrS and the Common Securities on a Pro Rata Basis, in lieu of any cash
distribution. In the case of certain Tax Events, Ford will also have the right in
certain circumstances to redeem the Junior Subordinated Debentures at any time with the
result that the Trust will redeem the Trust Securities on a Pro Rata Basis to the same
extent as the Junior Subordinated Debentures are redeemed. If the Junior Subordinated
Debentures are distributed to the holders of the Trust Securities, Ford will use its
best efforts to have the Junior Subordinated Debentures listed on the New York Stock
Exchange or on such other exchange as the TOPrS are then listed.
The Preferred Securities
Guarantee........................ Pursuant to the Preferred Securities Guarantee, Ford will agree, to the extent set forth
therein, to pay in full, to the holders of the TOPrS, the Guarantee Payments (as defined
below), to the extent not paid by the Trust, regardless of any defense, right of set-off
or counterclaim that the Trust may have or assert. The following payments or distributions
with respect to the Preferred Securities to the extent not paid or made by the Trust
(the "Guarantee Payments") will be subject to the Guarantee: (i) any accrued and unpaid
distributions on the Preferred Securities and the redemption price, including all accrued
and unpaid distributions to the date of the redemption, with respect to the Preferred
Securities called for redemption by the Trust but only if and to the extent that in each
case Ford has made a payment to the Institutional Trustee of interest or principal on the
Junior Subordinated Debentures and (ii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Trust (other than in connection with the distribution
of Junior Subordinated Debentures to holders of Trust Securities or the redemption of
all of the Preferred Securities upon the maturity or redemption of the Junior
Subordinated Debentures), the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor, and (b) the amount of
assets of the Trust remaining available for distribution to the holders of Preferred
Securities in liquidation of the Trust.
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Cash Distributions............... Cash distributions on the TOPrS will be cumulative from the first day following the
Expiration Date (the "Accrual Date") at an annual rate of 9% of the liquidation amount
of $25 per TOPrS, and will be payable quarterly in arrears on March 31, June 30,
September 30, and December 31 of each year, commencing on December 31, 1995.
Distributions in arrears will bear interest thereon at the rate per annum of 9%,
compounded quarterly (to the extent permitted by applicable law). The term
"distributions" as used herein includes such cash distributions and any such interest
payable unless otherwise stated. In addition, holders of the TOPrS will be entitled to
an additional cash distribution at the rate of 8.25% per annum of the liquidation
amount thereof from December 1, 1995 through the Expiration Date in lieu of dividends
accumulating after December 1, 1995 on their Depositary Shares accepted for exchange,
such additional distribution to be made on December 31, 1995 to holders of the TOPrS on
the record date for such distribution.
Distribution Extensions.......... So long as Ford shall not be in default in the payment of interest on the Junior
Subordinated Debentures, Ford has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment period
from time to time on the Junior Subordinated Debentures for a period not exceeding 20
consecutive quarterly interest periods (each, an "Extension Period"), during which no
interest shall be due and payable. In such an event, quarterly distributions on the
TOPrS would not be made (but would continue to accrue with interest thereon at the rate
of 9% per annum, compounded quarterly to the extent permitted by applicable law) by the
Trust during any such Extension Period. As a result, for tax purposes, beneficial
owners of TOPrS during an Extension Period will include their pro rata share of
interest on the Junior Subordinated Debentures in their gross income in advance of the
receipt of cash, and any holders who dispose of their TOPrS prior to the record date
for the payment of interest following such Extension Period will not receive from the
Trust any cash related thereto. No extension will be permitted with respect to the
distribution accruing from December 1, 1995 through the Expiration Date.
Upon the termination of any Extension Period and the payment of all amounts then due,
Ford may commence a new Extension Period, subject to the requirements described in the
Prospectus. Ford may also pay on any interest payment date all or any portion of the
interest accrued during an Extension Period. Consequently, there could be multiple
Extension Periods of varying lengths (up to six Extension Periods of 20 consecutive
quarterly interest periods each or more numerous shorter Extension Periods) throughout
the term of the Junior Subordinated Debentures.
Liquidation Distribution......... In the event of any voluntary or involuntary dissolution, liquidation, winding-up or
termination of the Trust, the holders of the Trust Securities at the date of
dissolution, winding-up or termination of the Trust will be entitled to receive on a
Pro Rata Basis solely out of the assets of the Trust, after satisfaction of liabilities
of creditors (to the extent not satisfied by Ford as provided in the Declaration), an
amount equal to the aggregate of the stated liquidation amount of $25 per Trust
Security plus accrued and unpaid distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, liquidation, winding-up or termination, Junior Subordinated Debentures in
an aggregate principal amount equal to the aggregate stated liquidation amount of such
Trust Securities and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid distributions on such Trust Securities, shall be distributed on a
Pro Rata Basis to the holders of Trust Securities in exchange therefor.
Voting Rights.................... Except as provided under "Description of the Preferred Securities -- Modification and
Amendment of the Declaration" and "Description of the Preferred Securities Guarantee --
Amendments and Assignment" in the Prospectus, and as otherwise required by the Delaware
Business Trust Act, the Trust Indenture Act and the Declaration, the holders of the
TOPrS will have no voting rights.
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
Dividends Received
Deduction ..................... Distributions on the TOPrS will not be eligible for the dividends received deduction
for corporate holders.
Book-Entry; Delivery and
Form ......................... TOPrS will be issued in fully registered form. Investors may elect to hold their TOPrS
directly or, subject to the rules and procedures of a Depository Institution (as
described in the Prospectus), hold interests in a global certificate (the "Preferred
Securities Global Certificate") registered in the name of a Depository Institution or
its nominee. However, tendering holders of Depositary Shares held in global form shall
initially receive an interest in the Preferred Securities Global Certificate and
tendering holders of Depositary Shares held directly in certificated form shall
initially receive TOPrS in certificated form, in each case unless otherwise specified
in the Letter of Transmittal.
Listing ...................... The TOPrS have been approved for listing on the New York Stock Exchange (the "NYSE"),
subject to notice of issuance. In order to satisfy the NYSE listing requirements,
acceptance of Depositary Shares validly tendered in the Offer is subject to the Minimum
Distribution Condition, which condition may not be waived.
Although the Dealer Managers have indicated to the Trust that they intend to make a
market in the Preferred Securities following the Expiration Date as permitted by
applicable laws and regulations prior to the commencement of trading on the NYSE, they
are not obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Preferred Securities.
</TABLE>
<PAGE> 7
FORD MOTOR COMPANY
Ford is the second-largest producer of cars and trucks in the world,
and ranks among the largest providers of financial services in the United
States. Ford was incorporated in Delaware in 1919 and acquired the business of
a Michigan company, also known as Ford Motor Company, incorporated in 1903 to
produce automobiles designed and engineered by Henry Ford.
Ford's two principal business segments are Automotive and Financial
services. The activities of the Automotive segment consist of the design,
manufacture, assembly and sale of cars and trucks and related parts and
accessories. Substantially all of Ford's automotive products are marketed
through retail dealerships, most of which are privately owned and financed.
The Financial Services segment is comprised of the following direct
subsidiaries, the activities of which include financing operations, vehicle and
equipment and leasing and insurance operations: Ford Motor Credit Company
("Ford Credit"), Ford Credit Europe plc ("Ford Credit Europe"), Ford Holdings,
Inc. ("Ford Holdings"), The Hertz Corporation and Granite Management
Corporation (formerly First Nationwide Financial Corporation). Ford Holdings
is a holding company that owns primarily Associates First Capital Corporation
("The Associates"), USL Capital Corporation (formerly United States Leasing
International, Inc.) ("USL Capital") and the American Road Insurance Company.
In addition, there are a number of international affiliates not listed above
that are consolidated in the total Financial Services results, but are managed
by either Ford Credit (which manages Ford Credit Europe, as well as other
international affiliates), The Associates or USL Capital.
FORD MOTOR COMPANY CAPITAL TRUST I
The Trust is a statutory business trust that was formed under the
Delaware Business Trust Act on September 19, 1995. The Trust's original
declaration of trust will be amended and restated in its entirety as of the
date the Trust accepts depositary shares in the offer. Upon issuance of the
Preferred Securities, the holders thereof will own all of the issued and
outstanding Preferred Securities. Ford has agreed to acquire Common Securities
in an amount equal to at least 3% of the total capital of the Trust and will
own, directly or indirectly, all of the issued and outstanding Common
Securities. The TOPrS and the Common Securities will have equivalent terms;
provided that (i) if an event of default under the Declaration occurs and is
continuing, the holders of TOPrS will have a priority over holders of the
Common Securities with respect to the payments in respect of distributions and
payments upon liquidation, redemption or otherwise and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration)
to appoint, remove or replace Trustees and to increase or decrease the number
of Trustees.
The Trust exists for the purpose of (a) issuing (i) its Preferred
Securities in exchange for Depositary Shares validly tendered in the offer and
delivering such Depositary Shares to Ford in consideration of the deposit by
Ford as trust assets of Junior Subordinated Debentures having an aggregate
stated principal amount equal to the aggregate stated liquidation amount of
such Preferred Securities and (ii) its Common Securities to Ford in exchange
for cash and investing the proceeds thereof in an equivalent amount of Junior
Subordinated Debentures and (b) engaging in such other activities as are
necessary or incidental thereto.
<PAGE> 8
FINANCIAL REVIEW OF FORD AND RECENT DEVELOPMENTS
OVERVIEW
Ford earned $357 million in the third quarter of 1995, compared with earnings
of $1.12 billion for the third quarter of 1994. In the first nine months of
this year, Ford earned $3.5 billion, compared with $3.7 billion through the
first nine months in 1994.
In this year's third quarter, lower production volume, primarily in the United
States, was the single largest factor explaining Ford's decline in earnings.
Ford's sales to dealers in the U.S. were 869,000 units, down 123,000 units, or
12%, from the third quarter of 1994. The decrease reflected unusually high
production in the year-ago period as well as units lost in the third quarter of
1995 because of major new model launches and component shortages.
AUTOMOTIVE
Ford's worldwide automotive operations experienced a loss of $201 million in
the third quarter of 1995, compared with earnings of $619 million in the third
quarter of 1994. In the U.S., Ford earned $187 million for the quarter, down
$366 million from a year earlier. Lower production volumes and costs
associated with introducing new models accounted for the decrease in earnings.
Cost efficiencies were partial offsets.
In Europe, Ford's automotive operations incurred a loss of $320 million,
compared with a loss of $37 million a year earlier. The larger losses in
Europe were explained by lower volume and higher marketing costs, the cost of
introducing new models and unfavorable foreign exchange effects.
Outside of Europe and the U.S., Ford posted a loss of $68 million, compared
with a profit of $103 million a year earlier. The decline is primarily
attributable to operations in Brazil, where higher import duties and a market
shift to small cars have resulted in excess inventories and higher marketing
costs.
From now through early next year, Ford is launching the new Ford Taurus,
Mercury Sable, F-150 pick-up truck, Ford Escort and Mercury Tracer in North
America, and the Ford Galaxy and Fiesta in Europe. In the U.S., the new
products will represent about 35% of Ford's volume compared to more typical
years when new products represent about 10% to 15% of volume. In Europe, the
Fiesta is Ford's highest volume product.
FINANCIAL SERVICES
Ford's Financial Services Group earned a record $558 million in the third
quarter of 1995, up $53 million from the year earlier period.
Each of the major businesses in the Group set third-quarter records. Ford
Credit's profit of $357 million was up $42 million from a year earlier.
Associates Corporation of North America earned $188 million, up $26 million
from a year earlier. USL Capital earned $31 million, up $4 million from a year
earlier.
Ford is reviewing possible strategic actions with respect to its Financial
Services operations. Such actions could include the partial or complete sale
of USL Capital and the partial sale of The Associates.
Ford Holdings has announced its intention to exchange for cash its preferred
stock (totaling about $2 billion) by means of a cash-out merger, subject to
approval by the holders of a majority of the voting power of the outstanding
capital stock of Ford Holdings. Ford and Ford Credit together own all the
outstanding common stock of Ford Holdings, representing 75% of the combined
voting power of all classes of capital stock of Ford Holdings. Therefore
stockholder approval is assured. Ford Holdings will pay the preferred
stockholders the liquidation preference of the stock (i.e., the price at which
the stock was originally issued), plus accrued dividends. It is anticipated
that the merger will become effective by the end of 1995.
FOURTH QUARTER OUTLOOK
Ford expects that its net income in the fourth quarter of 1995 will be higher
than its net income of $357 million in the third quarter of 1995, but will be
well below its net income of $1,569 million in the fourth quarter of 1994.
Lower production in North America, the continuation of major new product
launches in North Americas (F-150) and in Europe (Fiesta), higher costs
associated with additional reductions in personnel and continued adverse
foreign exchange effects are expected to result in lower earnings in the fourth
quarter this year compared with a year ago.
<PAGE> 9
LONGER-TERM OUTLOOK
In the U.S., Ford expects that the strong growth experienced from 1993 to 1994
will slow to a more sustainable pace in the 1995 to 1997 period, with industry
sales of 15 million or more units per year. In Europe, Ford expects the
economic recovery there to gain pace and industry volumes should improve for
the next several years.
While Ford's automotive margins have declined this year, Ford expects them to
improve in future years, as the benefits of Ford 2000 (the global
reorganization of Ford's automotive operations) are realized.
ACCOUNTING CHANGES
The Emerging Issues Task Force (The "EITF") of the Financial Accounting
Standards Board is considering an accounting issue that concerns timing of
revenue recognition when a manufacturer conditionally guarantees the resale
value of a product or agrees to repurchase the product at a fixed price (Issue
95-1). For Ford, this issue affects primarily sales through dealers to certain
daily rental companies where the daily rental company has an option to require
Ford to repurchase vehicles. Ford recognizes revenue upon the sale of vehicles
to dealers, including vehicles that subsequently are sold to daily rental
companies. If the EITF determines such sales should be accounted for as
operating leases, with revenues and income deferred and recognized over the
term of the lease, Ford would be required to change its accounting for such
transactions. The effect of this change, if required, on Ford's financial
results is not expected to be material relative to full year 1995 earnings, but
it could be material in the quarter in which the accounting change is made. If
required, the change could be made either on a prospective basis or on a
one-time cumulative basis; in either case, there would be no effect on Ford's
cash flow.
<PAGE> 10
RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO THE OFFER
Prospective exchanging holders of Depositary Shares who plan to participate in
the Offer should carefully consider, in addition to the other information set
forth elsewhere herein and in the Prospectus, the following:
EXCHANGE OF DEPOSITARY SHARES FOR TOPRS IS A TAXABLE EVENT
The exchange of Depositary Shares for TOPrS pursuant to the Offer will be a
taxable event. Generally, gain or loss will be recognized in an amount equal to
the difference between the fair market value on the Expiration Date of the
holder's pro rata share of the Junior Subordinated Debentures represented by
the TOPrS received in the exchange and the exchanging Holder's tax basis in the
Depositary Shares exchanged therefor. All Holders of Depositary Shares are
advised to consult their tax advisors regarding the United States federal,
state, local and foreign tax consequences of the exchange of Depositary Shares
and the issuance of TOPrS.
CORPORATE HOLDERS OF TOPRS NOT ENTITLED TO DIVIDENDS RECEIVED DEDUCTION
While dividends with respect to the Depositary Shares are eligible for the
dividends received deduction for corporate holders, distributions on the TOPrS
are not eligible for the dividends received deduction for corporate holders.
RANKING OF SUBORDINATED OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE AND
JUNIOR SUBORDINATED DEBENTURES
The obligations of Ford under the Junior Subordinated Debentures are unsecured
obligations of Ford and will be subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Prospectus) of Ford, except
obligations and securities made pari passu or subordinate by their terms, but
senior to all capital stock now or hereafter issued by Ford and to any
guarantee now or hereafter entered into by Ford in respect of its capital
stock. Ford's obligations under the Preferred Securities Guarantee are
unsecured and will rank (i) subordinate and junior in right of payment to all
Senior Indebtedness of Ford, and to the Junior Subordinated Debentures, and
(ii) senior to all capital stock now or hereafter issued by Ford and to any
guarantee now or hereafter entered into by Ford in respect of its capital
stock. At September 30, 1995, liabilities of Ford on a consolidated basis
aggregated approximately $211.6 billion. The terms of the Preferred
Securities, the Junior Subordinated Debentures or the Preferred Securities
Guarantee do not limit the ability of Ford to incur additional indebtedness or
other liabilities, including indebtedness that ranks senior to or pari passu
with the Junior Subordinated Debentures and the Preferred Securities Guarantee,
or the ability of its subsidiaries to incur additional indebtedness or other
liabilities.
TRUST DISTRIBUTION DEPENDENT ON FORD'S PAYMENTS ON JUNIOR SUBORDINATED
DEBENTURES
The Trust's ability to make distributions and other payments on the
TOPrS is solely dependent upon Ford making interest and other payments on the
Junior Subordinated Debentures deposited as trust assets as and when required.
If Ford were not to make distributions or other payments on the Junior
Subordinated Debentures for any reason, including as a result of Ford's
election to defer the payment of interest on the Junior Subordinated Debentures
by extending the interest period on the Junior Subordinated Debentures, the
Trust will not make payments on the Trust Securities. In such an event, holders
of the TOPrS would not be able to rely on the Preferred Securities Guarantee
since distributions and other payments on the TOPrS are subject to such
Guarantee only if and to the extent that Ford has made a payment to the Trust
of interest or principal on the Junior Subordinated Debentures deposited in the
Trust as trust assets. Instead, holders of TOPrS would rely on the enforcement
by the Institutional Trustee of its rights against Ford pursuant to the terms
of the Indenture. However, if the Trust's failure to make distributions on the
TOPrS is a consequence of Ford's exercise of its right to extend the interest
payment period for the Junior Subordinated Debentures, the Institutional
Trustee will have no right to enforce the payment of distributions on the TOPrS
until an Event of Default under the Declaration shall have occurred.
The Declaration provides that Ford shall pay for all debts and obligations
(other than with respect to the Trust Securities) and all costs and expenses of
the Trust, including any taxes and all costs and expenses with respect thereto,
to which the Trust may become subject, except for United States withholding
taxes.
FORD MAY DEFER INTEREST PAYMENTS ON JUNIOR SUBORDINATED DEBENTURES
So long as Ford shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Ford has the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures by extending the
interest payment period from time to time on the Junior Subordinated Debentures
for an Extension Period not exceeding 20 consecutive quarterly interest
periods, during which no interest shall be due and payable, provided that no
Extension Period may extend beyond the maturity of the Junior Subordinated
Debentures. In such an event, quarterly distributions on the TOPrS would not be
made (but would continue to accrue with interest thereon at the rate of 9% per
annum, compounded quarterly to the extent permitted by applicable law) by the
Trust during any such Extension Period. If Ford exercises the right to extend
an interest payment period, Ford may not during such
<PAGE> 11
Extension Period declare or pay dividends on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock or any other securities similar to the TOPrS or the
Junior Subordinated Debentures or make any guarantee payments with respect
thereto; provided that Ford will be permitted to pay dividends (and cash in
lieu of fractional shares) upon the conversion, other than at the option of
Ford, of any of its preferred stock, including its Series A Cumulative
Convertible Preferred Stock, in accordance with the terms of such stock. Any
Extension Period with respect to payment of interest on the Junior Subordinated
Debentures, other debt securities of Ford under the Indenture or on any similar
securities will apply to all such securities and will also apply to
distributions with respect to the Preferred Securities and all other securities
with similar terms.
Prior to the termination of any Extension Period, Ford may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarterly
interest periods. Upon the termination of any Extension Period and the payment
of all amounts then due, Ford may commence a new Extension Period, subject to
the above requirements. Ford may also pay on any interest payment date all or
any portion of the interest accrued during an Extension Period. Consequently,
there could be multiple Extension Periods of varying lengths (up to six
Extension Periods of 20 consecutive quarterly interest periods each or more
numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures.
TAX CONSEQUENCES OF EXTENSION OF INTEREST PAYMENT PERIODS
Because Ford has the right to extend the interest payment period up to 20
consecutive quarterly interest periods on various occasions, the Junior
Subordinated Debentures will be treated as issued with "original issue
discount" for United States federal income tax purposes. As a result, holders
of TOPrS will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. Generally, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures will
be accounted for as "original issue discount" and actual distributions of
stated interest will not be separately reported as taxable income.
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, Ford has the right to extend an interest payment period on
the Junior Subordinated Debentures from time to time for periods not exceeding
20 consecutive quarterly interest periods. If Ford determines to extend an
interest payment period, or if Ford thereafter extends an Extension Period or
pays interest accrued during an Extension Period as described above, the market
price of the TOPrS is likely to be adversely affected. In addition, as a result
of such rights, the market price of the TOPrS (which represent an undivided
interest in Junior Subordinated Debentures) may be more volatile than other
securities on which original issue discount accrues that do not have such
rights. A holder that disposes of its TOPrS during an Extension Period,
therefore, may not receive the same return on its investment as a holder that
continues to hold its TOPrS.
LACK OF ESTABLISHED TRADING MARKET FOR TOPRS
The TOPrS constitute a new issue of securities of the Trust with no established
trading market. While the TOPrS have been approved for listing on the NYSE,
subject to notice of issuance, there can be no assurance that an active market
for the TOPrS will develop or be sustained in the future on such exchange.
Although the Dealer Managers have indicated to Ford and the Trust that they
intend to make a market in the TOPrS following the Expiration Date, as
permitted by applicable laws and regulations prior to the commencement of
trading on the NYSE, they are not obligated to do so and may discontinue any
such market-making at any time without notice. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the TOPrS. In order to
satisfy the NYSE listing requirements, acceptance of Depositary Shares validly
tendered in the Offer is subject to the Minimum Distribution Condition, which
condition may not be waived by Ford or the Trust.
REDUCED TRADING MARKET FOR DEPOSITARY SHARES
To the extent Depositary Shares are tendered and accepted in the Offer, the
liquidity and trading market for the Depositary Shares to be outstanding
following the Offer, and the terms upon which such Depositary Shares could be
sold, could be adversely affected. In addition, if the Offer is substantially
subscribed or oversubscribed, there would be a significant risk that round lot
holdings of Depositary Shares outstanding following the Offer would be limited.
The Offer is for up to 44,600,000 Depositary Shares (or 98% of the 45,600,000
Depositary Shares outstanding), rather than for all the outstanding Depositary
Shares, to reduce the risk that the Depositary Shares would be subject to
delisting following consummation of the Offer.
Under the rules of the NYSE, preferred securities such as the Depositary Shares
are subject to delisting if (i) the aggregate value of publicly-held shares is
less than $2 million and (ii) the number of publicly-held shares is less than
100,000. Since at least 1,000,000 Depositary Shares will remain outstanding
following consummation of the Offer,
<PAGE> 12
the number of outstanding Depositary Shares will exceed the delisting criteria
set forth in clause (ii) above. In addition, based on the market price of the
Depositary Shares on the NYSE ($27 on November 1, 1995) and the closing
sales price of the Depositary Shares on the NYSE on the last full trading day
immediately prior to Ford's first public announcement of the Offer ($27.50 on
September 19, 1995), the Company believes that the aggregate value of the
minimum number (1,000,000) of Depositary Shares which will be outstanding
following consummation of the Offer should exceed the delisting criteria set
forth in clause (i) above. If less than 44,600,000 Depositary Shares are
validly tendered, then the number of Depositary Shares remaining outstanding,
and the market value thereof, will be even greater.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence and during the continuation of a Tax Event or Investment
Company Event (each as defined in the Prospectus), which may occur at any time,
the Trust shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be dissolved, with the result that
Junior Subordinated Debentures having an aggregate principal amount equal to
the aggregate stated liquidation amount of, and bearing accrued and unpaid
interest equal to accrued and unpaid distributions on, the TOPrS and Common
Securities would be distributed on a Pro Rata Basis to the holders of the TOPrS
and Common Securities in liquidation of the Trust. In the case of certain Tax
Events, in certain circumstances, Ford shall have the right to redeem at any
time the Junior Subordinated Debentures, in whole or in part, in which event
the Trust will redeem the TOPrS and Common Securities on a Pro Rata Basis to
the same extent as the Junior Subordinated Debentures are redeemed. There can
be no assurance as to the market prices for TOPrS or the Junior Subordinated
Debentures which may be distributed in exchange for TOPrS if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Junior Subordinated
Debentures which the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price of the Depositary Shares exchanged.
Under current United States federal income tax law, a distribution of the
Junior Subordinated Debentures upon a Tax Event or Investment Company Event
would not be a taxable event to holders of the Preferred Securities.
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will not be
able to appoint, remove or replace, or to increase or decrease the number of,
Trustees, which rights are vested exclusively in the Common Securities.
Holders of Depositary Shares also have limited voting rights. However, in the
event that dividends on all series of preferred stock, including the Series B
Preferred, are in arrears and unpaid for such number of dividend periods which
shall in the aggregate contain not less than 540 days, the Board of Directors
is required to be increased by two directors and the holders of Series B
Preferred, together with the holders of all other series of preferred stock
then entitled to vote thereon, would be entitled to elect two directors of the
expanded Board of Directors with certain exceptions.
The Indenture contains no provisions which would afford the holders of Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving Ford or a change of control of Ford.
<PAGE> 13
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
ALL HOLDERS OF DEPOSITARY SHARES ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS
TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF
DEPOSITARY SHARES FOR TOPRS AND OF THE OWNERSHIP AND DISPOSITION OF TOPRS IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE,
LOCAL OR OTHER TAX LAWS.
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Gain or loss generally will be recognized in an
amount equal to the difference between the fair market value on the Expiration
Date of the holder's pro rata share of the Junior Subordinated Debentures
represented by the Preferred Securities received in the exchange and the
exchanging Holder's tax basis in the Depositary Shares surrendered. For this
purpose, the fair market value of the Junior Subordinated Debentures deemed
issued in exchange for Depositary Shares on the Expiration Date will equal the
fair market value of the TOPrS on that date.
The Junior Subordinated Debentures will be treated as issued with "original
issue discount" for United States federal income tax purposes. Holders of
Preferred Securities (each a "Securityholder") will be required to include
their pro rata share of original issue discount in gross income as it accrues
on the Junior Subordinated Debentures in advance of the receipt of cash.
Generally, all of a Securityholder's taxable interest income with respect to
the Junior Subordinated Debentures will be accounted for as "original issue
discount" and actual distributions of stated interest will not be separately
reported as taxable income.
While dividends on the Depositary Shares are eligible for the dividends
received deduction for corporate holders, distributions on the TOPrS are not
eligible for the dividends received deduction for corporate holders.
The Preferred Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A Securityholder who disposes of his Preferred
Securities and does not receive a payment of interest from the Trust for the
period in which the disposition occurs will nevertheless be required to include
accrued but unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income, and to add such amount to the
adjusted tax basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. Accordingly, such a Securityholder will
recognize a capital loss to the extent the selling price (which may not fully
reflect the value of accrued but unpaid interest) is less than the
Securityholder's adjusted tax basis (which will include accrued but unpaid
interest). Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes.
INFORMATION SOURCES
Questions and requests for assistance regarding the Offer, requests for copies
of the Prospectus and the Letter of Transmittal, and requests for copies of the
Notice of Guaranteed Delivery may be directed to the following:
GEORGESON & COMPANY INC.
(Information Agent)
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (Toll-Free)
Banks and Brokers, Call Collect:
(212) 440-9800
Questions about the Offers and tender procedures should be directed to:
Questions about the Offer may also be directed to:
<PAGE> 14
PROCEDURES FOR TENDERING
Each holder of the Depositary Shares wishing to participate in the Offer must
(i) properly complete and sign the Letter of Transmittal or a facsimile thereof
in accordance with the instructions contained in the Prospectus and in the
Letter of Transmittal, together with any required signature guarantees, and
deliver the same to Chemical Bank as Exchange Agent, at one of its addresses
set forth below prior to the Expiration Date and either (a) certificates for
the Depositary Shares must be received by the Exchange Agent at such address or
(b) such Depositary Shares must be transferred pursuant to the procedures for
book-entry transfer described in the Prospectus and a confirmation of such
book-entry transfer must be received by the Exchange Agent, in each case prior
to the Expiration Date, or (ii) comply with the guaranteed delivery procedures
described in the Prospectus.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST SUBMIT
A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN
ACCORDANCE WITH THE INSTRUCTIONS CONTAINED IN THE PROSPECTUS AND IN THE LETTER
OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT--NOT TO FORD, THE TRUST, THE DEALER
MANAGERS OR THE INFORMATION AGENT.
THE EXCHANGE AGENT FOR THE OFFER IS:
CHEMICAL BANK
BY MAIL:
c/o Chemical Mellon Shareholder Services
Midtown Station
P.O. Box 837
New York, NY 10018
<TABLE>
<S> <C> <C>
BY OVERNIGHT COURIER IN NEW YORK: BY FACSIMILE TRANSMISSION: BY HAND:
C/O CHEMICAL MELLON (FOR ELIGIBLE INSTITUTIONS ONLY) c/o Chemical Mellon
Shareholder Services (201) 296-4293 Shareholder Services
85 Challenger Road Reorganization Department
Ridgefield Park, NJ 07660 CONFIRM BY TELEPHONE 120 Broadway, 13th Floor
(201) 296-4209 New York, NY 10271
</TABLE>
Any questions or requests for assistance or additional copies of the
Prospectus, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone number and locations set
forth on the previous page. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning the
Offer.
<PAGE> 15
QUESTIONS AND ANSWERS
RELATING TO THE OFFER (THE "OFFER") BY
FORD MOTOR COMPANY CAPITAL TRUST I (THE "TRUST")
TO EXCHANGE ITS
9% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)")
FOR SERIES B DEPOSITARY SHARES OF
FORD MOTOR COMPANY (THE "COMPANY")
Please note that the following information does not purport to be complete and
is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Prospectus dated November 3, 1995 (the
"Prospectus") and the Letter of Transmittal (which together constitute the
Offer). Please refer to the Prospectus for details of the Offer and defined
terms used herein.
1. Q: WHAT ARE THE TERMS OF THE OFFER?
A: The Trust will exchange one TOPrS for each Series B Depositary Share
issued by the Company. See "The Offer" in the Prospectus.
2. Q: WHAT ARE TOPRS?
A: TOPrS represent preferred interests in the Trust's assets,
consisting solely of Junior Subordinated Debentures due 2025
issued by the Company. TOPrS securities pay quarterly
distributions corresponding to the interest rate and the payment
dates for the Junior Subordinated Debentures. See "Description
of the Preferred Securities" in the Prospectus.
3. Q: WHAT IS THE PURPOSE OF THE OFFER?
A: The principal purpose is to refinance the Depositary Shares with the
TOPrS to achieve certain tax efficiencies and to preserve
flexibility with respect to future financings. The refinancing will
permit the Company to deduct interest payable on the Junior
Subordinated Debentures for United States federal income tax
purposes, while the dividends payable on the Depositary Shares are
not deductible.
4. Q: WILL THE TOPRS BE LISTED ON THE NEW YORK STOCK EXCHANGE?
A: Yes. The ticker symbol will be "F Pr T".
5. Q: ARE THE TOPRS RATED?
A: As of the date of the Prospectus, the TOPrS have been rated by
Moody's and by Standard & Poor's and have the same ratings as the
Depositary Shares.
6. Q: HOW ARE THE TOPRS GUARANTEED?
A: Payments of dividends on the TOPrS and on liquidation or redemption
are guaranteed on a subordinated basis by the Company, only if
and to the extent payments have been made on the Junior Subordinated
Debentures. See "Description of the Preferred Securities Guarantee"
in the Prospectus.
7. Q: ARE THE REDEMPTION PROVISIONS OF THE TOPRS DIFFERENT FROM THE
DEPOSITARY SHARES?
A: Yes. While the Depositary Shares have no maturity date, the TOPrS
will be redeemed following repayment of the Junior Subordinated
Debentures upon their December 31, 2025 final maturity date or
earlier redemption. The Junior Subordinated Debentures and the
Depositary Shares (under certain circumstances) are redeemable at
the option of the Company on or after December 1, 2002. The
redemption price of $25 per share is the same for the Junior
Subordinated Debentures and the Depositary Shares. See
"Description of the Preferred Securities", "Description of the
Series B Preferred and Depositary Shares", and "Prospectus Summary
- Potential Risks to Exchanging Holders" in the Prospectus.
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE> 16
DISTRIBUTION AND DIVIDEND MATTERS
8. Q: HOW DOES THE DISTRIBUTION RATE ON THE TOPRS COMPARE TO THE
DIVIDEND RATE ON THE DEPOSITARY SHARES?
A: The distribution rate on the TOPrS is 9% per annum, while the
dividend rate for the Depositary Shares is 8.25% per annum.
9. Q: WILL DISTRIBUTIONS ON THE TOPRS BE PAID ON THE SAME SCHEDULE
AS DIVIDENDS ON THE DEPOSITARY SHARES?
A: No, there is a different payment schedule. Distributions on
the TOPrS will be paid on March 31, June 30, September 30 and
December 31, while dividends are paid on the Depositary Shares
on March 1, June 1, September 1 and December 1.
10. Q: THE NEXT SCHEDULED DIVIDEND PAYMENT DATE ON THE DEPOSITARY
SHARES IS DECEMBER 1, 1995. WILL THAT DIVIDEND BE PAID ON
DEPOSITARY SHARES THAT ARE EXCHANGED IN THE OFFER?
A: Yes. However, holders who exchange their Depositary Shares
in the Offer will not be paid dividends on those Depositary
Shares for any period after December 1, 1995. Instead, such
holders will be entitled to receive distributions on their new
TOPrS at the rate of 8.25% per annum from December 1, 1995 up
to and including the Expiration Date of the Offer, and 9% per
annum thereafter, with the first payment to be made on
December 31, 1995. see "Description of the Preferred
Securities - Distributions" in the Prospectus.
11. Q: EXPLAIN THE 20 QUARTER DIVIDEND DEFERRAL PROVISION OF THE TOPRS?
A: Quarterly interest payments on the Junior Subordinated
Debentures may be deferred for one or more periods of up to 20
consecutive quarters each, at the option of the Company. in
the case of any such deferral, distributions on the TOPrS will
be similarly deferred. The Junior Subordinated Debentures
have a maturity date which may not be extended. see
"Description of the Preferred Securities - Distributions" in
the Prospectus. Quarterly dividend payments on the Depositary
Shares are payable only if declared by the Company's Board of
Directors and such dividends may be deferred indefinitely. To
date, the Company has made each quarterly dividend payment
with respect to the Depositary Shares on the scheduled
dividend payment date. The Depositary Shares have no maturity
date.
Deferred TOPrS distributions continue to accrue and,
if in arrears, compound quarterly at a rate equal to 9% per
annum. However, while dividends on the Depositary Shares
accrue if dividends are suspended, there is no such
compounding feature. During such a deferral, the Trust will
continue to accrue interest income (as original issue discount)
in respect of the Junior Subordinated Debentures which will be
taxable to beneficial owners of TOPrS. As a result, beneficial
owners of TOPrS during such a deferral will include their pro
rata share of the interest in gross income in advance of the
receipt of cash.
TAX ISSUES
12. Q: WILL THE EXCHANGE OF TOPRS FOR DEPOSITARY SHARES CONSTITUTE A
TAXABLE EVENT?
A: Yes. The Company recommends that each holder read the section
entitled "Taxation" in the Prospectus and consult their own
tax advisor.
13. Q: WHAT WILL BE THE INITIAL TAX BASIS FOR THE TOPRS?
A: The initial tax basis of TOPrS acquired in the Offer will be
equal to the fair market value of the TOPrS on the Expiration
Date of the Offer. See "Taxation" in the Prospectus.
14. Q: HOW WILL DISTRIBUTIONS ON THE TOPRS BE REPORTED TO THE IRS?
A: Distribution on the TOPrS will be reported on Form 1099-OID.
15. Q: CORPORATE HOLDERS CAN CLAIM THE DIVIDENDS RECEIVED DEDUCTION
ON DIVIDENDS ON THE DEPOSITARY SHARES. ARE DISTRIBUTIONS ON
THE TOPRS ELIGIBLE FOR THAT DEDUCTION FOR CORPORATE HOLDERS?
A: No.
<PAGE> 17
PROCEDURES FOR EXCHANGING DEPOSITARY SHARES
16. Q: IF DEPOSITARY SHARES ARE REGISTERED IN MY NAME, HOW DO I PARTICIPATE IN
THE OFFER?
A: You should have received a package from Chemical Bank consisting of
this Question and Answer sheet and:
* Prospectus dated November 3, 1995,
* Letter of Transmittal (printed on blue paper) bearing a pre-printed
label with your account name and address,
* Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9,
* Notice of Guaranteed Delivery,
* Letter from the Chairman of Ford Motor Company, and
* Return envelope addressed to Chemical Bank.
If, after reviewing these materials carefully, you decide to
participate in the Offer, complete the Letter of Transmittal and
send it with your certificate(s) representing Depositary Shares to
Chemical Bank as Exchange Agent at either of the addresses shown on
the Letter of Transmittal. It is recommended that you use
registered or certified mail.
Holders of record may also contact their broker to exchange
their Depositary Shares on their behalf. And if you cannot deliver
your certificate(s) to the Exchange Agent before the Expiration
Date, then you must arrange for your broker to guarantee delivery
of your Depositary Shares. See "The Offer - Procedures for
Tendering" in the Prospectus.
17. Q: IF MY DEPOSITARY SHARES ARE HELD BY A BROKER OR BANK FOR MY ACCOUNT, HOW
DO I PARTICIPATE IN THE OFFER?
A: If your Depositary Shares are held by a broker or bank for your
account, you should have received a package from them as holder of
record containing, along with this Question and Answer sheet, the
following:
* Prospectus dated November 3, 1995,
* Letter of Transmittal for information only,
* Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9,
* Notice of Guaranteed Delivery,
* Letter from the Chairman of Ford Motor Company, and
* Cover letter or notice from your broker or bank.
If you decide to participate in the Offer, you must contact your broker
or bank to tender your Depositary Shares on your behalf. See "The Offer
- Procedures for Tendering - Special Procedure for Beneficial Owners"
in the Prospectus.
18. Q: ONCE I HAVE TENDERED MY DEPOSITARY SHARES (OR INSTRUCTED MY BROKER OR
BANK TO TENDER THEM ON MY BEHALF), MAY I WITHDRAW THEM FROM THE OFFER?
A: Yes, tenders of Depositary Shares may be withdrawn at any time prior
to the Expiration date and, unless accepted for exchange by the Trust,
may be withdrawn at any time after 40 business days from the date of the
Prospectus. See "The Offer - Withdrawal of Tenders" in the Prospectus.
19. Q: WHEN DOES THE OFFER EXPIRE?
A: At 12:00 midnight, New York City Time, on Friday, December 8, 1995
unless extended by the Trust. The Trust may also amend or terminate
the Offer as described in the Prospectus.
FOR ADDITIONAL DETAILS, OR IF YOU HAVE ANY QUESTIONS,
PLEASE CALL THE INFORMATION AGENT.
GEORGESON & COMPANY INC.
(800) 223-2064 (TOLL-FREE)
BANKS AND BROKERS, CALL COLLECT:
(212) 440-9800
<PAGE> 18
NOTES
