SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 7, 1995
----------------
FORD MOTOR COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
1-3950 38-0549190
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
The American Road, Dearborn, Michigan 48121
- --------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
------------
<PAGE>
Item 5. Other Events.
- --------------------
The Consolidated Financial Statements of Ford Motor Company and
Subsidiaries for the year ended and at December 31, 1994, together with the
Report on Examination thereof by Coopers & Lybrand, independent certified
public accountants, filed as Exhibit 20 to this Current Report on Form 8-K,
are incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ---------------------------------------------------------------------------
EXHIBITS
--------
Designation Description Method of Filing
- ----------- ----------- ----------------
Exhibit 20 Consolidated Financial Statements Filed with this Report.
of Ford and Subsidiaries for the
year ended and at December 31, 1994,
together with the Report on Examination
thereof by Coopers & Lybrand, independent
certified public accountants.
Exhibit 23 Consent of Experts. Filed with this Report.
Exhibit 27.1 Financial Data Schedule - Filed with this Report.
Automotive
Exhibit 27.2 Financial Data Schedule - Filed with this Report.
Financial Services
Exhibit 27.3 Financial Data Schedule - Filed with this Report.
Consolidated
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 on the date indicated.
FORD MOTOR COMPANY
(Registrant)
Date: February 7, 1995 By:/s/T. J. DeZure
T. J. DeZure
Assistant Secretary
<PAGE>
EXHIBIT INDEX
-------------
Designation Description Page
- ----------- ----------- ----
Exhibit 20 Consolidated Financial Statements
of Ford and Subsidiaries for the
year ended and at December 31, 1994,
together with the Report on Examination
thereof by Coopers & Lybrand, independent
certified public accountants.
Exhibit 23 Consent of Exports.
Exhibit 27.1 Financial Data Schedule -
Automotive
Exhibit 27.2 Financial Data Schedule -
Financial Services
Exhibit 27.3 Financial Data Schedule -
Consolidated
a:\8kcov
<TABLE>
Ford Motor Company and Subsidiaries
HIGHLIGHTS
-----------
<CAPTION>
Fourth Quarter Full Year
------------------------- -------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Worldwide factory sales of cars
and trucks (in thousands)
- - United States 1,062 941 4,276 3,824
- - Outside United States 584 512 2,363 2,141
----- ----- ----- -----
Total 1,646 1,453 6,639 5,965
===== ===== ===== =====
Sales and revenues (in millions)
- - Automotive $27,766 $23,511 $107,137 $ 91,568
- - Financial Services 5,877 4,330 21,302 16,953
------- ------- -------- --------
Total $33,643 $27,841 $128,439 $108,521
======= ======= ======== ========
Net income (in millions)
- - Automotive $ 1,085 $ 297 $ 3,824 $ 940
- - Financial Services 484 422 1,484* 1,589
------- ------- -------- --------
Total $ 1,569 $ 719 $ 5,308 $ 2,529
======= ======= ======== ========
Capital expenditures (in millions)
- - Automotive $ 2,404 $ 1,985 $ 8,310 $ 6,714
- - Financial Services 65 32 236 100
------- ------- -------- --------
Total $ 2,469 $ 2,017 $ 8,546 $ 6,814
======= ======= ======== ========
Stockholders' equity at December 31
- - Total (in millions) $21,659 $15,574 $ 21,659 $ 15,574
- - After-tax return on Common and
Class B stockholders' equity 34.5% 21.1% 33.6% 18.6%
Automotive cash, cash equivalents,
and marketable securities at
December 31 (in millions) $12,083 $ 9,752 $ 12,083 $ 9,752
Automotive debt at December 31
(in millions) $ 7,258 $ 8,016 $ 7,258 $ 8,016
Automotive after-tax returns on sales 3.9% 1.3% 3.6% 1.1%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,020 996 1,010 986
- - Number outstanding at December 31 1,023 998 1,023 998
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income
- - Automotive $ 1.00 $ 0.23 $ 3.50 $ 0.66
- - Financial Services 0.47 0.42 1.47 1.61
------- ------- -------- --------
Total $ 1.47 $ 0.65 $ 4.97 $ 2.27
======= ======= ======== ========
Income assuming full dilution $ 1.31 $ 0.60 $ 4.44 $ 2.10
Cash dividends per share of Common
and Class B Stock $ 0.26 $ 0.20 $ 0.91 $ 0.80
- - - - - -
*Includes a loss of $440 million related to the disposition of Granite Savings Bank (formerly First
Nationwide Bank)
Share data have been restated to reflect the 2-for-1 stock split that became effective June 6, 1994.
FS-1
/TABLE
<PAGE>
<TABLE>
Ford Motor Company and Subsidiaries
VEHICLE FACTORY SALES
---------------------
For the Periods Ended December 31, 1994 and 1993
(in thousands)
<CAPTION>
Fourth Quarter Full Year
-------------------------- --------------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
North America
Cars - U.S. 537 458 2,077 1,950
- Canada 33 35 124 130
- Mexico 15 12 49 51
----- ----- ----- -----
Total cars 585 505 2,250 2,131
Trucks - U.S. 525 483 2,199 1,874
- Canada 42 42 156 126
- Mexico 12 10 42 39
----- ----- ----- -----
Total trucks 579 535 2,397 2,039
----- ----- ----- -----
Total North America 1,164 1,040 4,647 4,170
Outside North America
Germany 216 193 938 831
Britain 115 98 463 422
Spain 77 48 302 211
Australia 38 34 130 127
Taiwan 17 19 86 114
Japan 8 11 34 53
Other countries 11 10 39 37
----- ----- ----- -----
Total outside North America 482 413 1,992 1,795
----- ----- ----- -----
Total worldwide vehicle
factory sales 1,646 1,453 6,639 5,965
===== ===== ===== =====
Includes units manufactured by other companies and sold by Ford. Factory sales are shown by source of manufacture,
except within North America. In North America, U.S. sales include exports from Canada, Mexico, and Australia. Canadian
sales include exports from the U.S. and Mexico. Mexican sales include exports from the U.S. and Canada.
FS-2
/TABLE
<PAGE>
<TABLE>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Years Ended December 31, 1994, 1993 and 1992
(in millions)
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
AUTOMOTIVE
Sales (Note 1) $107,137 $91,568 $84,407
Costs and expenses (Note 1)
Costs of sales 96,180 85,168 81,748
Selling, administrative, and other expenses 5,131 4,968 4,434
-------- ------- -------
Total costs and expenses 101,311 90,136 86,182
Operating income/(loss) 5,826 1,432 (1,775)
Interest income 665 563 653
Interest expense 721 807 860
-------- ------- -------
Net interest expense (56) (244) (207)
Equity in net income of affiliated companies (Note 1) 271 127 15
Net (expense)/revenue from transactions with
Financial Services (Note 18) (44) (24) 15
-------- ------- -------
Income/(loss) before income taxes and cumulative effects of
changes in accounting principles - Automotive 5,997 1,291 (1,952)
FINANCIAL SERVICES
Revenues (Note 1) 21,302 16,953 15,725
Costs and expenses (Note 1)
Interest expense 7,023 6,482 7,056
Depreciation 4,910 3,064 2,089
Operating and other expenses 4,607 3,196 2,945
Provision for credit and insurance losses 1,539 1,523 1,795
Loss on disposition of Granite Savings Bank (formerly
First Nationwide Bank) (Note 16) 475 - -
-------- ------- -------
Total costs and expenses 18,554 14,265 13,885
Net revenue/(expense) from transactions with
Automotive (Note 18) 44 24 (15)
-------- ------- -------
Income before income taxes and cumulative effects of
changes in accounting principles - Financial Services 2,792 2,712 1,825
-------- ------- -------
TOTAL COMPANY
Income/(loss) before income taxes and cumulative effects of
changes in accounting principles 8,789 4,003 (127)
Provision for income taxes (Note 6) 3,329 1,350 295
-------- ------- -------
Income/(loss) before minority interests and cumulative effects
of changes in accounting principles 5,460 2,653 (422)
Minority interests in net income of subsidiaries 152 124 80
-------- ------- -------
Income/(loss) before cumulative effects of changes in
accounting principles 5,308 2,529 (502)
Cumulative effects of changes in accounting
principles (Notes 6 and 8) - - (6,883)
-------- ------- -------
Net income/(loss) 5,308 2,529 (7,385)
Preferred stock dividend requirements 287 288 209
-------- ------- -------
Income/(loss) attributable to Common and Class B Stock $ 5,021 $ 2,241 $(7,594)
======== ======= =======
FS-3
/TABLE
<PAGE>
<TABLE>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Years Ended December 31, 1994, 1993, and 1992
(in millions)
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Average number of shares of Common and Class B Stock
outstanding 1,010 986 972
AMOUNTS PER SHARE OF COMMON STOCK AND CLASS B STOCK
AFTER PREFERRED STOCK DIVIDENDS (Note 1)
Income/(loss) before cumulative effects of changes in
accounting principles $ 4.97 $ 2.27 $ (0.73)
Cumulative effects of changes in accounting principles - - (7.08)
------- ------ -------
Income/(loss) $ 4.97 $ 2.27 $ (7.81)
======= ====== =======
Income/(loss) assuming full dilution $ 4.44 $ 2.10 $ (7.81)
Cash dividends $ 0.91 $ 0.80 $ 0.80
The accompanying notes are part of the financial statements.
Share data have been restated to reflect the 2-for-1 stock split that became effective June 6, 1994.
FS-4
/TABLE
<PAGE>
<TABLE>
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
<CAPTION>
December 31, December 31,
1994 1993
------------ -------------
<S> <C> <C>
ASSETS
Automotive
Cash and cash equivalents $ 4,481 $ 5,667
Marketable securities (Note 2) 7,602 4,085
-------- --------
Total cash, cash equivalents, and marketable securities 12,083 9,752
Receivables 2,548 2,302
Inventories (Note 4) 6,487 5,538
Deferred income taxes 3,062 2,830
Other current assets 2,006 1,226
Net current receivable from Financial Services (Note 18) 677 834
-------- --------
Total current assets 26,863 22,482
Equity in net assets of affiliated companies (Note 1) 3,554 3,002
Net property (Note 5) 27,048 23,059
Deferred income taxes 4,146 5,427
Other assets (Notes 1 and 8) 6,760 7,691
Net noncurrent receivable from Financial Services (Note 18) 0 76
-------- --------
Total Automotive assets 68,371 61,737
Financial Services
Cash and cash equivalents 1,739 2,555
Investments in securities (Note 2) 6,105 8,219
Net receivables and lease investments (Note 3) 130,356 119,535
Other assets (Note 1) 12,783 6,892
-------- --------
Total Financial Services assets 150,983 137,201
-------- --------
Total assets $219,354 $198,938
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 10,777 $ 8,769
Other payables 2,624 1,976
Accrued liabilities (Note 7) 11,599 10,815
Income taxes payable 316 160
Debt payable within one year (Note 9) 155 932
-------- --------
Total current liabilities 25,471 22,652
Long-term debt (Note 9) 7,103 7,084
Other liabilities (Note 7) 24,920 25,911
Deferred income taxes 948 1,089
-------- --------
Total Automotive liabilities 58,442 56,736
Financial Services
Payables 2,361 1,881
Debt (Note 9) 123,713 103,960
Deposit accounts - 10,549
Deferred income taxes 2,958 2,287
Other liabilities and deferred income 7,669 5,583
Net payable to Automotive (Note 18) 677 910
-------- --------
Total Financial Services liabilities 137,378 125,170
Preferred stockholders' equity in a subsidiary company (Note 1) 1,875 1,458
Stockholders' equity
Capital stock (Notes 11 and 12)
Preferred Stock, par value $1.00 per share (aggregate liquidation
preference of $3.4 billion) * *
Common Stock, par value $1.00 per share (952 and 464 million shares issued) 952 464
Class B Stock, par value $1.00 per share (71 and 35 million shares issued) 71 35
Capital in excess of par value of stock 5,273 5,082
Foreign currency translation adjustments and other (Note 1) 189 (678)
Minimum pension liability adjustment - (400)
Earnings retained for use in business 15,174 11,071
-------- --------
Total stockholders' equity 21,659 15,574
-------- --------
Total liabilities and stockholders' equity $219,354 $198,938
======== ========
The accompanying notes are part of the financial statements.
- - - - - -
*Less than $1 million
FS-5
/TABLE
<PAGE>
<TABLE>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
For the Years Ended December 31, 1994, 1993, and 1992
(in millions)
<CAPTION>
1994 1993 1992
---------------------- ---------------------- ----------------------
Financial Financial Financial
Automotive Services Automotive Services Automotive Services
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents at January 1 $ 5,667 $ 2,555 $ 3,504 $ 3,182 $ 4,958 $ 3,175
Cash flows from operating activities (Note 17) 7,542 9,087 6,862 7,145 5,753 5,762
Cash flows from investing activities
Capital expenditures (8,310) (236) (6,714) (100) (5,697) (93)
Proceeds from sale and leaseback of
fixed assets 0 - 884 - 263 -
Acquisitions of other companies 0 (485) 0 (336) 0 (461)
Proceeds from sales of subsidiaries 0 715 173 0 52 0
Acquisitions of receivables and lease
investments - (202,407) - (163,858) - (134,619)
Collections of receivables and
lease investments - 172,694 - 142,844 - 123,144
Acquisitions of daily rental vehicles, net
of disposals - (924) - - - -
Purchases of securities (Note 17) (412) (10,688) (100,493) (13,741) (50,437) (12,877)
Sales and maturities of securities (Note 17) 511 9,649 101,927 12,426 49,629 12,169
Proceeds from sales of receivables - 3,622 - 4,794 - 6,465
Loans originated net of principal payments - (207) - (1,466) - (938)
Investing activity with Financial Services 355 - (117) - 709 -
Other (331) (312) (69) 389 (492) 372
-------- -------- -------- -------- -------- --------
Net cash used in investing activities (8,187) (28,579) (4,409) (19,048) (5,973) (6,838)
Cash flows from financing activities
Cash dividends (1,205) - (1,086) - (977) -
Sale of Preferred Stock 0 - 0 - 1,104 -
Issuance of Common Stock 715 - 394 - 221 -
Changes in short-term debt (795) 10,314 (66) 6,065 (426) 2,739
Proceeds from issuance of other debt 158 21,885 424 22,128 1,865 13,382
Principal payments on other debt (75) (14,088) (376) (13,791) (1,598) (13,122)
Financing activity with Automotive - (355) - 117 - (709)
Changes in customers' deposits, excluding
interest credited - (422) - (3,861) - (3,418)
Receipts from annuity contracts (Note 10) - 1,124 - 821 - 703
Redemption of Hertz common and preferred stock - (145) - - - -
(Note 16)
Issuance of subsidiary company preferred stock - 417 - 375 - 283
Other 31 13 (124) (76) 79 (10)
-------- -------- -------- -------- -------- --------
Net cash (used in)/provided by financing
activities (1,171) 18,743 (834) 11,778 268 (152)
Effect of exchange rate changes on cash 397 166 17 25 (220) (47)
Net transactions with Automotive/
Financial Services 233 (233) 527 (527) (1,282) 1,282
-------- -------- -------- -------- -------- --------
Net (decrease)/increase in cash and cash
equivalents (1,186) (816) 2,163 (627) (1,454) 7
-------- -------- -------- -------- -------- --------
Cash and cash equivalents at December 31 $ 4,481 $ 1,739 $ 5,667 $ 2,555 $ 3,504 $ 3,182
======== ======== ======== ======== ======== ========
The accompanying notes are part of the financial statements.
FS-6
/TABLE
<PAGE>
<TABLE>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
For the Years Ended December 31, 1994, 1993, and 1992
(in millions)
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
CAPITAL STOCK (Note 11)
Common Stock
Balance at beginning of year $ 464 $ 454 $ 448
Stock split in form of a 100% stock dividend 469 - -
Issued for employee benefit plans and other 19 10 6
------- ------- -------
Balance at end of year 952 464 454
Class B Stock
Balance at beginning of year 35 35 35
Stock split in form of a 100% stock dividend 36 - -
------- ------- -------
Balance at end of year 71 35 35
Series A Preferred Stock * * *
Series B Preferred Stock * * *
CAPITAL IN EXCESS OF PAR VALUE OF STOCK
Balance at beginning of year 5,082 4,698 3,379
Stock split in form of a 100% stock dividend (505) - -
Issued for employee benefit plans and other 696 384 215
Sale of Series B Preferred Stock 0 0 1,104
------- ------- -------
Balance at end of year 5,273 5,082 4,698
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
AND OTHER (Note 1)
Balance at beginning of year (1,078) (62) 838
Translation adjustments during year 800 (508) (975)
Minimum pension liability adjustment 400 (400) -
Other 67 (108) 75
------- ------- -------
Balance at end of year 189 (1,078) (62)
EARNINGS RETAINED FOR USE IN THE BUSINESS
Balance at beginning of year 11,071 9,628 17,990
Net income/(loss) 5,308 2,529 (7,385)
Cash dividends (1,205) (1,086) (977)
------- ------- -------
Balance at end of year 15,174 11,071 9,628
------- ------- -------
Total stockholders' equity $21,659 $15,574 $14,753
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Series A Series B
Common Class B Preferred Preferred
Stock Stock Stock Stock
------ ------- --------- ---------
<S> <C> <C> <C> <C>
SHARES OF CAPITAL STOCK
Issued at December 31, 1991 448 35 0.046 0
Additions
1992 6 0 0 0.023
1993 10 0 0 0
1994 - Stock split in form of a 100% stock
dividend 469 36 - -
- Employee benefit plans and other 19 - - -
----- -- ----- -----
Net additions 504 36 0.046 0.023
----- -- ----- -----
Issued at December 31, 1994 952 71 0.046 0.023
===== == ===== =====
Authorized at December 31, 1994 3,000 265 -- In total: 30 --
- - - - - -
*The balances at the beginning and end of each period were less than $1 million
The accompanying notes are part of the financial statements.
FS-7
/TABLE
<PAGE>
Ford Motor Company and Subsidiaries
Notes to Financial Statements
NOTE 1. Accounting Policies
- ----------------------------
Principles of Consolidation
- ---------------------------
The consolidated financial statements include all significant
majority-owned subsidiaries and reflect the operating results,
assets, liabilities and cash flows for two business segments:
Automotive and Financial Services. The assets and liabilities of the
Automotive segment are classified as current or noncurrent, and those
of the Financial Services segment are unclassified. Affiliates that
are 20% to 50% owned, principally Mazda Motor Corporation, Autolatina
and AutoAlliance International Inc., and subsidiaries where control
is expected to be temporary, principally investments in certain
dealerships, are generally accounted for on an equity basis. For
purposes of Notes to Financial Statements, "Ford" or "the company"
means Ford Motor Company and its majority-owned consolidated
subsidiaries unless the context requires otherwise.
Revenue Recognition - Automotive
- --------------------------------
Sales are recorded by the company when products are shipped to
dealers. Provisions for approved sales incentive programs normally
are recognized as sales reductions at the time of revenue
recognition. Provisions for sales incentive programs approved
subsequent to the time that related sales were recorded are
recognized when the programs are approved.
Revenue Recognition - Financial Services
- ----------------------------------------
Revenue from finance receivables is recognized over the term of the
receivable using the interest method. Certain loan origination costs
are deferred and amortized over the term of the related receivable as
a reduction in financing revenue. Revenue from operating leases is
recognized as scheduled payments become due. Agreements between
Automotive operations and certain Financial Services operations
provide for interest supplements and other support costs to be paid
by Automotive operations on certain financing and leasing
transactions. Financial Services operations recognize this revenue
in income over the period that the related receivables and leases are
outstanding; interest supplements and other support costs are
recorded as sales incentives by Automotive operations.
Other Costs
- -----------
Advertising and sales promotion costs are expensed as incurred.
Advertising costs were $1,977 million in 1994, $1,773 million in 1993
and $1,702 million in 1992.
Anticipated costs related to product warranty are accrued at the time
of sale.
Research and development costs are expensed as incurred and were
$5,214 million in 1994, $5,021 million in 1993 and $4,332 million in
1992.
Income/(Loss) Per Share of Common and Class B Stock
- ---------------------------------------------------
Income/(loss) per share of Common and Class B Stock is calculated by
dividing the income/(loss) attributable to Common and Class B Stock
by the average number of shares of Common Stock and Class B Stock
outstanding during the applicable period.
FS-8
<PAGE>
NOTE 1. Accounting Policies (Cont'd)
- ---------------------------
The company has outstanding securities, primarily Series A Preferred
Stock, which could be converted to Common Stock. Other obligations,
such as stock options, are considered to be common stock equivalents.
The calculation of income/(loss) per share of Common and Class B
Stock assuming full dilution takes into account the effect of these
convertible securities and common stock equivalents when the effect
is material and dilutive.
Derivative Financial Instruments
- --------------------------------
The company and many of its subsidiaries have entered into agreements
to manage certain exposures to fluctuations in foreign exchange and
interest rates. All derivative financial instruments are classified
as "held for purposes other than trading"; company policy
specifically prohibits the use of derivatives for speculative
purposes.
Ford has operations in many countries outside the U.S., and purchases
and sales of finished vehicles and production parts, debt and other
payables, subsidiary dividends, and investments in subsidiaries are
frequently denominated in foreign currencies. Agreements to manage
foreign exchange exposure include foreign currency forward contracts,
currency swaps and, to a lesser extent, foreign currency options.
Gains and losses on the various agreements are recognized in income
during the period of the related transactions, included in the bases
of the related transactions, or, in the case of hedges of net
investments in foreign subsidiaries, recognized as an adjustment to
the foreign currency translation component of stockholders' equity.
Financial Services operations issue debt and other payables for which
the maturity and interest rate structure differs from the invested
assets to ensure continued access to capital markets and to minimize
overall borrowing costs. Agreements to manage interest rate
fluctuations include interest-rate swap agreements. The differential
paid or received on interest-rate swap agreements is recognized as an
adjustment to interest expense in the period.
Foreign-Currency Translation
- ----------------------------
Revenues, costs and expenses of foreign subsidiaries are translated
to U.S. dollars at average-period exchange rates. The effect of
changes in foreign exchange rates on revenues and costs was generally
unfavorable in 1994.
Assets and liabilities of foreign subsidiaries are translated to U.S.
dollars at end-of-period exchange rates. The effects of this
translation for most foreign subsidiaries and certain other foreign
currency transactions are reported in a separate component of
stockholders' equity. Translation gains and losses for foreign
subsidiaries that are located in highly inflationary countries or
conduct a major portion of their business with the company's U.S.
operations are included in income. Also included in income are gains
and losses arising from transactions denominated in a currency other
than the functional currency of the subsidiary involved.
The effect of changes in foreign exchange rates on assets and
liabilities, as described above, increased net income by $376 million
in 1994 and by $419 million in 1993 and decreased the net loss by
$132 million in 1992. These amounts included net transaction and
translation gains before taxes of $574 million in 1994, $988 million
in 1993 and $557 million in 1992. A majority of these gains were
offset by higher costs of sales that resulted from the use of
historical exchange rates for inventories sold during the period in
countries with high inflation rates.
Goodwill
- --------
Goodwill represents the excess of the purchase price over the fair
value of the net assets of acquired companies and is amortized using
the straight-line method principally over 40 years. Total goodwill
included in Automotive and Financial Services other assets at
December 31, 1994 was $2.4 billion and $3.3 billion, respectively.
FS-9
<PAGE>
NOTE 1. Accounting Policies (Cont'd)
- ---------------------------
The company evaluates the carrying value of goodwill for potential
impairment on an ongoing basis. Such evaluations compare operating
income before amortization of goodwill to the amortization recorded
for the operations to which the goodwill relates. The company also
considers projected future operating results, trends and other
circumstances in making such evaluations.
Preferred Stockholders' Equity in a Subsidiary Company
- ------------------------------------------------------
Preferred stockholders' equity in a subsidiary company refers to the
outstanding preferred stock of Ford Holdings, Inc. ("Ford Holdings"),
a subsidiary of Ford. All the outstanding common stock of Ford
Holdings, representing 75% of the combined voting power of all
classes of capital stock of Ford Holdings, is owned directly or
indirectly by Ford. The balance of the capital stock, consisting of
preferred stock, is owned by persons other than Ford and accounts for
the remaining 25% of the combined voting power.
NOTE 2. Marketable and Other Securities
- ----------------------------------------
The company adopted Statement of Financial Accounting Standards No.
115 ("SFAS 115"), "Accounting for Certain Investments in Debt and
Equity Securities," as of January 1, 1994. The cumulative effect of
this change in accounting principle on the company's financial
statements was not material.
Trading securities are recorded at fair value, with unrealized gains
and losses included in income. Available-for-sale securities are
recorded at fair value, with unrealized gains and losses excluded
from income and reported in a separate component of stockholders'
equity net of tax. Held-to-maturity securities are recorded at
amortized cost. Equity securities which do not have readily
determinable fair values are recorded at cost. The bases of cost
used in determining realized gains and losses are specific
identification for Automotive operations and first-in, first-out for
Financial Services operations.
The fair value of most securities was estimated based on quoted
market prices. For those securities for which there were no quoted
market prices, the estimate of fair value was based on similar types
of securities that are traded in the market.
Expected maturities of debt securities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without penalty.
<TABLE>
Automotive
- ----------
Investments in securities at December 31, 1994 were as follows (in millions):
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Trading securities $7,382 $3 $56 $7,329
Available-for-sale securities
- -----------------------------
Debt securities issued by foreign governments 23 0 0 23
Corporate securities 231 0 1 230
------ -- --- ------
Total available-for-sale securities 254 0 1 253
Held-to-maturity securities
Corporate securities 20 0 0 20
------ -- --- ------
Total investments in securities $7,656 $3 $57 $7,602
====== == === ======
FS-10
/TABLE
<PAGE>
NOTE 2. Marketable and Other Securities (Cont'd)
- ----------------------------------------
All debt securities classified as available-for-sale or held-to-
maturity have contractual maturities of one year or less.
For trading securities, the net unrealized loss included in income
during 1994 was $53 million.
Proceeds from sales of available-for-sale securities were $87 million
in 1994; gross losses of $2 million were realized on those sales.
Included in stockholders' equity at December 31, 1994 was
$188 million that represented principally the company's equity
interest in the unrealized gains on securities owned by certain
unconsolidated subsidiaries.
Other securities classified as cash equivalents were $3.4 billion and
$3.3 billion at December 31, 1994 and 1993, respectively, and
consisted primarily of debt securities issued by the U.S. government
and agencies and short-term time deposits.
Marketable securities at December 31, 1993 totaled $4.1 billion and
were recorded at cost plus accrued interest, which approximated fair
value.
<PAGE>
<TABLE>
Financial Services
- ------------------
Investments in securities at December 31, 1994 were as follows (in millions):
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Trading securities $ 715 $ 6 $ 10 $ 711
Available-for-sale securities
- -----------------------------
Debt securities issued by the U.S.
government and agencies 692 1 38 655
Municipal securities 155 1 11 145
Debt securities issued by foreign governments 106 0 10 96
Corporate securities 1,929 3 152 1,780
Mortgage-backed securities 871 0 62 809
Other debt securities 22 0 0 22
Equity securities 172 34 6 200
------ --- ---- ------
Total available-for-sale securities 3,947 39 279 3,707
Held-to-maturity securities
Debt securities issued by the U.S.
government and agencies 10 0 0 10
Municipal securities 783 0 12 771
Corporate securities 570 4 27 547
------ --- ---- ------
Total held-to-maturity securities 1,363 4 39 1,328
Total investments in securities with
readily determinable fair value 6,025 $49 $328 $5,746
=== ==== ======
Equity securities not practicable to fair value 324
------
Total investments in securities $6,349
======
</TABLE>
FS-11
<PAGE>
<TABLE>
NOTE 2. Marketable and Other Securities (Cont'd)
- ----------------------------------------
The amortized cost and fair value of investments in available-for-sale securities and held-to-maturity
securities at December 31, 1994, by contractual maturity, were as follows (in millions):
<CAPTION>
Available-for-sale Held-to-maturity
---------------------- -----------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Due in one year or less $ 113 $ 112 $ 59 $ 58
Due after one year through five years 755 728 184 184
Due after five years through ten years 637 596 782 768
Due after ten years 1,399 1,262 338 318
Mortgage-backed securities 871 809 - -
Equity securities 172 200 - -
------ ------ ------ ------
Total $3,947 $3,707 $1,363 $1,328
====== ====== ====== ======
</TABLE>
For trading securities, the net unrealized loss included in income
during 1994 was $4 million.
Proceeds from sales of available-for-sale securities were $9.1
billion in 1994; gross gains of $24 million and gross losses of $56
million were realized on those sales. The net unrealized loss net of
tax included in stockholders' equity was $155 million at December 31,
1994.
Other securities classified as cash equivalents were $1.4 billion and
$1.6 billion at December 31, 1994 and 1993, respectively, and
consisted primarily of short-term time deposits and corporate
securities.
At December 31, 1993, investments in debt securities were recorded at
amortized cost because of the ability to hold such securities until
maturity and the intent to hold them for the foreseeable future.
Marketable equity securities were recorded at fair value.
<TABLE>
Investments in debt securities at December 31, 1993 were as follows
(in millions):
<CAPTION>
Gross Gross
Book Unrealized Unrealized
Value Gains Losses Fair Value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Debt securities issued by the U.S.
government and agencies $ 974 $ 27 $ 1 $1,000
Municipal securities 126 3 0 129
Debt securities issued by foreign
governments 88 4 1 91
Corporate securities 1,779 48 19 1,808
Mortgage-backed securities 2,588 39 82 2,545
Other debt securities 192 0 1 191
------ ----- ---- ------
Total $5,747 $121 $104 $5,764
====== ==== ==== ======
</TABLE>
<PAGE>
The book value and fair value of investments in debt securities at
December 31, 1993, by contractual maturity, were as follows (in
millions):
Book
Value Fair Value
------- ----------
Due in one year or less $ 96 $ 96
Due after one year through five years 1,023 1,035
Due after five years through ten years 563 580
Due after ten years 1,477 1,508
Mortgage-backed securities 2,588 2,545
------ ------
Total $5,747 $5,764
====== ======
FS-12
<PAGE>
NOTE 2. Marketable and Other Securities (Cont'd)
- ---------------------------------------
Proceeds from sales of investments in debt securities were $11.2
billion in 1993 and $10.5 billion in 1992. In 1993, gross gains of
$113 million and gross losses of $20 million were realized on those
sales; gross gains of $142 million and gross losses of $86 million
were realized in 1992.
Other securities other than debt securities totaled $2,472 million at
December 31, 1993. The estimated fair value in excess of book value
of those securities which were practicable to value was $59 million
at December 31, 1993. It was not practicable to calculate the fair
value of certain securities totaling $660 million at December 31,
1993 because they represented preferred stocks of non-traded
companies with whom the company does business and for which similar
market-traded securities were not available for comparison.
NOTE 3. Receivables
- --------------------
Automotive
- ----------
Automotive receivables are generally short-term, and book value
approximates fair value.
Financial Services
- ------------------
Included in net receivables and lease investments at December 31 were
net finance receivables, investments in direct financing leases and
investments in operating leases. The investments in direct financing
and operating leases relate to the leasing of motor vehicles and
various types of transportation and other equipment and facilities.
Net finance receivables at December 31 were as follows (in millions):
1994 1993
--------- --------
Automotive $ 87,858 $ 58,738
Real estate, mainly residential 15,560 24,152
Other 6,237 24,968
-------- --------
Total finance receivables 109,655 107,858
Loan origination costs 194 124
Unearned income (9,656) (9,037)
Allowance for credit losses (1,671) (2,017)
Unearned insurance premiums and
unpaid insurance claims related
to finance receivables (90) (139)
-------- --------
Net finance receivables $ 98,432 $ 96,789
======== ========
Fair value $ 99,609 $ 98,505
Included in finance receivables was a total of $1.3 billion for 1994
and $1.5 billion for 1993 owed by three customers with the largest
receivable balances. Other finance receivables consisted primarily
of commercial and consumer loans, collateralized loans, credit card
receivables, general corporate obligations and accrued interest.
Also included in other finance receivables at December 31, 1994 and
1993 were $3.4 billion and $2.4 billion, respectively, of accounts
receivable purchased by certain Financial Services operations from
Automotive operations.
Contractual maturities of automotive and other finance receivables
are as follows (in millions): 1995 - $49,084; 1996 - $18,444; 1997 -
$12,841; thereafter - $13,726. Experience indicates that a substantial
portion of the portfolio generally is repaid before the contractual
maturity dates.
The fair value of most receivables was estimated by discounting
future cash flows using an estimated discount rate which reflected
the credit, interest rate and prepayment risks associated with
similar types of instruments. For receivables with short maturities,
the book value approximated fair value.
Sales of finance receivables increased net income by $15 million in
1994, $60 million in 1993 and $7 million in 1992.
FS-13
<PAGE>
NOTE 3. Receivables (Cont'd)
- -------------------
Investments in direct financing leases at December 31 were as follows
(in millions):
1994 1993
Minimum lease rentals $ 8,321 $ 7,382
Estimated residual values 3,715 2,764
Lease origination costs 70 69
Unearned income (2,299) (2,010)
Allowance for credit losses (185) (133)
------- -------
Net investments in direct
financing leases $ 9,622 $ 8,072
======= =======
Minimum direct financing lease rentals (including executory costs of
$36 million) are contractually due as follows (in millions): 1995 -
$2,736; 1996 - $1,998; 1997 - $1,282; 1998 - $740; thereafter -
$1,601.
Investments in operating leases at December 31 were as follows (in
millions):
1994 1993
-------- --------
Vehicles and other equipment, at cost $28,050 $18,589
Lease origination costs 38 23
Accumulated depreciation (5,425) (3,736)
Allowance for credit losses (361) (202)
------- -------
Net investments in operating leases $22,302 $14,674
======= =======
Future minimum rentals on operating leases are contractually due as
follows (in millions): 1995 - $4,533; 1996 - $1,807; 1997 - $220;
1998 - $56; thereafter - $108.
Depreciation expense on operating leases reflects primarily the
straight-line method over the term of the leases and was as follows
(in millions): 1994 - $4,231; 1993 - $2,984; 1992 - $2,000.
Allowances for credit losses are established as required based on
historical experience. Other factors that affect collectibility also
are evaluated, and additional amounts may be provided. Finance
receivables and lease investments are charged to the allowances for
credit losses when an account is deemed to be uncollectible, taking
into consideration the financial condition of the borrower, the value
of the collateral, recourse to guarantors and other factors.
Recoveries on finance receivables and lease investments previously
charged off as uncollectible are credited to the allowances for
credit losses.
Changes in the allowances for credit losses were as follows (in
millions):
1994 1993 1992
------- ------- -------
Beginning balance $2,352 $2,257 $2,078
Additions 988 1,019 1,218
Net losses (826) (903) (993)
Other changes (297) (21) (46)
------ ------ ------
Ending balance $2,217 $2,352 $2,257
====== ====== ======
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan", was issued in May 1993 and
amended in October 1994 by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan
- - Income Recognition and Disclosures". The Standards require that
impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate.
The company will adopt these standards as of January 1, 1995, and the
effect is not expected to be material.
FS-14
<PAGE>
NOTE 4. Inventories - Automotive
- ---------------------------------
Inventories at December 31 were as follows (in millions):
1994 1993
------ ------
Raw materials, work in process and supplies $3,192 $2,937
Finished products 3,295 2,601
------ ------
Total inventories $6,487 $5,538
====== ======
U.S. Inventories $2,917 $2,575
Inventories are stated at the lower of cost or market. The cost of
most U.S. inventories is determined by the last-in, first-out
("LIFO") method. The cost of the remaining inventories is determined
primarily by the first-in, first-out ("FIFO") method.
If the FIFO method had been used instead of the LIFO method,
inventories would have been higher by $1,383 million and $1,342
million at December 31, 1994 and 1993, respectively.
NOTE 5. Net Property, Depreciation and Amortization - Automotive
- -----------------------------------------------------------------
Net property at December 31 was as follows (in millions):
1994 1993
--------- ---------
Land $ 359 $ 360
Buildings and land improvements 6,939 5,923
Machinery, equipment and other 33,551 29,655
Construction in progress 1,685 1,551
-------- --------
Total land, plant and equipment 42,534 37,489
Accumulated depreciation (22,738) (20,691)
-------- --------
Net land, plant and equipment 19,796 16,798
Unamortized special tools 7,252 6,261
-------- --------
Net property $ 27,048 $ 23,059
======== ========
Property, equipment, and special tools are stated at cost, less
accumulated depreciation. Assets placed in service before January 1,
1993 are depreciated using an accelerated method that results in
accumulated depreciation of approximately two-thirds of asset cost
during the first half of the asset's estimated useful life. Assets
placed in service after December 31, 1992 are depreciated using the
straight-line method of depreciation. This change in accounting
principle was made to reflect improvements in the design and
flexibility of manufacturing machinery and equipment and improvements
in maintenance practices. These improvements have resulted in more
uniform productive capacities and maintenance costs over the useful
life of an asset, and straight-line depreciation is preferable in
these circumstances.
Depreciation and amortization expenses were as follows (in millions):
1994 1993 1992
------ ------ ------
Depreciation $2,297 $2,392 $2,569
Amortization 2,129 2,012 2,097
------ ------ ------
Total $4,426 $4,404 $4,666
====== ====== ======
On average, buildings and land improvements are depreciated based on
a 30-year life; automotive machinery and equipment are depreciated
based on a 14-year life. Special tools are amortized over periods of
time representing the productive use of those tools. When plant and
equipment are retired, the general policy is to charge the cost of
those assets, reduced by net salvage proceeds, to accumulated
depreciation. Maintenance, repairs and rearrangement costs are
expensed as incurred and were $2,377 million in 1994, $1,934 million
in 1993 and $1,872 million in 1992. Expenditures that increase the
value or productive capacity of assets are capitalized.
Preproduction costs related to new facilities are expensed as
incurred.
FS-15
<PAGE>
NOTE 6. Income Taxes
- ---------------------
Income/(loss) before income taxes and cumulative effects of changes
in accounting principles for U.S. and foreign operations, excluding
equity in net income of affiliated companies, was as follows (in
millions):
1994 1993 1992
------ ------- --------
U.S. $6,944 $4,152 $ 889
Foreign 1,574 (276) (1,031)
------ ------ -------
Total income/(loss)
before income taxes $8,518 $3,876 $ (142)*
====== ====== ======
- - - - -
*Excludes cumulative effects of changes in accounting principles
The provision for income taxes was as follows (in millions):
1994 1993 1992
------ ------ ------
Currently payable/(refundable)
U.S. federal $1,640 $1,259 $(122)
Foreign 690 169 427
State and local 165 123 104
------ ------ -----
Total currently payable 2,495 1,551 409
Deferred tax liability/(benefit)
U.S. federal 827 (161) 434
Foreign (71) (106) (499)
State and local 78 66 (49)
------ ------ -----
Total deferred 834 (201) (114)
------ ------ -----
Total provision $3,329 $1,350 $ 295*
====== ====== =====
- - - - - -
*Excludes cumulative effects of changes in accounting principles
The provision includes estimated taxes payable on that portion of
retained earnings of subsidiaries expected to be received by the
company. No provision was made with respect to $3.3 billion of
retained earnings at December 31, 1994 which have been invested by
foreign subsidiaries. It is not practicable to estimate the amount
of unrecognized deferred tax liability for the undistributed foreign
earnings.
A reconciliation of the provision for income taxes compared with the
amounts at the U.S. statutory tax rate is shown below (in millions):
1994 1993 1992
------ ------ ------
Tax provision/(credit) at U.S. statutory rate
of 35% for 1994 and 1993 and 34% for 1992 $2,981 $1,357 $ (48)
Effect of:
Foreign taxes over U.S. tax rate 68 219 263
State and local income taxes 158 118 36
Rate adjustments on U.S. and foreign
deferred taxes - (199) -
Income not subject to tax or subject to
tax at reduced rates (62) (70) (112)
Other 184 (75) 156
------ ------ -----
Provision for income taxes $3,329 $1,350 $ 295*
====== ====== =====
Effective Tax Rate 39.1% 34.8% -
- - - - - -
*Excludes cumulative effects of changes in accounting principles
The company adopted Statement of Financial Accounting Standards No.
109 ("SFAS 109"), "Accounting for Income Taxes," as of
January 1, 1992. The adoption of SFAS 109 changed the method of
accounting for income taxes from the deferred method using Accounting
Principles Board Opinion No. 11 ("APB 11") to an asset and liability
approach. The cumulative effect of this change in accounting
principle decreased the net loss in 1992 by $657 million.
FS-16
<PAGE>
NOTE 6. Income Taxes (Cont'd)
- --------------------
Under SFAS 109, deferred income taxes reflect the estimated tax
effect of temporary differences between assets and liabilities for
financial reporting purposes and those amounts as measured by tax
laws and regulations. The components of deferred income tax assets
and liabilities at December 31 were as follows (in millions):
1994 1993
------- -------
Deferred Tax Assets
- -------------------
Employee benefit plans $ 5,951 $ 5,839
Dealer and customer allowances and claims 3,375 3,243
Net operating loss carryforwards 1,152 1,378
Allowance for credit losses 821 858
Alternative minimum tax 318 129
Depreciation and amortization
(excludes leasing transactions) 39 30
All other 1,198 1,093
Valuation allowances (159) (174)
------- -------
Total deferred tax assets 12,695 12,396
Deferred Tax Liabilities
Leasing transactions 3,935 3,166
Depreciation and amortization
(excludes leasing transactions) 2,804 2,574
Employee benefit plans 1,443 697
All other 1,336 1,157
------- -------
Total deferred tax liabilities 9,518 7,594
------- -------
Net deferred tax assets $ 3,177 $ 4,802
======= =======
Net foreign operating loss carryforwards for tax purposes were $3.2
billion at December 31, 1994. A substantial portion of these losses
has an indefinite carryforward period; the remaining losses have
expiration dates beginning in 1996. For financial statement
purposes, the tax benefit of operating losses is recognized as a
deferred tax asset, subject to appropriate valuation allowances. The
company evaluates the tax benefits of operating loss carryforwards on
an ongoing basis. Such evaluations include a review of historical
and consideration of projected future operating results, the eligible
carryforward period and other circumstances.
NOTE 7. Liabilities - Automotive
- ---------------------------------
Current Liabilities
- -------------------
Included in accrued liabilities at December 31 were the following (in
millions):
1994 1993
------- -------
Dealer and customer allowances and claims $ 6,716 $ 6,645
Employee benefit plans 1,786 1,415
Postretirement benefits other than pensions 688 674
Salaries, wages, and employer taxes 598 594
Other 1,811 1,487
------- -------
Total accrued liabilities $11,599 $10,815
======= =======
Noncurrent Liabilities
- ----------------------
Included in other liabilities at December 31 were the following (in
millions):
1994 1993
------- -------
Postretirement benefits other than pensions $14,025 $13,288
Dealer and customer allowances and claims 6,044 5,170
Employee benefit plans 2,232 2,353
Unfunded pension obligation 362 2,873
Minority interests in net assets of
subsidiaries 118 161
Other 2,139 2,066
------- -------
Total other liabilities $24,920 $25,911
======= =======
FS-17
<PAGE>
NOTE 8. Employee Retirement Benefits
- -------------------------------------
Employee Retirement Plans
- -------------------------
The company has two principal retirement plans in the U.S. The Ford-
UAW Retirement Plan covers hourly employees represented by the UAW,
and the General Retirement Plan covers substantially all other
employees of the company and several finance subsidiaries in the U.S.
The hourly plan provides noncontributory benefits related to employee
service. The salaried plan provides similar noncontributory benefits
and contributory benefits related to pay and service. Other U.S. and
non-U.S. subsidiaries have separate plans which generally provide
similar types of benefits covering their employees. The company and
its subsidiaries also have defined benefit plans applicable to
certain executives which are not funded.
The company's policy for funded plans is to contribute annually, at a
minimum, amounts required by applicable law, regulations and union
agreements. Plan assets consist principally of investments in
stocks, government and other fixed income securities and real estate.
The various plans generally are funded, except in Germany, where this
has not been the custom, and as noted above; in those cases, an
unfunded liability is recorded. In 1994, the company contributed
$1.7 billion to its U.S. plans and $300 million to its non-U.S.
plans.
<PAGE>
<TABLE>
The company's pension expense, including Financial Services, was as follows (in millions):
<CAPTION>
1994 1993 1992
---------------------- ---------------------- ----------------------
Non- Non- Non-
U.S. Plans U.S. Plans U.S. Plans U.S. Plans U.S. Plans U.S. Plans
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Benefits attributed to
employees' service $ 526 $ 236 $ 419 $ 181 $ 342 $ 213
Interest on projected
benefit obligation 1,639 677 1,517 667 1,437 698
Return on assets:
Actual (gain)/loss (74) 137 (2,264) (1,370) (1,465) (865)
Deferred gain/(loss) (1,928) (759) 389 677 (204) 190
------- ------- ------- ------- -------
Recognized (gain) (2,002) (622) (1,875) (693) (1,669) (675)
Net amortization and other 452 151 259 169 228 180
------- ------- ------- ------- ------- ------
Net pension expense $ 615 $ 442 $ 320 $ 324 $ 338 $ 416
======= ======= ======= ======= ======= ======
Pension expense increased in 1994 as a result of lower discount rates
for both U.S. and non-U.S. plans, compared with 1993. In addition,
amendments made in September 1993 to the Ford-UAW Retirement Plan and
the General Retirement Plan provided benefit improvements that
increased net U.S. expense in 1994.
FS-18
</TABLE>
<PAGE>
<TABLE>
NOTE 8. Employee Retirement Benefits (Cont'd)
- -------------------------------------
The status of these plans at December 31 was as follows (in millions):
<CAPTION>
1994 1993
------------------------------ ------------------------------
Assets in Accum. Assets in Accum.
Excess of Benefits Excess of Benefits
Accum. in Excess Total Accum. in Excess Total
Benefits of Assets Plans Benefits of Assets Plans
--------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
U.S. Plans
- ----------
Plan assets at fair value $23,264 $ 132 $23,396 $12,122 $10,779 $22,901
Actuarial present value of:
Vested benefits $17,217 $ 404 $17,621 $ 8,708 $ 9,962 $18,670
Accumulated benefits 20,256 453 20,709 9,700 12,603 22,303
Projected benefits 21,404 541 21,945 10,896 12,767 23,663
Plan assets in excess of/(less than)
projected benefits $ 1,860 $ (409) $ 1,451 $ 1,226 $(1,988) $ (762)
Unamortized (net asset)/net
transition obligation a/ (164) 12 (152) (760) 563 (197)
Unamortized prior service cost b/ 2,134 86 2,220 538 2,053 2,591
Unamortized net (gains)/losses c/ (717) 56 (661) (159) 297 138
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability) 3,113 (255) 2,858 845 925 1,770
Adjustment required to recognize
minimum liability d/ - (77) (77) - (2,771) (2,771)
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability)
recognized in the balance sheet $ 3,113 $ (332) $ 2,781 $ 845 $(1,846) $(1,001)
======= ======= ======= ======= ======= =======
Plan assets in excess of/(less than)
accumulated benefits $ 3,008 $ (321) $ 2,687 $ 2,422 $(1,824) $ 598
Assumptions:
Discount rate at year-end 8.25% 7.0%
Average rate of increase in compensation 5.5 % 5.5%
Long-term rate of return on assets 9.0 % 9.5%
Non-U.S. Plans
- --------------
Plan assets at fair value $ 7,018 $ 950 $ 7,968 $ 5,806 $ 1,815 $ 7,621
Actuarial present value of:
Vested benefits $ 5,318 $ 2,895 $ 8,213 $ 4,538 $ 3,888 $ 8,426
Accumulated benefits 5,419 3,053 8,472 4,619 4,092 8,711
Projected benefits 6,321 3,240 9,561 5,333 4,484 9,817
Plan assets in excess of/(less than)
projected benefits $ 697 $(2,290) $(1,593) $ 473 $(2,669) $(2,196)
Unamortized (net asset)/net
transition obligation a/ 32 241 273 (209) 461 252
Unamortized prior service cost b/ 227 248 475 267 232 499
Unamortized net (gains)/losses c/ (81) (25) (106) (88) 863 775
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability) 875 (1,826) (951) 443 (1,113) (670)
Adjustment required to recognize
minimum liability d/ - (284) (284) - (1,164) (1,164)
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability)
recognized in the balance sheet $ 875 $(2,110) $(1,235) $ 443 $(2,277) $(1,834)
======= ======= ======= ======= ======= =======
Plan assets in excess of/(less than)
accumulated benefits $ 1,599 $(2,103) $ (504) $ 1,187 $(2,277) $(1,090)
Assumptions:
Discount rate at year-end 8.3% 7.2%
Average rate of increase in compensation 5.2% 5.1%
Long-term rate of return on assets 9.0% 9.5%
- - - - - -
a/ The balance of the initial difference between assets and obligation deferred for recognition over a
15 year period.
b/ The prior service effect of plan amendments deferred for recognition over remaining service.
c/ The deferred gain or loss resulting from investments, other experience and changes in assumptions.
d/ An adjustment to reflect the unfunded accumulated benefits -- at year-end 1994 this amount is offset by
an intangible asset; at year-end 1993, the unfunded liability in excess of $3,250 million was recorded
net of deferred taxes as a $400 million reduction in stockholders' equity.
FS-19
</TABLE>
<PAGE>
NOTE 8. Employee Retirement Benefits (Cont'd)
- -------------------------------------
Postretirement Health Care and Life Insurance Benefits
- ------------------------------------------------------
The company and certain of its subsidiaries sponsor unfunded plans to
provide selected health care and life insurance benefits for retired
employees. The company's U.S. and Canadian employees may become
eligible for those benefits if they retire while working for the
company; however, benefits and eligibility rules may be modified from
time to time. The estimated cost for postretirement health care
benefits is accrued over periods of employee service on an
actuarially determined basis, in accordance with the requirements of
Statement of Financial Accounting Standards No. 106 ("SFAS 106"),
"Employers' Accounting for Postretirement Benefits Other Than
Pensions".
In adopting SFAS 106, the company elected to recognize immediately
the prior-year unaccrued accumulated postretirement benefit
obligation, resulting in an adverse effect on income of
$7,540 million in the first quarter of 1992. The charge reflected an
unaccrued retiree benefit obligation of $12 billion, offset partially
by projected tax benefits of $4.5 billion.
Net postretirement benefit expense, including Financial Services, was
as follows (in millions):
1994 1993 1992
------ ------ -----
Benefits attributed to employees' service $ 263 $ 240 $ 235
Interest on accumulated benefit obligation 1,088 1,207 1,129
Net amortization (32) - -
------ ------ ------
Net postretirement benefit expense $1,319 $1,447 $1,364
====== ====== ======
Retiree benefit payments $ 639 $ 654 $ 641
The status of these plans at December 31 was as follows (in
millions):
1994 1993
-------- --------
Accumulated postretirement benefit obligation:
Retirees $ 6,720 $ 8,147
Active employees eligible to retire 2,282 2,725
Other active employees 4,266 5,984
------- -------
Total accumulated obligation 13,268 16,856
Unamortized prior service cost a/ 321 387
Unamortized net gains/(losses) b/ 1,440 (2,880)
------- -------
Accrued liability $15,029 $14,363
======= =======
Assumptions:
Discount rate 8.75% 7.5%
Present health care cost trend rate 5.9 % 9.7%
Ultimate trend rate in ten years 5.5 % 5.5%
Weighted-average trend rate 6.6 % 6.8%
- - - - - -
a/The prior service effect of plan amendments deferred for
recognition over remaining service to retirement eligibility.
b/The deferred gain or loss resulting from experience and changes
in assumptions deferred for recognition over remaining service
to retirement.
Changing the assumed health care cost trend rates by one percentage
point would change the aggregate service and interest cost components
of net postretirement benefit expense for 1994 by $180 million and
the accumulated postretirement benefit obligation at December 31,
1994 by $1.6 billion.
FS-20
<PAGE>
<TABLE>
NOTE 9. Debt
- -------------
The fair value of debt was estimated based on quoted market prices or current rates for similar
debt with the same remaining maturities.
Automotive
- ----------
Debt at December 31 was as follows (in millions):
<CAPTION>
Weighted Average
Interest Rate* Book Value
------------------- -------------------
Maturity 1994 1993 1994 1993
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Debt payable within one year
Short-term debt 10.0% 7.1% $ 112 $ 887
Long-term debt payable within one year 43 45
------ ------
Total debt payable within one year 155 932
Long-term debt 1996-2043 9.0% 9.0% 7,103 7,084
------ ------
Total debt $7,258 $8,016
====== ======
Fair value $7,492 $9,044
- - - - - -
*Excludes the effect of interest-rate swap agreements
</TABLE>
Long-term debt at December 31, 1994 included maturities as follows
(in millions): 1995 - $43 (included in current liabilities); 1996 -
$932; 1997 - $599; 1998 - $1,210; 1999 - $350; thereafter - $4,012.
Included in long-term debt at December 31, 1994 and 1993 were
obligations of $6,567 million and $6,568 million, respectively, with
fixed interest rates and $536 million and $516 million, respectively,
with variable interest rates (generally based on LIBOR or other
short-term rates). Obligations payable in foreign currencies at
December 31, 1994 and 1993 were $994 million and $970 million,
respectively.
Agreements to manage exposures to fluctuations in interest rates,
which include primarily interest-rate swap agreements and futures
contracts, did not materially change the overall weighted-average
rate on long-term debt and effectively decreased the obligations
subject to variable interest rates to $465 million at December 31,
1994.
<TABLE>
Financial Services
- ------------------
Debt at December 31 was as follows (in millions):
<CAPTION>
Weighted Average
Interest Rate* Book Value
------------------- -------------------
Maturity 1994 1993 1994 1993
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Debt payable within one year
- ----------------------------
Unsecured short-term debt $ 2,990 $ 2,852
Commercial paper 51,008 37,793
Other short-term debt 2,301 3,111
-------- --------
Total short-term debt 5.9% 3.9% 56,299 43,756
Long-term debt payable within one year 9,310 12,304
-------- --------
Total debt payable within one year 65,609 56,060
Long-term debt
- --------------
Secured indebtedness 1996-2005 6.7% 8.0% 98 1,821
Unsecured senior indebtednes
Notes and bank debt 1996-2048 7.1% 7.1% 54,248 41,471
Debentures 1996-2010 7.8% 9.4% 560 916
Unamortized (discount) (61) (55)
-------- --------
Total unsecured senior indebtedness 54,747 42,332
Unsecured subordinated indebtedness
Notes 1996-2021 9.2% 8.9% 3,159 3,634
Debentures 1996-2009 8.1% 8.1% 141 142
Unamortized (discount) (41) (29)
-------- --------
Total unsecured subordinated indebtedness 3,259 3,747
-------- --------
Total long-term debt 58,104 47,900
-------- --------
Total debt $123,713 $103,960
======== ========
Fair value $122,252 $107,233
- - - - - -
*Excludes the effect of interest-rate swap agreements
FS-21
</TABLE>
<PAGE>
NOTE 9. Debt (Cont'd)
- -------------
Information concerning short-term borrowings (excluding long-term
debt payable within one year) is as follows (in millions):
1994 1993 1992
-------- -------- -------
Average amount of short-term borrowings $50,106 $38,353 $33,993
Weighted-average short-term interest rates
per annum (average year) 4.6% 3.8% 5.2%
Average remaining term of commercial paper
at December 31 27 days 29 days 29 days
Long-term debt at December 31, 1994 included maturities as follows
(in millions): 1995 - $9,310; 1996 - $12,086; 1997 - $13,106; 1998 -
$9,871; 1999 - $9,883; thereafter - $13,158.
Included in long-term debt at December 31, 1994 and 1993 were
obligations of $45.9 billion and $40.7 billion, respectively, with
fixed interest rates and $12.2 billion and $7.2 billion,
respectively, with variable interest rates (generally based on LIBOR
or other short-term rates). Obligations payable in foreign
currencies at December 31, 1994 and 1993 were $12.2 billion and $12.9
billion, respectively. These obligations were issued primarily to
fund foreign business operations.
Agreements to manage exposures to fluctuations in interest rates
include primarily interest-rate swap agreements. These agreements
decreased the overall weighted-average rate on long-term debt to
7.1%, compared with 7.2% excluding these agreements, and effectively
decreased the obligations subject to variable interest rates to
$7.2 billion at December 31, 1994. The weighted-average interest
rate on short-term debt decreased to 5.6%, compared with 5.9%
excluding these agreements.
Support Facilities
- ------------------
At December 31, 1994, Ford (parent company only) had long-term
contractually committed credit agreements in the U.S. under which
$5.9 billion is available from various banks at least through
June 30, 1999. The entire $5.9 billion may be used, at Ford's
option, by either Ford or Ford Credit. These facilities were unused
at December 31, 1994.
Outside the U.S., Ford had additional long-term contractually
committed credit-line agreements of $2.5 billion. These facilities
are available in varying amounts from 1995 through 1999; $21 million
were in use at December 31, 1994.
At December 31, 1994, Financial Services had $33.8 billion of
contractually committed support facilities (including the
$5.9 billion of the Ford credit agreements) for use in the U.S.; less
than 1% of these facilities, excluding the Ford credit agreements,
were in use. An additional $8.9 billion of contractually committed
support facilities were available outside the U.S. at
December 31, 1994; $1.4 billion of these were in use.
NOTE 10. Annuity Contracts - Financial Services
- ------------------------------------------------
The liability for annuity contracts, included in other liabilities,
was $2,722 million at December 31, 1994 and $1,598 million at
December 31, 1993, and reflected deposits received and interest
credited, less related withdrawals. The weighted-average interest
rate on annuity contracts outstanding at December 31, 1994 and 1993
was 6.3% and 6.2%, respectively. Interest rates offered are
initially guaranteed for periods of either one or five years.
Interest credited to annuity account balances is
recognized as expense; surrender charges are recognized as a
reduction of interest credited to annuitants. The fair value of
annuity contracts at December 31, 1994 and 1993 approximated book
value because the contractual interest rate due holders is reset
annually for more than 97% of contracts outstanding.
FS-22
<PAGE>
NOTE 11. Capital Stock
- -----------------------
On April 14, 1994, the company's Board of Directors declared a 2-for-
1 stock split in the form of a 100% stock dividend on the company's
Common Stock and Class B Stock effective June 6, 1994. Share data
have been restated to reflect the split, where appropriate.
At December 31, 1994, all general voting power was vested in the
holders of Common Stock and the holders of Class B Stock, voting
together without regard to class. At that date, the holders of
Common Stock were entitled to one vote per share and, in the
aggregate, had 60% of the general voting power; the holders of Class
B Stock were entitled to such number of votes per share as would give
them, in the aggregate, the remaining 40% of the general voting
power, as provided in the company's Certificate of Incorporation.
The Certificate provides that all shares of Common Stock and Class B
Stock share equally in dividends (other than dividends declared with
respect to any outstanding Preferred Stock), except that any stock
dividends are payable in shares of Common Stock to holders of that
class and in Class B Stock to holders of that class. Upon
liquidation, all shares of Common Stock and Class B Stock are
entitled to share equally in the assets of the company available for
distribution to the holders of such shares.
<TABLE>
Information concerning the Preferred Stock of the company is as
follows:
<CAPTION>
Series A Preferred Stock Series B Preferred Stock
-------------------------------------- ----------------------------------------
<S> <C> <C>
Year issued 1991 1992
Shares issued 46,000 shares 22,800 shares
Shares sold 46,000,000 Depositary Shares, each 45,600,000 Depositary Shares, each
representing 1/1,000 of a share of representing 1/2,000 of a share of
Series A Cumulative Convertible Series B Cumulative Preferred Stock
Preferred Stock
Dividends $4.20 per year per Depositary Share $2.0625 per year per Depositary Share
Conversion Shares can be converted any time None
into shares of Common Stock of the
company at a rate equivalent to
3.2654 shares of Common Stock for
each Depositary Share (equivalent to
a conversion price of $15.3121 per
share of Common Stock).
Redemption Not redeemable prior to Not redeemable prior to
December 7, 1997 December 1, 2002.
On and after December 7, 1997, the On and after December 1, 2002, and
stock is redeemable for cash at the upon satisfaction of certain
company's option, in whole or in conditions, the stock is redeemable
part, initially at an amount equi- for cash at the option of Ford, in
valent to $51.68 per Depositary whole or in part, at a redemption
Share and thereafter at prices price equivalent to $25 per Depositary
declining to $50 per Depositary Share, plus an amount equal to the sum
Share on and after December 1, 2001, of all accrued and unpaid dividends.
plus, in each case, an amount equal
to the sum of all accrued and unpaid
dividends.
Liquidation preference $50 per Depositary Share $25 per Depositary Share
and shares outstanding $2.3 billion and 45,946 shares $1.1 billion and 22,800 shares
at December 31, 1994 outstanding outstanding
The Series A and Series B Preferred Stock rank (and any other outstanding Preferred Stock of the company
would rank) senior to the Common Stock and Class B Stock in respect of dividends and liquidation rights.
FS-23
</TABLE>
<PAGE>
NOTE 12. Stock Options
- -----------------------
The company has stock options outstanding under the 1985 Stock Option
Plan and the 1990 Long-term Incentive Plan. These plans were
approved by the stockholders.
Information concerning stock options, restated to reflect the 2-for-1
stock split, is as follows (shares in millions):
1994 1993 1992
------ ------ ------
Option price of new grants a/ $29.06 $28.84 $18.50
and
$28.63
Shares subject to option
- ------------------------
Outstanding at beginning of period 37.4 41.1 33.0
New grants 9.5 7.1 9.6
Exercised b/ (2.6) (6.7) (1.0)
Surrendered upon exercise of stock
appreciation rights (0.9) (3.9) (0.5)
Terminated and expired (0.1) (0.2) *
----- ----- ------
Outstanding at end of period 43.3 c/ 37.4 41.1
Outstanding but not exercisable (21.3) (19.3) (19.5)
----- ----- ------
Exercisable at end of period 22.0 18.1 21.6
===== ===== ======
Shares authorized for future grants
(as of December 31)d/ 0 0 0
- - - - - -
*Less than 50,000 shares.
a/ Fair market value of Common Stock at dates of grant.
b/ At option prices ranging from $9.09 to 28.84 during 1994, $9.09
to $25.84 during 1993, from $3.52 to $15.34 during 1992.
c/ Including 10.0 and 33.3 million shares under the 1985 and 1990
Plans, respectively, at option prices ranging from $9.09 to
$29.06 per share.
d/ In addition, up to 1% of the issued Common Stock as of December 31
of any year may be made available for stock options and other
plan awards in the next succeeding calendar year. That limit may
be increased up to 2% in any year, with a corresponding reduction
in shares available for grants in future years.
No further grants may be made under the 1985 Plan. Grants may be
made under the 1990 Plan through April 2000. In general, options
granted under the 1985 Plan and options granted to date under the
1990 Plan become exercisable 25% after one year from the date of
grant, 50% after two years, 75% after three years and in full after
four years. Options under both Plans expire after 10 years. Certain
options outstanding under the plans were granted with an equal number
of accompanying stock appreciation rights which may be exercised in
lieu of the options. Under the Plans, a stock
appreciation right entitles the holder to receive, without payment,
the excess of the fair market value of the Common Stock on the date
of exercise over the option price, either in Common Stock or cash or
a combination. In addition, grants of Contingent Stock Rights were
made with respect to 709,800 shares in 1994, 2,327,200 shares in
1993, and 1,264,800 shares in 1992 under the 1990 Long-Term Incentive
Plan (not included in the table above). The number of shares
ultimately awarded will depend on the extent to which the Performance
Target specified in each Right is achieved, the individual
performances of the recipients and other factors, as determined by
the Compensation and Option Committee of the Board of Directors.
FS-24
<PAGE>
NOTE 13. Litigation and Claims
- -------------------------------
Various legal actions, governmental investigations and proceedings
and claims are pending or may be instituted or asserted in the future
against the company and its subsidiaries, including those arising out
of alleged defects in the company's products, governmental
regulations relating to safety, emissions and fuel economy, financial
services, intellectual property rights, product warranties and
environmental matters. Certain of the pending legal actions are, or
purport to be, class actions. Some of the foregoing matters involve
or may involve compensatory, punitive, or antitrust or other treble
damage claims in very large amounts, or demands for recall campaigns,
environmental remediation programs, sanctions, or other relief which,
if granted, would require very large expenditures.
Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not predictable with assurance. It
is reasonably possible that some of the matters discussed in the
foregoing paragraph could be decided unfavorably to the company or
the subsidiary involved and could require the company or such
subsidiary to pay damages or make other expenditures in amounts or a
range of amounts that at December 31, 1994 cannot reasonably be
estimated. Although the final resolution of any such matters could
have a material effect on the company's consolidated financial
results for a particular reporting period, the company believes
that, based on its analysis, any resulting liability should not
materially affect the company's consolidated financial position at
December 31, 1994.
NOTE 14. Commitments and Contingencies
- ---------------------------------------
At December 31, 1994, the company had the following minimum rental
commitments under non-cancelable operating leases (in millions):
1995 - $713; 1996 - $610; 1997 - $538; 1998 - $250;
1999 - $222; thereafter - $653. These amounts include rental
commitments related to the sales and leasebacks of certain Automotive
machinery and equipment.
The company and certain of its subsidiaries have entered into
agreements with various banks to introduce credit card programs that
offer rebates which can be applied against the purchase or lease of
Ford cars or trucks. The maximum amount of rebates available to
qualified cardholders at December 31, 1994 and 1993 was $2.3 billion
and $1.7 billion, respectively. The company has provided for the
estimated net cost of these programs as a sales incentive based on
the estimated number of participants who will ultimately purchase
vehicles.
Certain Financial Services subsidiaries make credit lines available
to holders of their credit cards. At December 31, 1994 and 1993, the
unused portion of available credit was approximately $10.3 billion
and $9.9 billion, respectively, and is revocable under specified
conditions. The fair value of unused credit lines and the potential
risk of loss was not considered to be significant.
FS-25
<PAGE>
NOTE 15. Financial Instruments
- -------------------------------
The company adopted Statement of Financial Accounting Standards No.
119, "Disclosure about Derivative Financial Instruments and Fair
Value of Financial Instruments" as of December 31, 1994. Estimated
fair value amounts have been determined using available market
information and various valuation methods depending on the type of
instrument. In evaluating the fair value information, considerable
judgement is required to interpret the market data used to develop
the estimates. The use of different market assumptions and/or
different valuation techniques may have a material effect on the
estimated fair value amounts.
<TABLE>
Balance Sheet Financial Instruments
- -----------------------------------
Information about specific valuation techniques and related fair value detail is provided throughout the
footnotes. The table below provides book value and fair value amounts (in millions) and a cross reference to
the applicable Note.
<CAPTION>
December 31, 1994 December 31, 1993
----------------------- -----------------------
Book Fair Book Fair Fair Value
Value Value Value Value Reference
---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Automotive
- ----------
Cash & cash equivalents $ 4,481 $ 4,481 $ 5,667 $ 5,667 Note 17
Marketable securities 7,602 7,602 4,085 4,085 Note 2
Receivables 2,548 2,548 2,302 2,302 Note 3
Debt 7,258 7,492 8,016 9,044 Note 9
Financial Services
- ------------------
Cash & cash equivalents $ 1,739 $ 1,739 $ 2,555 $ 2,555 Note 17
Marketable securities 5,781 5,746 7,559 7,635 Note 2
Receivables 98,432 99,609 96,789 98,505 Note 3
Debt 123,713 122,252 103,960 107,223 Note 9
Annuity contracts* 2,722 2,722 1,598 1,598 Note 10
- - - - - -
* Included in Financial Services other liabilities and deferred income on the balance sheet.
</TABLE>
Foreign Currency Instruments
- ----------------------------
The fair value of foreign currency instruments generally was
estimated using current market prices provided by outside quotation
services. At December 31, 1994, the fair value of net receivable
contracts was $298 million, and the fair value of net payable
contracts was $108 million. At December 31, 1993, the fair value for
all agreements was a net receivable of $149 million. At December 31,
1994, foreign currency instruments had a deferred gain of
$220 million. In the unlikely event that a counterparty fails to
meet the terms of a foreign currency agreement, the company's market
risk is limited to the exchange rate differential. In the case of
currency swaps, the company's market risk also may include an
interest rate differential. At December 31, 1994 and 1993, the total
amount of the company's foreign currency forward contracts (contracts
purchased and sold) and currency swaps and options outstanding was
$12.6 billion and $10.9 billion, respectively, maturing primarily
through 1997.
Interest-Rate Instruments
- -------------------------
The fair value of interest-rate instruments is the estimated amount
the company would receive or pay to terminate the agreement. Fair
value is calculated using information provided by outside quotation
services, taking into account current interest rates and the current
credit-worthiness of the swap parties. At December 31, 1994, the
fair value of net receivable contracts was $458 million, and the fair
value of net payable contracts was $602 million. At December 31,
1993, the fair value for all agreements was a net receivable of
$512 million. In the unlikely event that a counterparty fails to
meet the terms of an interest-rate agreement, the company's exposure
is limited to the interest rate differential. At December 31, 1994
and 1993, the underlying principal amounts on which the company has
interest-rate swap agreements outstanding aggregated $53.8 billion
and $36.1 billion, respectively, maturing primarily through 1999.
FS-26
<PAGE>
NOTE 15. Financial Instruments (Cont'd)
- -----------------------------
Other Instruments
- -----------------
In addition, the company and its subsidiaries have entered into a
variety of other financial agreements which contain potential risk of
loss. These agreements include limited guarantees under sales of
receivables agreements, financial guarantees, letters of credit,
interest rate caps and floors, and government security repurchase
agreements. Neither the amounts of these agreements nor the
potential risk of loss was considered to be significant at
December 31, 1994.
Note 16. Significant Acquisitions and Dispositions of Subsidiaries
- -------------------------------------------------------------------
Acquisition of the Hertz Corporation
- ------------------------------------
On March 8, 1994, Ford purchased from Commerzbank Aktiengesellschaft,
a German bank, additional shares of common stock of Hertz aggregating
5% of the total outstanding voting stock, thereby bringing Ford's
ownership of the total voting stock of Hertz to 54% from 49%. On
April 29, 1994, Ford acquired 20% of Hertz' common stock from Park
Ridge Limited Partnership, and Hertz redeemed the common stock (26%)
and preferred stock of Hertz owned by AB Volvo for $145 million.
These transactions resulted in Hertz becoming a wholly-owned
subsidiary of Ford. In addition, a $150 million subordinated
promissory note of Hertz held by Ford Credit was exchanged for
$150 million of preferred stock of Hertz. Prior to these
transactions, Hertz had been accounted for on an equity basis as part
of the Automotive segment. Hertz' operating results, assets,
liabilities and cash flows are now consolidated as part of the
Financial Services segment. In 1994, Financial Services net income
included $92 million for Hertz. In 1993, Automotive net income
included $26 million for Hertz.
Sale of First Nationwide Bank
- -----------------------------
On September 30, 1994, substantially all of the assets of First
Nationwide Bank, a Federal Savings Bank, since known as Granite
Savings Bank (the "Bank"), were sold to, and substantially all of the
Bank's liabilities were assumed by, First Madison Bank, FSB ("First
Madison"). The Bank is a wholly-owned subsidiary of Granite
Management Corporation (formerly First Nationwide Financial
Corporation) ("Granite"), which in turn is a wholly-owned subsidiary
of Ford.
The company recognized in First Quarter 1994 earnings a pre-tax
charge of $475 million ($440 million after taxes) related to the
disposition of the Bank, reflecting the non-recovery of goodwill and
reserves for estimated losses on assets to be retained or repurchased
by Granite. These assets will be liquidated over time as market
conditions permit. The tax effect of this transaction takes into
account differences between the book and tax basis of certain assets
for which deferred taxes were not required to be provided under SFAS
No. 109, "Accounting for Income Taxes". The company's income
statement includes the results of operations of Granite through March
31, 1994. The net assets of Granite at December 31, 1994 are
included in the balance sheet under Financial Services - Other
Assets. Historically, Granite (including the Bank) has not had a
significant effect on Ford's operating results.
FS-27
<PAGE>
<TABLE>
NOTE 17. Cash Flows
- --------------------
The reconciliation of net income/(loss) to cash flows from operating activities is as follows (in millions):
<CAPTION>
1994 1993 1992
--------------------- --------------------- --------------------
Financial Financial Financial
Automotive Services Automotive Services Automotive Services
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income/(loss) $3,824 $1,484 $ 940 $1,589 $(8,628) $1,243
Adjustments to reconcile net income/(loss)
to cash flows from operating activities:
Cumulative effects of changes in
accounting principles - - - - 7,094 (211)
Depreciation and amortization 4,426 4,910 4,404 3,064 4,666 2,089
(Earnings)/losses of affiliated
companies in excess of dividends
remitted (171) (2) (21) (9) 16 51
Provision for credit and
insurance losses - 1,539 - 1,523 - 1,795
Foreign currency adjustments (384) - (650) - (362) -
Net purchases of trading securities
(Note 2) (3,616) (41) - - - -
Provision/(credit) for deferred income
taxes 424 410 (796) 595 (447) 333
Changes in assets and liabilities:
(Increase)/decrease in accounts
receivable and other current assets (1,096) - 34 - 103 -
(Increase)/decrease in inventory (894) - (275) - 380 -
Increase in accounts payable and
accrued and other liabilities 4,949 1,077 3,735 594 2,617 295
Other 80 (290) (509) (211) 314 167
------- ------- ------- ------- ------- -------
Cash flows from operating activities $7,542 $9,087 $6,862 $7,145 $ 5,753 $5,762
======= ======= ======= ======= ======= =======
</TABLE>
The company considers all highly-liquid investments purchased with a
maturity of three months or less to be cash equivalents. The book
value of these investments approximates fair value because of the
short maturity. Cash flows resulting from futures contracts, forward
contracts and options that are accounted for as hedges of
identifiable transactions are classified in the same category as the
item being hedged. With the adoption of SFAS 115 in 1994, the
purchases and sales of trading securities are included in cash flows
from operating activities. The purchases and sales of available-for-
sale and held-to-maturity securities are included in cash flows from
investing activities.
<PAGE>
Cash paid for interest and income taxes was as follows (in millions):
1994 1993 1992
------ ------ ------
Interest $7,718 $6,969 $8,255
Income taxes 2,042 1,522 31
NOTE 18. Segment Information
- ----------------------------
The company operates in two principal business segments: Automotive
and Financial Services. The Automotive segment consists of the
design, manufacture, assembly and sale of cars, trucks and related
parts and accessories. The Financial Services segment consists
primarily of financing operations, insurance operations, and vehicle
and equipment leasing operations.
Intersegment transactions represent principally transactions
occurring in the ordinary course of business, borrowings and related
transactions between entities in the Financial Services and
Automotive segments, and interest and other support under special
vehicle financing programs. These arrangements are reflected in the
respective business segments.
Intercompany sales among geographic areas consist primarily of
vehicles, parts and components manufactured by the company and
various subsidiaries and sold to different entities within the
consolidated group. Transfer prices for these transactions are
established by agreement between the affected entities.
FS-28
<PAGE>
NOTE 18. Segment Information (Cont'd)
- ----------------------------
Financial information segregated by major geographic area is as
follows (in millions):
Automotive
- ----------
1994 1993 1992
--------- --------- ---------
Sales to unaffiliated customers
United States $ 73,008 $ 61,559 $ 51,918
Europe* 21,784 18,507 21,579
All other 12,345 11,502 10,910
-------- -------- --------
Total $107,137 $ 91,568 $ 84,407
======== ======== ========
Intercompany sales among
geographic areas
United States $ 11,206 $ 8,721 $ 6,978
Europe* 1,709 1,690 1,717
All other 11,811 9,791 10,120
-------- -------- --------
Total $ 24,726 $ 20,202 $ 18,815
======== ======== ========
Total sales
United States $ 84,214 $ 70,280 $ 58,896
Europe* 23,493 20,197 23,296
All other 24,156 21,293 21,030
Elimination of intercompany sales (24,726) (20,202) (18,815)
-------- -------- --------
Total $107,137 $ 91,568 $ 84,407
======== ======== ========
Operating income/(loss)
United States $ 4,190 $ 1,677 $ (582)
Europe* 935 (402) (924)
All other 701 157 (269)
-------- -------- --------
Total $ 5,826 $ 1,432 $ (1,775)
======== ======== ========
Net income/(loss) before cumulative
effects of changes in accounting
principles
United States $ 3,040 $ 1,482 $ (405)
Europe* 388 (407) (647)
All other 396 (135) (482)
-------- -------- --------
Total $ 3,824 $ 940 $ (1,534)
======== ======== ========
Assets at December 31
United States $ 45,554 $ 39,666 $ 34,334
Europe* 13,514 13,452 13,414
All other 20,231 18,248 17,534
Net receivables from
Financial Services 677 910 1,437
Elimination of intercompany
receivables (11,605) (10,539) (9,549)
-------- -------- --------
Total $ 68,371 $ 61,737 $ 57,170
======== ======== ========
Capital expenditures (facilities,
machinery and equipment and tooling)
United States $ 5,428 $ 4,289 $ 3,018
Europe* 1,236 1,376 1,857
All other 1,646 1,049 822
-------- -------- --------
Total $ 8,310 $ 6,714 $ 5,697
======== ======== ========
- - - - - -
*Excludes Jaguar
Financial Services
- ------------------
1994 1993 1992
--------- --------- ---------
Revenues
United States $ 17,356 $ 14,102 $ 12,514
Europe 2,336 1,673 2,051
All other 1,610 1,178 1,160
-------- -------- --------
Total $ 21,302 $ 16,953 $ 15,725
======== ======== ========
Income before income taxes and
cumulative effects of changes
in accounting principles**
United States $ 2,185 $ 2,311 $ 1,452
Europe 419 285 266
All other 188 116 107
-------- -------- --------
Total $ 2,792 $ 2,712 $ 1,825
======== ======== ========
- - - - - -
**Financial Services Activities do not report operating income;
income before income taxes is representative of operating income.
FS-29
<PAGE>
NOTE 18. Segment Information (Cont'd)
- ----------------------------
Net income before cumulative
effects of changes in accounting
principles
United States $ 1,119 $ 1,340 $ 919
Europe 277 187 68
All other 88 62 45
-------- -------- --------
Total $ 1,484 $ 1,589 $ 1,032
======== ======== ========
Assets at December 31
United States $124,118 $117,290 $104,749
Europe 16,507 12,132 11,512
All other 10,358 7,779 7,114
-------- -------- --------
Total $150,983 $137,201 $123,375
======== ======== ========
<TABLE>
Note 19. Summary Quarterly Financial Data (Unaudited)
- -----------------------------------------------------
(in millions except amounts per share)
<CAPTION>
1994 1993
------------------------------------- -------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Automotive
Sales $26,070 $28,375 $24,926 $27,766 $22,686 $25,264 $20,107 $23,511
Operating income/(loss) 1,559 1,966 989 1,312 505 787 (242) 382
Financial Services
Revenues 4,332 5,397 5,696 5,877 4,077 4,155 4,391 4,330
Income before income taxes 196 911 896 789 670 654 732 656
Total Company
Net income $ 904a/ $ 1,711 $ 1,124 $ 1,569 $ 572 $ 775 $ 463b/ $ 719c/
Preferred stock dividend
requirements 72 72 72 72 72 72 72 71
------- ------- ------- ------- ------- ------- ------- -------
Income attributable
to Common and Class B Stock $ 832 $ 1,639 $ 1,052 $ 1,497 $ 500 $ 703 $ 391 $ 648
======= ======== ======= ======= ======= ======= ======= =======
AMOUNTS PER SHARE OF COMMON
AND CLASS B STOCK AFTER
PREFERRED STOCK DIVIDENDSd/
Income $ 0.83 $ 1.63 $ 1.04 $ 1.47 $ 0.51 $ 0.72 $ 0.40 $ 0.65
======= ======= ======= ======= ======= ======= ======= =======
Income assuming full
dilution $ 0.75 $ 1.44 $ 0.93 $ 1.31 $ 0.48 $ 0.65 $ 0.38 $ 0.60
Dividends $ 0.20 $ 0.225 $ 0.225 $ 0.26 $ 0.20 $ 0.20 $ 0.20 $ 0.20
- - - - - -
a/ Includes a loss of $440 million related to the disposition of Granite Savings Bank (formerly First
Nationwide Bank)
b/ Includes a one-time tax reduction of $140 million to reflect revaluation of U.S. deferred tax balances,
offset partially by restructuring charges at Jaguar ($65 million).
c/ Includes restructuring charges at Jaguar ($109 million) and Ford of Australia ($57 million), partially
offset by the favorable one-time effect of a reduction in German tax rates ($59 million) and a gain on
the sale of part of Ford's North American automotive seating and seat trim business ($73 million).
d/ The sum of the per-share amounts in 1994 and 1993 is different than the amounts reported for the full
year because of the effect that sales of the company's stock had on average shares for those periods.
Share data have been restated to reflect the 2-for-1 stock split that became effective June 6, 1994.
</TABLE>
FS-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Motor Company
We have audited the consolidated balance sheet of Ford Motor Company and
Subsidiaries at December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1994. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ford Motor
Company and Subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Notes 6 and 8 to the consolidated financial statements, the
company changed its methods of accounting for postretirement benefits other
than pensions and income taxes in 1992.
COOPERS & LYBRAND L.L.P.
400 Renaissance Center
Detroit, Michigan 48243
313-446-7100
January 27, 1995
Ford Motor Company
The American Road
Dearborn, Michigan
CONSENT OF COOPERS & LYBRAND
Re: Ford Motor Company Registration Statements Nos. 2-95018, 2-95020,
33-9722, 33-14951, 33-19036, 33-36043, 33-36061, 33-39402,
33-50087, 33-50194, 33-50238, 33-54304, 33-54344, 33-54348,
33-54275, 33-54283, 33-54735, 33-54737, 33-55847 and 33-56785
on Form S-8, and 2-42133, 33-32641, 33-40638, 33-43085,
33-45887, 33-55474 and 33-55171 on Form S-3
We consent to the incorporation by reference in the above Registration
Statements of our report dated January 27, 1995 to the Board of Directors and
Stockholders of Ford Motor Company accompanying the financial statements of
Ford Motor Company and Subsidiaries included in the Ford Motor Company Current
Report on Form 8-K dated February 7, 1995.
COOPERS & LYBRAND L.L.P.
400 Renaissance Center
Detroit, Michigan 48243
February 7, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information of the Automotive Segment
extracted from the consolidated financial statements of Ford Motor Company
and Subsidiaries for the year ended and at December 31, 1994 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 4,481
<SECURITIES> 7,602
<RECEIVABLES> 2,615
<ALLOWANCES> 67
<INVENTORY> 6,487
<CURRENT-ASSETS> 26,863
<PP&E> 59,623
<DEPRECIATION> 32,575
<TOTAL-ASSETS> 68,371
<CURRENT-LIABILITIES> 25,471
<BONDS> 7,103
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 107,137
<TOTAL-REVENUES> 107,137
<CGS> 96,180
<TOTAL-COSTS> 101,311
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 721
<INCOME-PRETAX> 5,997
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information of the Financial
Services Segment extracted from the consolidated financial statements of
Ford Motor Company and Subsidiaries for the year ended and at December 31,
1994 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,739
<SECURITIES> 6,105
<RECEIVABLES> 130,356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 150,983
<CURRENT-LIABILITIES> 0
<BONDS> 123,713
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 21,302
<TOTAL-REVENUES> 21,302
<CGS> 0
<TOTAL-COSTS> 18,554
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,539
<INTEREST-EXPENSE> 7,023
<INCOME-PRETAX> 2,792
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> CT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Ford Motor Company and Subsidiaries for
the year ended and at December 31, 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<TOTAL-ASSETS> 219,534
<COMMON> 1,023
0
0
<OTHER-SE> 20,636
<TOTAL-LIABILITY-AND-EQUITY> 219,354
<TOTAL-REVENUES> 128,439
<INCOME-TAX> 3,329
<INCOME-CONTINUING> 5,308
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,308
<EPS-PRIMARY> 4.97
<EPS-DILUTED> 4.44
</TABLE>
