UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the
- ------ Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1995
-----------------
OR
Transition report pursuant to Section 13 or 15(d) of
- ------ the Securities Exchange Act of 1934 (No Fee Required)
For the transition period from ______________ to______________
Commission file number 1-3950
------
FORD MOTOR COMPANY
------------------
(Exact name of registrant as specified in its charter)
Delaware 38-0549190
-------- ----------
(State of incorporation) (I.R.S. 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
------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered (a)
- --------------------------------------- ---------------------------
<S> <C>
Common Stock, par value $1.00 per share New York Stock Exchange
Pacific Coast Stock Exchange
Depositary Shares, each representing New York Stock Exchange
1/1,000 of a share of Series A Cumulative
Convertible Preferred Stock, as described
below
Depositary Shares, each representing New York Stock Exchange
1/2,000 of a share of Series B Cumulative
Preferred Stock, as described below
</TABLE>
_____________
(a) In addition, shares of Common Stock of the Registrant are
listed on certain stock exchanges in the United Kingdom and
Continental Europe.
[Cover page 1 of 2 pages]
<PAGE>
Securities registered pursuant to Section 12(g) of the Act:
Series A Cumulative Convertible Preferred Stock, par value $1.00
per share, with an annual dividend rate of $4,200 per share and a
liquidation preference of $50,000 per share.
Series B Cumulative Preferred Stock, par value $1.00 per share,
with an annual dividend rate of $4,125 per share and a liquidation
preference of $50,000 per share.
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
-------
As of February 1, 1996, the Registrant had outstanding
1,097,956,189 shares of Common Stock and 70,852,076 shares of
Class B Stock. Based on the New York Stock Exchange Composite
Transaction closing price of the Common Stock on that date ($30-
1/2 a share), the aggregate market value of such Common Stock was
$33,487,663,764.50. Although there is no quoted market for the
Registrant's Class B Stock, shares of Class B Stock may be
converted at any time into an equal number of shares of Common
Stock for the purpose of effecting the sale or other disposition
of such shares of Common Stock. The shares of Common Stock and
Class B Stock outstanding at February 1, 1996 included shares
owned by persons who may be deemed to be "affiliates" of the
Registrant. The Registrant does not believe, however, that any
such person should be considered to be an affiliate. For
information concerning ownership of outstanding Common Stock and
Class B Stock, see the Proxy Statement for the Registrant's
Annual Meeting of Stockholders to be held on May 9, 1996 (the
"Proxy Statement"), which is incorporated by reference under
various Items of this Report.
Document Incorporated by Reference*
----------------------------------
Document Where Incorporated
-------- ------------------
Proxy Statement Part III (Items 10,
11, 12 and 13)
__________________________
* As stated under various Items of this Report, only certain
specified portions of such document are incorporated by reference
herein.
[Cover page 2 of 2 pages]
<PAGE>
<PAGE>
PART I
Item 1. Business
- -----------------
Ford Motor Company (referred to herein as "Ford", the
"Company" or the "Registrant") was incorporated in Delaware in 1919
and acquired the business of a Michigan company, also known as Ford
Motor Company, incorporated in 1903 to produce automobiles designed
and engineered by Henry Ford. Ford is the second-largest producer
of cars and trucks in the world, and ranks among the largest
providers of financial services in the United States.
General
-------
The Company's two principal business segments are Automotive
and Financial Services. The activities of the Automotive segment
consist of the design, manufacture, assembly and sale of cars and
trucks and related parts and accessories. Substantially all of
Ford's automotive products are marketed through retail dealerships,
most of which are privately owned and financed.
The primary activities of the Financial Services segment
consist of financing operations, vehicle and equipment leasing and
insurance operations. These activities are conducted through the
Company's subsidiaries, Ford FSG, Inc. ("FFSGI"), Ford Holdings,
Inc. ("Ford Holdings"), The Hertz Corporation ("Hertz") and Granite
Management Corporation ("Granite"). FFSGI is a holding company
that owns primarily Ford Motor Credit Company ("Ford Credit"), a
majority of Ford Credit Europe plc ("Ford Credit Europe"), and
Associates First Capital Corporation ("The Associates"). Ford
Holdings is a holding company that owns primarily a portion of
FFSGI and all of USL Capital Corporation ("USL Capital") and The
American Road Insurance Company ("American Road").
See Note 17 of Notes to Financial Statements and Item 6.
"Selected Financial Data" for information relating to revenue,
operating income/(loss) and assets attributable to Ford's industry
segments. Also see Item 7. "Management's Discussion and Analysis
of Financial Condition and Results of Operations" for information
with respect to revenue, net income and other matters.
Automotive Operations
---------------------
The worldwide automotive industry is affected significantly by
a number of factors over which the industry has little control,
including general economic conditions.
In the United States, the automotive industry is a highly-
competitive, cyclical business characterized by a wide variety of
product offerings. The level of industry demand (retail deliveries
of cars and trucks) can vary substantially from year to year and,
in any year, is dependent to a large extent on general economic
conditions, the cost of purchasing and operating cars and trucks
and the availability and cost of credit and of fuel, and reflects
the fact that cars and trucks are durable items, the replacement of
which can be postponed.
The automotive industry outside of the United States consists
of many producers, with no single dominant producer. Certain
manufacturers, however, account for the major percentage of total
sales within particular countries, especially their respective
countries of origin. Most of the factors that affect the U.S.
automotive industry and its sales volumes and profitability are
equally relevant outside the United States.
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
The worldwide automotive industry also is affected
significantly by a substantial amount of government regulation. In
the United States and Europe, for example, government regulation
has arisen primarily out of concern for the environment, for
greater vehicle safety and for improved fuel economy. Many
governments also regulate local content and/or impose import
requirements as a means of creating jobs, protecting domestic
producers or influencing their balance of payments.
Unit sales of Ford vehicles vary with the level of total
industry demand and Ford's share of industry sales. Ford's share
is influenced by the quality, price, design, driveability, safety,
reliability, economy and utility of its products compared with
those offered by other manufacturers, as well as by the timing of
new model introductions and capacity limitations. Ford's ability
to satisfy changing consumer preferences with respect to type or
size of vehicle and its design and performance characteristics can
affect Ford's sales and earnings significantly.
The profitability of vehicle sales is affected by many
factors, including unit sales volume, the mix of vehicles and
options sold, the level of "incentives" (price discounts) and other
marketing costs, the costs for customer warranty claims and other
customer satisfaction actions, the costs for government-mandated safety,
emission and fuel economy technology and equipment, the ability to
control costs and the ability to recover cost increases through
higher prices. Further, because the automotive industry is
capital intensive, it operates with a relatively high percentage of
fixed costs which can result in large changes in earnings with
relatively small changes in unit volume.
Ford has operations in over 30 countries and sells vehicles in
over 200 markets. These businesses frequently have foreign
currency exposures when they buy, sell, and finance in currencies
other than their local currencies. Ford's primary foreign currency
exposures, in terms of net corporate exposure, are in the German
Mark, Japanese Yen, Italian Lira and French Franc. The effect of
changes in exchange rates on income depends largely on the
relationship between revenues and costs incurred in the local
currency versus other currencies. Historically, the effect of
changes in exchange rates on Ford's earnings generally has been
small relative to other factors that also affect earnings (such as
unit sales).
United States
- -------------
Sales Data. The following table shows U.S. industry demand
for the years indicated:
<TABLE>
<CAPTION>
U.S. Industry Retail Deliveries
(millions of units)
--------------------------------------
Years Ended December 31
--------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cars 8.6 9.0 8.5 8.2 8.2
Trucks 6.5 6.4 5.7 4.9 4.3
---- ---- ---- ---- ----
Total 15.1 15.4 14.2 13.1 12.5
==== ==== ==== ==== ====
</TABLE>
-2-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Ford classifies cars by small, middle, large and luxury
segments and trucks by compact pickup, compact van/utility, full-
size pickup, full-size van/utility and medium/heavy segments. The
large and luxury car segments and the compact van/utility, full-
size pickup and full-size van/utility truck segments include the industry's
most profitable vehicle lines. The following tables show the proportion
of retail car and truck sales by segment for the industry (including
Japanese and other foreign-based manufacturers) and Ford for the years
indicated:
<TABLE>
<CAPTION>
U.S. Industry Vehicle Sales by Segment
--------------------------------------
Years Ended December 31
--------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CARS
Small 17.7% 18.4% 17.3% 18.3% 18.9%
Middle 28.3 28.5 31.2 32.4 33.5
Large 4.3 4.8 5.1 5.8 6.3
Luxury 6.8 6.6 6.4 6.1 6.5
----- ----- ----- ----- -----
Total U.S. Industry Car Sales 57.1 58.3 60.0 62.6 65.2
----- ----- ----- ----- -----
TRUCKS
Compact Pickup 6.8 7.7 7.6 7.8 7.8
Compact Van/Utility 18.0 16.9 16.5 15.0 13.5
Full-Size Pickup 11.5 11.0 9.9 9.0 8.7
Full-Size Van/Utility 4.4 4.1 4.2 4.0 3.3
Medium/Heavy 2.2 2.0 1.8 1.6 1.5
----- ----- ----- ----- -----
Total U.S. Industry Truck Sales 42.9 41.7 40.0 37.4 34.8
----- ----- ----- ----- -----
Total U.S. Industry Vehicle Sales 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Ford Vehicle Sales by Segment in U.S.
---------------------------------------
Years Ended December 31
---------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CARS
Small 15.1% 17.5% 15.1% 14.6% 17.6%
Middle 22.3 22.7 26.9 29.4 26.7
Large 4.9 5.2 5.1 5.8 5.7
Luxury 4.4 4.7 4.9 5.2 6.4
----- ----- ----- ----- -----
Total Ford U.S. Car Sales 46.7 50.1 52.0 55.0 56.4
----- ----- ----- ----- -----
TRUCKS
Compact Pickup 8.0 8.9 9.5 7.6 8.1
Compact Van/Utility 20.1 16.7 15.6 15.1 13.7
Full-Size Pickup 17.9 16.7 15.6 15.1 15.6
Full-Size Van/Utility 5.9 6.2 6.0 5.9 5.1
Medium/Heavy 1.4 1.4 1.3 1.3 1.1
----- ----- ----- ----- -----
Total Ford U.S. Truck Sales 53.3 49.9 48.0 45.0 43.6
----- ----- ----- ----- -----
Total Ford U.S. Vehicle Sales 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
As shown in the tables above, since 1991 there has been a
significant shift from cars to trucks for both industry sales and
Ford sales. Most of the shift reflects fewer sales of cars in the
middle and large segments for the industry and in the middle, large
and luxury segments for Ford and increased sales of trucks in the
compact van/utility (e.g., Windstar and Explorer) and full-size
pickup segments for both the industry and Ford. The increased
sales of full-size pickups reflects the increased use of such
vehicles for personal (rather than commercial) purposes.
-3-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Market Share Data. The following tables show changes in car
and truck market shares of United States and foreign-based
manufacturers for the years indicated:
<TABLE>
<CAPTION>
U.S. Car Market Shares*
--------------------------------------
Years Ended December 31
--------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
U.S. Manufacturers (Including Imports)
Ford 20.9% 21.8% 22.3% 21.8% 20.1%
General Motors 33.9 34.0 34.1 34.6 35.6
Chrysler 9.1 9.0 9.8 8.3 8.6
---- ---- ---- ---- ----
Total U.S. Manufacturers 63.9 64.8 66.2 64.7 64.3
Foreign-Based Manufacturers**
Japanese 29.7 29.6 29.1 30.1 30.2
All Other 6.4 5.6 4.7 5.2 5.5
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers 36.1 35.2 33.8 35.3 35.7
----- ----- ----- ----- -----
Total U.S. Car Retail Deliveries 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
U.S. Truck Market Shares*
--------------------------------------
Years Ended December 31
--------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
U.S. Manufacturers (Including Imports)
Ford 31.9% 30.1% 30.5% 29.7% 28.9%
General Motors 29.9 30.9 31.4 32.2 32.9
Chrysler 21.3 21.7 21.4 21.1 18.5
Navistar International 1.4 1.3 1.3 1.3 1.4
All Other 2.0 1.8 1.6 1.4 1.3
----- ----- ----- ----- ----
Total U.S. Manufacturers 86.5 85.8 86.2 85.7 83.0
Foreign-Based Manufacturers**
Japanese 12.7 13.5 13.2 13.8 16.5
All Other 0.8 0.7 0.6 0.5 0.5
----- ----- ----- ----- ----
Total Foreign-Based Manufacturers 13.5 14.2 13.8 14.3 17.0
----- ----- ----- ----- ----
Total U.S. Truck Retail Deliveries 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
U.S. Combined Car and Truck Market Shares*
------------------------------------------
Years Ended December 31
------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
U.S. Manufacturers (Including Imports)
Ford 25.6% 25.2% 25.5% 24.7% 23.2%
General Motors 32.2 32.7 33.1 33.7 34.6
Chrysler 14.3 14.3 14.4 13.1 12.0
Navistar International 0.6 0.5 0.5 0.5 0.5
All Other 0.9 0.8 0.7 0.5 0.5
----- ----- ----- ---- -----
Total U.S. Manufacturers 73.6 73.5 74.2 72.5 70.8
Foreign-Based Manufacturers**
Japanese 22.6 22.9 22.8 24.0 25.5
All Other 3.8 3.6 3.0 3.5 3.7
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers 26.4 26.5 25.8 27.5 29.2
----- ----- ----- ------ ----
Total U.S. Car and Truck Retail Deliveries 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
__________________________
* All U.S. retail sales data are based on publicly available
information from the American Automobile Manufacturers
Association, the media and trade publications.
** Share data include cars and trucks assembled and sold in the
U.S. by Japanese-based manufacturers selling through their own
dealers as well as vehicles imported by them into the U.S. "All
Other" includes primarily companies based in various European
countries and in Korea.
-4-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Japanese Competition. The market share of Ford and other
domestic manufacturers in the U.S. is affected by sales from
Japanese manufacturers. As shown in the table above, the share of
the U.S. combined car and truck industry held by the Japanese
manufacturers decreased from 25.5% in 1991 to 22.6% in 1995,
reflecting in part the effects of the strengthening of the Japanese
yen on the prices of vehicles produced by the Japanese
manufacturers, the overall market shift from cars to trucks and
improvements in the vehicles produced by U.S. manufacturers.
In the 1980s and continuing in the 1990s, Japanese
manufacturers added assembly capacity in North America (frequently
referred to as "transplants") in response to a variety of factors,
including export restraints, the significant growth of Japanese car
sales in the U.S. and international trade considerations. In
response to the strengthening of the Japanese yen to the U.S.
dollar, Japanese manufacturers are continuing to add production
capacity (particularly in the profitable truck segments) in the
United States. Production in the U.S. by Japanese transplants
reached about 2.3 million units in 1995 and is expected to increase
gradually over the next several years.
Marketing Incentives and Fleet Sales. As a result of intense
competition from new product offerings (from both domestic and
foreign manufacturers) and the desire to maintain economic
production levels, automotive manufacturers that sell vehicles in
the U.S. have provided marketing incentives (price discounts) to
retail and fleet customers (i.e., daily rental companies,
commercial fleets, leasing companies and governments). Marketing
incentives are particularly prevalent during periods of economic
downturns, when excess capacity in the industry tends to exist.
Ford's marketing costs in North America as a percentage of
gross sales revenue for each of 1995, 1994, and 1993 were: 7.5%,
7.3%, and 8.7%, respectively. During the 1983-1988 period, such
costs as a percentage of sales revenue were in the 3% to 5% range.
In 1991, marketing costs peaked at 12% of gross revenues.
"Marketing costs" include (i) marketing incentives such as retail
rebates and special financing rates, (ii) reserves for residual
guaranties on retail vehicle leases, (iii) reserves for costs
and/or losses associated with obligatory repurchases of certain
vehicles sold to daily rental companies and (iv) costs for
advertising and sales promotions.
Sales by Ford to fleet customers were as follows for the years
indicated:
<TABLE>
<CAPTION>
Ford Fleet Sales
----------------------------------------------------
Years Ended December 31
----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Units sold 931,000 924,000 881,000 882,000 782,000
Percent of Ford's total car and truck sales 24% 24% 25% 28% 27%
</TABLE>
Fleet sales generally are less profitable than retail sales, and
sales to daily rental companies generally are less profitable than
sales to other fleet purchasers. The mix between sales to daily
rental companies and other fleet sales has been about evenly split
in recent years.
Warranty Coverages. In recent years, due to competitive
pressures, vehicle manufacturers have both expanded the coverages
and extended the terms of warranties on vehicles sold in the U.S.
Ford presently provides warranty coverage for defects in factory-
supplied materials and workmanship on all vehicles sold by it in
the U.S. that extends for at least 36 months or 36,000 miles
(whichever occurs first) and covers all components of the vehicle,
other than tires which are warranted by the tire manufacturers.
Different warranty coverages are provided on vehicles sold outside
the U.S. In addition, as discussed below under "Governmental
Standards - Mobile Source Emissions Control", the Federal Clean
Air Act requires a useful life of 10 years or 100,000 miles
(whichever occurs first) for emissions equipment on vehicles sold
in the U.S. As a result of these coverages and the increased
concern for customer satisfaction, costs for warranty repairs,
emissions equipment repairs and customer satisfaction actions
("warranty costs") can be substantial. Estimated warranty costs for
each vehicle sold by Ford are accrued at the time of sale. Such accruals,
however, are subject to adjustment from time to time depending on actual
experience.
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Europe
- ------
Europe is the largest market for the sale of Ford cars and
trucks outside the United States. The automotive industry in
Europe is intensely competitive; for the past 12 years, the top six
manufacturers have each achieved a car market share in about the
10% to 16% range. (Manufacturers' shares, however, vary
considerably by country.) This competitive environment is expected
to intensify further as Japanese manufacturers, which together had
a European car market share of 10.9% for 1995, increase their
production capacity in Europe and import restrictions on Japanese
built-up vehicles gradually are removed in total by December 31,
1999.
In 1995, European car industry sales were 11.8 million cars,
equal to 1994 levels. Truck sales were 1.6 million units, up 7%
from 1994 levels. Ford's European car share for 1995 was 11.9%, the
same as 1994, and its European truck share for 1995 was a record
14.8%, compared with 14.7% for 1994.
For Ford, Great Britain and Germany are the most important
markets within Europe, although the Southern European countries are
becoming increasingly significant. Any adverse change in the
British or German market has a significant effect on total
automotive profits. For 1995 compared with 1994, total industry
sales were up 1% in Great Britain and up 3% in Germany.
Other Foreign Markets
- ---------------------
Mexico and Canada. Mexico and Canada also are important
markets for Ford. Generally, industry conditions in Canada closely
follow conditions in the U.S. market. In 1995, industry sales of
cars and trucks in Canada were down 7% from 1994 levels, somewhat
worse than the decrease of 2% in the U.S. over the same period.
Mexico had been a growing market until late 1994. However,
substantial devaluation of the Mexican Peso in late 1994 created a
high level of uncertainty regarding economic activity in Mexico.
Although the long-term outlook remains positive, industry volume
was down 62% in 1995. Ongoing financial effects on Ford of the
devaluation are expected to be unfavorable; the magnitude of these
effects will be dependent in large part upon overall economic conditions.
South America. Brazil and Argentina are the principal markets
for Ford in South America. The economic environment in those
countries has been volatile in recent years, leading to large
variations in profitability. Results also have been influenced by
government actions to reduce inflation and public deficits, and
improve the balance of payments. In 1995 , Ford's results in
the region declined compared with 1994. The decrease reflected
primarily losses for operations in Brazil, where higher import
duties and a market shift to small cars resulted in excess dealer
inventories and higher marketing costs. The lower results are
expected to continue into 1996. The Company is reestablishing
manufacturing capacity in Brazil for small cars, which should
assist in improving the Company's competitiveness in this region
longer term. Industry sales in 1995, compared with 1994, were up
19% in Brazil but down 35% in Argentina. Ford's future results in
the region largely will be dependent on the political and economic
environments in Brazil and Argentina, which historically have been
unpredictable and are expected to continue to be volatile and
subject to rapid change.
In November 1995, Ford and Volkswagen AG dissolved their
Autolatina joint venture in Brazil and Argentina. See Item 7.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" for more information concerning the effects
of this dissolution.
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Asia Pacific. In the Asia Pacific region, Australia, Taiwan
and Japan are the principal markets for Ford products. In 1995,
Ford was the market share leader in Australia with a 21.5% combined
car and truck market share. In Taiwan (where sales of built-up
vehicles manufactured in Japan are prohibited), Ford was the market
share leader with a combined car and truck market share in 1995 of
18.9%. Ford's principal competition in the Asia Pacific region has
been the Japanese manufacturers. It is anticipated that the
continuing relaxation of import restrictions (including duty
reductions) in Australia and Taiwan will intensify competition in
those markets.
The Asia Pacific region offers many important opportunities
for the future. Ford believes that China is strategically
important to its long-term success in the Asia Pacific region. In
1995, Ford purchased a 20% equity interest in a Chinese light truck
manufacturer, Jiangling Motors Corporation, Ltd.; established a
wholly owned holding company in Beijing; and invested in an
aluminum radiator joint venture in China, in addition to the
previously established automotive component manufacturing joint
ventures in China (automotive interior trim, automotive glass and
automotive electronic/audio components). In late 1995, Ford
established a joint venture in Thailand with Mazda Motor
Corporation ("Mazda") to manufacture pickup trucks designed by
Mazda. In 1994, Ford purchased a 6.5% equity interest in Mahindra
and Mahindra Limited ("Mahindra"), an automotive and tractor
manufacturer in India. In 1995, Ford received governmental
approval to invest in an automobile manufacturing joint venture in
India with Mahindra. Ford is continuing to investigate additional
automotive component manufacturing and vehicle assembly
opportunities in those markets as well as others. In addition, Ford
is expanding the number of right-hand-drive vehicles it will offer
in Japan, including the Explorer and Taurus models.
Africa. In late 1994, Ford re-entered the South African
market by acquiring a 45% equity interest in South African Motor
Corporation (Pty.) Limited ("SAMCOR"). SAMCOR is an assembler of
Ford and other manufacturers' vehicles in South Africa.
Financial Services Operations
-----------------------------
Ford Holdings, Inc. and Ford FSG, Inc.
- --------------------------------------
Ford Holdings was incorporated in 1989 for the principal
purpose of acquiring, owning and managing certain assets of Ford.
In December 1995, Ford Holdings merged with Ford Holdings Capital
Corporation, a wholly owned subsidiary of Ford Holdings, which
resulted in the cancellation of all of the voting preferred stock
of Ford Holdings. All of the outstanding common stock of Ford
Holdings, representing 100% of the voting power in Ford Holdings,
is owned beneficially by Ford.
In late 1995, Ford began a reorganization of its Financial
Services group in order to align more closely under a single
subsidiary legal ownership of the Financial Services affiliates
with management responsibility for such affiliates. As part of the
reorganization, Ford Holdings formed FFSGI to own primarily all of
the Financial Services affiliates. At the time, 55% of the common
stock of Ford Holdings was owned by Ford and 45% was owned by Ford
Credit.
After the formation of FFSGI, Ford Holdings contributed its
interest in The Associates to FFSGI in exchange for 100% of the
common stock of FFSGI and the assumption by FFSGI of certain debt
of Ford Holdings. Thereafter, Ford contributed to FFSGI all of its
interest in Ford Credit Europe. In exchange for this contribution,
Ford received a class of common stock in FFSGI that has controlling
voting power of FFSGI but otherwise is equal to all other common
stock of FFSGI as to the payment of dividends, etc. (the "Class F
Stock"). In February 1996, substantially all of the shares of Ford
Holdings common stock owned by Ford Credit were repurchased by Ford
Holdings in exchange for the issuance of a promissory note by Ford
Holdings. Thereafter, Ford contributed to FFSGI all of its
interest in Ford Credit in exchange for additional shares of Class
F Stock of FFSGI. In addition, Ford will contribute to FFSGI
certain of its international Financial Services affiliates managed
by Ford Credit in exchange for additional stock in FFSGI.
-7-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
It is also expected that Ford Holdings will contribute American
Road to FFSGI, which in turn is expected to contribute it to Ford
Credit. The percentages of economic interests of FFSGI held by
Ford and Ford Holdings are based on the relative value of the
entities contributed to FFSGI by Ford and Ford Holdings.
Currently, those percentages are approximately 78% for Ford and 22%
for Ford Holdings.
On February 9, 1996, The Associates filed a registration
statement with the Securities and Exchange Commission for an
initial public offering of its common stock representing up to a
19.8% economic interest in The Associates (the "IPO").
Substantially all of the net proceeds from the IPO are expected to
be used to repay indebtedness of The Associates, which will be
incurred to repay an intercompany debt owed to FFSGI in the amount
of $1.75 billion. Prior to completion of the IPO, Ford expects to
contribute to The Associates certain international affiliates owned
by Ford but managed by The Associates. Also, as announced by Ford
in the fourth quarter of 1995, Ford is investigating the sale of
all or a part of USL Capital.
Ford Motor Credit Company
- -------------------------
Ford Credit is a wholly owned subsidiary of FFSGI. It
provides wholesale financing and capital loans to franchised Ford
dealers and other dealers associated with such franchisees and
purchases retail installment sale contracts and retail leases from
them. Ford Credit also makes loans to vehicle leasing companies,
the majority of which are affiliated with such dealers. In
addition, a wholly owned subsidiary of Ford Credit provides these
financing services in the U.S. and Canada to other vehicle dealers.
More than 80% of all new vehicles financed by Ford Credit are
manufactured by Ford or its affiliates. In addition to vehicle
financing, Ford Credit makes loans to affiliates of Ford, finances
certain receivables of Ford and its subsidiaries and offers
diversified financing services which are managed by USL Capital, a
wholly owned subsidiary of Ford Holdings. Ford Credit also manages
the activities of a number of international credit affiliates of
Ford and FFSGI. In addition, it is expected that Ford Credit will
become the owner of American Road, an insurance company discussed
further below. Currently, Ford Credit manages the activities of American
Road.
Ford Credit financed the following percentages of new Ford
cars and trucks sold or leased at retail and sold at wholesale in
the United States during each of the past five years:
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Retail* 36.9% 36.6% 38.5% 37.7% 35.2%
Wholesale 79.7 81.5 81.4 77.6 74.9
</TABLE>
___________________
* As a percentage of total sales and leases, including cash sales.
-8-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Ford Credit's finance receivables and investments in operating
leases were as follows at the dates indicated (in millions):
<TABLE>
<CAPTION>
December 31,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Finance receivables
Retail $43,773 $40,567
Wholesale 16,507 15,253
Diversified 2,737 2,738
Other 4,631 4,264
------- -------
Total finance receivables 67,648 62,822
Loan origination costs, net 220 156
Unearned income (6,155) (5,371)
Allowance for credit losses (669) (660)
------- -------
Finance receivables, net $61,044 $56,947
======= =======
Investments in operating leases $30,493 $24,853
Accumulated depreciation (5,424) (4,603)
Allowance for credit losses (258) (256)
------ -------
Investments in operating
leases, net $24,811 $19,994
======= =======
</TABLE>
Installments on finance receivables, including interest, past-due 60
days or more and the aggregate receivable balances related to such
past-due installments were as follows at the dates indicated (in millions):
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------------- -------------------------
Installments Balances Installments Balances
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Retail $66 $283 $27 183
Diversified - - 5 8
Other 10 38 1 7
--- --- --- ----
Total $76 $321 $33 $198
=== ==== === ====
</TABLE>
The following table sets forth information concerning Ford
Credit's credit loss experience with respect to the various categories
of financing during the years indicated (dollar amounts in millions):
<TABLE>
<CAPTION>
Years Ended or at December 31,
----------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net losses
Retail* $377 $221 $213
Wholesale 8 1 (4)
Diversified 5 2 14
Other 4 5 5
---- ---- ----
Total $394 $229 $228
==== ==== ====
Net losses as a percentage of average receivables
Retail* 0.57% 0.38% 0.46%
Total finance receivables* 0.44 0.30 0.35
Provision for credit losses $438 $247 $270
Allowance for credit losses 927 916 916
Allowance as a percent of net receivables* 1.07% 1.18% 1.42%
*Includes investments in operating leases.
</TABLE>
-9-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
An analysis of Ford Credit's allowance for credit losses on
finance receivables and operating leases is as follows for the
years indicated (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Beginning balance $916 $916 $916
Additions 438 247 270
Deductions
Losses 557 378 392
Recoveries (163) (149) (164)
---- ---- ----
Net losses 394 229 228
Other changes, including
reclassifications and
amounts related to finance
receivables sold 33 18 42
---- ---- ----
Net deductions 427 247 270
---- ---- ----
Ending balance $927 $916 $916
==== ==== ====
</TABLE>
Ford Credit relies heavily on its ability to raise substantial
amounts of funds. These funds are obtained primarily by sales of
commercial paper and issuance of term debt. Funds also are
provided by retained earnings and sales of receivables. The level
of funds can be affected by certain transactions with Ford, such as
capital contributions and dividend payments, interest supplements
and other support from Ford for vehicles financed by Ford Credit
under Ford-sponsored special financing or leasing programs, and the
timing of payments for the financing of dealers' wholesale
inventories and for income taxes. Ford Credit's ability to obtain
funds is affected by its debt ratings, which are closely related to
the financial condition of and the outlook for Ford, and the nature
and availability of support facilities, such as revolving credit
agreements and receivables-backed facilities.
The long-term senior debt of Ford and Ford Credit is rated
"A1" and "A+" and Ford Credit's commercial paper is rated "Prime-1"
and "A-1" by Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group, respectively.
Ford and Ford Credit have a profit maintenance agreement which
provides for payments by Ford to the extent required to maintain
Ford Credit's earnings at specified minimum levels. No payments
were required under the agreement during the period 1988 through
1995.
Ford Credit Europe plc
- ----------------------
In 1993, most of the European credit operations of Ford, which generally
had been organized as subsidiaries of the respective automotive affiliates of
Ford throughout Europe, were consolidated into a single company, Ford Credit
Europe. Ford Credit Europe, which was originally incorporated in 1963 in
England as a private limited company, is now owned by FFSGI and Ford Werke
AG. Ford Credit Europe's primary business is to support the sale of Ford
vehicles in Europe through the Ford dealer network. A variety of retail,
leasing and wholesale finance plans is provided in most countries in which
it operates. The business of Ford Credit Europe is substantially dependent
upon Ford's automotive operations in Europe. Ford Credit Europe issues
commercial paper, certificates of deposit and term debt to fund its credit
operations. One of the purposes of the consolidation described above is to
facilitate Ford Credit Europe's access to public debt markets. Ford Credit
Europe's ability to obtain funds in these markets is affected by its credit
ratings, which are closely related to the financial condition of and outlook
for Ford.
-10-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Ford Credit Europe's finance receivables and investments in operating
leases were as follows at the dates indicated (in millions):
<TABLE>
<CAPTION>
December 31,
-----------------------
1995 1994
------- -------
<S> <C> <C>
Finance receivables
Retail $10,638 $9,356
Wholesale 5,616 4,615
Other 246 234
------- -------
Total finance receivables 16,500 14,205
Loan origination costs, net 107 85
Unearned income (1,390) (1,159)
Allowance for credit losses (119) (162)
------- -------
Finance receivables, net $15,098 $12,969
======= =======
Investments in operating leases $ 1,146 $ 1,010
Accumulated depreciation (268) (231)
Allowance for credit losses (9) (7)
------- -------
Investments in operating leases, net $ 869 $ 772
======= =======
</TABLE>
An analysis of Ford Credit Europe's allowance for credit losses
in finance receivables and operating leases is as follows for the years
indicated (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Beginning balance $169 $90 $123
Additions 43 50 46
Net losses (92) (5) (72)
Other changes* 8 24 (7)
---- ---- ----
Ending balance $128 $169 $ 90
</TABLE> ==== ==== ====
___________________________
* The reported amounts reflect primarily foreign currency
translation adjustments.
Associates First Capital Corporation
- ------------------------------------
The Associates conducts its operations primarily through its
principal operating subsidiary, Associates Corporation of North
America. The Associates' primary business activities are consumer
finance and commercial finance. The consumer finance operation
invests in home equity, personal lending and sales finance
receivables, and credit card receivables primarily through a wholly
owned credit card bank, in addition to providing financing in the
foregoing areas and in manufactured housing. The commercial
finance operation is principally engaged in financing and leasing
transportation and industrial equipment, and providing other
services, including automobile fleet leasing and management,
relocation services and automobile club and roadside assistance
services. The Associates has an insurance operation which
underwrites credit life, credit accident and health, property,
casualty and accidental death and dismemberment insurance,
principally for customers of the finance operations. Such
insurance activity is conducted by The Associates' licensed
insurance agents and is managed as a separate activity. Insurance
sales are dependent on the business activities and volumes of the
consumer and commercial business. As mentioned above, The
Associates has filed a registration statement with the Securities
and Exchange Commission for an initial public offering of its
common stock representing up to a 19.8% economic interest in The
Associates.
-11-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
The Associates' net finance receivables were as follows at the
dates indicated (in millions):
<TABLE>
<CAPTION>
December 31,
-------------------------
1995 1994
------- -------
<S> <C> <C>
Consumer finance
Home equity lending $13,190 $11,455
Personal lending and retail sales finance 4,753 4,189
Credit card 4,858 4,035
Manufactured housing 2,049 1,681
------- -------
Total consumer finance receivables 24,850 21,360
------- -------
Commercial finance
Truck and truck trailer 7,416 6,553
Equipment 3,959 2,970
Other 384 293
------- -------
Total commercial finance receivables 11,759 9,816
------- -------
Net finance receivables $36,609 $31,176
======= =======
</TABLE>
Credit loss experience, net of recoveries, of The Associates'
finance business was as follows for the years indicated (dollar
amounts in millions):
<TABLE>
<CAPTION>
Years Ended or at December 31
-----------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
NET CREDIT LOSSES
Consumer finance
Amount $ 547 $ 456 $ 372
% of average net receivables 2.36% 2.33% 2.19%
% of receivables liquidated 3.20 3.09 3.41
Commercial finance
Amount $ 21 $ 8 $ 22
% of average net receivables .19% .09% .30%
% of receivables liquidated .19 .08 .26
Total net credit losses
Amount $ 568 $ 464 $ 394
% of average net receivables 1.68% 1.62% 1.61%
% of receivables liquidated 2.03 1.84 2.03
ALLOWANCE FOR LOSSES
Balance at end of period $1,124 $ 944 $ 809
% of net receivables 3.07% 3.03% 3.07%
</TABLE>
The following table shows total gross balances contractually
delinquent sixty days and more by type of business at the dates
indicated (dollar amounts in millions):
<TABLE>
<CAPTION>
Consumer Finance Commercial Finance Total
------------------- ---------------------- ----------------------
Balances Delinquent Balances Delinquent Balances Delinquent
60 Days and More 60 Days and More 60 Days and More
------------------- ---------------------- ----------------------
Gross % of Gross % of Gross % of
Amount Outstandings Amount Outstandings Amount Outstandings
------ ------------ ------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
At December 31,
1995 $622 2.25% $85 0.64% $707 1.73%
1994 439 1.82 31 0.28 470 1.34
</TABLE>
-12-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
An analysis of The Associates' allowance for losses on finance
receivables is as follows for the years indicated (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Beginning balance $944 $809 $699
Additions 743 577 477
Recoveries 116 101 88
Losses (684) (565) (482)
Other adjustments, primarily
reserves of acquired businesses 5 22 27
------ ---- ----
Ending balance $1,124 $944 $809
====== ==== ====
</TABLE>
USL Capital Corporation
- ------------------------
USL Capital, a diversified commercial leasing and financing
organization, originally incorporated in 1956, was acquired by Ford
in 1987 and was transferred to Ford Holdings in 1989. The primary
operations of USL Capital include the leasing, financing, and
management of office, manufacturing and other general-purpose
business equipment; commercial fleets of automobiles, vans, and
trucks; large-balance transportation equipment (principally
commercial aircraft, rail, and marine equipment); industrial and
energy facilities; and essential-use equipment for state and local
governments. It also provides intermediate-term,
first-mortgage loans on commercial properties and invests in
corporate preferred stock and senior and subordinated debt
instruments. Certain of these financing transactions are
underwritten by Ford Credit. As mentioned above, Ford is
considering the sale of all or a part of USL Capital.
The following table sets forth certain information regarding
USL Capital's earning assets, credit losses, and delinquent
accounts at the dates indicated (dollar amounts in millions):
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Total earning assets
Investments in finance leases - net $2,549 $2,435 $2,364
Investments in operating leases - net 904 712 695
Investments in leveraged leases - net 438 266 191
Notes receivable 1,040 825 721
Investments in securities 1,065 700 563
Inventory held for sale or lease 108 87 55
Investments in associated companies 17 18 18
------ ------ ------
Total $6,121 $5,043 $4,607
====== ====== ======
Allowance for doubtful accounts
Beginning balance $ 58 $ 55 $ 40
Additions 6 8 25
Deductions (4) (5) (10)
------ ------ ------
Ending balance $ 60 $ 58 $ 55
====== ====== ======
Allowance for doubtful accounts
as a percent of earning assets 1.0% 1.2% 1.2%
Total balance over 90 days past due
at year end $ 23 $ 37 $ 44
Percent of earning assets 0.4% 0.7% 1.0%
</TABLE>
The American Road Insurance Company
- -----------------------------------
American Road was incorporated by Ford in 1959, became a
wholly owned subsidiary of Ford Credit in 1966, and was transferred
to Ford Holdings in 1989. It is expected that American Road will
be transferred back to Ford Credit as part of the reorganization of
the Financial Services group. The operations of American Road
consist primarily of underwriting floor plan insurance related to
substantially all new vehicle inventories of dealers financed at
wholesale by Ford Credit in the United States and Canada, credit
life and disability insurance in connection with retail vehicle
financing, and insurance related to retail contracts sold by
automobile dealers to cover vehicle repairs. In late 1995,
American Road agreed to sell all of its interest in Ford Life
Insurance Company ("Ford Life"), a wholly owned subsidiary of
American Road, to SunAmerica Inc. At the time of the sale, Ford
-13-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Life's business consisted of offering deferred annuities sold
primarily through banks and brokerage firms; the non-annuities
portion of the business was transferred to another subsidiary of American Road
prior to the sale of Ford Life.
The following table summarizes the revenues and net income of
American Road (in millions):
<TABLE>
<CAPTION>
Premiums Investment Annuities and Net
Earned Income Other Income Total Income
-------- ---------- ------------- ----- ------
<S> <C> <C> <C> <C>
1995 $310 $ 72 $ 215 $597 $ 28
1994 376 41 159 576 58*
1993 465 141 130 736 79
1992 519 175 42 736 63**
1991 706 211 2 919 126
----------------
* Includes an increase of $26 million for nonrecurring
recovery of income taxes in 1994 from prior years.
** Includes an increase of $16 million resulting from the
cumulative effect of adopting new accounting rules on
income taxes.
</TABLE>
The detail of premiums earned by American Road was as follows
(in millions):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Extended service contracts $ 92 $148 $211 $217 $318
Physical damage 113 119 139 176 227
Credit life and disability 105 109 115 126 161
---- ---- ---- ---- ----
Total $310 $376 $465 $519 $706
==== ==== ==== ==== ====
</TABLE>
The Hertz Corporation
- ---------------------
Hertz was incorporated in 1967 and is a successor to
corporations which were engaged in the automobile and truck leasing
and rental business since 1924. During 1994, Ford entered into
various transactions which resulted in Hertz becoming a wholly
owned subsidiary of Ford. Hertz, its affiliates and independent
licensees are engaged principally in the business of renting
automobiles and renting and leasing trucks, without drivers, in the
U.S. and in approximately 150 foreign countries. Collectively, they
operate what Hertz believes is the largest car rental business in
the world and one of the largest one-way truck rental businesses in
the U.S. In addition, through its wholly owned subsidiary, Hertz
Equipment Rental Corporation, Hertz operates what it believes to be
the largest business in the U.S. involving the rental, lease and
sale of construction and materials handling equipment. Other
activities of Hertz include the sale of its used vehicles; the
leasing of automobiles in Australia and New Zealand and in Europe
through an affiliate; and providing claim management and
telecommunications services in the U.S.
Revenue earning equipment is used in the rental of vehicles
and construction equipment and the leasing of vehicles under
closed-end leases where the disposition of the vehicles upon
termination of the lease is for the account of Hertz.
-14-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
The cost and accumulated depreciation of revenue earning
equipment were as follows for the nine months ended December 31,
1994 and the year ended December 31, 1995 (in millions):
<TABLE>
<CAPTION>
Revenue Earning Equipment
----------------------------------------------------
Accumulated
Cost Depreciation Net Book Value
---- ------------ --------------
<S> <C> <C> <C>
Balance, March 31, 1994 $ 4,211 $ 441 $ 3,770
Additions 5,002 554 4,448
Retirements and other (4,402) (444) (3,958)
------ ---- ------
Balance, December 31, 1994 4,811 551 4,260
Additions 7,255 804 6,451
Retirements and other (7,410) (869) (6,541)
------ ---- ------
Balance, December 31, 1995 $ 4,656 $ 486 $ 4,170
======= ===== =======
</TABLE>
Granite Management Corporation
- ------------------------------
Granite, a savings and loan holding company organized in
Delaware in 1959, was acquired by Ford in December 1985. Until
September 30, 1994, the principal asset of Granite was the capital
stock of First Nationwide Bank, A Federal Savings Bank, since known
as Granite Savings Bank (the "Bank"). On September 30, 1994,
substantially all of the assets of the Bank were sold to, and
substantially all of the liabilities of the Bank were assumed by,
First Madison Bank, FSB ("First Madison").
At the time of the sale, Ford retained, through Granite,
approximately $1.2 billion of commercial real estate and other
assets formerly owned by the Bank. These retained assets generally
were of lower quality than those included in the sale and will be
liquidated over time as market conditions permit. In addition, for
the three-year period ending in November 1996, First Madison has
the option of requiring Granite to repurchase up to $500 million of
the assets included in the sale that become nonperforming. This repurchase
obligation is guaranteed by Ford. Through December 31, 1995, approximately
$387 million of such assets had been repurchased by Granite. At December 31,
1995, approximately $875 million of Granite's assets remained unsold.
Governmental Standards
----------------------
A number of governmental standards and regulations relating to
safety, corporate average fuel economy ("CAFE"), emissions control,
noise control, damageability and theft prevention are applicable to
new motor vehicles, engines, and equipment manufactured for sale in
the United States, Europe and elsewhere. In addition,
manufacturing and assembly facilities in the United States, Europe
and elsewhere are subject to stringent standards regulating air
emissions, water discharges and the handling and disposal of
hazardous substances. Such facilities in the United States also
are subject to a comprehensive federal-state permit program
relating to air emissions.
Mobile Source Emissions Control - United States Requirements.
As amended in November 1990, the Federal Clean Air Act (the "Clean
Air Act" or the "Act") imposes stringent limits on the amount of regulated
pollutants that lawfully may be emitted by new motor vehicles and engines
produced for sale in the United States. In addition, the Act requires that
emissions equipment for vehicles sold in the U.S. have a minimum "useful
life" during which compliance with the applicable standards must be achieved.
Passenger cars, for example, must comply for 10 years or 100,000
miles, whichever first occurs. The Act prohibits, among other
things, the sale in or importation into the U.S. of any new motor
vehicle or engine which is not covered by a certificate of
conformity issued by the United States Environmental Protection
Agency (the "EPA").
The Act also may require production of certain new cars and
trucks capable of operating on clean alternative fuels under a
-15-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
pilot test program to be conducted in California beginning in the
1996 model year. Under this pilot program, each manufacturer will
be required to sell its pro rata share of 150,000 alternative fuel
vehicles in each of the 1996, 1997 and 1998 model years and its pro
rata share of 300,000 alternative fuel vehicles in each model year
thereafter. The Act also authorizes certain states to establish
programs to encourage the purchase of such vehicles. Since the Act
considers California's already adopted reformulated (i.e., cleaner
burning) gasoline to be an alternative fuel, most manufacturers
will be able to comply with this requirement in California by
selling vehicles certified to California standards.
Motor vehicle emissions standards even more stringent than
those presently in effect will become effective as early as the
2004 model year, unless the EPA determines that such standards are
not necessary, technologically feasible or cost-effective.
The Act authorizes California to establish unique emissions
control standards that, in the aggregate, are at least as stringent
as the federal standards if it secures the requisite waiver of
federal preemption from the EPA. The Health and Safety Code of the
State of California prohibits, among other things, the sale to an
ultimate purchaser who is a resident of or doing business in
California of a new motor vehicle or engine which is intended for
use or registration in that state which has not been certified by
the California Air Resources Board (the "CARB"). The CARB received
a waiver from the EPA for a series of passenger car and light truck
emissions standards (the "low emission vehicle", or "LEV",
standards), effective beginning between the 1994 and 2003
model years, that are significantly more stringent than
those prescribed by the Act for the corresponding periods of time.
These California standards are intended to promote the
development of various classes of low emission vehicles.
California also requires that a specified percentage of each
manufacturer's vehicles produced for sale in California, beginning
at 2% in 1998 and increasing to 10% in 2003, must be "zero-emission
vehicles" ("ZEVs"), which produce no emissions of regulated
pollutants. In February 1996, CARB issued a notice for eliminating
the ZEV mandate applicable before the 2003 model year. Final
action on the proposed rule change is expected at the March 1996
board meeting. If CARB eliminates the mandate, manufacturers have
volunteered to provide air quality benefits for California
equivalent to a 49 state program (i.e., providing vehicles
certified to California LEV emissions standards nationwide
beginning with the 2001 model year), to continue research and
development of EV technology and to provide specific numbers of
advanced technology battery vehicles through demonstration programs
in California.
Electric vehicles are the only presently known type of zero-
emission vehicles. However, despite intensive research activities,
technologies have not been identified that would allow
manufacturers to produce an electric vehicle that either meets
customer expectations or is commercially viable. Such vehicles
likely will run on lead-acid batteries with a limited range (well
under 100 miles per recharge in optimal conditions), have a long
recharge time (up to 8 hours), lack substantial infrastructure
support (home and public facilities for recharging) and have a
significant cost premium over conventional vehicles. The proposed
elimination of the ZEV mandate and the manufacturers' voluntary
program will better allow market forces to guide the introduction
of ZEVs into the market. If the mandate is not changed, compliance
may require manufacturers to offer substantial discounts on
electric vehicles, selling them well below cost, or increase the
price or curtail the sale of nonelectric vehicles.
The California LEV standards present significant technological
challenges to manufacturers and compliance may require costly
actions that would have a substantial adverse effect on Ford's
sales volume and profits.
The Act also permits other states which do not meet national
ambient air quality standards to adopt new motor vehicle emissions
standards identical to those adopted by California, if such states
lawfully adopt such standards two years before commencement of the
affected model year. Twelve northeastern states and the District
of Columbia organized under provisions of the Act into a group
known as the Ozone Transport Commission (the "OTC") and petitioned
the EPA to require California LEV standards in that region. There
are major problems with transferring California standards to the
Northeast - many dealers sell vehicles in neighboring states and
the range of present ZEVs is greatly diminished (by more than 50
percent) in cold weather. Also, the Northeast states have refused
to adopt the California reformulated gasoline requirement - the
absence of which makes the task of meeting standards even more
difficult. California LEV standards (including the ZEV
requirements) already have been adopted in New York and
Massachusetts. Connecticut also has adopted such standards, but
without the ZEV requirements.
-16-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
To mitigate these problems, the automobile industry proposed
to voluntarily meet emissions standards nationwide that are more
stringent than those required by the Act. The proposal was based
on using technology developed to meet the California LEV standards,
but adjusting for the absence of the California reformulated
gasoline and ZEV requirements. While there was a general
receptivity to the industry's proposal, some of the states are
insisting on either a ZEV mandate or a guarantee that "advanced
technology" vehicles will be sold in their states.
In December 1994, the EPA granted the OTC petition to impose
California LEV standards, while at the same time urging states and
manufacturers to agree on a national approach which the EPA
described as "environmentally superior" to the California
standards. The states will have until early 1996 to include in
their State Implementation Plans a California LEV program or an
acceptable alternative.
Under the Act, if the EPA determines that a substantial number
of any class or category of vehicles, although properly maintained
and used, do not conform to applicable emissions standards, a
manufacturer may be required to recall and remedy such
nonconformity at its expense. Further, if the EPA determines
through testing of production vehicles that emission control
performance requirements are not met, it can halt shipment of motor
vehicles of the configuration tested. California has similar, and
in some respects greater, authority to order manufacturers to
recall vehicles. Ford may be required to recall vehicles for such
purposes from time to time. In addition, as it has from time to
time in the past, Ford may voluntarily recall vehicles to fix
emissions-related concerns. The costs of related repairs or
inspections associated with such recalls can be substantial.
The Act generally prohibits the introduction of new fuel
additives unless a waiver is granted by the EPA. In 1995, the U.S.
Court of Appeals for the District of Columbia ordered the EPA to
grant such a waiver to Ethyl Corporation for the additive MMT, over
the objections of the EPA and U.S. automobile manufacturers,
including Ford. Ethyl Corporation can now market MMT for use in unleaded
gasoline. Ford and other manufacturers believe that the use of MMT
will impair the performance of current emissions systems and
onboard diagnostics systems. The introduction of MMT could
increase Ford's future warranty costs and necessitate changes in
the Company's warranties for emission control devices.
European Requirements. Council Directive 70/220/EEC (as
amended through Council Directive 94/12/EEC) and related European
legislation impose limits on the amount of regulated pollutants
that may be emitted by new motor vehicles and engines sold in the
European Union. Standards for vehicles homologated before January
1, 1996 are of generally equivalent stringency to 1983 model year
U.S. standards for gasoline powered vehicles and to 1987 model year
U.S. standards for diesel powered vehicles. All passenger cars
homologated from January 1, 1996 and all new passenger cars
registered from January 1, 1997 must comply with more stringent
standards that are of generally equivalent stringency to 1994 model
year U.S. standards. Similarly, new more stringent standards for
light duty trucks ("LDTs") have been proposed but not yet finally
enacted by the European Union. These would apply to passenger-car
derived LDTs from January 1, 1997 for new homologations and
October 1, 1997 for new registrations and would apply to other
classes of LDTs from January 1, 1998 for new homologations and
October 1, 1998 for new registrations. The European Commission is
presently preparing proposals for even more stringent emissions
standards and for new enforcement procedures for both passenger
cars and trucks (the "Stage III Directive"). It is proposed that
the Stage III Directive would become effective beginning in 2000
for new vehicle homologations and 2001 for new vehicle
registrations.
Certain European countries are conducting in-use emissions
testing to ascertain compliance of motor vehicles with applicable
emission standards. These actions could lead to recalls of
vehicles; the future costs of related inspection or repairs could
be substantial.
-17-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Motor Vehicle Safety - Under the National Traffic and Motor
Vehicle Safety Act of 1966, as amended (the "Safety Act"), the
National Highway Traffic Safety Administration (the "Safety
Administration") is required to establish appropriate federal motor
vehicle safety standards that are practicable, meet the need for
motor vehicle safety and are stated in objective terms. The Safety
Act prohibits the sale in the United States of any new motor
vehicle or item of motor vehicle equipment that does not conform to
applicable federal motor vehicle safety standards. Compliance with
many safety standards is costly because doing so tends to conflict
with the need to reduce vehicle weight in order to meet stringent
emissions and fuel economy standards. The Safety Administration
also is required to make a determination on the basis of its
investigation whether motor vehicles or equipment contain defects
related to motor vehicle safety or fail to comply with applicable
safety standards and, generally, to require the manufacturer to
remedy any such condition at its own expense. The same obligation
is imposed on a manufacturer which learns that motor vehicles
manufactured by it contain a defect which the manufacturer decides
in good faith is related to motor vehicle safety. There currently
are pending before the Safety Administration a number of major
investigations relating to alleged safety defects or alleged
noncompliance with applicable safety standards in vehicles built,
imported or sold by Ford. The cost of recall programs to remedy
safety defects or noncompliance, should any be determined to exist
as a result of certain of such investigations, could be
substantial.
Canada, the European Union, individual member countries within
the European Union and other countries in Europe, Latin America
and the Asia-Pacific markets also have safety standards
applicable to motor vehicles and are likely to adopt additional or
more stringent standards in the future. The cost of complying with
these standards, as well as the cost of any recall programs to
remedy safety defects or noncompliance, could be substantial.
Motor Vehicle Fuel Economy - Passenger cars and trucks rated
at less than 8,500 pounds gross vehicle weight are required by
regulations issued by the Safety Administration pursuant to the
Motor Vehicle Information and Cost Savings Act (the "Cost Savings
Act") to meet separate minimum CAFE standards. Failure to meet the
CAFE standard in any model year, after taking into account all
available credits, would subject a manufacturer to the imposition
of a civil penalty of $5 for each one-tenth of a mile per gallon
("mpg") under the applicable standard multiplied by the number of
vehicles in the class (i.e., trucks, domestic cars, or imported
cars) produced in that model year. Each such class of vehicle may
earn credits either as a result of exceeding the standard in one or
more of the preceding three model years ("carryforward credits") or
pursuant to a plan, approved by the Safety Administration, under
which a manufacturer expects to exceed the standard in one or more
of the three succeeding model years ("carryback credits"), but
credits earned by a class may not be applied to any other class of
vehicles.
The Cost Savings Act established a passenger car CAFE standard
of 27.5 mpg for the 1985 and later model years, which the Safety
Administration asserts it has the authority to amend to a level it
determines to be the "maximum feasible" level (considering the
following factors: technological feasibility, economic
practicality, the effect of other federal motor vehicle standards
on fuel economy, and the need of the nation to conserve energy).
Pursuant to the Cost Savings Act, the Safety Administration has
established a 20.7 mpg CAFE standard applicable to light trucks
(under 8,500 pounds gross vehicle weight on a combined two-wheel
drive/four-wheel drive basis) for model years 1996 and 1997 and has
proposed the same for 1998.
The EPA issued proposed regulations pursuant to the Clean Air
Act that would change the test procedures for measuring motor
vehicle emissions and fuel economy. If adopted without adequate adjustments,
these regulations may require costly measures to reduce tailpipe
emissions and to increase fuel economy.
Although Ford expects to be able to comply with the foregoing
CAFE standards, there are factors that could jeopardize its ability
to comply. These factors include the possibility of changes in
market conditions, including a shift in demand for larger vehicles
and a decline in demand for small and middle-size vehicles; or
-18-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
conversely, a shortage of reasonably priced gasoline resulting in
a decreased demand for more profitable vehicles and a corresponding
increase in demand for relatively less profitable vehicles.
It is anticipated that efforts may be made to raise the CAFE
standard because of concerns for carbon dioxide ("CO2") emissions,
energy security or other reasons. President Clinton's Climate
Change Action Plan ("CCAP") sets a goal to improve new vehicle fuel
efficiency in an amount equivalent to at least 2% per year over a
10 to 15 year period, using a combination of regulatory and
nonregulatory measures. The Safety Administration is considering
significant increases in the truck CAFE standard for the 1999 -
2006 model years that could be as high as 28 mpg by the 2006 model
year. If the CCAP goals are partially or fully implemented through
increases in the CAFE standard, or if significant increases in car
or light truck CAFE standards for subsequent model years otherwise
are imposed, Ford would find it necessary to take various costly
actions that would have substantial adverse effects on its sales
volume and profits. For example, Ford could find it necessary to
curtail or eliminate production of larger family-size and luxury
passenger cars and full-size light trucks, restrict offerings of
engines and popular options, and continue or increase market
support programs for its most fuel-efficient passenger cars and
light trucks.
International concerns over global warming due to the emission
of "greenhouse gasses" have given rise to strong pressures to
increase fuel economy of motor vehicles as a means of limiting
their emission of CO2. For example, the United Nations Climate
Change Convention held in Brazil in 1992 (the "U.N. Climate Change
Convention") sought to stabilize greenhouse gas emissions at 1990
levels by the year 2000. A subsequent meeting of the parties to
the U.N. Climate Change Convention in Berlin in March 1995 resulted
in an agreement to establish goals by 1997 for reductions in
greenhouse gas emissions after the year 2000.
In December 1994, the European Union Council of Environmental
Ministers directed the European Commission to develop proposals for
reducing CO2 emissions from passenger cars to 120 grams per
kilometer by 2005 (which equates to 5 liters consumed per 100
kilometers for gasoline engines and 4.5 liters consumed per 100
kilometers for diesel engines). Similar proposals have been made
within the European Parliament. In December 1995, the European
Commission issued a communication to the Council and the Parliament
proposing a package of potential measures for reducing CO2
emissions from passenger cars. These include fiscal measures
(taxes and incentives), fuel economy labeling, increased research
and development efforts, and a negotiated agreement with industry
for reduction in CO2 emissions from new cars of 25% from 1990
levels by 2005. The proposed agreement may also include
incremental targets and monitoring provisions for the years before
2005. Some of these proposals, if adopted, could require costly
actions that could have substantial adverse effects on Ford's sales
volumes and profits in Europe.
On March 23, 1995, the German Automobile Manufacturers
Association (of which Ford Werke A.G. is a member) undertook an
industry-wide voluntary agreement with the German government to
reduce the average fuel consumption of new cars sold in Germany by
25% from 1990 levels by 2005, to review before the year 2000 the
need for and feasibility of further reductions in average fuel
consumption, to make regular reports on fuel consumption, and to
increase industry research and development efforts. At the same
time, the German government undertook to improve traffic management
systems, eliminate infrastructure bottlenecks, integrate transport
modes, promote alternative fuels and improved drive systems, and
introduce an emission-based road tax system.
On January 26, 1996, French vehicle manufacturers made a
voluntary pledge to reduce the average fuel consumption of new
vehicles to a sales-weighted average of 150 grams of CO2 per
kilometer by 2005, to offer at least one vehicle that emits less
than 120 grams of CO2 per kilometer by 2005, to propose an
objective by 2000 for further reducing CO2 emissions by 2010, and
to promote alternative fuel technologies that result in reduced CO2
emissions. This pledge assumes a 50/50 mix of gasoline and diesel
engined vehicles, no change in the mix of vehicles by weight and
engine size class, no new regulatory requirement beyond those
forecast in 1995 for the year 2000, and that oil companies and tire
-19-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
producers will contribute to reduction in vehicle fuel consumption.
The pledge of the French vehicle manufacturers may create pressure
for similar pledges from automobile importers (such as Ford France
S.A.).
Other initiatives for reducing CO2 emissions from motor
vehicles may be proposed by other European countries. Taken
together such proposals could have substantial adverse effects on
Ford's sales volumes and profits in Europe.
Japan has adopted automobile fuel consumption goals that
manufacturers must attempt to achieve by the 2000 model year. The
consumption levels apply only to gasoline-powered vehicles, vary by vehicle
weight, and range from 5.8 km/I to 19.2 km/l. To achieve these
target fuel consumption levels for the vehicles Ford exports to Japan
may require costly actions that could have substantial adverse effects on
Ford's sales volume and profits in Japan.
The U.S. Energy Tax Act of 1978, as amended, imposes a federal
excise tax on automobiles which do not achieve prescribed fuel
economy levels. Additional legislative proposals could be
introduced that, if enacted, would increase excise taxes or create
economic disincentives to purchase any except the least fuel
consuming vehicles. Because of the uncertainties and variables
inherent in testing for fuel economy and the uncertain effect on
fuel economy of other government requirements, it is not possible
to predict the amount of excise tax, if any, which may be incurred.
Stationary Source Air Pollution Control - Pursuant to the
Clean Air Act the states are required to amend their implementation
plans to require more stringent limitations on the quantity of
pollutants which may be emitted into the atmosphere, and other
controls, to achieve national ambient air quality standards
established by the EPA. In addition, the Act requires reduced
emissions of substances that are classified as hazardous or that
contribute to acid deposition, imposes comprehensive permit
requirements for manufacturing facilities in addition to those
required by various states, and expands federal authority to impose
severe penalties and criminal sanctions. The Act requires the EPA
and the states to adopt regulations, and allows states to adopt
standards more stringent than those required by the Act. The costs
to comply with these provisions of the Act cannot presently be
quantified but could be substantial. In addition, the enormous
complexity and time-consuming nature of the comprehensive federal-
state permit program provided for by the Act may reduce operational
flexibility and may delay or prevent future competitive upgrading
of Ford's production facilities in the United States.
Water Pollution Control - Pursuant to the Federal Clean Water
Act (the "Clean Water Act"), Ford has been issued National
Pollutant Discharge Elimination System permits which establish
certain pollution control standards for its manufacturing
facilities that discharge wastewater into public waters. Ford,
among many other companies, also is required to comply with certain
standards and obtain permits relating to discharges into municipal
sewerage systems. The EPA also requires management standards and,
in some cases, permits for the discharge of storm water. The
standards under the Clean Water Act are established by the EPA and
by the state where a facility is located. Many states have
requirements that go beyond those established under the Clean Water
Act. These various requirements may necessitate the addition of
costly control equipment.
The EPA recently adopted regulations, pursuant to the Great
Lakes Critical Programs Act of 1990, that require more restrictive
standards for discharges into waters that impact the Great Lakes.
These regulations may require the addition of costly control
equipment.
Hazardous Waste Control - Pursuant to the Federal Resource
Conservation and Recovery Act ("RCRA"), the EPA has issued
regulations establishing certain procedures and standards for
persons who generate, transport, treat, store, or dispose of
hazardous wastes. These regulations also require permits for
treatment, storage, and disposal facilities and corrective action
for prior releases at sites where permits are issued. The EPA has
delegated permit authority to states with programs equivalent to
-20-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
RCRA, and states may adopt even more extensive requirements. The
Federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (the "Superfund Act"), requires
disclosure of certain releases from Ford facilities into the
environment, creates potential liability for remediation costs at
sites where Ford waste was disposed and for damage to natural
resources resulting from a release, and provides for citizens'
suits for failure to comply with final requirements of orders or
regulations. A number of states have enacted separate state laws
of this type. In addition, under the Federal Toxic Substances
Control Act ("TSCA"), the EPA evaluates environmental and health
effects of existing chemicals and new substances. Pursuant to TSCA,
the EPA has banned production of polychlorinated biphenyls and
regulates their use in transformers, capacitors and other equipment
that may be located at Ford's facilities.
European Stationary Source Environmental Control - The
European Union by directives and regulations, and individual member
countries by legislation and regulations, impose requirements on
waste and hazardous wastes, incineration, packaging, landfill, soil
pollution, integrated pollution control, air emissions standards,
import/export and use of dangerous substances, air and water
quality standards, noise, environmental management systems, energy
efficiency, emissions reporting, and planning and permitting.
Additional or more stringent requirements (including tax measures
and civil liability schemes for cleaning polluted sites) are likely
to be adopted in the future. The cost of complying with these
standards could be substantial.
Climate Change Convention - In response to the requirements of
the U.N. Climate Change Convention, national governments are
examining ways to reduce potential global warming risks. These
actions may restrict the use of certain chemicals that are used as
refrigerants (in vehicles and buildings), such as R-134a, and
cleaning solvents.
Worldwide Regulatory Compatibility - Ford's efforts to develop
new markets and increase imports are impeded by incompatible
automotive safety, environmental and other product regulatory
standards. At present, differing standards either restrict the
vehicles Ford can export to serve new markets or increase the cost
and complexity to do so. Also, vehicle safety is a priority with
customers in North America, Europe and key Asia-Pacific markets and
better global understanding of real-world accidents and injuries is
a competitive necessity.
The "traditional" and developed automotive markets have
developed their own bodies of regulation. Two sets of European
vehicle regulations overlay those of individual European countries:
1) European Union directives and regulations, which member
countries are obliged to implement; and 2) United Nations Economic
Commission for Europe (ECE) regulations, which member countries
have the option to implement. Although European Union directives
and regulations and ECE regulations generally are aligned (the
European Union directives cover about half of the 99 ECE
regulations), some variations exist in the manner in which they are
interpreted and enforced by each member country. The United States
and Canada use a substantially different regulatory system, and
Japan and Australia use a hybrid of the ECE system.
The ECE regulations are generally recognized outside the above
markets. Countries in the process of defining motor vehicle
regulations, such as China, India, Malaysia and Russia, are
adopting ECE (versus U.S.) regulations. As a result, U.S.-built
vehicles have to be modified for these markets.
The U.S. and Europe have so far shown limited willingness to
accept each other's regulations, and negotiations for acceptance of
U.S. regulations as being functionally equivalent to the ECE
standards in emerging markets have had limited success.
Pollution Control Costs - During the period 1996 through 2000,
Ford expects that approximately $700 million will be spent on its
North American and European facilities to comply with air and water
pollution and hazardous waste control standards which now are in
effect or are scheduled to come into effect. Of this total, Ford
estimates that approximately $200 million will be spent in 1996 and
$150 million will be spent in 1997.
-21-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Employment Data
---------------
In 1995, Ford's worldwide average employment increased to
346,990 from 337,728 in 1994. The increase in average employment
for 1995 resulted primarily from the full-year (versus partial-
year) inclusion of Hertz as a consolidated subsidiary. Worldwide
payrolls were $16.6 billion in 1995, an increase of $719 million
from 1994.
Average employment by geographic area in 1995 compared with
1994 levels was as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
United States 185,960 180,460
Canada 17,602 16,840
Europe 105,019 102,887
Latin America 24,955 24,406
Asia Pacific 13,454 13,135
------- -------
Total 346,990 337,728
======= =======
For further information regarding employment statistics of
Ford, see Item 6. "Selected Financial Data". For information
concerning employee retirement benefits, see Note 8 of Notes to
Financial Statements.
Substantially all hourly employees of Ford in the United
States are included in collective bargaining units represented by
unions. Approximately 99% of these unionized hourly employees are
represented by the United Automobile Workers (the "UAW").
Approximately 3% of salaried employees are represented by
unions. Most hourly employees and many nonmanagement salaried
employees of subsidiaries outside the United States also are
represented by unions. Affiliates of Ford also are parties to
collective bargaining agreements in Britain, Spain, Germany and
France.
Collective bargaining agreements between Ford and the UAW and
between Ford of Canada and the Canadian Automobile Workers were
entered into in 1993 and are scheduled to expire in September 1996.
It is not known whether Ford will be able to reach new agreements
without a work stoppage. If there should be a protracted work
stoppage, Ford's profits could be substantially adversely affected.
-22-
<PAGE>
<PAGE>
Item 1. Business (Continued)
- ---------------------------
Research and Development
------------------------
Ford and certain of its subsidiaries have staffs of
professional employees whose activities are directed primarily to
the improvement of the performance (including fuel efficiency),
safety and comfort of the products of those companies and to the
development of new products, and also have staffs of scientists
engaged in basic research. Extensive engineering, research and
design facilities are maintained for these purposes. Principal
among them are the engineering, research and design centers of Ford
at Dearborn, Michigan; of Ford Motor Company, Limited at Dunton,
England; and of Ford Werke AG. at Merkenich, Germany.
In 1995, 1994 and 1993, $6.5 billion, $5.8 billion and $5.6
billion, respectively, were charged to income of Ford and its
consolidated subsidiaries for Ford-sponsored research and
development activities relating to the development of new products
and services and the improvement of existing products and services.
In addition, $18 million, $38 million and $55 million were charged
to income in 1995, 1994 and 1993, respectively, for customer-
sponsored research and development activities.
Item 2. Properties
- -------------------
Ford's United States manufacturing and assembly facilities,
substantially all of which are owned by Ford and its subsidiaries,
are situated in various sections of the country and include
assembly plants, engine plants, casting plants, metal stamping
plants, electronic components plants, transmission and axle plants,
glass plants and industrial equipment plants. A major portion of
the distribution centers, warehouses and sales offices is owned by
Ford, with the remainder being leased.
In addition, Ford's foreign subsidiaries maintain and operate
manufacturing plants, assembly facilities, parts distribution
centers and engineering centers outside the United States,
substantially all of which are owned by such subsidiaries.
The furniture, equipment and other physical property owned by
Ford's Financial Services operations are not significant in
relation to their total assets.
-23-
<PAGE>
<PAGE>
Item 3. Legal Proceedings
- -------------------------
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; employment-related matters;
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. See Item
1, "Business-Governmental Standards". Included among the foregoing
matters are the following:
Product Liability Matters - Ford is a defendant in various
actions for damages arising out of automobile accidents where
plaintiffs claim that the injuries resulted from (or were
aggravated by) alleged defects in the occupant restraint systems in
vehicle lines of various model years. The damages specified by the
plaintiffs in these actions, including both actual and punitive
damages, aggregated approximately $782 million at December 31,
1995.
Ford is a defendant in various actions involving the alleged
propensity of Bronco II utility vehicles to roll over. The damages
specified in these actions, including both actual and punitive
damages, aggregated approximately $1 billion at December 31, 1995.
In most of the actions described in the foregoing paragraphs
no dollar amount of damages is specified or the specific amount
referred to is only the jurisdictional minimum. It has been Ford's
experience that in cases that allege a specific amount of damages
in excess of the jurisdictional minimum, such amounts, on average,
bear little relation to the actual amounts of damages paid by Ford
in such cases, which generally are, on average, substantially less
than the amounts originally claimed. In addition to the pending actions,
accidents have occurred and claims have arisen which also
may result in lawsuits in which such a defect may be alleged.
Ford is a defendant in various actions for injuries claimed to
have resulted from alleged contact with certain Ford parts and
other products containing asbestos. Damages specified by
plaintiffs in complaints in these actions, including both actual
and punitive damages, aggregated approximately $977 million at
December 31, 1995. (In some of these actions no dollar amount of
damages is specified or the specific amount referred to is only the
jurisdictional minimum.) As distinguished from most lawsuits
against Ford, in most of these asbestos-related cases, Ford is but
one of many defendants, and many of these co-defendants have
substantial resources.
Environmental Matters - Ford has received two notices from a
government environmental enforcement agency concerning matters
which potentially involve monetary sanctions exceeding $100,000.
The agency believes that Ford facilities may have violated
regulations relating to the management of certain materials or
relating to certain emissions from facility operations.
Ford has received notices under RCRA, the Superfund Act and
applicable state laws that it (along with others) may be a
potentially responsible party for the costs associated with
remediating numerous hazardous substance storage, recycling or
disposal sites in many states and, in some instances, for natural
resource damages. Ford also may have been a generator of hazardous
substances at a number of other sites. The amount of any such
costs or damages for which Ford may be held responsible could be substantial.
Contingent losses expected to be incurred by Ford in connection with many
of these sites have been accrued and are reflected in Ford's financial
statements in accordance with generally accepted accounting principles.
However, for many other of these sites the remediation costs and other
damages for which Ford ultimately may be responsible are not reasonably
estimable because of the uncertainties with respect to factors such as Ford's
connection to the site or to materials there, the involvement of
other potentially responsible parties, the application of laws and
other standards or regulations, site conditions, and
-24-
<PAGE>
<PAGE>
Item 3. Legal Proceedings
- -------------------------
the nature and scope of investigations, studies and remediation to
be undertaken (including the technologies to be required and the
extent, duration and success of remediation). As a result, Ford is
unable to determine or reasonably estimate the amount of costs or
other damages for which it is potentially responsible in connection
with these sites, although it could be substantial.
Other Matters - A number of claims have been made or may be
asserted in the future against Ford alleging infringement of
patents held by others. Ford believes that it has valid defenses
with respect to the claims that have been asserted. If some of
such claims should lead to litigation, however, and if the claimant
were to prevail, Ford could be required to pay substantial damages.
In 1992, Ford was sued in federal court in Nevada by an
individual patent owner (Lemelson) seeking damages and an
injunction for alleged infringement of four U.S. patents
characterized by Lemelson as covering machine vision inspection
technologies, including bar code reading. Ford filed a declaratory
judgment action in the same court to have these four patents as
well as others of Lemelson's patents directed to machine vision and
laser uses declared invalid, unenforceable and not infringed.
Lemelson filed a counterclaim, alleging infringement of the patents
added by Ford and several additional patents. If Lemelson were to
prevail, Ford could be required to pay substantial damages of an as
yet indeterminate amount and could become subject to an injunction
preventing future use of any process or product found to be covered
by a valid patent. In June of 1995, the magistrate judge handling
this case recommended to the district court judge that he grant
Ford's motion for summary judgment and hold that Lemelson's patents
pertaining to machine vision inspection technology are
unenforceable. The magistrate judge found that Lemelson engaged in
"undue delay" by taking 35 years to prosecute the numerous patent
applications for these patents and that he claimed the work of
others as he saw the technologies develop. In late July, after a
period of time for the filing of objections to the recommendation
and replies to those objections, the case was submitted to the
district judge for review. Ford believes there is a high
probability that the district judge will adopt the magistrate
judge's recommendation and issue an order granting Ford's motion.
Currently, there are three purported class action lawsuits
pending against the Company that allege defects in the paint
processes used with respect to certain vehicles manufactured by
Ford. Two lawsuits, Arnold and Landry, which are nationwide in
scope, have been consolidated for pretrial proceedings in the U.S.
District Court for the Eastern District of Louisiana. The other
lawsuit, Sheldon, is pending in Texas state court is limited to
Texas purchasers of the subject vehicles. Ford is attempting to
consolidate Sheldon with the Arnold and Landry lawsuits. Three
other nationwide lawsuits were dismissed pursuant to plaintiffs'
motion, since such lawsuits were duplicative of Arnold and Landry.
In each pending lawsuit, the plaintiffs seek unspecified
compensatory damages, as well as punitive damages, attorneys' fees
and costs. The lawsuits appear to focus on vehicles painted with
a high-build electrocoat primer. The vehicles in this class are:
1985 through 1991 F-Series/Broncos, 1984 through 1989 Mustangs,
1985 through 1991 Rangers, and 1985 Bronco II's. E.I. DuPont De
Nemours and Company, PPG Industries, Inc. and BASF Corporation have
been added as defendants in the Landry action. If the plaintiffs
were to prevail in these lawsuits, Ford could be required to pay
substantial damages.
Nine purported class action lawsuits seeking economic damages
(including damages for diminution in value and rescission of
purchase agreements) have been brought on behalf of all Bronco II
owners in the United States and are currently pending against Ford.
Each lawsuit expressly excludes personal injury claimants, whose
claims are discussed above. Several of the lawsuits seek recovery
of unspecified punitive damages. In addition, several of the
lawsuits seek an order requiring the Company to recall and retrofit
these vehicles. On Ford's motion, the federal Judicial Panel on
Multidistrict Litigation consolidated seven of these cases for
pretrial purposes before a federal judge in Louisiana. The other
two cases remain pending in state courts in Alabama and Texas. A
tentative settlement was reached in these matters in 1994, but was
rejected by the federal multidistrict judge. The federal
plaintiffs subsequently moved for certification of a nationwide
class of Bronco II owners; Ford has vigorously opposed the motion.
The plaintiffs' motion is currently pending before the federal
multidistrict judge.
-25-
<PAGE>
<PAGE>
Item 3. Legal Proceedings
- -------------------------
In early 1996, Ford was served with seven purported nationwide
class action lawsuits covering purchasers of numerous Ford vehicle
lines, ranging in model years from 1983 to 1993. Plaintiffs allege
the ignition switch equipped on these vehicles has a design defect
that can cause the switch to short circuit, resulting in smoke and
fire damage to the vehicle. In 1995, Ford voluntarily recalled
248,000 vehicles in Canada equipped with the allegedly defective
ignition switch. In the U.S., however, no recall campaign has been
instituted to date, in part because the overall incident rate is
significantly lower in the U.S. than in Canada. Plaintiffs are
seeking unspecified compensatory damages, punitive damages,
attorneys' fees and costs, as well as injunctive relief requiring,
among other things, that Ford replace the allegedly defective
ignition switch in all affected vehicles. If the plaintiffs in the
purported class actions were to prevail, Ford could be required to
pay substantial damages. Ford will attempt to consolidate all
seven lawsuits in one federal jurisdiction and vigorously oppose
class certification.
In addition to the foregoing purported class action lawsuits,
the Safety Administration and Transport Canada are investigating
ignition switch fires in certain of the vehicles included in the
lawsuit. If the Safety Administration and Transport Canada order
Ford to recall all or a substantial portion of the affected
vehicles and retrofit them with a redesigned ignition switch, the
aggregate cost would be substantial.
The Federal Trade Commission and the Department of Justice are
continuing their investigation, commenced in 1995, of the retail
vehicle financing credit practices of Ford Credit for compliance
with the Equal Credit Opportunity Act and Regulation B.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
Not required.
-26-
<PAGE>
<PAGE>
Item 4A. Executive Officers of the Registrant
- ---------------------------------------------
The executive officers of the Registrant and their respective
positions and ages at March 25, 1996 are shown in the table below:
</TABLE>
<TABLE>
<CAPTION>
Present Position
with the Registrant
Name Position Held Since Age
---- -------- ---------- ---
<S> <C> <C> <C>
Alex Trotman Chairman of the Board November 1993 62
(1)(2) of Directors, President
and Chief Executive Officer
Director
W. Wayne Booker Executive Vice President October 1992 61
Edward E. Hagenlocker Executive Vice President May 1994 56
(President, Ford Automotive
Operations)
Peter J. Pestillo Executive Vice President - January 1993 58
Corporate Relations
Kenneth Whipple Executive Vice President March 1988 61
(President, Ford
Financial Services Group)
John M. Devine Group Vice President and October 1994 51
Chief Financial Officer
Jacques A. Nasser Group Vice President - May 1994 48
Product Development
William E. Odom Group Vice President, Ford; December 1993 60
and Chairman of the Board
of Directors and Chief
Executive Officer, Ford
Motor Credit Company
Robert L. Rewey Group Vice President - December 1993 57
Marketing and Sales
Robert H. Transou Group Vice President - May 1994 56
Manufacturing
</TABLE>
-27-
<PAGE>
<PAGE>
Item 4A. Executive Officers of the Registrant (Continued)
- --------------------------------------------------------
<TABLE>
<CAPTION>
Present Position
with the Registrant
Name Position Held Since Age
---- -------- ---------- ---
<S> <C> <C> <C>
Albert Caspers Vice President, Ford; and May 1994 63
Chairman of the Board of
Directors, Ford of Europe
Incorporated
Kenneth R. Dabrowski Vice President - May 1994 52
Vehicle Center 5
James D. Donaldson Vice President - May 1994 53
Vehicle Center 2
James E. Englehart Vice President - May 1994 59
Vehicle Center 4
Edsel B. Ford II Vice President and Director, December 1993 47
(2) Ford; and President and Chief
Operating Officer, Ford
Motor Credit Company
Ronald E. Goldsberry Vice President-General February 1994 53
Manager, Ford Customer
Service Division
Elliott S. Hall Vice President-Washington July 1987 57
Affairs
John T. Huston Vice President-Powertrain May 1994 53
Operations
Kenneth K. Kohrs Vice President - May 1994 57
Vehicle Center 3
Vaughn A. Koshkarian Vice President (President, August 1995 54
Ford Motor (China) Ltd.)
Robert O. Kramer Vice President - October 1995 57
Human Resources
Malcolm S. Macdonald Treasurer January 1995 56
</TABLE>
-28-
<PAGE>
<PAGE>
Item 4A. Executive Officers of the Registrant (Continued)
- --------------------------------------------------------
<TABLE>
<CAPTION>
Present Position
with the Registrant
Name Position Held Since Age
---- -------- ---------- ---
<S> <C> <C> <C>
Frank E. Macher Vice President-General May 1994 55
Manager, Automotive
Components Division
Keith C. Magee Vice President-General February 1994 49
Manager, Lincoln-Mercury
Division
John W. Martin, Jr. Vice President-General April 1989 59
Counsel
Carlos E. Mazzorin Vice President-Purchasing May 1994 54
David N. McCammon Vice President-Finance October 1987 61
W. Dale McKeehan Vice President-Vehicle May 1994 58
Operations
John P. McTague Vice President-Technical March 1990 57
Affairs
Richard Parry-Jones Vice President - May 1994 44
Vehicle Center 1
Helen O. Petrauskas Vice President-Environmental March 1983 51
and Safety Engineering
William F. Powers Vice President - Research February 1996 55
Neil W. Ressler Vice President- Advanced May 1994 56
Vehicle Technology
John M. Rintamaki Secretary July 1993 54
Ross H. Roberts Vice President-General May 1991 58
Manager, Ford Division
Dennis E. Ross Chief Tax Officer April 1995 45
David W. Scott Vice President-Public Affairs July 1986 55
-29-
</TABLE>
<PAGE>
Item 4A. Executive Officers of the Registrant (Continued)
- --------------------------------------------------------
<TABLE>
<CAPTION>
Present Position
with the Registrant
Name Position Held Since Age
---- -------- ---------- ---
<S> <C> <C> <C>
Charles W. Szuluk Vice President-Process May 1994 53
Leadership
John J. Telnack Vice President-Design August 1993 58
Thomas J. Wagner Vice President-Customer February 1994 57
Communication and
Satisfaction
Dennis F. Wilkie Vice President-Business December 1994 53
Development Office
</TABLE>
__________________
(1) Also Chairman of the Organization Review and Nominating
Committee of the Board of Directors.
(2) Also a member of the Finance Committee of the Board of
Directors.
Some of the officers listed above also are members of one or
more additional committees of the Registrant that are not
committees of the Board of Directors.
All of the above officers, other than Mr. Ross, have been
employed by the Registrant or its subsidiaries in one or more
capacities during the past five years. Before joining Ford, Mr.
Ross had been a partner in the New York law firm of Davis, Polk &
Wardwell since 1989.
Under the By-Laws of the Registrant the executive officers are
elected by the Board of Directors at the Annual Meeting of the
Board of Directors held for this purpose, each to hold office until
his or her successor shall have been chosen and shall have
qualified or as otherwise provided in the By-Laws.
-30-
<PAGE>
<PAGE>
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
- ------------------------------------------------------------
PART II
The Common Stock of Ford presently is listed on the New York
and Pacific Coast Stock Exchanges in the United States and on
certain stock exchanges in Belgium, France, Germany, Switzerland
and the United Kingdom. Ford is considering, however, the
withdrawal of its Common Stock from listing and registration on
certain of these foreign stock exchanges.
The high and low sales prices for Ford Common Stock and the
dividends paid per share of Common and Class B Stock for each full
quarterly period in the years indicated were as follows (in each
case, adjusted to reflect a 2-for-1 stock split in the form of a
100% stock dividend on Ford's Common and Class B Stock effective
June 6, 1994):
<TABLE>
<CAPTION>
1995 1994
--------------------------------------- --------------------------------------
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>
Common Stock price per share*
High $29 1/8 $31 1/8 $32 7/8 $32 3/8 $35 $31 1/8 $32 3/4 $30
Low 24 3/4 25 3/4 28 27 3/4 28 1/2 26 3/4 26 1/8 25 5/8
Dividends per share of
Common and Class B Stock $0.26 $0.31 $0.31 $0.35 $0.20 $0.225 $0.225 $0.26
</TABLE>
___________________________
* Prices reflect New York Stock Exchange Composite Transactions.
As of February 1, 1996, stockholders of record of Ford included
280,738 holders of Common Stock and 110 holders of Class B Stock.
<PAGE>
Item 6. Selected Financial Data
- ---------------------------------
The following tables set forth selected financial data and other data
concerning Ford for each of the last ten years (dollar amounts in millions
except per share amounts):
<TABLE>
<CAPTION>
SUMMARY OF OPERATIONS 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Automotive
Sales $110,496 $107,137 $91,568 $84,407 $72,051 $81,844 $82,879 $82,193 $71,797 $62,868
Operating income/(loss) 3,281 5,826 1,432 (1,775) (3,769) 316 4,252 6,612 6,256 4,142
Income/(loss) before income
taxes and cumulative effects
of changes in accounting
principles` 3,166 5,997 1,291 (1,952) (4,052) 275 5,156 7,312 6,499 4,299
Income/(loss) before cumulative
effects of changes in
accounting principles a/ 2,056 3,913 1,008 (1,534) (3,186) 99 3,175 4,609 3,767 2,512
----- ----- ----- ------ ------- ------- ------- ------- ------- -------
Net income/(loss) 2,056 3,913 1,008 (8,628) (3,186) 99 3,175 4,609 3,767 2,512
----- ----- ----- ------ ------- ------- ------- ------- ------- -------
Financial Services
Revenues $26,641 $21,302 $16,953 $15,725 $16,235 $15,806 $13,267 $10,253 $ 8,096 $ 6,826
Income before income taxes and
cumulative effects of changes in
accounting principles 3,539 2,792 2,712 1,825 1,465 1,220 874 1,031 1,386 1,321
Income before cumulative effects
of changes in accounting
principles b/ 2,083 1,395 1,521 1,032 928 761 660 691 858 773
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
Net income 2,083 1,395 1,521 1,243 928 761 660 691 858 773
------- ------- ------- ------- ------- ------- ------- ------ ------- -------
Total Company
Income/(loss) before income
taxes and cumulative effects
of changes in accounting
principles $ 6,705 $ 8,789 $ 4,003 $ (127) $(2,587) $ 1,495 $ 6,030 $ 8,343 $ 7,885 $ 5,620
Provision/(credit) for income
taxes 2,379 3,329 1,350 295 (395) 530 2,113 2,999 3,226 2,323
Minority interests in net
income of subsidiaries 187 152 124 80 66 105 82 44 34 12
------- ------ ------ ------ ------ ------- ------- ------- ------- -------
Income/(loss) before cumulative
effects of changes in
accounting principles a/, b/ 4,139 5,308 2,529 (502) (2,258) 860 3,835 5,300 4,625 3,285
Cumulative effects of changes
in accounting principles _ _ _ (6,883) _ _ _ _ _ _
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net income/(loss) $ 4,139 $ 5,308 $ 2,529 $(7,385) $(2,258) $ 860 $ 3,835 $ 5,300 $ 4,625 $ 3,285
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total Company Data Per Share of
Common and Class B Stock c/
Income/(loss) before cumulative
effects of changes in
accounting principles $3.58 $4.97 $2.27 (0.73) $ (2.40) $ 0.93 $ 4.11 $ 5.48 $ 4.53 $ 3.08
Income/(loss)
Assuming no dilution 3.58 4.97 2.27 (7.81) (2.40) 0.93 4.11 5.48 4.53 3.08
Assuming full dilution 3.33 4.44 2.10 (7.81) (2.40) 0.92 4.06 5.40 4.46 3.03
Cash dividends 1.23 0.91 0.80 0.80 0.98 1.50 1.50 1.15 0.79 0.56
Common stock price range (NYSE)
High 32 7/8 35 33 1/16 24 7/16 18 7/8 24 9/16 28 5/16 27 1/2 28 5/32 15 7/8
Low 24 3/4 25 5/8 21 1/2 13 7/8 11 11/16 12 1/2 20 11/16 19 1/32 14 7/32 9
Average number of shares of
Common and Class B stock
outstanding (in millions) 1,071 1,010 986 972 952 926 934 968 1,022 1,066
____________
a/ 1989 includes an after-tax loss of $424 million from the sale of Rouge
Steel Company.
b/ 1994 includes an after-tax loss of $440 million from the sale of Granite
Savings Bank (formerly First Nationwide Bank).
c/ Share data have been adjusted to reflect stock dividends and stock splits.
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
Item 6. Selected Financial Data (Continued)
- -------------------------------------------
SUMMARY OF OPERATIONS
(CONTINUED) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Company Balance
Sheet Data at Year-End
Assets
Automotive $ 72,772 $ 68,639 $ 61,737 $ 57,170 $ 52,397 $ 50,824 $ 45,819 $ 43,128 $ 39,734 $ 34,021
Financial Services 170,511 150,983 137,201 123,375 122,032 122,839 115,074 100,239 76,260 59,211
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total assets $243,283 $219,622 $198,938 $180,545 $174,429 $173,663 $160,893 $143,367 $115,994 $ 93,232
Long-term debt
Automotive $ 5,475 $ 7,103 $ 7,084 $ 7,068 $ 6,539 $ 4,553 $ 1,137 $ 1,336 $ 2,058 $ 2,467
Financial Services 68,259 58,104 47,900 42,369 43,680 40,779 37,784 30,777 26,009 19,128
Stockholders' equity d/ 24,547 21,659 15,574 14,753 22,690 23,238 22,728 21,529 18,493 14,860
Total Company Facility
and Tooling Data
Capital expenditures for
facilities (excluding
special tools) $ 5,455 $ 5,236 $ 4,339 $ 3,613 $ 3,611 $ 4,702 $ 4,412 $ 3,148 $ 2,415 $ 2,179
Depreciation 8,954 7,207 5,456 4,658 3,956 3,185 2,720 2,458 2,107 1,859
Expenditures for
special tools 3,542 3,310 2,475 2,177 2,236 2,556 2,354 1,634 1,343 1,285
Amortization of
special tools 2,765 2,129 2,012 2,097 1,822 1,695 1,509 1,335 1,353 1,293
Total Company Employee
Data - Worldwide
Payroll $ 16,572 $ 15,853 $ 13,750 $ 13,754 $ 12,850 $ 14,014 $ 13,327 $ 13,010 $ 11,670 $ 11,290
Total labor costs 23,661 22,985 20,065 19,850 17,998 18,962 18,152 18,108 16,567 15,610
Average number of
employees 346,990 337,728 321,925 325,333 331,977 369,547 366,641 358,939 350,320 382,274
Total Company Employee
Data - U.S. Operations
Payroll $ 10,482 $ 10,371 $ 8,888 $ 8,015 $ 7,389 $ 8,309 $ 8,650 $ 8,473 $ 7,762 $ 7,704
Average number of
employees 185,960 180,460 166,593 158,377 156,079 180,104 188,286 185,540 180,838 181,476
Average hourly labor
costs e/
Earnings $ 21.79 $ 21.81 $ 20.94 $ 19.92 $ 19.10 $ 18.44 $ 17.77 $ 17.39 $ 16.50 $ 16.12
Benefits 18.66 19.13 18.12 19.24 17.97 14.12 13.21 13.07 12.38 11.01
-------- ------- -------- -------- -------- -------- -------- -------- ------- -------
Total hourly labor
costs $ 40.45 $ 40.94 $ 39.06 $ 39.16 $ 37.07 $ 32.56 $ 30.98 $ 30.46 $ 28.88 $ 27.13
======== ======= ======== ======== ======== ======== ======== ======== ======= =======
</TABLE>
_________________
d/ The cumulative effects of changes in accounting principles reduced equity
by $6,883 million in 1992.
e/ Per hour worked (in dollars). Excludes data for subsidiary companies.
-33-
<TABLE>
<CAPTION>
Item 6. Selected Financial Data (Continued)
- -------------------------------------------
SUMMARY OF VEHICLE UNIT SALES f/
(in thousands) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
North America
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States
Cars 1,767 2,036 1,925 1,820 1,588 1,870 2,201 2,364 2,176 2,105
Trucks 2,226 2,182 1,859 1,510 1,253 1,416 1,517 1,537 1,480 1,406
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total United States 3,993 4,218 3,784 3,330 2,841 3,286 3,718 3,901 3,656 3,511
Canada 254 281 256 237 259 257 326 349 349 321
Mexico 32 92 91 126 112 89 87 63 35 44
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total North America 4,279 4,591 4,131 3,693 3,212 3,632 4,131 4,313 4,040 3,876
Europe
Britain 496 520 464 420 471 607 739 753 628 596
Germany 409 386 340 407 501 361 326 332 328 320
France 165 180 150 194 190 185 192 168 162 151
Italy 193 179 172 266 301 219 153 98 93 85
Spain 160 163 117 165 128 155 173 158 159 112
Other countries 286 281 250 270 296 289 296 290 285 300
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Europe 1,709 1,709 1,493 1,722 1,887 1,816 1,879 1,799 1,655 1,564
Other international
Brazil 201 164 151 117 137 137 157 154 129 177
Australia 139 125 120 105 104 134 154 132 128 139
Taiwan 106 97 122 119 107 115 115 88 55 31
Japan 57 50 53 64 83 99 82 60 49 40
Argentina 48 54 49 49 26 18 25 30 33 32
Other countries 67 63 65 71 67 72 65 86 82 92
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total other international 618 553 560 525 524 575 598 550 476 511
Total worldwide cars
and trucks 6,606 6,853 6,184 5,940 5,623 6,023 6,608 6,662 6,171 5,951
Total worldwide tractors g/ - - - - 13 66 72 77 64 68
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total worldwide vehicle
unit sales 6,606 6,853 6,184 5,940 5,636 6,089 6,680 6,739 6,235 6,019
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
____________
f/ Vehicle unit sales are reported worldwide on a "where sold" basis and
include sales of all Ford-badged units, as well as units manufactured by
Ford and sold to other manufacturers. Unit sales for 1986 through 1994
have been restated to reflect the country where sold and to include sales
of all Ford-badged units. Previously, factory unit sales were reported
in North America on a "where sold" basis and overseas on a "where
produced" basis. Also, Ford-badged unit sales of certain unconsolidated
subsidiaries (primarily Autolatina--Brazil and Argentina) were not
previously reported.
g/ Ford's tractor operation, Ford New Holland, was sold on May 6, 1991.
</TABLE>
-34-
<PAGE>
Item 7. Managments's Discussion and Analysis of Financial Condition
and Results of Operations
- -------------------------------------------------------------------
OVERVIEW
The Company's worldwide net income in 1995 was $4,139 million,
or $3.58 per share of Common and Class B stock, compared with
$5,308 million, or $4.97 per share in 1994. Fully diluted earnings
per share were $3.33 in 1995, compared with $4.44 a year ago. The
Company's worldwide sales and revenues were $137.1 billion in 1995,
up $8.7 billion, or 7% from 1994. Vehicle unit sales of cars and
trucks were 6,606,000, down 247,000 units, or 3.6%. Stockholders'
equity was $24.5 billion at December 31, 1995, up $2.9 billion from
December 31, 1994.
The Company's earnings in 1995 were down from 1994, a record
year, and reflected the effects of lower volumes in the U.S., costs
associated with introducing new products and lower earnings at
operations outside the U.S., primarily in Latin America. Earnings
from Financial Services operations were up $688 million compared
with 1994. The improvement reflected record earnings at Ford
Credit, The Associates, USL Capital and Hertz and the nonrecurrence
of a $440 million charge to net income in the first quarter of 1994
for the disposition of First Nationwide Bank.
In 1995, Automotive capital expenditures for new products and
facilities totaled $8.7 billion, up $366 million from 1994. Cash
and marketable securities of the Company's Automotive operations
were $12.4 billion at December 31, 1995, up $323 million from
December 31, 1994. Automotive debt at December 31, 1995 totaled
$7.3 billion, up $49 million from a year ago.
In 1994, the Company announced a reorganization of its
Automotive operations, called "Ford 2000." The reorganization is
a fundamental change intended to provide customers with a wider
array of vehicles in more markets, assure full competitiveness in
vehicle design, quality and value, and substantially reduce the
cost of operating Ford's automotive business. The new structure
reduces duplication of effort and facilitates best practices around
the world by merging Ford's North American Automotive Operations,
European Automotive Operations, and Automotive Components Group
into a single global organization, Ford Automotive Operations. The
new organization was implemented during 1995. The major operations
in Latin America and Asia Pacific will be integrated into Ford
Automotive Operations during 1996.
Ford is expanding its efforts in many new markets,
particularly in the Asia Pacific region including China, India and
Thailand. New market development encompasses a variety of business
arrangements to establish component manufacturing and vehicle
assembly capabilities. Entry into new markets is an integral part
of the Company's long-term strategy to improve its global
competitive position.
The Company's Financial Statements and Notes to Financial
Statements on pages FS-1 through FS-31, including the Report of
Independent Accountants, should be read as an integral part of this
review.
Fourth Quarter of 1995
- ----------------------
In the fourth quarter of 1995, the Company's worldwide net
income was $660 million, or $0.49 per share of Common and Class B
stock, compared with $1,569 million, or $1.47 per share in the
fourth quarter of 1994. Fully diluted earnings per share were
$0.48 in the fourth quarter of 1995, compared with $1.31 a year
ago.
Worldwide Automotive operations earned $16 million in the
fourth quarter of 1995, compared with $1,119 million a year ago.
U.S. Automotive operations earned $168 million in the fourth
quarter of 1995, compared with $745 million a year ago. The lower
results for U.S. Automotive operations reflected lower unit volume
and costs associated with introducing new products. Automotive
operations outside the U.S. incurred a loss of $152 million in the
fourth quarter of 1995, compared with earnings of $374 million a
year ago, reflecting primarily losses in Latin America and the
nonrecurrence of a one-time favorable effect from devaluation of
the Mexican Peso in 1994. Ford's European Automotive operations
incurred a loss of $48 million in the fourth quarter of 1995,
compared with a loss of $55 million a year ago.
-35-
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- -------------------------------------------------------------------
Financial Services operations earned a record $644 million in
the fourth quarter of 1995, compared with $450 million a year ago.
The improvement reflected primarily record earnings at Ford Credit,
The Associates, USL Capital and Hertz.
RESULTS OF OPERATIONS: 1995 COMPARED WITH 1994
Automotive Operations
- ---------------------
Ford's worldwide Automotive operations earned $2,056 million
in 1995 on sales of $110.5 billion, compared with $3,913 million in
1994 on sales of $107.1 billion.
In the U.S., Ford's Automotive operations earned
$1,843 million on sales of $73.9 billion, compared with
$3,002 million in 1994 on sales of $73.7 billion. The decline in
earnings reflected primarily lower unit volume (reflecting
nonrecurrence of a dealer inventory increase in 1994 and lower
industry sales) and costs associated with introducing new products
(mainly the all-new Taurus, Sable and F-150 pickup truck). U.S.
Automotive after-tax return on sales was 2.5% in 1995, down 1.6
points from a year ago. It is expected that results in the first
half of 1996 will continue to be affected adversely by costs
associated with introducing new products (the F-150 pickup truck,
Escort and Tracer).
The U.S. economy grew at a moderate rate in 1995 with interest
rates and inflation at comparatively low levels. U.S. car and
truck industry volumes, however, decreased from 15.4 million units
in 1994 to 15.1 million units in 1995. Most of the decrease in
industry sales was attributable to cars. Ford's share of the U.S.
car market was 20.9%, down 9/10 of a point from 1994. Ford's U.S.
truck share was 31.9%, up 1.8 points from 1994. Ford's combined
U.S. car and truck share was 25.6%, up 4/10 of a point from 1994.
The increase in share reflected primarily higher sales of the
Explorer and F-Series trucks, offset partially by lower sales of
specialty vehicles and lower availability of the Taurus and Sable
due to model changeover.
Outside the U.S., Automotive operations earned $213 million in
1995 on sales of $36.6 billion, compared with $911 million in 1994
on sales of $33.4 billion. The decline reflected primarily lower
results in Latin America.
Ford's European Automotive operations earned $116 million in
1995, compared with $128 million in 1994. The decline reflected
primarily costs associated with introducing new products (the all-
new Galaxy minivan and Fiesta) and the unfavorable effect of
foreign exchange rate changes.
Car and truck industry sales in Europe were 13.4 million units
in 1995, compared with 13.3 million units in 1994. Ford's share of
the European car market was 11.9%, equal to a year ago. Ford's
European truck share was 14.8%, up 1/10 of a point from 1994.
Ford's combined European car and truck share was 12.3%, up 1/10 of
a point from 1994.
Outside the U.S. and Europe, Ford earned $97 million in 1995,
compared with $783 million in 1994. About half of the decrease
reflected primarily unfavorable results for operations in Brazil,
where higher import duties and a market shift to small cars
resulted in excess dealer inventories and higher marketing costs.
These conditions are expected to continue into 1996; business
conditions have been and are expected to continue to be volatile
and subject to rapid change, which can affect Ford's future
earnings. These factors were offset partially in 1995 by a one-
time gain from the dissolution of Ford's Autolatina joint venture
(discussed below). The decline in earnings outside the U.S. and
Europe also reflected the nonrecurrence of a one-time favorable
effect for devaluation of the Mexican Peso in 1994 and lower
results in Argentina.
-36-
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
- -------------------------------------------------------------------
During the fourth quarter of 1995, the Company's Autolatina
joint venture in Brazil and Argentina with Volkswagen AG was
dissolved. The dissolution resulted in a gain of $230 million,
primarily from a one-time cash compensation payment to Ford.
Historically, earnings in Brazil and Argentina have represented a
significant portion of Ford's Automotive earnings outside the U.S.
and Europe. The long-term effect, if any, of the dissolution of
Autolatina on the Company's future results will depend on Ford's
ability to compete on its own in these markets. The Company is
reestablishing manufacturing capacity in Brazil for small cars,
which should assist in improving Ford's competitiveness.
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned a record
$2,083 million in 1995, up $688 million from 1994. The improvement
reflected record earnings at Ford Credit, The Associates, USL
Capital and Hertz and the nonrecurrence of a $440 million charge to
net income in the first quarter of 1994 for the disposition of
First Nationwide Bank.
Ford Credit's consolidated net income was a record
$1,395 million in 1995, up $82 million from 1994. The improvement
reflected primarily higher levels of earning assets, favorable tax
adjustments and improved cost performance, offset partially by
lower net interest margins and higher credit losses. Depreciation
costs increased as a result of continued growth in operating
leases; the related lease revenues more than offset the increased
depreciation. Ford Credit's results for 1995 included $255 million
from equity in the net income of affiliated companies, primarily
Ford Holdings, compared with $233 million a year ago. Ford
Holdings is a holding company which, through December 1995, owned
primarily The Associates, USL Capital and American Road. The
international operations managed by Ford Credit, but not included
in its consolidated results, earned $265 million in 1995, up
$24 million from 1994, reflecting primarily higher levels of
earning assets, offset partially by lower net interest margins.
The Associates earned a record $632 million in the U.S. in
1995, up $84 million from 1994. The increase reflected higher
levels of earning assets and improved net interest margins. The
international operations managed by The Associates, but not
included in its consolidated results, earned $114 million in 1995,
up $38 million from 1994.
USL Capital earned a record $135 million in 1995, up
$26 million from 1994. The improvement resulted primarily from
higher levels of earning assets, higher gains on asset sales and
lower operating costs. Hertz earned a record $105 million in 1995,
up $13 million from 1994. The increase reflected primarily higher
volume in construction equipment rentals and sales, offset
partially by increased depreciation and borrowing costs. American
Road earned $28 million in 1995, down $30 million from 1994. The
decline reflected primarily the nonrecurrence of prior year tax
adjustments and a loss on disposition of the annuity business.
In December 1995, Ford Holdings merged with Ford Holdings
Capital Corporation, a subsidiary of Ford Holdings, which resulted
in the cancellation of the voting preferred stock of Ford Holdings
in exchange for payment by Ford Holdings of the liquidation
preference of the stock plus accrued dividends (totaling about $2
billion). Ford Holdings funded the payment to the holders of the
preferred stock, which occurred in January 1996, primarily with
bank loans.
In late 1995, Ford began a reorganization of its Financial
Services group in order to align management responsibility more
closely with the legal ownership of the Financial Services
affiliates. As part of this reorganization, substantially all of
the common stock of Ford Holdings owned by Ford Credit was
repurchased by Ford Holdings in exchange for a promissory note.
-37-
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
- -------------------------------------------------------------------
Also, in February 1996, The Associates filed a registration
statement with the Securities and Exchange Commission for an
initial public offering of its common stock representing up to a
19.8% economic interest in The Associates. As previously
announced, Ford is investigating the sale of all or a part of USL
Capital. A fuller description of the reorganization is provided in
Item 1. "Business - Financial Services Operations - Ford Holdings,
Inc. and Ford FSG, Inc."
HISTORICAL REFERENCE: 1994 COMPARED WITH 1993
The Company's worldwide net income in 1994 was a record
$5,308 million, or $4.97 per share of Common and Class B stock,
compared with $2,529 million, or $2.27 per share in 1993. Fully
diluted earnings per share were $4.44, compared with $2.10 a year
ago. Sales and revenues totaled $128.4 billion in 1994, up 18%
from 1993. Vehicle unit sales of cars and trucks were 6,853,000,
up 669,000 units, or 11%.
On June 6, 1994, a 2-for-1 stock split in the form of a 100%
stock dividend on the Company's outstanding Common and Class B
stock became effective. Earnings per share for prior periods were
restated to reflect the stock split.
The Company's financial results in 1994 showed substantial
improvement compared with 1993. Improvements in U.S. Automotive
operations included the favorable effects of higher industry volume
and improved margins. Automotive operations outside the U.S. also
improved. The improvement reflected primarily higher unit volume,
lower manufacturing costs and improved margins in Europe. Earnings
from Financial Services operations were down $126 million compared
with 1993, which was more than explained by a $440 million write-
off for the disposition of First Nationwide Bank (discussed below).
The write-off was offset largely by substantially improved earnings
at the other operations.
Automotive Operations
- ---------------------
Net income from Ford's worldwide Automotive operations was
$3,913 million in 1994 on sales of $107.1 billion, compared with
$1,008 million in 1993 on sales of $91.6 billion.
In the U.S., Ford's Automotive operations earned
$3,002 million on sales of $73.7 billion, compared with $1,442
million in 1993 on sales of $62.1 billion. Higher vehicle
production, reflecting increased industry sales, accounted for most
of the improvement. Improved margins, reflecting mainly favorable
material costs, manufacturing efficiencies, and lower marketing
costs, were offset partially by higher costs for new products and
related facilities. Results in 1993 included the one-time
favorable effect of tax legislation ($171 million) for the
restatement of U.S. deferred tax balances, and the gain on the sale
of Ford's North American automotive seating and seat trim business
($73 million).
The U.S. economy grew at an above-trend rate in 1994, and
interest rates and inflation remained at comparatively low levels.
U.S. car and truck industry volumes increased from 14.2 million
units in 1993 to 15.4 million units in 1994. Over 70% of the
increase in industry sales was attributable to trucks (including
minivans, compact utility vehicles, full-size pickups and compact
pickups). Ford's share of the U.S. car market was 21.8%, down half
of a point from 1993, reflecting lower shares for the Tempo and
Topaz, which were discontinued in 1994. The Company's U.S. truck
share was 30.1%, down 4/10 of a point from 1993, reflecting
capacity constraints on the Explorer.
Outside the U.S., Ford's Automotive operations earned
$911 million in 1994 on sales of $33.4 billion, compared with a
loss of $434 million in 1993 on sales of $29.5 billion. The
improvement reflected primarily higher unit volumes, lower
manufacturing costs and improved margins in Europe. Ford's
European Automotive operations earned $128 million in 1994,
compared with a loss of $873 million in 1993. Results outside the
U.S. in 1993 included restructuring charges at Jaguar
($174 million) and at Ford of Australia ($57 million), offset
partially by the favorable one-time effect of a reduction in German
tax rates ($59 million).
-38-
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
- -------------------------------------------------------------------
Car and truck industry sales in Europe were 13.3 million units
in 1994, compared with 12.6 million units in 1993. Ford's European
car market share was 11.9% in 1994, up 3/10 of a point from 1993.
Ford's European truck share improved 2/10 of a point to 14.7%.
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned
$1,395 million in 1994, down $126 million from 1993. The decline
was more than explained by the charge to net income of $440 million
in 1994 related to the disposition of First Nationwide Bank. This
charge, however, was offset largely by record earnings at Ford
Credit, The Associates and USL Capital, and the consolidation of
results for Hertz. Results in 1993 included an unfavorable one-
time effect of $31 million from tax legislation in the U.S.
Ford Credit's consolidated net income was a record
$1,313 million in 1994, up $119 million from 1993. The improvement
reflected primarily higher levels of earning assets, the one-time
effect of the gain on sale of an interest in Manheim Auctions, Inc.
(an auto auction company), the nonrecurrence of the one-time tax
adjustment in 1993 for increased U.S. tax rates, and improved cost
performance; partial offsets included lower net interest margins
and lower gains from the sale of receivables. Ford Credit's
results in 1994 included $233 million from equity in the net income
of affiliated companies, primarily Ford Holdings, compared with
$198 million a year ago. Depreciation costs increased as a result
of continued growth in operating leases; the related lease revenues
more than offset the increased depreciation. The international
operations managed by Ford Credit, but not included in its
consolidated results, earned $241 million in 1994, up $42 million
from 1993, reflecting primarily higher levels of earning assets and
lower credit losses.
The Associates earned a record $548 million in the U.S. in
1994, up $78 million from 1993. The increase reflected higher
levels of earning assets and improved net interest margins. The
international operations managed by The Associates, but not
included in its consolidated results, earned $76 million in 1994,
up $38 million from 1993, reflecting primarily higher levels of
earning assets.
USL Capital earned a record $109 million in 1994, up
$32 million from 1993. The increase reflected higher earning
assets, lower operating costs and the nonrecurrence of the one-time
tax adjustment in 1993 for increased U.S. tax rates. American
Road earned $58 million in 1994, compared with $79 million in 1993.
The decline reflected primarily reduced investment income from
capital gains.
In April 1994, Hertz became a wholly owned subsidiary of Ford.
In 1994, Financial Services net income included $92 million for
Hertz. In 1993, Automotive net income included $26 million for
Hertz (reflecting Ford's prior equity interest).
On September 30, 1994, substantially all of the assets of
First Nationwide 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. 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. In 1994,
Granite incurred a loss of $484 million including a charge of
$440 million related to the disposition of the Bank, reflecting the
nonrecovery of goodwill and reserves for estimated losses on assets
not included in the sale. Granite incurred a loss of $55 million
in 1993.
-39-
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
- -------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
- ---------------------
Cash and marketable securities of the Company's Automotive
operations were $12.4 billion at December 31, 1995, up $323 million
from December 31, 1994. The Company paid $1.6 billion in cash
dividends on its Common Stock, Class B Stock and Preferred Stock
during 1995.
Automotive capital expenditures were $8.7 billion in 1995, up
$366 million from 1994. During the next several years, Ford's
spending for product change is expected to be at similar levels;
however, as a percent of sales, such spending is expected to be at
lower levels.
At December 31, 1995, Automotive debt totaled $7.3 billion,
which was 22% of total capitalization (stockholders' equity and
Automotive debt), compared with $7.3 billion, or 25% of total
capitalization, at December 31, 1994.
At December 31, 1995, Ford had long-term contractually
committed global credit agreements under which $8.4 billion is
available from various banks at least through June 30, 2000. The
entire $8.4 billion may be used, at Ford's option, by any affiliate
of Ford; however, any borrowing by an affiliate will be guaranteed
by Ford. In addition, Ford has the ability to transfer on a
nonguaranteed basis the entire $8.4 billion in varying portions to
Ford Credit and Ford Credit Europe. These facilities were unused
at December 31, 1995.
In addition, at December 31, 1995, Ford Brasil Ltda. had $276
million of contractually committed credit facilities with various
banks ranging in maturity from June 1996 to December 1996. None of
these facilities were in use at December 31, 1995.
Financial Services Operations
- -----------------------------
The Financial Services operations rely heavily on their
ability to raise substantial amounts of funds in the capital
markets in addition to collections on loans and retained earnings.
The levels of funds for certain Financial Services operations are
affected by certain transactions with Ford, such as capital
contributions, dividend payments and the timing of payments for
income taxes. Their ability to obtain funds also is affected by
their debt ratings which, for certain operations, are closely
related to the financial condition and outlook for Ford and the
nature and availability of support facilities, such as revolving
credit and receivables sales agreements.
Ford Credit's outstanding commercial paper totaled $35 billion
at December 31, 1995 with an average remaining maturity of 29 days.
Support facilities represent additional sources of funds, if
required.
At December 31, 1995, Financial Services had a total of $48.5
billion of contractually committed support facilities. Of these
facilities, $23.8 billion (excluding the $8.4 billion of Ford
credit facilities) are contractually committed global credit
agreements under which $19.8 billion and $4 billion are available
to Ford Credit and Ford Credit Europe, respectively, from various
banks; 62% and 75%, respectively, of such facilities are available
through June 30, 2000. The entire $19.8 billion may be used, at
Ford Credit's option, by any subsidiary of Ford Credit, and the
entire $4 billion may be used, at Ford Credit Europe's option, by
any subsidiary of Ford Credit Europe. Any borrowings by such
subsidiaries will be guaranteed by Ford Credit or Ford Credit
Europe, as the case may be. At December 31, 1995, none of the Ford
Credit global facilities were in use; $742 million of the Ford
Credit Europe global facilities were in use. In addition to the
Ford, Ford Credit and Ford Credit Europe global credit agreements,
at December 31, 1995, international subsidiaries and other credit
operations managed by Ford Credit had $1.1 billion of contractually
committed support facilities available outside the U.S. At
December 31, 1995, approximately 29% of these facilities were in
use.
-40-
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
- -------------------------------------------------------------------
At December 31, 1995, Ford Holdings had outstanding long-term
debt of $1.9 billion, of which $205 million matures in 1996. All
of the Ford Holdings debt held by nonaffiliated persons is
guaranteed by Ford. Ford Holdings has a $1.5 billion term loan
agreement available through December 13, 1996, none of which was in
use at December 31, 1995, but all of which has since been used to
fund the payment to the holders of Ford Holdings' preferred stock
discussed above.
At December 31, 1995, The Associates had contractually
committed lines of credit with banks of $3.9 billion, with various
maturities ranging from January 31, 1996 to December 30, 1996, none
of which were utilized at December 31, 1995. Also, at December 31,
1995, The Associates had $5.1 billion of contractually committed
revolving credit facilities with banks, with maturity dates ranging
from January 1, 1996 through April 1, 2001, and $1.3 billion of
contractually committed receivables sale facilities, $275 million
of which are available through April 24, 1996, $500 million of
which are available through April 15, 1997, and $500 million of
which are available through April 30, 1998; none of these
facilities were in use at December 31, 1995. At December 31, 1995,
international operations managed by The Associates, but not
included in its support facilities, had about $270 million of
contractually committed support facilities available outside the
U.S., of which $50 million were in use at December 31, 1995.
At December 31, 1995, USL Capital had $1.7 billion of
contractually committed credit facilities, of which 71% are
available through September 2000. These facilities included
$46 million of contractually committed receivables sale facilities,
of which 100% were in use at December 31, 1995. At December 31, 1995,
international operations managed by USL Capital, but not
included in its support facilities, had about $3 million of
contractually committed support facilities available outside the
U.S., of which 50% were in use at December 31, 1995.
American Road's principal sources of funds are insurance
premiums and investment income. American Road had no debt and none
of its own credit lines at December 31, 1995.
At December 31, 1995, Hertz had $2 billion of contractually
committed credit facilities in the U.S., none of which were
utilized at December 31, 1995. These facilities included $751
million and $1 billion of agreements with banks which mature
June 27, 1996 and June 30, 2000, respectively, and a $250 million
revolving credit facility with Ford which matures June 30, 1999.
In addition, at December 31, 1995, international operations of
Hertz had about $317 million of contractually committed support
facilities available outside the U.S., of which about 53% were in
use at December 31, 1995.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
The Financial Statements and Notes to Financial Statements of
the Registrant and the Report of Independent Accountants that are
filed as part of this Report are listed under Item 14.
"Exhibits, Financial Statement Schedules, and Reports on Form 8-K"
and are set forth on pages FS-1 through FS-31 immediately following
the signature pages of this Report.
Selected quarterly financial data of Ford and its consolidated
subsidiaries for 1995 and 1994 are set forth in Note 18 of Notes to
Financial Statements.
Item 9. Disagreements With Accountants on Accounting and
Financial Disclosure
- ----------------------------------------------------------
Not required.
-41-
<PAGE>
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
The information called for by Item 10 is incorporated by
reference from the information under the caption "Election of
Directors" in the Proxy Statement, except that the information
called for by Item 10 with respect to executive officers of the
Registrant appears as Item 4A under Part I of this Report.
Item 11. Executive Compensation
- --------------------------------
The information called for by Item 11 is incorporated by
reference from the information under the captions "Compensation of
Directors", "Compensation and Option Committee Report on Executive
Compensation" and "Compensation of Executive Officers" in the Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
- -------------------------------------------------------------
The information called for by Item 12 is incorporated by
reference from the information on page 1 of, and under the caption
"Election of Directors" in, the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
The information called for by Item 13 is incorporated by
reference from the information under the caption "Certain
Relationships and Related Transactions" in the Proxy Statement.
-42-
<PAGE>
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
- -----------------------------------------------------------------
(a) 1. Financial Statements - Ford Motor Company and Subsidiaries
Consolidated Statement of Income for the years ended December
31, 1995, 1994 and 1993.
Consolidated Balance Sheet at December 31, 1995 and 1994.
Consolidated Statement of Cash Flows for the years ended
December 31, 1995, 1994 and 1993.
Consolidated Statement of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993.
Notes to Financial Statements
Report of Independent Accountants
The Financial Statements, the Notes to Financial Statements
and the Report of Independent Accountants listed above are filed as
part of this Report and are set forth on pages FS-1 through FS-31
immediately following the signatures pages of this Report.
(a) 2. Financial Statement Schedules
Designation Description
- ----------- -----------
Supplemental
Schedule Condensed Financial Information of Subsidiary
The Financial Statement Schedule listed above is filed as part
of this Report and is set forth on page FSS-1 immediately following
page FS-31. The schedules not filed are omitted because the
information required to be contained therein is disclosed elsewhere
in the Financial Statements or the amounts involved are not
sufficient to require submission.
-43-
<PAGE>
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K (Continued)
- ----------------------------------------------------------------
(a) 3. Exhibits
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 3-A Restated Certificate of Incorporation, Filed as Exhibit 4.1 to the Registrant's
of the Registrant dated June 6, 1994. Registration Statement No. 33-55171.*
Exhibit 3-B By-Laws of the Registrant as Filed with this Report.
amended through January 1, 1996.
Exhibit 4-A Form of Deposit Agreement dated as of Filed as Exhibit 4-E to the Registrant's
November 20, 1991 among Ford Motor Registration Statement No. 33-43085.*
Company, Manufacturers Hanover Trust
Company, as Depositary, and the holders
from time to time of Depositary Shares,
each representing 1/1,000 of a share of
the Registrant's Series A Cumulative
Convertible Preferred Stock.
Exhibit 4-B Form of Deposit Agreement dated as of Filed as Exhibit 4-E to the Registrant's
October 29, 1992 among Ford Motor Registration Statement No. 33-53092.*
Company, Chemical Bank, as Depositary,
and the holders from time to time of
Depositary Shares, each representing
1/2,000 of a share of the Registrant's
Series B Cumulative Preferred Stock.
Exhibit 10-A Amended and Restated Agreement dated Filed as Exhibit 10-A to the Registrant's
as of July 1, 1993 between the Annual Report on Form 10-K for the
Registrant and Ford Credit. year ended December 31, 1993.*
Exhibit 10-B 1985 Stock Option Plan of the Registrant.** Filed as Exhibit 10-D to the Registrant's
Annual Report on Form 10-K for the
year ended December 31, 1985.*
Exhibit 10-B-1 Amendment dated as of March 8, 1990 Filed as Exhibit 10-C-1 to the
to 1985 Stock Option Plan.** Registrant's Annual Report on Form
10-K for the year ended December 31, 1989.*
Exhibit 10-C Ford Motor Company Supplemental Filed as Exhibit 10-H to theRegistrant's
Compensation Plan as amended through Annual Report on Form 10-K for the
May 8, 1986.** year ended December 31, 1986.*
Exhibit 10-C-1 Amendment to Ford Motor Company Filed as Exhibit 10-F-1 to the
Supplemental Compensation Plan, dated Registrant's Annual Report on Form
May 12, 1988.** 10-K for the year ended
December 31, 1988.*
</TABLE>
-44-
<PAGE>
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K (Continued)
- -------------------------------------------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 10-C-2 Amendment to Ford Motor Company Filed as Exhibit 10-D-2 to the
Supplemental Compensation Plan, dated Registrant's Annual Report on Form
July 8, 1992.** 10-K for the year ended December 31, 1992.*
Exhibit 10-C-3 Amendment to Ford Motor Company Filed as Exhibit 10.1 to the Registrant's
Supplemental Compensation Plan, Quarterly Report on Form 10-Q for the
effective as of March 8, 1995.** quarter ended March 31, 1995.*
Exhibit 10-C-4 Amendment to Ford Motor Company Filed as Exhibit 10.1 to the Registrant's
Supplemental Compensation Plan, Quarterly Report on Form 10-Q for the
effective as of July 13, 1995.** quarter ended June 30, 1995.*
Exhibit 10-C-5 Amendment to Ford Motor Company Filed with this Report.
Supplemental Compensation Plan,
effective January 10, 1996.**
Exhibit 10-D Ford Motor Company Executive Separation Filed as Exhibit 10-D to the Registrant's
Allowance Plan as amended through Annual Report on Form 10-K for the
December 9, 1993 for separations on year ended December 31, 1994.*
or after January 1, 1981.**
Exhibit 10-E Description of Company practices regarding Filed as Exhibit 10-I to the Registrant's
club memberships for executives.** Annual Report on Form 10-K for the
year ended December 31, 1981.*
Exhibit 10-F Description of Company practices regarding Filed as Exhibit 10-J to the Registrant's
travel expenses of spouses of certain Annual Report on Form 10-K for the
executives.** year ended December 31, 1980.*
Exhibit 10-G Ford Motor Company Deferred Compensation Filed as Exhibit 10-H-1 to the
Plan for Non-Employee Directors, as amended Registrant's Annual Report on Form
on July 11, 1991.** 10-K for the year ended December 31,
1991.*
Exhibit 10-G-1 Amendments to Deferred Compensation Plan Filed with this Report.
for Non-Employee Directors, effective as of
January 1, 1996.**
Exhibit 10-H Ford Motor Company Benefit Equalization Filed as Exhibit 10-H to the Registrant's
Plan, as amended as of January 1, Annual Report on Form 10-K for the
1989.** year ended December 31, 1994.*
Exhibit 10-H-1 Description of Amendments to Benefit Filed with this Report.
Equalization Plan, adopted January 11,
1996 and January 25, 1996.**
</TABLE>
-45-
<PAGE>
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K (Continued)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 10-I Description of Financial Counseling Filed as Exhibit 10-N to the Registrant's
Services provided to certain executives.** Annual Report on Form 10-K for the
year ended December 31, 1983.*
Exhibit 10-J 1986 Long-Term Incentive Plan of the Filed as Exhibit 10-Q to the Registrant's
Registrant.** Annual Report on Form 10-K for the
year ended December 31, 1985.*
Exhibit 10-J-1 Amendment dated as of June 1, 1990 to Filed as Exhibit 10-N-1 to the
1986 Long-Term Incentive Plan of the Registrant's Annual Report on Form
Registrant.** 10-K for the year ended December 31,
1990.*
Exhibit 10-K Supplemental Executive Retirement Plan, Filed with this Report.
as restated and incorporating amendments
through December 12, 1995.**
Exhibit 10-L Ford Motor Company Restricted Stock Filed as Exhibit 10-P to the Registrant's
Plan for Non-Employee Directors adopted Annual Report on Form 10-K for the
by the Board of Directors on November 10, year ended December 31, 1988.*
1988, and approved by the stockholders at
the 1989 Annual Meeting.**
Exhibit 10-M 1990 Long-Term Incentive Plan, amended Filed as Exhibit 10-R to the Registrant's
as of June 1, 1990.** Annual Report on Form 10-K for the
year ended December 31, 1990.*
Exhibit 10-M-1 Amendment to 1990 Long-Term Incentive Filed as Exhibit 10-P-1 to the
Plan, effective as of October 1, 1990.** Registrant's Annual Report on Form
10-K for the year ended
December 31, 1991.*
Exhibit 10-M-2 Amendment to 1990 Long-Term Incentive Filed as Exhibit 10.2 to the Registrant's
Plan, effective as of March 8, 1995.** Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.*
Exhibit 10-N Description of Matching Gift Program for Filed as Exhibit 10-Q to the Registrant's
Non-Employee Directors.** Annual Report on Form 10-K for the
year ended December 31, 1991.*
Exhibit 10-O Non-Employee Directors Life Insurance Filed as Exhibit 10-O to the Registrant's
and Optional Retirement Plan Annual Report on Form 10-K for the
(as amended as of January 1, 1993).** year ended December 31, 1994.*
Exhibit 10-P Description of Non-Employee Directors Filed as Exhibit 10-S to the Registrant's
Accidental Death, Dismemberment and Annual Report on Form 10-K for the
Permanent Total Disablement Indemnity.** year ended December 31, 1992.*
</TABLE>
-46-
<PAGE>
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K (Continued)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 10-Q Agreement dated December 10, 1992 Filed as Exhibit 10-T to the Registrant's
between William C. Ford and the Annual Report on Form 10-K for the
Registrant.** year ended December 31, 1992.*
Exhibit 10-R Support Agreement dated as of October 1, Filed as Exhibit 10-T to the Registrant's
1993 between the Registrant and Ford Annual Report on Form 10-K for the
Credit Europe. year ended December 31, 1993.*
Exhibit 10-R-1 Amendment No. 1 dated as of November Filed with this Report.
15, 1995 to Support Agreement between
the Registrant and Ford Credit Europe.
Exhibit 10-S Description of Select Retirement Plan Filed as Exhibit 10 to the Registrant's
adopted on June 9, 1994.** Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994.*
Exhibit 10-T Ford Motor Company Deferred Filed as Exhibit 10.2 to the Registrant's
Compensation Plan, effective as of Quarterly Report on Form 10-Q for the
July 13, 1995.** quarter ended June 30, 1995.*
Exhibit 10-T-1 Amendments to Ford Motor Company Filed with this Report.
Deferred Compensation Plan, effective
as of July 13, 1995 and October 1, 1995.**
Exhibit 10-U Description of Amendments to Supplemental Filed with this Report.
Executive Retirement Plan and Executive
Separation Allowance Plan, adopted
January 25, 1996.**
Exhibit 11 Computation of Primary and Fully Diluted Filed with this Report.
Earnings per Share.
Exhibit 12 Computation of Ratio of Earnings to Filed with this Report.
Combined Fixed Charges and Preferred
Stock Dividends.
Exhibit 21 List of Subsidiaries of the Registrant Filed with this Report.
as of March 15, 1996.
Exhibit 23 Consent of Independent Certified Public Filed with this Report.
Accountants.
Exhibit 24 Powers of Attorney. Filed with this Report.
- ------------
* Incorporated by reference as an exhibit hereto
** Management contract or compensatory plan or arrangement
</TABLE>
-47-
<PAGE>
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K (Continued)
- ----------------------------------------------------------------
Instruments defining the rights of holders of certain issues of
long-term debt of the Registrant and of certain consolidated subsidiaries
and of any unconsolidated subsidiary, for which financial statements are
required to be filed with this Report, have not been filed as exhibits to
this Report because the authorized principal amount of any one of such
issues does not exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis. The Registrant agrees to furnish a
copy of each of such instruments to the Commission upon request.
(b) Reports on Form 8-K
During the quarter ended December 31, 1995, the Registrant filed
the following Current Reports on Form 8-K:
1. Current Report on Form 8-K dated October 12, 1995 that
included information regarding possible strategic actions
with respect to the Registrant's Financial Services group.
2. Current Report on Form 8-K dated October 18, 1995 that
included information regarding the consolidated results of
operations and financial condition of the Registrant and its
subsidiaries for the three and nine-month periods ended or at
September 30, 1995.
3. Current Report on Form 8-K dated November 9, 1995 that
included information regarding the Registrant's 7-1/8%
Debentures due November 15, 2025.
4. Current Report on Form 8-K dated December 11, 1995 that
included information regarding extension of an exchange offer
for the Registrant's Series B Cumulative Preferred Stock.
-48-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
FORD MOTOR COMPANY
By: John M. Devine*
---------------
(John M. Devine)
Group Vice President and
Chief Financial Officer
Date: March 19, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Alex Trotman* Director and March 19, 1996
- ---------------------------- Chairman of the Board
(Alex Trotman) of Directors, President
and Chief Executive Officer
(principal executive officer)
Colby H. Chandler* Director March 19, 1996
- ----------------------------
(Colby H. Chandler)
Michael D. Dingman* Director March 19, 1996
- ----------------------------
(Michael D. Dingman)
Edsel B. Ford II* March 19, 1996
- ---------------------------- Director and Vice
(Edsel B. Ford II) President, Ford; and
President and Chief
Operating Officer, Ford
Motor Credit Company
William Clay Ford* Director March 19, 1996
- ----------------------------
(William Clay Ford)
William Clay Ford, Jr.*
- ---------------------------- Director and March 19, 1996
(William Clay Ford, Jr.) Chairman of the
Finance Committee
</TABLE>
-49-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Roberto C. Goizueta* Director March 19, 1996
----------------------------
(Roberto C. Goizueta)
Irvine O. Hockaday, Jr.* Director March 19, 1996
- -----------------------------
(Irvine O. Hockaday, Jr.)
Marie-Josee Kravis* Director March 19, 1996
- -----------------------------
(Marie-Josee Kravis)
Drew Lewis* Director March 19, 1996
- -------------------------------
(Drew Lewis)
Ellen R. Marram* Director March 19, 1996
- -------------------------------
(Ellen R. Marram)
Kenneth H. Olsen* Director March 19, 1996
- -------------------------------
(Kenneth H. Olsen)
Carl E. Reichardt* Director March 19, 1996
- -------------------------------
(Carl E. Reichardt)
John L. Thornton* Director March 19, 1996
- ------------------------------
(John L. Thornton)
Clifton R. Wharton, Jr.* Director March 19, 1996
- -------------------------------
(Clifton R. Wharton, Jr.)
John M. Devine*
- -------------------------------- Group Vice President and March 19, 1996
(John M. Devine) Chief Financial Officer
(principal financial officer)
Daniel R. Coulson*
- -------------------------------- Director of Accounting March 19, 1996
(Daniel R. Coulson) (principal accounting officer)
*By:/s/ John M. Rintamaki
-----------------------
(John M. Rintamaki)
Attorney-in-Fact
-50-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
Fourth Quarter Full Year
------------------------- --------------------------
1995 1994 1995 1994
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- - United States 955 1,051 3,993 4,218
- - Outside United States 635 656 2,613 2,635
----- ----- ----- -----
Total 1,590 1,707 6,606 6,853
===== ===== ===== =====
Sales and revenues (in millions)
- - Automotive $27,597 $27,766 $110,496 $107,137
- - Financial Services 6,950 5,877 26,641 21,302
------- ------- -------- --------
Total $34,547 $33,643 $137,137 $128,439
======= ======= ======== ========
Net income (in millions)
- - Automotive $ 16 $ 1,119 $ 2,056 $ 3,913
- - Financial Services 644 450 2,083 1,395*
------- ------- -------- --------
Total $ 660 $ 1,569 $ 4,139 $ 5,308
======= ======= ======== ========
Capital expenditures (in millions)
- - Automotive $ 2,472 $ 2,404 $ 8,676 $ 8,310
- - Financial Services 98 65 321 236
------- ------- -------- --------
Total $ 2,570 $ 2,469 $ 8,997 $ 8,546
======= ======= ======== ========
Stockholders' equity at December 31
- - Total (in millions) $24,547 $21,659 $ 24,547 $ 21,659
- - After-tax return on Common and
Class B stockholders' equity 10.9% 34.5% 18.2% 33.6%
Automotive cash, cash equivalents,
and marketable securities at
December 31 (in millions) $12,406 $12,083 $ 12,406 $ 12,083
Automotive debt at December 31
(in millions) $ 7,307 $ 7,258 $ 7,307 $ 7,258
Automotive after-tax returns on sales 0.1% 4.1% 1.9% 3.7%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,136 1,020 1,071 1,010
- - Number outstanding at December 31 1,159 1,023 1,159 1,023
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income $ 0.49 $ 1.47 $ 3.58 $ 4.97
Income/(Loss) assuming full dilution
- - Automotive $ (0.06) $ 0.93 $ 1.59 $ 3.25
- - Financial Services 0.54 0.38 1.74 1.19
------- ------- -------- ---------
Total $ 0.48 $ 1.31 $ 3.33 $ 4.44
======= ======= ======== =========
Cash dividends $ 0.35 $ 0.26 $ 1.23 $ 0.91
</TABLE>
- - - - - -
*Includes a loss of $440 million related to the disposition of Granite
Savings Bank (formerly First Nationwide Bank)
Segment results for 1994 have been adjusted to reflect reclassification
of certain tax amounts to conform with the 1995 presentation.
FS-1
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
------------------
For the Periods Ended December 31, 1995 and 1994
(in thousands)
Fourth Quarter Full Year
--------------------------- -------------------------
1995 1994 1995 1994
----------- ---------- --------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
North America
United States
Cars 434 530 1,767 2,036
Trucks 521 521 2,226 2,182
----- ----- ----- -----
Total United States 955 1,051 3,993 4,218
Canada 76 75 254 281
Mexico 11 27 32 92
----- ----- ----- -----
Total North America 1,042 1,153 4,279 4,591
Europe
Britain 125 109 496 520
Germany 84 104 409 386
Italy 54 39 193 179
France 41 45 165 180
Spain 31 41 160 163
Other countries 74 71 286 281
----- ----- ----- -----
Total Europe 409 409 1,709 1,709
Other international
Brazil 48 43 201 164
Australia 32 38 139 125
Taiwan 16 21 106 97
Japan 13 13 57 50
Argentina 14 13 48 54
Other countries 16 17 67 63
----- ----- ----- -----
Total other international 139 145 618 553
----- ----- ----- -----
Total worldwide vehicle unit sales 1,590 1,707 6,606 6,853
===== ===== ===== =====
</TABLE>
Vehicle unit sales are reported worldwide on a "where sold" basis
and include sales of all Ford-badged units, as well as units manufactured
by Ford and sold to other manufacturers.
Fourth Quarter and Full Year 1994 unit sales have been restated to reflect
the country where sold and to include sales of all Ford-badged units.
Previously, factory unit sales were reported in North America on a
"where sold" basis and overseas on a "where produced" basis. Also,
Ford-badged unit sales of certain unconsolidated subsidiaries
(primarily Autolatina -- Brazil and Argentina) were not previously reported.
FS-2
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Years Ended December 31, 1995, 1994 and 1993
(in millions, except amounts per share)
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
AUTOMOTIVE
Sales (Note 1) $110,496 $107,137 $91,568
Costs and expenses (Note 1)
Costs of sales 101,171 95,887 85,280
Selling, administrative, and other expenses 6,044 5,424 4,856
-------- -------- -------
Total costs and expenses 107,215 101,311 90,136
Operating income 3,281 5,826 1,432
Interest income 800 665 563
Interest expense 622 721 807
-------- -------- -------
Net interest income/(expense) 178 (56) (244)
Equity in net (loss)/income of affiliated companies (Note 1) (154) 271 127
Net expense from transactions with Financial Services (Note 1) (139) (44) (24)
-------- -------- -------
Income before income taxes - Automotive 3,166 5,997 1,291
FINANCIAL SERVICES
Revenues (Note 1) 26,641 21,302 16,953
Costs and expenses (Note 1)
Interest expense 9,424 7,023 6,482
Depreciation 6,500 4,910 3,064
Operating and other expenses 5,499 4,607 3,196
Provision for credit and insurance losses 1,818 1,539 1,523
Loss on disposition of Granite Savings Bank (formerly
First Nationwide Bank) (Note 15) - 475 -
-------- -------- -------
Total costs and expenses 23,241 18,554 14,265
Net revenue from transactions with Automotive (Note 1) 139 44 24
-------- -------- -------
Income before income taxes - Financial Services 3,539 2,792 2,712
-------- -------- -------
TOTAL COMPANY
Income before income taxes 6,705 8,789 4,003
Provision for income taxes (Note 6) 2,379 3,329 1,350
-------- -------- -------
Income before minority interests 4,326 5,460 2,653
Minority interests in net income of subsidiaries 187 152 124
-------- -------- -------
Net income $ 4,139 $ 5,308 $ 2,529
======== ======== =======
Income attributable to Common and Class B Stock
after preferred stock dividends (Note 1) $ 3,839 $ 5,021 $ 2,241
Average number of shares of Common and Class B Stock outstanding 1,071 1,010 986
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Note 1)
Income $ 3.58 $ 4.97 $ 2.27
Income assuming full dilution $ 3.33 $ 4.44 $ 2.10
Cash dividends $ 1.23 $ 0.91 $ 0.80
</TABLE>
The accompanying notes are part of the financial statements.
FS-3
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
December 31, December 31,
1995 1994
------------- -------------
<S> <C> <C>
ASSETS
Automotive
Cash and cash equivalents $ 5,750 $ 4,481
Marketable securities (Note 2) 6,656 7,602
-------- --------
Total cash, cash equivalents, and marketable securities 12,406 12,083
Receivables 3,321 2,548
Inventories (Note 4) 7,162 6,487
Deferred income taxes 2,709 3,062
Other current assets 1,483 2,006
Net current receivable from Financial Services (Note 1) 200 677
-------- --------
Total current assets 27,281 26,863
Equity in net assets of affiliated companies (Note 1) 2,248 3,554
Net property (Note 5) 31,273 27,048
Deferred income taxes 4,802 4,414
Other assets (Notes 1 and 8) 7,168 6,760
-------- --------
Total Automotive assets 72,772 68,639
Financial Services
Cash and cash equivalents 2,690 1,739
Investments in securities (Note 2) 4,553 6,105
Net receivables and lease investments (Note 3) 149,694 130,356
Other assets (Note 1) 13,574 12,783
-------- --------
Total Financial Services assets 170,511 150,983
-------- --------
Total assets $243,283 $219,622
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 11,260 $ 10,777
Other payables 1,976 2,280
Accrued liabilities (Note 7) 13,392 11,943
Income taxes payable 316 316
Debt payable within one year (Note 9) 1,832 155
-------- --------
Total current liabilities 28,776 25,471
Long-term debt (Note 9) 5,475 7,103
Other liabilities (Note 7) 25,677 24,920
Deferred income taxes 1,186 1,216
-------- --------
Total Automotive liabilities 61,114 58,710
Financial Services
Payables 5,476 2,361
Debt (Note 9) 141,317 123,713
Deferred income taxes 3,831 2,958
Other liabilities and deferred income 6,116 7,669
Net payable to Automotive (Note 1) 200 677
-------- --------
Total Financial Services liabilities 156,940 137,378
Company-obligated mandatorily redeemable preferred securities of
a subsidiary trust (aggregate principal amount of $632 million) (Note 1) 682 -
Preferred stockholders' equity in a subsidiary company (Note 1) - 1,875
Stockholders' equity
Capital stock (Notes 10 and 11)
Preferred Stock, par value $1.00 per share (aggregate liquidation
preference of $1 billion and $3.4 billion) * *
Common Stock, par value $1.00 per share (1,089 and 952 million shares issued) 1,089 952
Class B Stock, par value $1.00 per share (71 million shares issued) 71 71
Capital in excess of par value of stock 5,105 5,273
Foreign currency translation adjustments and other (Note 1) 594 189
Earnings retained for use in business 17,688 15,174
-------- --------
Total stockholders' equity 24,547 21,659
-------- --------
Total liabilities and stockholders' equity $243,283 $219,622
======== ========
</TABLE>
- - - - - -
*Less than $1 million
The accompanying notes are part of the financial statements.
FS-4
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
For the Years Ended December 31, 1995, 1994 and 1993
(in millions)
1995 1994 1993
---------------------- --------------------- ----------------------
Financial Financial Financial
Automotive Services Automotive Services Automotive Services
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents at January 1 $ 4,481 $ 1,739 $ 5,667 $ 2,555 $ 3,504 $ 3,182
Cash flows from operating activities
(Note 16) 8,849 12,322 7,542 9,087 6,862 7,145
Cash flows from investing activities
Capital expenditures (8,676) (321) (8,310) (236) (6,714) (100)
Proceeds from sale and leaseback of
fixed assets 0 - 0 - 884 -
Acquisitions of other companies 0 0 0 (485) 0 (336)
Proceeds from sales of subsidiaries 0 0 0 715 173 0
Acquisitions of receivables and lease
investments - (99,967) - (90,824) - (76,566)
Collections of receivables and
lease investments - 71,149 - 61,111 - 55,552
Net acquisitions of daily rental vehicles - (1,459) - (924) - -
Purchases of securities (Note 16) (51) (6,274) (412) (10,688) (100,493) (13,741)
Sales and maturities of securities (Note 16) 325 5,052 511 9,649 101,927 12,426
Proceeds from sales of receivables - 4,360 - 3,622 - 4,794
Loans originated net of principal payments - (9) - (207) - (1,466)
Net investing activity with Financial
Services (19) - 355 - (117) -
Other 558 (175) (331) (312) (69) 389
------- -------- ------ -------- -------- --------
Net cash used in investing activities (7,863) (27,644) (8,187) (28,579) (4,409) (19,048)
Cash flows from financing activities
Cash dividends (1,559) - (1,205) - (1,086) -
Issuance of Common Stock 601 - 715 - 394 -
Changes in short-term debt 413 5,884 (795) 10,314 (66) 6,065
Proceeds from issuance of other debt 300 23,854 158 21,885 424 22,128
Principal payments on other debt (177) (11,489) (75) (14,088) (376) (13,791)
Net financing activity with Automotive - 19 - (355) - 117
Changes in customers' deposits, excluding
interest credited - - - (422) - (3,861)
Receipts from annuity contracts - 283 - 1,124 - 821
Net (redemption)/issuance of subsidiary
company preferred stock (Note 1) - (1,875) - 417 - 375
Other 121 102 31 (132) (124) (76)
------- -------- -------- -------- -------- -------
Net cash (used in)/provided by financing
activities (301) 16,778 (1,171) 18,743 (834) 11,778
Effect of exchange rate changes on cash 107 (28) 397 166 17 25
Net transactions with Automotive/
Financial Services 477 (477) 233 (233) 527 (527)
------- -------- -------- -------- -------- --------
Net increase/(decrease) in cash and
cash equivalents 1,269 951 (1,186) (816) 2,163 (627)
------- -------- -------- -------- -------- --------
Cash and cash equivalents at December 31 $ 5,750 $ 2,690 $ 4,481 $ 1,739 $ 5,667 $ 2,555
======= ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are part of the financial statements.
FS-5
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
For the Years Ended December 31, 1995, 1994 and 1993
(in millions)
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
CAPITAL STOCK (Note 10)
Common Stock
- ------------
Balance at beginning of year $ 952 $ 464 $ 454
Issued for Series A Preferred Stock conversion,
employee benefit plans and other 137 19 10
Stock split in form of a 100% stock dividend - 469 -
------- ------- -------
Balance at end of year 1,089 952 464
Class B Stock
- -------------
Balance at beginning of year 71 35 35
Stock split in form of a 100% stock dividend - 36 -
------- ------- -------
Balance at end of year 71 71 35
Series A Preferred Stock * * *
Series B Preferred Stock (Note 1) * * *
CAPITAL IN EXCESS OF PAR VALUE OF STOCK
Balance at beginning of year 5,273 5,082 4,698
Exchange of Series B Preferred Stock (Notes 1 and 10) (632) - -
Issued for Series A Preferred Stock conversion,
employee benefit plans and other 464 696 384
Stock split in form of a 100% stock dividend - (505) -
------- ------- -------
Balance at end of year 5,105 5,273 5,082
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
AND OTHER (Note 1)
Balance at beginning of year 189 (1,078) (62)
Translation adjustments during year 250 800 (508)
Minimum pension liability adjustment (108) 400 (400)
Other 263 67 (108)
------- ------- -------
Balance at end of year 594 189 (1,078)
EARNINGS RETAINED FOR USE IN THE BUSINESS
Balance at beginning of year 15,174 11,071 9,628
Net income 4,139 5,308 2,529
Cash dividends (1,559) (1,205) (1,086)
Fair value adjustment from exchange
of Series B Preferred Stock (Note 1) (66) - -
------- ------- -------
Balance at end of year 17,688 15,174 11,071
------- ------- -------
Total stockholders' equity $24,547 $21,659 $15,574
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Series A Series B
Common Class B Preferred Preferred
SHARES OF CAPITAL STOCK Stock Stock Stock Stock
------ ------- --------- ---------
<S> <C> <C> <C> <C>
Issued at December 31, 1992 454 35 0.046 0.023
Additions
1993 10 0 0 0
1994 - Stock split in form of a 100% stock
dividend 469 36 - -
- Employee benefit plans and other 19 - - -
1995 - Conversion of Series A Preferred Stock 115 - (0.035) -
- Employee benefit plans and other 22 - - -
- Exchange of Series B Preferred Stock (Note 10) - - - (0.013)
----- --- ----- -----
Net additions 635 36 (0.035) (0.013)
----- --- ----- -----
Issued at December 31, 1995 1,089 71 0.011 0.010
===== === ===== =====
Authorized at December 31, 1995 3,000 265 -- In total: 30 --
</TABLE>
- - - - - -
*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-6
<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 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.
Use of estimates and assumptions as determined by management is
required in the preparation of consolidated financial statements
in conformity with generally accepted accounting principles.
Actual results could differ from those estimates and assumptions.
Certain amounts for prior periods have been reclassified to
conform with 1995 presentations.
Nature of Operations
- --------------------
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.
Revenue Recognition - Automotive
- --------------------------------
Sales are recorded by the company when products are shipped to
dealers, except as described below. Estimated costs for
approved sales incentive programs normally are recognized as
sales reductions at the time of revenue recognition. Estimated
costs for sales incentive programs approved subsequent to the
time that related sales were recorded are recognized when the
programs are approved.
Beginning December 1, 1995, sales through dealers to certain
daily rental companies where the daily rental company has an
option to require the company to repurchase vehicles, subject to
certain conditions, are recognized over the period of daily
rental service in a manner similar to lease accounting. This
change in accounting principle was made as a result of the
consensus reached on November 15, 1995 by the Emerging Issues
Task Force of the Financial Accounting Standards Board on Issue
95-1 concerning the timing of revenue recognition when a
manufacturer conditionally guarantees the resale value of a
product or agrees to repurchase the product at a fixed price.
The company elected to recognize this change in accounting
principle on a prospective basis. The effect on the company's
1995 consolidated results of operations was not material, nor is
it expected to have a material effect in future years.
Implementation of this change will not affect the company's cash
flow. Previously, the company recognized revenue for these
vehicles when shipped.
FS-7
<PAGE>
NOTE 1. Accounting Policies (Cont'd)
- ----------------------------
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; the estimated
costs of 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 $2,024 million in 1995, $1,823 million in
1994 and $1,610 million in 1993.
Estimated costs related to product warranty are accrued at the
time of sale.
Research and development costs are expensed as incurred and were
$6,509 million in 1995, $5,811 million in 1994, and $5,618
million in 1993.
Income Per Share of Common and Class B Stock
- --------------------------------------------
Income per share of Common and Class B Stock is calculated by
dividing the income 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.
The company has outstanding securities, primarily Series A
Preferred Stock, that could be converted to Common Stock. Other
obligations, such as stock options, are considered to be common
stock equivalents. The calculation of income 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.
Income attributable to Common and Class B Stock was as follows
(in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -------
<S> <C> <C> <C>
Net income $4,139 $5,308 $2,529
Less:
Preferred stock dividend
requirements 234 287 288
Fair value adjustment from
exchange of Series B
Preferred Stock* 66 - -
------ ------ -----
Income attributable to
Common and Class B Stock $3,839 $5,021 $2,241
====== ====== ======
</TABLE>
- - - - -
* Represents a one-time reduction of $0.06 per share of Common and
Class B Stock related to the exchange of Series B Preferred Stock
for company-obligated mandatorily redeemable preferred securities
of a subsidiary trust; this adjustment equals the excess of the
fair value of company-obligated mandatorily redeemable preferred
securities at the date of issuance over the carrying amount of
exchanged Series B Preferred Stock
FS-8
<PAGE>
NOTE 1. Accounting Policies (Cont'd)
- ----------------------------
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 exposures 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 exposures include primarily 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 1995, 1994 and 1993.
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 $13
million in 1995, $376 million in 1994, and $419 million in 1993.
These amounts included net transaction and translation gains
before taxes of $37 million in 1995, $574 million in 1994 and
$988 million in 1993. 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.
Impairment of Long-Lived Assets and Certain Identifiable
Intangibles
- --------------------------------------------------------
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 estimates
and evaluations.
Statement of Financial Accounting Standards No. 121 ("SFAS 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," was issued in March 1995.
SFAS 121 requires that, effective January 1, 1996, long-lived
assets and certain identifiable intangibles to be held and used
by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value of an
asset may not be recoverable. It also requires that long-lived
assets and certain identifiable intangibles to be disposed of be
reported at the lower of carrying amount or fair value less cost
to sell. The effect of adopting SFAS 121 is not expected to be
material.
FS-9
<PAGE>
NOTE 1. Accounting Policies (Cont'd)
- ----------------------------
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, 1995 was $2.3 billion and
$3.2 billion, respectively.
Company-Obligated Mandatorily Redeemable Preferred Securities of
a Subsidiary Trust
- ----------------------------------------------------------------
On December 21, 1995, Ford Motor Company Capital Trust I (the
"Trust") issued $632 million of its 9% Trust Originated Preferred
Securities (the "Preferred Securities") in a one-for-one exchange
for 25,273,537 shares of the company's outstanding Series B
Depositary Shares ("Depositary Shares"), each representing
1/2,000 of a share of Series B Preferred Stock of Ford.
Concurrent with the issuance of the Preferred Securities in
exchange for Depositary Shares and the related purchase by Ford
of the Trust's common securities (the "Common Securities"), the
company issued to the Trust $651 million aggregate principal
amount of its 9% Junior Subordinated Debentures due December 2025
(the "Debentures"). The sole assets of the Trust are and will be
the Debentures. The interest and other payment dates on the
Debentures correspond to the distribution and other payment dates
on the Preferred Securities and Common Securities. The
Debentures are redeemable, in whole or in part, at the company's
option on or after December 1, 2002, at a redemption price of $25
per Debenture plus accrued and unpaid interest. If the company
redeems the Debentures, or upon maturity of the Debentures, the
Trust is required to redeem the Preferred Securities and Common
Securities at $25 per share plus accrued and unpaid
distributions.
Ford guarantees to pay in full to the holders of the Preferred
Securities all distributions and other payments on the Preferred
Securities to the extent not paid by the Trust only if and to the
extent that Ford has made a payment of interest or principal on
the Debentures. This guarantee, when taken together with Ford's
obligations under the Debentures and the Indenture relating
thereto and its obligations under the Declaration of Trust of the
Trust, including its obligation to pay certain costs and expenses
of the Trust, constitutes a full and unconditional guarantee by
Ford of the Trust's obligations under the Preferred Securities.
Preferred Stockholders' Equity in a Subsidiary Company
- ------------------------------------------------------
During Fourth Quarter 1995, Ford Holdings, Inc. ("Ford
Holdings"), a subsidiary of Ford, merged with Ford Holdings
Capital Corporation, a subsidiary of Ford Holdings, which
resulted in the cancellation of the voting preferred stock of
Ford Holdings in exchange for payment by Ford Holdings of the
liquidation preference of the stock plus accrued and unpaid
dividends. Ford Holdings funded the payment to the holders of
the preferred stock primarily with bank loans.
FS-10
<PAGE>
NOTE 2. Marketable and Other Securities
- ----------------------------------------
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, net of tax, in a
separate component of stockholders' equity. 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.
Automotive
- ----------
Investments in securities at December 31, 1995 were as follows (in
millions):
<TABLE>
<CAPTION>
Gross Gross Memo:
Amortized Unrealized Unrealized Fair Book
Cost Gains Losses Value Value
--------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
Trading securities $6,646 $12 $2 $6,656 $6,656
====== === == ====== ======
</TABLE>
Investments in securities at December 31, 1994 were as follows (in millions):
<TABLE>
<CAPTION>
Gross Gross Memo:
Amortized Unrealized Unrealized Fair Book
Cost Gains Losses Value Value
--------- ---------- ---------- ------ ------
<S> <C> <C> <C> <C> <C>
Trading securities $7,382 $3 $56 $7,329 $7,329
Available-for-sale securities
- -----------------------------
Debt securities issued by foreign governments 23 0 0 23 23
Corporate securities 231 0 1 230 230
------ -- --- ------- ------
Total available-for-sale securities 254 0 1 253 253
Held-to-maturity securities
- ---------------------------
Corporate securities 20 0 0 20 20
------ -- --- ------ ------
Total investments in securities $7,656 $3 $57 $7,602 $7,602
====== == === ====== ======
</TABLE>
All debt securities classified as available-for-sale or held-to-maturity
had contractual maturities of one year or less.
Included in stockholders' equity at December 31, 1995 and 1994 was $146
million and $188 million, respectively, which represented principally
the company's equity interest in the unrealized gains on securities
owned by certain unconsolidated subsidiaries.
FS-11
<PAGE>
NOTE 2. Marketable and Other Securities (Cont'd)
- ----------------------------------------
Financial Services
- ------------------
Investments in securities at December 31, 1995 were as follows (in millions):
<TABLE>
<CAPTION>
Gross Gross Memo:
Amortized Unrealized Unrealized Fair Book
Cost Gains Losses Value Value
--------- ----------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Trading securities $ 477 $ 1 $ 2 $ 476 $ 476
Available-for-sale securities
- -----------------------------
Debt securities issued by the U.S.
government and agencies 574 20 0 594 594
Municipal securities 102 3 2 103 103
Debt securities issued by foreign governments 38 1 0 39 39
Corporate securities 579 12 9 582 582
Mortgage-backed securities 336 4 1 339 339
Other debt securities 13 0 0 13 13
Equity securities 300 58 0 358 358
------ --- --- ------ ------
Total available-for-sale securities 1,942 98 12 2,028 2,028
Held-to-maturity securities
- ---------------------------
Debt securities issued by the U.S.
government and agencies 8 1 0 9 8
Municipal securities 1,132 60 7 1,185 1,132
Corporate securities 585 15 2 598 585
------ --- --- ------ ------
Total held-to-maturity securities 1,725 76 9 1,792 1,725
Total investments in securities with
readily determinable fair value 4,144 $175 $23 $4,296 4,229
==== ==== ======
Equity securities not practicable to
fair value 324 324
----- ------
Total investments in securities $4,468 $4,553
====== ======
</TABLE>
Investments in securities at December 31, 1994 were as follows (in millions):
<TABLE>
<CAPTION>
Gross Gross Memo:
Amortized Unrealized Unrealized Fair Book
Cost Gains Losses Value Value
-------- ---------- ---------- ----- -------
<S> <C> <C> <C> <C> <C>
Trading securities $ 715 $ 6 $ 10 $ 711 $ 711
Available-for-sale securities
- -----------------------------
Debt securities issued by the U.S.
government and agencies 692 1 38 655 655
Municipal securities 155 1 11 145 145
Debt securities issued by foreign governments 106 0 10 96 96
Corporate securities 1,929 3 152 1,780 1,780
Mortgage-backed securities 871 0 62 809 809
Other debt securities 22 0 0 22 22
Equity securities 172 34 6 200 200
------ --- ---- ------ ------
Total available-for-sale securities 3,947 39 279 3,707 3,707
Held-to-maturity securities
- ---------------------------
Debt securities issued by the U.S.
government and agencies 10 0 0 10 10
Municipal securities 783 0 12 771 783
Corporate securities 570 4 27 547 570
------ --- ---- ------ ------
Total held-to-maturity securities 1,363 4 39 1,328 1,363
Total investments in securities with
readily determinable fair value 6,025 $49 $328 $5,746 5,781
=== ==== ======
Equity securities not practicable to
fair value 324 324
------ ------
Total investments in securities $6,349 $6,105
====== ======
</TABLE>
FS-12
<PAGE>
NOTE 2. Marketable and Other Securities (Cont'd)
- ----------------------------------------
Financial Services (Cont'd)
- ------------------
The amortized cost and fair value of investments in available-for-sale
securities and held-to-maturity securities at December 31, 1995, by
contractual maturity, were as follows (in millions):
<TABLE>
<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 $ 173 $ 173 $ 50 $ 47
Due after one year through five years 522 534 281 285
Due after five years through ten years 449 454 1,317 1,381
Due after ten years 283 293 77 79
Mortgage-backed securities 215 216 - -
Equity securities 300 358 - -
------ ------ ------ ------
Total $1,942 $2,028 $1,725 $1,792
====== ====== ====== ======
</TABLE>
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):
<TABLE>
<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>
Proceeds from sales of available-for-sale securities were $2.4 billion
in 1995 and $9.1 billion in 1994; gross gains of $39 million and gross
losses of $18 million were realized on those sales in 1995, and gross
gains of $24 million and gross losses of $56 million were realized on
those sales in 1994. Stockholders' equity included, net of tax, a net
unrealized gain of $56 million at December 31, 1995 and a net unrealized
loss of $155 million at December 31, 1994. Proceeds from sales of
investments in debt securities were $11.2 billion in 1993; gross gains
of $113 million and gross losses of $20 million were realized on those sales.
FS-13
<PAGE>
NOTE 3. Receivables - 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 vehicles, various types
of transportation and other equipment, and facilities.
Net finance receivables at December 31 were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Automotive $ 98,162 $ 87,858
Real estate, mainly residential 17,577 15,560
Other 7,732 6,237
-------- --------
Total finance receivables 123,471 109,655
Loan origination costs 268 194
Unearned income (11,045) (9,656)
Allowance for credit losses (1,947) (1,762)
Unearned insurance premiums and
unpaid insurance claims related
to finance receivables (2) (90)
-------- --------
Net finance receivables $110,745 $ 98,341
======== ========
Fair value $112,798 $ 99,518
</TABLE>
Included in finance receivables at December 31, 1995 and 1994 were
a total of $1.3 billion 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, 1995 and 1994 were $3.5 billion and $3.4 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): 1996 - $53,718;
1997 - $20,569; 1998 - $14,160; thereafter - $17,447.
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 that 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 $69 million
in 1995, $15 million in 1994 and $60 million in 1993.
Investments in direct financing leases at December 31 were as
follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Minimum lease rentals $ 9,385 $ 8,321
Estimated residual values 3,960 3,715
Lease origination costs 81 70
Unearned income (2,439) (2,299)
Allowance for credit losses (155) (185)
------- -------
Net investments in direct financing leases $10,832 $ 9,622
======= =======
</TABLE>
Minimum direct financing lease rentals (including executory costs of
$31 million) are contractually due as follows (in millions):
1996 - $3,093; 1997 - $2,346; 1998 - $1,489; 1999 - $893; thereafter - $1,595.
FS-14
<PAGE>
NOTE 3. Receivables - Financial Services (Cont'd)
- -----------------------------------------
Investments in operating leases at December 31 were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Vehicles and other equipment, at cost $34,855 $28,050
Lease origination costs 50 38
Accumulated depreciation (6,499) (5,425)
Allowance for credit losses (289) (270)
------- -------
Net investments in operating leases $28,117 $22,393
======= =======
</TABLE>
Minimum rentals on operating leases are contractually due as
follows (in millions): 1996 - $6,364; 1997 - $2,694; 1998 -
$431; 1999 - $131; thereafter - $222.
Depreciation expense for assets subject to operating leases is
provided primarily on the straight-line method over the term of
the lease in amounts necessary to reduce the carrying amount of
the asset to its estimated residual value. Gains and losses upon
disposal of the asset also are included in depreciation expense.
Depreciation expense was as follows (in millions): 1995 -
$5,508; 1994 - $4,231; 1993 - $2,984.
Allowances for credit losses are estimated and 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):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------ ------
<S> <C> <C> <C>
Beginning balance $ 2,217 $2,352 $2,257
Additions 1,327 988 1,019
Net losses (1,120) (826) (903)
Other changes (33) (297) (21)
------- ------ ------
Ending balance $ 2,391 $2,217 $2,352
======= ====== ======
</TABLE>
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 adopted these standards as
of January 1, 1995, and the effect was not material.
NOTE 4. Inventories - Automotive
- ---------------------------------
Inventories at December 31 were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Raw materials, work in process and supplies $3,717 $3,192
Finished products 3,445 3,295
------ ------
Total inventories $7,162 $6,487
====== ======
U.S. inventories $2,662 $2,917
</TABLE>
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 $1,406 million and $1,383
million at December 31, 1995 and 1994, respectively.
FS-15
<PAGE>
NOTE 5. Net Property, Depreciation and Amortization - Automotive
- -----------------------------------------------------------------
Net property at December 31 was as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Land $ 381 $ 359
Buildings and land improvements 7,539 6,939
Machinery, equipment and other 38,954 33,551
Construction in progress 1,609 1,685
-------- --------
Total land, plant and equipment 48,483 42,534
Accumulated depreciation (25,313) (22,738)
-------- --------
Net land, plant and equipment 23,170 19,796
Unamortized special tools 8,103 7,252
-------- --------
Net property $ 31,273 $ 27,048
======== ========
</TABLE>
Property, equipment and special tools are stated at cost, less
accumulated depreciation and amortization. Property and equipment
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 estimated useful life of the asset. Property and
equipment placed in service after December 31, 1992 are
depreciated using the straight-line method of depreciation over
the estimated useful life of the asset. On average, buildings and
land improvements are depreciated based on a 30-year life;
machinery and equipment are depreciated based on a 14-year life.
Special tools are amortized using an accelerated method over
periods of time representing the estimated productive life of
those tools.
Depreciation and amortization expenses were as follows (in
millions):
1995 1994 1993
------ ------ ------
Depreciation $2,454 $2,297 $2,392
Amortization 2,765 2,129 2,012
------ ------ ------
Total $5,219 $4,426 $4,404
====== ====== ======
When property 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 $2,529
million in 1995, $2,377 million in 1994, and $1,934 million in
1993. Expenditures that increase the value or productive capacity
of assets are capitalized. Preproduction costs related to new
facilities are expensed as incurred.
NOTE 6. Income Taxes
- ---------------------
Income/(loss) before income taxes for U.S. and foreign operations,
excluding equity in net (loss)/income of affiliated companies, was
as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
U.S. $5,521 $6,944 $4,152
Foreign 1,338 1,574 (276)
------ ------ ------
Total income
before income taxes $6,859 $8,518 $3,876
====== ====== ======
</TABLE>
The provision for income taxes was estimated as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Currently payable
U.S. federal $ 971 $1,640 $1,259
Foreign 578 690 169
State and local 17 165 123
------ ------ ------
Total currently payable 1,566 2,495 1,551
Deferred tax liability/(benefit)
U.S. federal 731 827 (161)
Foreign (10) (71) (106)
State and local 92 78 66
------ ------ ------
Total deferred 813 834 (201)
------ ------ ------
Total provision $2,379 $3,329 $1,350
====== ====== ======
</TABLE>
FS-16
<PAGE>
NOTE 6. Income Taxes (Cont'd)
- ---------------------
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 $2.6 billion of
retained earnings at December 31, 1995 that 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):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Tax provision at U.S. statutory rate of 35% $2,400 $2,981 $1,357
Effect of:
Foreign taxes over U.S. tax rate 100 68 219
State and local income taxes 71 158 118
Rate adjustments on U.S. and foreign
deferred taxes - - (199)
Income not subject to tax or subject to
tax at reduced rates (47) (62) (70)
Other (145) 184 (75)
------ ------ ------
Provision for income taxes $2,379 $3,329 $1,350
====== ====== ======
Effective tax rate 34.7% 39.1% 34.8%
</TABLE>
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 and net operating losses of subsidiaries. The
components of deferred income tax assets and liabilities at
December 31 were as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets
-------------------
Employee benefit plans $ 6,672 $ 5,951
Dealer and customer allowances and claims 3,750 3,375
Allowance for credit losses 921 821
Net operating loss carryforwards 844 1,152
Alternative minimum tax 440 318
Depreciation and amortization
(excludes leasing transactions) - 39
All other 1,711 1,466
Valuation allowances (158) (159)
------- -------
Total deferred tax assets 14,180 12,963
Deferred tax liabilities
------------------------
Leasing transactions 4,933 3,935
Depreciation and amortization
(excludes leasing transactions) 3,626 2,804
Employee benefit plans 1,486 1,443
All other 1,920 1,604
------- -------
Total deferred tax liabilities 11,965 9,786
------- -------
Net deferred tax assets $ 2,215 $ 3,177
======= =======
</TABLE>
Foreign net operating loss carryforwards for tax purposes were
$2.4 billion at December 31, 1995. 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.
FS-17
<PAGE>
NOTE 7. Liabilities - Automotive
- ---------------------------------
Current Liabilities
- -------------------
Included in accrued liabilities at December 31 were the following
(in millions):
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Dealer and customer allowances and claims $ 7,824 $ 7,115
Employee benefit plans 2,225 2,130
Salaries, wages, and employer taxes 843 598
Postretirement benefits other than pensions 782 688
Other 1,718 1,412
------- ------
Total accrued liabilities $13,392 $11,943
======= =======
</TABLE>
Noncurrent Liabilities
- ----------------------
Included in other liabilities at December 31 were the following (in millions):
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Postretirement benefits other than pensions $14,533 $14,025
Dealer and customer allowances and claims 5,514 6,044
Employee benefit plans 2,657 2,232
Unfunded pension obligation 627 362
Minority interests in net assets of subsidiaries 121 118
Other 2,225 2,139
------- -------
Total other liabilities $25,677 $24,920
======= =======
</TABLE>
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 that 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.
The company's pension expense, including Financial Services, was
as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
---------------------- ------------------------ ------------------------
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 $ 435 $ 208 $ 526 $ 236 $ 419 $ 181
Interest on projected
benefit obligation 1,776 785 1,639 677 1,517 667
Return on assets:
Actual (gain)/loss (5,696) (1,201) (74) 137 (2,264) (1,370)
Deferred gain/(loss) 3,565 435 (1,928) (759) 389 677
------- ------- ------- ----- ------- -------
Recognized (gain) (2,131) (766) (2,002) (622) (1,875) (693)
Net amortization and other 408 234 452 151 259 169
------- ------- ------- ----- ------- -------
Net pension expense $ 488 $ 461 $ 615 $ 442 $ 320 $ 324
======= ======= ======= ===== ======= =======
Discount rate for expense 8.25% 8.3% 7.0% 7.2% 8.0% 8.6%
Assumed long-term rate
of return on assets 9.0 % 9.0% 9.0% 9.0% 9.5% 9.5%
</TABLE>
FS-18
<PAGE>
NOTE 8. Employee Retirement Benefits (Cont'd)
- -------------------------------------
Pension expense in 1995 decreased for U.S. plans primarily as a
result of higher discount rates, and increased for non-U.S.
plans primarily as a result of benefit improvements and
unfavorable exchange rates. Pension expense increased in 1994
as a result of lower discount rates for both U.S. and non-U.S.
plans. In addition, amendments made in September 1993 to the
Ford-UAW Retirement Plan and the General Retirement Plan
provided benefit improvements that increased U.S. expense in
1995 and 1994.
The status of these plans at December 31 was as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------------------------------ -------------------------------
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 $27,921 $ 154 $28,075 $23,264 $ 132 $23,396
Actuarial present value of:
Vested benefits $20,641 $ 516 $21,157 $17,217 $ 404 $17,621
Accumulated benefits 23,980 568 24,548 20,256 453 20,709
Projected benefits 25,607 670 26,277 21,404 541 21,945
Plan assets in excess of/(less than)
projected benefits $ 2,314 $ (516) $ 1,798 $ 1,860 $ (409) $ 1,451
Unamortized (net asset)/net
transition obligation a/ (142) 10 (132) (164) 12 (152)
Unamortized prior service cost b/ 1,808 60 1,868 2,134 86 2,220
Unamortized net (gains)/losses c/ (758) 144 (614) (717) 56 (661)
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability) 3,222 (302) 2,920 3,113 (255) 2,858
Adjustment required to recognize
minimum liability d/ - (114) (114) - (77) (77)
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability)
recognized in the balance sheet $ 3,222 $ (416) $ 2,806 $ 3,113 $ (332) $ 2,781
======= ======= ======= ======= ======= =======
Plan assets in excess of/(less than)
accumulated benefits $ 3,941 $ (414) $ 3,527 $ 3,008 $ (321) $ 2,687
Assumptions:
Discount rate at year-end 7.0% 8.25%
Average rate of increase in compensation 5.5% 5.5 %
Non-U.S. Plans
- --------------
Plan assets at fair value $ 8,447 $ 938 $ 9,385 $ 7,018 $ 950 $ 7,968
Actuarial present value of:
Vested benefits $ 6,468 $ 3,478 $ 9,946 $ 5,318 $ 2,895 $ 8,213
Accumulated benefits 6,556 3,506 10,062 5,419 3,053 8,472
Projected benefits 7,751 3,654 11,405 6,321 3,240 9,561
Plan assets in excess of/(less than)
projected benefits $ 696 $(2,716) $(2,020) $ 697 $(2,290) $(1,593)
Unamortized net transition obligation a/ 63 230 293 32 241 273
Unamortized prior service cost b/ 330 170 500 227 248 475
Unamortized net (gains)/losses c/ (184) 255 71 (81) (25) (106)
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability) 905 (2,061) (1,156) 875 (1,826) (951)
Adjustment required to recognize
minimum liability d/ - (517) (517) - (284) (284)
------- ------- ------- ------- ------- -------
Prepaid pension asset/(liability)
recognized in the balance sheet $ 905 $(2,578) $(1,673) $ 875 $(2,110) $(1,235)
======= ======= ======= ======= ======= =======
Plan assets in excess of/(less than)
accumulated benefits $ 1,891 $(2,568) $ (677) $ 1,599 $(2,103) $ (504)
Assumptions:
Discount rate at year-end 7.6% 8.3%
Average rate of increase in compensation 5.1% 5.2%
- - - - - -
</TABLE>
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 benefit
obligation in the balance sheet for plans whose benefits
exceed the assets -- at year-end 1995, the unfunded liability
in excess of $448 million is recorded net of deferred taxes as
a $108 million reduction in stockholders' equity, and at year-end
1994, the unfunded liability was offset by an intangible asset.
FS-19
<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 these 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.
Net postretirement benefit expense, including Financial Services,
was as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Benefits attributed to employees' service $ 223 $ 263 $ 240
Interest on accumulated benefit obligation 1,160 1,088 1,207
Net amortization (68) (32) -
------ ------ ------
Net postretirement benefit expense $1,315 $1,319 $1,447
====== ====== ======
Retiree benefit payments $ 698 $ 639 $ 654
</TABLE>
The status of these plans at December 31 was as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 8,413 $ 6,720
Active employees eligible to retire 3,014 2,282
Other active employees 5,717 4,266
------- -------
Total accumulated obligation 17,144 13,268
Unamortized prior service cost a/ 270 321
Unamortized net (losses)/gains b/ (1,756) 1,440
------- -------
Accrued liability $15,658 $15,029
======= =======
Assumptions:
Discount rate 7.25% 8.75%
Present health care cost trend rate 9.5 % 5.9 %
Ultimate trend rate in ten years 5.5 % 5.5 %
Weighted-average trend rate 6.6 % 6.6 %
</TABLE>
- - - - - -
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 is estimated to change the aggregate service and interest
cost components of net postretirement benefit expense for 1995 by
about $245 million and the accumulated postretirement benefit
obligation at December 31, 1995 by about $2 billion. Health care
trend rates, together with other assumptions, are subject to review
annually in the first quarter. Based on estimates of recent
experience and the general health care cost trend outlook, it is
expected that these rates will be lowered.
FS-20
<PAGE>
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):
<TABLE>
<CAPTION>
Weighted Average
Interest Rate* Book Value
------------------- -------------------
Maturity 1995 1994 1995 1994
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Debt payable within one year
----------------------------
Short-term debt 6.6% 10.0% $ 872 $ 112
Long-term debt payable within one year 960 43
------ ------
Total debt payable within one year 1,832 155
Long-term debt 1997-2043 9.2% 9.0% 5,475 7,103
------ ------
Total debt $7,307 $7,258
====== ======
Fair value $8,160 $7,492
- - - - - -
</TABLE>
*Excludes the effect of interest rate swap agreements
Long-term debt at December 31, 1995 included maturities as
follows (in millions): 1996 - $960 (included in current
liabilities); 1997 - $580; 1998 - $351; 1999 - $53; 2000 -
$1,003; thereafter - $3,488.
Included in long-term debt at December 31, 1995 and 1994 were
obligations of $5,031 million and $6,567 million, respectively,
with fixed interest rates and $444 million and $536 million,
respectively, with variable interest rates (generally based on
LIBOR or other short-term rates). Obligations payable in foreign
currencies at December 31, 1995 and 1994 were $968 million and
$994 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 $287 million at
December 31, 1995 and $465 million at December 31, 1994.
Financial Services
- ------------------
<TABLE>
<CAPTION>
Debt at December 31 was as follows (in millions):
Weighted Average
Interest Rate* Book Value
------------------- -------------------
Maturity 1995 1994 1995 1994
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Debt payable within one year
----------------------------
Unsecured short-term debt $ 3,032 $ 2,990
Commercial paper 56,002 51,008
Other short-term debt 1,927 2,301
--------- --------
Total short-term debt 5.7% 5.9% 60,961 56,299
Long-term debt payable within one year 12,097 9,310
--------- --------
Total debt payable within one year 73,058 65,609
Long-term debt
--------------
Secured indebtedness 1997-2005 7.7% 6.7% 89 98
Unsecured senior indebtedness
Notes and bank debt 1997-2048 6.9% 7.1% 64,810 54,248
Debentures 1997-2010 7.4% 7.8% 591 560
Unamortized (discount) (5) (61)
-------- --------
Total unsecured senior indebtedness 65,396 54,747
Unsecured subordinated indebtedness
Notes 1997-2021 8.8% 9.2% 2,665 3,159
Debentures 1997-2009 8.1% 8.1% 141 141
Unamortized (discount) (32) (41)
-------- --------
Total unsecured subordinated
indebtedness 2,774 3,259
-------- --------
Total long-term debt 68,259 58,104
-------- --------
Total debt $141,317 $123,713
======== ========
Fair value $144,730 $122,252
- - - - - -
</TABLE>
*Excludes the effect of interest rate swap agreements
FS-21
<PAGE>
NOTE 9. Debt (Cont'd)
- -------------
Financial Services (Cont'd)
- ------------------
Information concerning short-term borrowings (excluding long-term debt
payable within one year) is as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
Average amount of short-term borrowings $60,203 $50,106 $38,353
Weighted-average short-term interest rates per annum
(average year) 6.0% 4.6% 3.8%
Average remaining term of commercial paper
at December 31 34 days 27 days 29 days
</TABLE>
Long-term debt at December 31, 1995 included maturities as follows
(in millions): 1996 - $12,097; 1997 - $14,326; 1998 - $13,696;
1999 - $11,485; 2000 - $12,306; thereafter - $16,446.
Included in long-term debt at December 31, 1995 and 1994 were
obligations of $53.2 billion and $45.9 billion, respectively, with
fixed interest rates and $15.1 billion and $12.2 billion,
respectively, with variable interest rates (generally based on
LIBOR or other short-term rates). Obligations payable in foreign currencies
at December 31, 1995 and 1994 were $21 billion and $12.2 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. At December 31,
1995, these agreements did not change the overall weighted-average
rate on long-term debt of 7% excluding these agreements, and
effectively decreased the obligations subject to variable interest
rates to $11.9 billion. At December 31, 1995, the weighted-
average interest rate on short-term debt increased to 5.8%,
compared with 5.7% excluding these agreements. At
December 31, 1994, 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 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, 1995, Ford had long-term contractually committed
global credit agreements under which $8.4 billion is available
from various banks at least through June 30, 2000. The entire
$8.4 billion may be used, at Ford's option, by any affiliate of
Ford; however, any borrowing by an affiliate will be guaranteed by
Ford. In addition, Ford has the ability to transfer on a
nonguaranteed basis the entire $8.4 billion in varying portions to
Ford Credit and Ford Credit Europe. These facilities were unused
at December 31, 1995.
At December 31, 1995, Financial Services had a total of $48.5
billion of contractually committed support facilities. Of these
facilities, $23.8 billion (excluding the $8.4 billion of Ford
credit facilities) are contractually committed global credit
agreements under which $19.8 billion and $4 billion are available
to Ford Credit and Ford Credit Europe, respectively, from various
banks; 62% and 75%, respectively, of such facilities are available
through June 30, 2000. The entire $19.8 billion may be used, at
Ford Credit's option, by any subsidiary of Ford Credit, and the
entire $4 billion may be used, at Ford Credit Europe's option, by
any subsidiary of Ford Credit Europe. Any borrowings by such
subsidiaries will be guaranteed by Ford Credit or Ford Credit
Europe, as the case may be. At December 31, 1995, none of the Ford
Credit global facilities were in use; $742 million of the Ford Credit
Europe global facilities were in use. Other than the global credit
agreements, the remaining portion of the Financial Services support
facilities at December 31, 1995 consisted of $22 billion of
contractually committed support facilities available to various
affiliates in the U.S. and $2.7 billion of contractually committed
support facilities available to various affiliates outside the U.S.;
at December 31, 1995, about $1 billion of these facilities were in use.
FS-22
<PAGE>
NOTE 10. Capital Stock
- ------------------------
At December 31, 1995, 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.
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 were restated to reflect the split, where appropriate.
Information concerning the Preferred Stock of the company is as
follows:
<TABLE>
<CAPTION>
Series A Series B
Cumulative Convertible Preferred Stock Cumulative Preferred Stock
-------------------------------------- ---------------------------------------
<S> <C> <C>
Liquidation preference $50 per Depositary Share $25 per Depositary Share
and shares outstanding $534 million and 10,681 shares $508 million and 10,163 shares
at December 31, 1995 outstanding (10,680,665 Depositary outstanding (20,326,463 Depositary
Shares) Shares)
Dividends $4.20 per year per Depositary Share $2.0625 per year per Depositary Share
Conversion Shares can be converted at 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 25,273,537 Depositary Shares were
dividends exchanged during 1995 (see Note 1,
"Company-Obligated Mandatorily
Redeemable Preferred Securities of a
Subsidiary Trust")
</TABLE>
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
<PAGE>
NOTE 11. 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 is as follows (shares in
millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -------
<S> <C> <C> <C>
Option price of new grants a/ $32.00, $29.06 $28.84
$29.50, and
$28.06 $28.63
and
$28.56
Shares subject to option
------------------------
Outstanding at beginning of period 43.3 37.4 41.1
New grants 9.7 9.5 7.1
Exercised b/ (3.4) (2.6) (6.7)
Surrendered upon exercise of stock appreciation rights (0.9) (0.9) (3.9)
Terminated and expired (0.2) (0.1) (0.2)
----- ----- -----
Outstanding at end of period 48.5 c/ 43.3 37.4
Outstanding but not exercisable (22.6) (21.3) (19.3)
----- ----- -----
Exercisable at end of period 25.9 22.0 18.1
===== ===== =====
Shares authorized for future grants (as of
December 31) d/ 0 0 0
</TABLE>
- - - - - -
a/ Fair market value of Common Stock at dates of grant.
b/ At option prices ranging from $9.09 to $29.06 during 1995, $9.09
to $28.84 during 1994, and $9.09 to $25.84 during 1993.
c/ Including 7.6 million and 40.9 million shares under the 1985
and 1990 Plans, respectively, at option prices ranging from
$13.42 to $32.00 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. At
December 31, 1995, this reduction aggregated 2.4 million shares.
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 that 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 884,500 shares in 1995,
709,800 shares in 1994, and 2,327,200 shares in 1993 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 performance of the recipients and other
factors, as determined by the Compensation and Option Committee of
the Board of Directors.
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation", was issued in October
1995. SFAS 123 permits entities to record expense for employee
stock compensation plans based on fair value at date of grant.
The company, however, plans to continue to measure compensation
cost using the intrinsic value method, in accordance with APB
Opinion No. 25, "Accounting for Stock Issued to Employees."
FS-24
<PAGE>
NOTE 12. 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; employment related matters; 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.
Reserves have been established by the company for certain of the
matters discussed in the foregoing paragraph where losses are deemed
probable. It is reasonably possible, however, that some of the
matters discussed in the foregoing paragraph for which reserves have
not been established 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 cannot reasonably be at December 31, 1995. The company
does not reasonably expect, based on its analysis, that any adverse outcome
from such matters would have a material effect on future consolidated
financial statements for a particular year, although such an outcome is
possible.
NOTE 13. Commitments and Contingencies
- ---------------------------------------
At December 31, 1995, the company had the following minimum rental
commitments under non-cancelable operating leases (in millions):
1996 - $740; 1997 - $689; 1998 - $363; 1999 - $310; 2000 - $251;
thereafter - $456. 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 provide credit card programs that
offer rebates that 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, 1995 and 1994 was $3.1
billion and $2.3 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 ultimately will
purchase vehicles.
Certain Financial Services subsidiaries make credit lines
available to holders of their credit cards. At December 31, 1995
and 1994, the unused portion of available credit was approximately
$19.3 billion and $10.3 billion, respectively, and is revocable
under specified conditions. The fair value of unused credit lines
and the potential risk of loss were not considered to be material.
FS-25
<PAGE>
NOTE 14. Financial Instruments
- -------------------------------
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 judgment 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. Accordingly,
the estimates of fair value presented herein may not be indicative
of the amounts that could be realized in a current market
exchange.
Balance Sheet Financial Instruments
- -----------------------------------
Information about specific valuation techniques and related
estimated fair value detail is provided throughout the footnotes.
The table below provides book value and estimated fair value
amounts (in millions) and a cross reference to the applicable
Note.
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------------- ----------------------
Book Fair Book Fair Fair Value
Value Value Value Value Reference
--------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Automotive
----------
Marketable securities $ 6,656 $ 6,656 $ 7,602 $ 7,602 Note 2
Debt 7,307 8,160 7,258 7,492 Note 9
Financial Services
------------------
Marketable securities $ 4,229 $ 4,296 $ 5,781 $ 5,746 Note 2
Receivables 110,745 112,798 98,341 99,518 Note 3
Debt 141,317 144,730 123,713 122,252 Note 9
</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, 1995 and 1994, the fair value
of net receivable contracts was $373 million and $298 million,
respectively, and the fair value of net payable contracts was $316
million and $108 million, respectively. At December 31, 1995 and
1994, foreign currency instruments had a net deferred loss of $111
million and a net deferred gain of $59 million, respectively. 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, 1995 and 1994, the total amount of the company's
foreign currency forward contracts (contracts purchased and sold)
and currency swaps and options outstanding was $24.5 billion and
$12.6 billion, respectively, maturing primarily through 1996.
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, 1995 and 1994, the fair value of net receivable
contracts was $739 million and $452 million, respectively, and the
fair value of net payable contracts was $430 million and
$596 million, respectively. 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, 1995 and 1994, the underlying
principal amounts on which the company has interest rate swap
agreements outstanding aggregated $66.3 billion and $52.7 billion,
respectively, maturing primarily through 2001.
Other Financial Agreements
- --------------------------
At December 31, 1995, the company had guaranteed $1.2 billion of
debt of unconsolidated subsidiaries, affiliates and others. The
potential risk of loss under other financial agreements was not
material.
FS-26
<PAGE>
NOTE 15. Acquisitions and Dispositions
- ---------------------------------------
Dissolution of Autolatina Joint Venture
- ---------------------------------------
During 1995, the company's joint venture with Volkswagen AG in
Brazil and Argentina was dissolved. The dissolution resulted in a
gain of $230 million, primarily from a one-time cash compensation
payment to Ford. Prior to dissolution, the company held a 49%
interest in Autolatina and accounted for it on an equity basis.
The company's income statement for 1995 included Ford's equity
share in the net loss of the Autolatina joint venture through the
dissolution date together with the gain on dissolution. The
assets and liabilities of the new entities in Brazil and Argentina
were consolidated in the company's balance sheet at
December 31, 1995.
Historically, earnings in Brazil and Argentina have represented a
significant portion of Ford's Automotive earnings outside the U.S.
and Europe. The long-term effect, if any, of the dissolution of
Autolatina on the company's future results will depend on Ford's
ability to compete on its own in these markets.
Sale of Annuity Business
- ------------------------
During 1995, the company agreed to sell its annuity business to
SunAmerica, Inc. for $173 million. The sale is expected to be
completed in early 1996. The company recognized a one-time charge
related to the sale that was not material. The company's income
statement included the results of operations of the annuity
business through December 31, 1995. Net assets of the annuity
business at December 31, 1995 were included in the balance sheet
under Financial Services - Other Assets; at December 31, 1994, the
assets and liabilities were consolidated as part of the Financial
Services segment.
Sale of First Nationwide Bank
- -----------------------------
On September 30, 1994, substantially all of the assets of First
Nationwide 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. 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 not included in the
sale. The company's income statement included the results of
operations of Granite through March 31, 1994. The remaining net
assets of Granite at December 31, 1995 and 1994 were included in
the balance sheet under Financial Services - Other Assets.
Acquisition of The Hertz Corporation
- ------------------------------------
In April 1994, The Hertz Corporation ("Hertz") became a wholly
owned subsidiary of Ford. In 1993 and First Quarter 1994, Hertz
was accounted for on an equity basis as part of the Automotive
segment. In the balance of 1994 and in 1995, the operating
results, assets, liabilities and cash flows of Hertz were
consolidated as part of the Financial Services segment.
FS-27
<PAGE>
NOTE 16. Cash Flows
- --------------------
The reconciliation of net income to cash flows from operating
activities is as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
-------------------- --------------------- ---------------------
Financial Financial Financial
Automotive Services Automotive Services Automotive Services
--------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income $2,056 $ 2,083 $3,913 $1,395 $1,008 $1,521
Adjustments to reconcile net income
to cash flows from operating activities:
Depreciation and amortization 5,219 6,500 4,426 4,910 4,404 3,064
Losses/(Earnings) of affiliated
companies in excess of dividends
remitted 191 7 (171) (2) (21) (9)
Provision for credit and
insurance losses - 1,818 - 1,539 - 1,523
Foreign currency adjustments (64) - (384) - (650) -
Net sales/(purchases) of trading
securities 672 239 (3,616) (41) - -
Provision/(Credit) for deferred income
taxes 88 725 424 410 (796) 595
Changes in assets and liabilities:
Decrease/(Increase) in accounts
receivable and other current assets 129 - (1,096) - 34 -
(Increase) in inventory (46) - (894) - (275) -
Increase in accounts payable and
accrued and other liabilities 730 1,461 4,949 1,077 3,735 594
Other (126) (511) (9) (201) (577) (143)
------ ------- ------ ------ ------ ------
Cash flows from operating activities $8,849 $12,322 $7,542 $9,087 $6,862 $7,145
====== ======= ====== ====== ====== ======
The company considers all highly liquid investments purchased with
a maturity of three months or less, including short-term time
deposits and government, agency and corporate obligations, to be
cash equivalents. Automotive cash equivalents at December 31,
1995 and 1994 were $4.7 billion and $3.4 billion, respectively;
Financial Services cash equivalents at December 31, 1995 and 1994
were $1.8 billion and $1.4 billion, respectively. 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 Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities," as of January 1, 1994, purchases, sales and
maturities of trading securities are included in cash flows from
operating activities. Purchases, sales and maturities of
available-for-sale and held-to-maturity securities are included in
cash flows from investing activities.
Cash paid for interest and income taxes was as follows (in
millions):
1995 1994 1993
------ ------ -------
Interest $9,586 $7,718 $6,969
Income taxes 1,425 2,042 1,522
FS-28
<PAGE>
NOTE 17. Segment Information
- -----------------------------
Financial information segregated by major geographic area is as
follows (in millions):
</TABLE>
<TABLE>
<CAPTION>
Automotive
- ----------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Sales to unaffiliated customers
United States $ 73,870 $ 73,759 $ 62,108
Europe 26,132 22,623 19,468
All other 10,494 10,755 9,992
-------- -------- --------
Total $110,496 $107,137 $ 91,568
======== ======== ========
Intercompany sales among geographic areas*
United States $ 10,438 $ 11,206 $ 9,320
Europe 2,765 2,303 2,269
All other 12,060 11,217 8,613
-------- -------- --------
Total $ 25,263 $ 24,726 $ 20,202
======== ======== ========
Total sales
United States $ 84,308 $ 84,965 $ 71,428
Europe 28,897 24,926 21,737
All other 22,554 21,972 18,605
Elimination of intercompany sales (25,263) (24,726) (20,202)
-------- -------- --------
Total $110,496 $107,137 $ 91,568
======== ======== ========
Operating income/(loss)
United States $ 2,409 $ 4,131 $ 1,677
Europe 20 611 (531)
All other 852 1,084 286
-------- ------- --------
Total $ 3,281 $ 5,826 $ 1,432
======== ======== ========
Net income/(loss)
United States $ 1,843 $ 3,002 $ 1,442
Europe 116 128 (873)
All other 97 783 439
-------- -------- --------
Total $ 2,056 $ 3,913 $ 1,008
======== ======== ========
Assets at December 31
United States $ 45,841 $ 45,889 $ 39,959
Europe 17,010 16,880 16,210
All other 18,842 16,798 15,197
Net receivable from Financial Services 200 677 910
Elimination of intercompany receivables (9,121) (11,605) (10,539)
-------- -------- --------
Total $ 72,772 $ 68,639 $ 61,737
======== ======== ========
Capital expenditures (facilities, machinery
and equipment and tooling)
United States $ 5,296 $ 5,429 $ 4,289
Europe 1,892 1,393 1,490
All other 1,488 1,488 935
-------- -------- --------
Total $ 8,676 $ 8,310 $ 6,714
======== ======== ========
</TABLE>
- - - - - -
* 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
<TABLE>
<CAPTION>
Financial Services
- ------------------
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
Revenues
United States $ 21,383 $ 17,356 $ 14,102
Europe 3,144 2,336 1,673
All other 2,114 1,610 1,178
-------- -------- --------
Total $ 26,641 $ 21,302 $ 16,953
======== ======== ========
Income before income taxes**
United States $ 2,822 $ 2,185 $ 2,311
Europe 493 419 285
All other 224 188 116
-------- -------- --------
Total $ 3,539 $ 2,792 $ 2,712
======== ======== ========
</TABLE>
- - - - - -
** Financial Services activities do not report operating income;
income before income taxes is representative of operating income
FS-29
<PAGE>
NOTE 17. Segment Information (Cont'd)
- -----------------------------
Financial Services (Cont'd)
- ------------------
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
Net income
United States $ 1,718 $ 1,119 $ 1,340
Europe 321 218 140
All other 44 58 41
-------- -------- --------
Total $ 2,083 $ 1,395 $ 1,521
======== ======== ========
Assets at December 31
United States $137,154 $124,120 $117,290
Europe 20,237 16,507 12,132
All other 13,120 10,356 7,779
-------- -------- --------
Total $170,511 $150,983 $137,201
======== ======== ========
</TABLE>
NOTE 18. Summary Quarterly Financial Data (Unaudited)
- ------------------------------------------------------
(in millions, except amounts per share)
<TABLE>
<CAPTION>
1995 1994
------------------------------------ ------------------------------------
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 $28,601 $29,861 $24,437 $27,597 $26,070 $28,375 $24,926 $27,766
Operating income/(loss) 1,782 1,774 (204) (71) 1,559 1,966 989 1,312
Financial Services
Revenues 6,182 6,528 6,981 6,950 4,332 5,397 5,696 5,877
Income before income taxes 759 885 978 917 196 911 896 789
Total Company
Net income $ 1,550 $ 1,572 $ 357 $ 660 $ 904a/ $ 1,711 $ 1,124 $ 1,569
Less:
Preferred stock dividend
requirements 72 69 55 38 72 72 72 71
Fair value adjustment
from exchange of
Series B Preferred Stock - - - 66 - - - -
------ ------- ------- ------- ------- ------- ------- -------
Income attributable
to Common and
Class B Stock $ 1,478 $ 1,503 $ 302 $ 556 $ 832 $ 1,639 $ 1,052 $ 1,498
======= ======= ======= ======= ======= ======= ======= =======
AMOUNTS PER SHARE OF COMMON
AND CLASS B STOCK AFTER
PREFERRED STOCK DIVIDENDS b/
Income $ 1.44 $ 1.45 $ 0.28 $ 0.49 $ 0.83 $ 1.63 $ 1.04 $ 1.47
Income assuming full
dilution $ 1.28 $ 1.30 $ 0.27 $ 0.48 $ 0.75 $ 1.44 $ 0.93 $ 1.31
Cash dividends $ 0.26 $ 0.31 $ 0.31 $ 0.35 $ 0.20 $ 0.225 $ 0.225 $ 0.26
</TABLE>
- - - - - -
a/ Includes a loss of $440 million related to the disposition of
Granite Savings Bank (formerly First Nationwide Bank).
b/ The sum of the per share amounts in 1995 and 1994 is different
than the amounts reported for the full year because of the effect
that issuances of the company's stock had on average shares for
those periods.
FS-30
Coopers & Lybrand L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Motor Company
We have audited the consolidated financial statements and the
supplemental schedule of condensed financial information of
selected subsidiaries of Ford Motor Company and Subsidiaries listed
in Items 14(a)1 and 14(a)2 of this Form 10-K. These financial statements
and the supplemental schedule are the responsibility of the Company's
managment. Our responsibility is to express an opinion on these
financial statements and supplemental schedule 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 inthe financial statemetnts. An audit also includes
assessing the accounting pirnciples 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, 1995 and 1994
and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1995,
in conformity with generally accepted accounting principles. In
addition, in our opinion, the supplemental schedule referred to
above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the
information presented therein.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
400 Renaissance Center
Detroit, Michigan 48243
313-446-7100
January 26, 1996
FS-31
<PAGE>
Supplemental Schedule
<TABLE>
<CAPTION>
Ford Motor Company
CONDENSED FINANCIAL INFORMATION OF SUBSIDIARY
---------------------------------------------
(in millions)
FORD CAPITAL B.V.
- -----------------
December 31, December 31,
1995 1994
------------ -------------
<S> <C> <C>
Current assets $1,251 $1,048
Noncurrent assets 4,662 4,845
------ ------
Total assets $5,913 $5,893
====== ======
Current liabilities $ 626 $ 486
Noncurrent liabilities 4,661 4,909
Minority interests in net
assets of subsidiaries 22 12
Stockholder's equity 604 486
------ ------
Total liabilities and
stockholder's equity $5,913 $5,893
====== ======
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Sales and other revenue $2,623 $2,355 $1,935
Operating income 224 164 2
Income before income taxes 166 123 18
Net income 116 97 14
</TABLE>
Ford Capital B.V., a wholly-owned subsidiary of Ford Motor
Company, was established primarily for the purpose of raising
funds through the issuance of commercial paper and debt
securities. Ford Capital B.V. also holds shares of the capital
stock of Ford Nederland B.V., Ford Motor Company (Belgium) B.V.,
and Ford Motor Company A/S (Denmark). Substantially all of the
assets of Ford Capital B.V., other than its ownership interests
in subsidiaries, represent receivables from Ford Motor Company or
its consolidated subsidiaries.
FSS-1
EXHIBIT INDEX
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 3-A Restated Certificate of Incorporation, Filed as Exhibit 4.1 to the Registrant's
of the Registrant dated June 6, 1994. Registration Statement No. 33-55171.*
Exhibit 3-B By-Laws of the Registrant as Filed with this Report.
amended through January 1, 1996.
Exhibit 4-A Form of Deposit Agreement dated as of Filed as Exhibit 4-E to the Registrant's
November 20, 1991 among Ford Motor Registration Statement No. 33-43085.*
Company, Manufacturers Hanover Trust
Company, as Depositary, and the holders
from time to time of Depositary Shares,
each representing 1/1,000 of a share of
the Registrant's Series A Cumulative
Convertible Preferred Stock.
Exhibit 4-B Form of Deposit Agreement dated as of Filed as Exhibit 4-E to the Registrant's
October 29, 1992 among Ford Motor Registration Statement No. 33-53092.*
Company, Chemical Bank, as Depositary,
and the holders from time to time of
Depositary Shares, each representing
1/2,000 of a share of the Registrant's
Series B Cumulative Preferred Stock.
Exhibit 10-A Amended and Restated Agreement dated Filed as Exhibit 10-A to the Registrant's
as of July 1, 1993 between the Annual Report on Form 10-K for the
Registrant and Ford Credit. year ended December 31, 1993.*
Exhibit 10-B 1985 Stock Option Plan of the Registrant.** Filed as Exhibit 10-D to the Registrant's
Annual Report on Form 10-K for the
year ended December 31, 1985.*
Exhibit 10-B-1 Amendment dated as of March 8, 1990 Filed as Exhibit 10-C-1 to the
to 1985 Stock Option Plan.** Registrant's Annual Report on Form
10-K for the year ended December 31, 1989.*
Exhibit 10-C Ford Motor Company Supplemental Filed as Exhibit 10-H to the Registrant's
Compensation Plan as amended through Annual Report on Form 10-K for the
May 8, 1986.** year ended December 31, 1986.*
Exhibit 10-C-1 Amendment to Ford Motor Company Filed as Exhibit 10-F-1 to the
Supplemental Compensation Plan, dated Registrant's Annual Report on Form
May 12, 1988.** 10-K for the year ended
December 31, 1988.*
Exhibit 10-C-2 Amendment to Ford Motor Company Filed as Exhibit 10-D-2 to the
Supplemental Compensation Plan, dated Registrant's Annual Report on Form
July 8, 1992.** 10-K for the year ended December 31, 1992.*
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Designation Description Method of Fililng
- ----------- ----------- -----------------
<S> <C> <C>
Exhibit 10-C-3 Amendment to Ford Motor Company Filed as Exhibit 10.1 to the Registrant's
Supplemental Compensation Plan, Quarterly Report on Form 10-Q for the
effective as of March 8, 1995.** quarter ended March 31, 1995.*
Exhibit 10-C-4 Amendment to Ford Motor Company Filed as Exhibit 10.1 to the Registrant's
Supplemental Compensation Plan, Quarterly Report on Form 10-Q for the
effective as of July 13, 1995.** quarter ended June 30, 1995.*
Exhibit 10-C-5 Amendment to Ford Motor Company Filed with this Report.
Supplemental Compensation Plan,
effective January 10, 1996.**
Exhibit 10-D Ford Motor Company Executive Separation Filed as Exhibit 10-D to the Registrant's
Allowance Plan as amended through Annual Report on Form 10-K for the
December 9, 1993 for separations on year ended December 31, 1994.*
or after January 1, 1981.**
Exhibit 10-E Description of Company practices regarding Filed as Exhibit 10-I to the Registrant's
club memberships for executives.** Annual Report on Form 10-K for the
year ended December 31, 1981.*
Exhibit 10-F Description of Company practices regarding Filed as Exhibit 10-J to the Registrant's
travel expenses of spouses of certain Annual Report on Form 10-K for the
executives.** year ended December 31, 1980.*
Exhibit 10-G Ford Motor Company Deferred Compensation Filed as Exhibit 10-H-1 to the
Plan for Non-Employee Directors, as amended Registrant's Annual Report on Form
on July 11, 1991.** 10-K for the year ended December 31,
1991.*
Exhibit 10-G-1 Amendments to Deferred Compensation Plan Filed with this Report.
for Non-Employee Directors, effective as of
January 1, 1996.*
Exhibit 10-H Ford Motor Company Benefit Equalization Filed as Exhibit 10-H to the Registrant's
Plan, as amended as of January 1, Annual Report on Form 10-K for the
1989.** year ended December 31, 1994.*
Exhibit 10-H-1 Description of Amendments to Benefit Filed with this Report.
Equalization Plan, adopted January 11,
1996 and January 25, 1996.**
Exhibit 10-I Description of Financial Counseling Filed as Exhibit 10-N to the Registrant's
Services provided to certain executives.** Annual Report on Form 10-K for the
year ended December 31, 1983.*
Exhibit 10-J 1986 Long-Term Incentive Plan of the Filed as Exhibit 10-Q to the Registrant's
Registrant.** Annual Report on Form 10-K for the
year ended December 31, 1985.*
</TABLE>
-2-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 10-J-1 Amendment dated as of June 1, 1990 to Filed as Exhibit 10-N-1 to the
1986 Long-Term Incentive Plan of the Registrant's Annual Report on Form
Registrant.** 10-K for the year ended December 31,
1990.*
Exhibit 10-K Supplemental Executive Retirement Plan, Filed with this Report.
as restated and incorporating amendments
through December 12, 1995.**
Exhibit 10-L Ford Motor Company Restricted Stock Filed as Exhibit 10-P to the Registrant's
Plan for Non-Employee Directors adopted Annual Report on Form 10-K for the
by the Board of Directors on November 10, year ended December 31, 1988.*
1988, and approved by the stockholders at
the 1989 Annual Meeting.**
Exhibit 10-M 1990 Long-Term Incentive Plan, amended Filed as Exhibit 10-R to the Registrant's
as of June 1, 1990.** Annual Report on Form 10-K for the
year ended December 31, 1990.*
Exhibit 10-M-1 Amendment to 1990 Long-Term Incentive Filed as Exhibit 10-P-1 to the
Plan, effective as of October 1, 1990.** Registrant's Annual Report on Form
10-K for the year ended
December 31, 1991.*
Exhibit 10-M-2 Amendment to 1990 Long-Term Incentive Filed as Exhibit 10.2 to the Registrant's
Plan, effective as of March 8, 1995.** Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.*
Exhibit 10-N Description of Matching Gift Program for Filed as Exhibit 10-Q to the Registrant's
Non-Employee Directors.** Annual Report on Form 10-K for the
year ended December 31, 1991.*
Exhibit 10-O Non-Employee Directors Life Insurance Filed as Exhibit 10-O to the Registrant's
and Optional Retirement Plan Annual Report on Form 10-K for the
(as amended as of January 1, 1993).** year ended December 31, 1994.*
Exhibit 10-P Description of Non-Employee Directors Filed as Exhibit 10-S to the Registrant's
Accidental Death, Dismemberment and Annual Report on Form 10-K for the
Permanent Total Disablement Indemnity.** year ended December 31, 1992.*
Exhibit 10-Q Agreement dated December 10, 1992 Filed as Exhibit 10-T to the Registrant's
between William C. Ford and the Annual Report on Form 10-K for the
Registrant.** year ended December 31, 1992.*
Exhibit 10-R Support Agreement dated as of October 1, Filed as Exhibit 10-T to the Registrant's
1993 between the Registrant and Ford Annual Report on Form 10-K for the
Credit Europe. year ended December 31, 1993.*
<PAGE>
Exhibit 10-R-1 Amendment No. 1 dated as of November Filed with this Report.
15, 1995 to Support Agreement between
the Registrant and Ford Credit Europe.
-3-
<PAGE>
Exhibit 10-S Description of Select Retirement Plan Filed as Exhibit 10 to the Registrant's
adopted on June 9, 1994.** Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994.*
Exhibit 10-T Ford Motor Company Deferred Filed as Exhibit 10.2 to the Registrant's
Compensation Plan, effective as of Quarterly Report on Form 10-Q for the
July 13, 1995.** quarter ended June 30, 1995.*
Exhibit 10-T-1 Amendments to Ford Motor Company Filed with this Report.
Deferred Compensation Plan, effective
as of July 13, 1995 and October 1, 1995.**
Exhibit 10-U Description of Amendments to Supplemental Filed with this Report.
Executive Retirement Plan and Executive
Separation Allowance Plan, adopted
January 25, 1996.**
Exhibit 11 Computation of Primary and Fully Diluted Filed with this Report.
Earnings per Share.
Exhibit 12 Computation of Ratio of Earnings to Filed with this Report.
Combined Fixed Charges and Preferred
Stock Dividends.
Exhibit 21 List of Subsidiaries of the Registrant Filed with this Report.
as of December 31, 1995.
Exhibit 23 Consent of Independent Certified Public Filed with this Report.
Accountants.
Exhibit 24 Powers of Attorney. Filed with this Report.
- --------------
* Incorporated by reference as an exhibit hereto
** Management contract or compensatory plan or arrangement
</TABLE>
-4-
Exhibit 3-B
[FORD LOGO]
Ford Motor Company
By-Laws
As Amended Through January 1, 1996
<PAGE>
BY-LAWS
OF
FORD MOTOR COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE I - Offices.......................................... 1
ARTICLE II - Stockholders..................................... 1
Section 1. Annual Meeting.................................... 1
Section 2. Special Meetings.................................. 1
Section 3. Notice of Meetings................................ 2
Section 4. Quorum............................................ 2
Section 5. Organization...................................... 2
Section 6. Proxies and Voting................................ 2
Section 7. Stock Lists....................................... 2
Section 8. Ratification...................................... 3
Section 9. Judges............................................ 3
ARTICLE III - Board of Directors............................... 3
Section 1. Number, Term of Office and Eligibility............ 3
Section 2. Meetings.......................................... 4
Section 3. Notice of Meetings................................ 4
Section 4. Quorum and Organization of Meetings............... 4
Section 5. Powers............................................ 5
Section 6. Reliance upon Books, Reports and Records.......... 6
Section 7. Compensation of Directors......................... 7
ARTICLE IV - Committees....................................... 7
Section 1. Committees of the Board of Directors.............. 7
Section 2. Finance Committee................................. 7
Section 3. Audit Committee................................... 8
Section 4. Compensation and Option Committee................. 8
Section 5. Organization Review and Nominating Committee...... 8
Section 6. Other Committees.................................. 9
Section 7. Rules and Procedures.............................. 9
Section 8. Application of Article............................ 10
ARTICLE V - Officers......................................... 10
Section 1. Officers.......................................... 10
Section 2. Office of the Chief Executive..................... 10
Section 3. Chairman of the Board of Directors................ 10
Section 4. Vice Chairmen of the Board of Directors........... 11
Section 5. President......................................... 11
Section 6. Chief Operating Officer........................... 11
Section 7. Executive Vice Presidents, Group Vice Presidents
and Vice Presidents....................................... 11
Section 8. Treasurer and Assistant Treasurer................. 12
<PAGE>
Section 9. Secretary and Assistant Secretary................. 12
Section 10. General Counsel................................... 13
Section 11. Controller........................................ 13
Section 12. Salaries.......................................... 13
ARTICLE VI - Resignations, Removals and Vacancies............ 13
Section 1. Resignations..................................... 13
Section 2. Removals......................................... 13
Section 3. Vacancies........................................ 14
ARTICLE VII - Capital Stock - Dividends - Seal................ 14
Section 1. Certificates of Shares........................... 14
Section 2. Addresses of Stockholders........................ 14
Section 3. Lost, Destroyed or Stolen Certificate............ 14
Section 4. Fixing a Record Date............................. 15
Section 5. Regulations...................................... 15
Section 6. Corporate Seal................................... 15
ARTICLE VIII - Execution of Contracts and Other Documents...... 16
Section 1. Contracts, etc................................... 16
Section 2. Checks, Drafts, etc.............................. 16
ARTICLE IX - Fiscal Year..................................... 16
ARTICLE X - Miscellaneous................................... 16
Section 1. Original Stock Ledger............................ 16
Section 2. Notices and Waivers Thereof...................... 17
Section 3. Voting upon Stocks............................... 17
ARTICLE XI - Amendments...................................... 18
<PAGE>
CERTIFICATION
The undersigned officer of Ford Motor Company, a Delaware
corporation, does hereby certify that the following is a true
and correct copy of the By-Laws of the Company in effect on
the date hereof.
Witness my hand and the seal of the Company this day of 19
_____________________
Secretary
<PAGE>
BY-LAWS
OF
FORD MOTOR COMPANY
ARTICLE I
OFFICES
The registered office of the Company shall be in the City
of Wilmington, County of New Castle, State of Delaware. The
Company may also have an office in the City of Dearborn,
State of Michigan, and at such other places as the Board of
Directors may from time to time determine or as the business
of the Company may require. The books and records of the
Company may be kept (except as otherwise provided by law) at
the office of the Company in the City of Dearborn, State of
Michigan, outside of the State of Delaware, or at such other
places as from time to time may be determined by the Board
of Directors.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting.
The annual meeting of the stockholders for the purpose of
electing directors and of transacting such other business as
may come before it shall be held in the City of Detroit,
State of Michigan, unless otherwise determined by the Board
of Directors, on the second Thursday of May in each and
every year, if not a legal holiday, and if a legal holiday
then on the next day not a legal holiday. The Board of
Directors shall, by resolution duly adopted, fix the place
within the City of Detroit, Michigan, or elsewhere if so
determined, and the time for the holding of each such
meeting. At least twenty (20) days' notice shall be given
to each stockholder entitled to vote at such meeting of the
place and time so fixed.
Section 2. Special Meetings.
Special meetings of the stockholders shall be held at the
office of the Company in the City of Dearborn, State of
Michigan, unless otherwise determined by resolution of the
stockholders or of the Board of Directors, whenever called
in the manner required by law for purposes as to which there
are special statutory provisions, and for other purposes
whenever called by the Chairman of the Board of Directors, a
Vice Chairman of the Board of Directors or the President, or
by resolution of the Board of Directors, and whenever the
holders of thirty percent (30%) or more of the total number
of outstanding shares of any class of stock the holders of
which are entitled to vote on every matter that is to be
voted on without regard to class at such meeting shall file
with the Secretary a written application for such meeting
stating the time and purpose thereof.
-1-
<PAGE>
Section 3. Notice of Meetings.
Except as otherwise provided by law, at least twenty (20)
days' notice of stockholders' meetings stating the time and
place and the objects thereof shall be given by the Chairman
of the Board of Directors, a Vice Chairman of the Board of
Directors, the President or the Secretary to each
stockholder of record having voting power in respect of the
business to be transacted thereat. No business other than
that stated in the notice shall be transacted at any
meeting.
Section 4. Quorum.
At any meeting of the stockholders the number of shares the
holders of which shall be present or represented by proxy in
order to constitute a quorum for, and the votes that shall
be necessary for, the transaction of any business shall be
as expressly provided in Article FOURTH of the Certificate
of Incorporation, as amended. At any meeting of
stockholders at which a quorum is not present, the holders
of shares entitled to cast a majority of all of the votes
(computed, in the case of each share of Class B Stock, as
provided in subsection 1.3 of said Article FOURTH) which
could be cast at such meeting by the holders of outstanding
shares of stock of the Company who are present in person or
by proxy and who are entitled to vote on every matter that
is to be voted on without regard to class at such meeting
may adjourn the meeting from time to time.
Section 5. Organization.
The Chairman of the Board of Directors shall act as
chairman of meetings of the stockholders. The Board of
Directors may designate any other officer or director of the
Company to act as chairman of any meeting in the absence of
the Chairman of the Board of Directors, and the Board of
Directors may further provide for determining who shall act
as chairman of any stockholders meeting in the absence of
the Chairman of the Board of Directors and such designee.
The Secretary of the Company shall act as secretary of all
meetings of the stockholders, but in the absence of the
Secretary the presiding officer may appoint any other person
to act as secretary of any meeting.
Section 6. Proxies and Voting.
Every stockholder entitled to vote at any meeting may vote
in person, or by proxy appointed by an instrument in
writing, subscribed by such stockholder or by his or her
duly authorized attorney, and filed with the Secretary
before being voted on, but no proxy shall be voted after
three years from its date unless such proxy provides
expressly for a longer period. Shares of the Company's
stock belonging to the Company shall not be voted upon
directly or indirectly.
-2-
<PAGE>
Section 7. Stock Lists.
A complete list of stockholders entitled to vote at any
meeting of stockholders shall be prepared, in alphabetical
order by class, by the Secretary and shall be open to the
examination of any stockholder, at the place where the
meeting is to be held, for at least ten days before the
meeting and during the whole time of the meeting.
Section 8. Ratification.
Any transaction questioned in any stockholders' derivative
suit, or any other suit to enforce alleged rights of the
Company or any of its stockholders, on the ground of lack of
authority, defective or irregular execution, adverse
interest of any director, officer or stockholder,
nondisclosure, miscomputation or the application of improper
principles or practices of accounting may be approved,
ratified and confirmed before or after judgment by the Board
of Directors or by the holders of Common Stock and the
holders of Class B Stock voting as provided in subsection
1.6 of Article FOURTH of the Certificate of Incorporation,
as amended, and, if so approved, ratified or confirmed,
shall have the same force and effect as if the questioned
transaction had been originally duly authorized, and said
approval, ratification or confirmation shall be binding upon
the Company and all of its stockholders and shall constitute
a bar to any claim or execution of any judgment in respect
of such questioned transaction.
Section 9. Judges.
All votes by ballot at any meeting of stockholders shall be
conducted by two judges appointed for the purpose either by
the directors or by the meeting. The judges shall decide
upon the qualifications of voters, count the votes and
declare the result.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Number, Term of Office and Eligibility.
Except as provided by the laws of the State of Delaware or
by the Certificate of Incorporation, as amended, the
business and the property of the Company shall be managed by
or under the direction of a Board of not less than ten and
not more than twenty directors, the exact number of which
shall be fixed from time to time by resolution of the Board.
Each director shall be elected annually by ballot by the
holders of Common Stock and the holders of Class B Stock
voting as provided in subsection 1.6 of Article FOURTH of
the Certificate of Incorporation, as amended, at the annual
meeting of stockholders, to serve until his or her successor
shall have been elected and shall have qualified, except as
provided in this Section. No person may be elected or re-
elected a director of the Company if at the time of his or
-3-
<PAGE>
her election or re-election he or she shall have attained
the age of seventy years, and the term of any director who
shall have attained such age while serving as a director
shall terminate as of the time of the first annual meeting
of stockholders following his or her seventieth birthday;
provided, however, that the Board by resolution may waive
such age limitation in any year and from year to year with
respect to any director or directors.
Section 2. Meetings.
The directors may hold their meetings outside of the State
of Delaware, at the office of the Company in the City of
Dearborn, State of Michigan, or at such other place as from
time to time they may determine.
The annual meeting of the Board of Directors, for the
election of officers and the transaction of other business,
shall be held at the World Headquarters of the Company in
Dearborn, Michigan, on the same day as, and as soon as
practicable following, the annual meeting of stockholders,
or at such other time or place as shall be determined by the
Board at its regular meeting next preceding said annual
meeting of stockholders. No notice of said annual meeting
of the Board shall be required to be given to the directors.
Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be determined
by the Board.
Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board of
Directors, a Vice Chairman of the Board of Directors or the
President or by one-third of the directors then in office.
Section 3. Notice of Meetings.
The Secretary or an Assistant Secretary shall give notice
of the time and place of holding of meetings of the Board of
Directors (excepting the annual meeting of directors) by
mailing such notice not later than during the second day
preceding the day on which such meeting is to be held, or by
sending a cablegram, facsimile transmission, mailgram,
radiogram, telegram or other form of recorded communication
containing such notice or delivering such notice personally
or by telephone not later than during the first day
preceding the day on which such meeting is to be held to
each director. Unless otherwise stated in the notice
thereof any and all business may be transacted at any
meeting.
Section 4. Quorum and Organization of Meetings.
A third of the total number of members of the Board of
Directors as constituted from time to time, but in no event
less than three, shall constitute a quorum for the
transaction of business; but if at any meeting of the Board
of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time
to time, and the meeting may be held as adjourned without
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further notice or waiver. Except as otherwise provided by
law or by the Certificate of Incorporation, as amended, or
by these By-Laws, a majority of the directors present at any
duly constituted meeting may decide any question brought
before such meeting. Meetings shall be presided over by the
Chairman of the Board of Directors, or in his or her
absence, by a Vice Chairman of the Board of Directors or the
President, as designated by the Board of Directors, or in
the absence of all of the aforesaid officers by such other
person as the Board of Directors may designate or the
members present may select.
Section 5. Powers.
In addition to the powers and authorities by these By-Laws
expressly conferred upon them, the Board of Directors shall
have and may exercise all such powers of the Company and do
all such lawful acts and things that are not by statute or
by the Certificate of Incorporation, as amended, or by these
By-Laws directed or required to be exercised or done by the
stockholders. Without prejudice to or limitation of such
general powers and any other powers conferred by statute, or
by the Certificate of Incorporation, as amended, or by these
By-Laws, the Board of Directors shall have the following
powers:
(1) To determine, subject to the requirements of
law and of Section 5 of Article FOURTH of the
Certificate of Incorporation, as amended, what, if
any, dividends shall be declared and paid to the
stockholders out of net profits, current or
accumulated, or out of surplus or other assets of
the Company available for dividends.
(2) To fix, and from time to time to vary, the
amount of working capital of the Company, and to
set aside from time to time out of net profits,
current or accumulated, or surplus of the Company
such amount or amounts as they in their discretion
may deem necessary and proper as, or as a safeguard
to the maintenance of, working capital, as a
reserve for contingencies, as a reserve for
repairs, maintenance, or rehabilitation, or as a
reserve for revaluation of profits of the Company
or for such other proper purpose as may in the
opinion of the directors be in the best interests
of the Company; and in their sole discretion to
abolish or modify any such provision for working
capital or any such reserve, and to credit the
amount thereof to net profits, current or
accumulated, or to the surplus of the Company.
(3) To purchase, or otherwise acquire for the
Company, any business, property, rights or
privileges which the Company may at the time be
authorized to acquire, at such price or
consideration and generally on such terms and
conditions as they think fit; and at their
discretion to pay therefor either wholly or partly
in money, stock, bonds, debentures or other
securities of the Company.
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(4) To create, make and issue mortgages, bonds,
deeds of trust, trust agreements or negotiable or
transferable instruments or securities, secured by
mortgage or otherwise, and to do every other act
and thing necessary to effect the same.
(5) To appoint any person or corporation to accept
and hold in trust for the Company any property
belonging to the Company, or in which it is
interested, or for any other purpose, and to
execute such deeds and do all things requisite in
relation to any such trust.
(6) To delegate any of the powers of the Board in
the course of the business of the Company to any
officer, employee or agent, and to appoint any
person the agent of the Company, with such powers
(including the power to subdelegate) and upon such
terms as the Board may think fit.
(7) To remove any officer of the Company with or
without cause, and from time to time to devolve the
powers and duties of any officer upon any other
person for the time being.
(8) To confer upon any officer of the Company the
power to appoint, remove and suspend subordinate
officers, agents and employees.
(9) To determine who shall be authorized on the
Company's behalf, either generally or specifically,
to make and sign bills, notes, acceptances,
endorsements, checks, releases, receipts,
contracts, conveyances, and all other written
instruments executed on behalf of the Company.
(10) To make and change regulations, not
inconsistent with these By-Laws, for the management
of the Company's business and affairs.
(11) To adopt and, unless otherwise provided
therein, to amend and repeal, from time to time, a
bonus or supplemental compensation plan for
employees (including employees who are officers or
directors) of the Company or any subsidiary. Power
to construe, interpret, administer, modify or
suspend such plan shall be vested in the Board of
Directors or a committee thereof.
(12) To adopt a retirement plan, or plans, for the
purpose of making retirement payments to employees
(including employees who are officers or directors)
of the Company or of any subsidiary thereof; and to
adopt a group insurance plan, or plans, for the
purpose of enabling employees (including employees
who are officers or directors) of the Company or of
any subsidiary thereof to acquire insurance
protection; any such retirement plan or insurance
plan, unless otherwise provided therein, shall be
subject to amendment or revocation by the Board of
Directors.
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Section 6. Reliance upon Books, Reports and Records.
Each director, each member of any committee designated by
the Board of Directors and each officer, in the performance
of his or her duties, shall be fully protected in relying in
good faith upon the books of account or reports made to the
Company by any of its officials, or by an independent
certified public accountant, or by an appraiser selected
with reasonable care by the Board of Directors or by any
such committee, or in relying in good faith upon other
records of the Company.
Section 7. Compensation of Directors.
Directors, as such, may receive, pursuant to resolution of
the Board of Directors, fixed fees and other compensation
for their services as directors, including, without
limitation, services as members of committees of the
directors; provided, however, that nothing herein contained
shall be construed to preclude any director from serving the
Company in any other capacity and receiving compensation
therefor.
ARTICLE IV
COMMITTEES
Section 1. Committees of the Board of Directors.
There are hereby established as committees of the Board of
Directors a Finance Committee, an Audit Committee, a
Compensation and Option Committee, and an Organization
Review and Nominating Committee, each of which shall have
the powers and functions set forth in Sections 2, 3, 4, and
5 hereof, respectively, and such additional powers as may be
delegated to it by the Board of Directors. The Board of
Directors may from time to time establish additional
standing committees or special committees of the Board of
Directors, each of which shall have such powers and
functions as may be delegated to it by the Board of
Directors. The Board of Directors may abolish any committee
established by or pursuant to this Section 1 as it may deem
advisable. Each such committee shall consist of two or
more directors, the exact number being determined from time
to time by the Board of Directors; provided, however, that
membership on the Audit Committee and on the Compensation
and Option Committee shall be limited to directors who are
not officers or employees of the Company. Designations of
the Chairman and members of each such committee, and, if
desired, a Vice Chairman and alternates for members, shall
be made by the Board of Directors. Each such committee
shall have a secretary who shall be designated by its
chairman. A vice chairman of a committee shall act as the
chairman of the committee in the absence or disability of
the chairman.
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Section 2. Finance Committee.
The Finance Committee shall include the Chairman of the
Board of Directors together with such other directors as the
Board of Directors shall designate.
The Committee during intervals between meetings of the
Board of Directors shall have, and may exercise in such
manner as it shall deem to be in the best interests of the
Company, all the powers of the Board of Directors (except
with respect to matters within the powers of the Audit
Committee or the Compensation and Option Committee)
concerning the determination of financial policies of the
Company and the management of its financial affairs, not
inconsistent, however, with law or with such specific
directions as to the conduct of affairs as shall have been
given by the Board of Directors. The Committee also shall
perform such other functions and exercise such other powers
as may be delegated to it from time to time by the Board of
Directors. The Committee may redelegate from time to time
and to the full extent permitted by law, in writing, to any
officer or employee of the Company any of such powers.
During intervals between meetings of the Committee, the
Chairman, and, if any, the Vice Chairman, of the Committee
shall have and may exercise such of the powers of the
Committee as from time to time shall be conferred upon them
by resolution of the Board of Directors or of the Finance
Committee.
All actions by the Committee shall be reported to the Board
of Directors and shall be subject to revision by the Board
of Directors, provided no acts or rights of third parties
shall be affected thereby.
Section 3. Audit Committee.
The Audit Committee shall select and engage, on behalf of
the Company, independent public accountants to (1) audit the
books of account and other corporate records of the Company
and (2) perform such other duties as the Committee may from
time to time prescribe. The Committee shall transmit
financial statements certified by such independent public
accountants to the Board of Directors after the close of
each fiscal year. The selection of independent public
accountants for each fiscal year shall be made in advance of
the annual meeting of stockholders in such fiscal year and
shall be submitted for ratification or rejection at such
meeting. The Committee shall confer with such accountants
and review and approve the scope of the audit of the books
of account and other corporate records of the Company. The
Committee shall have the power to confer with and direct the
officers of the Company to the extent necessary to review
the internal controls, accounting practices, financial
structure and financial reporting of the Company. From time
to time the Committee shall report to and advise the Board
of Directors concerning the results of its consultation and
review and such other matters relating to the internal
controls, accounting practices, financial structure and
financial reporting of the Company as the Committee believes
merit review by the Board of Directors. The Committee also
shall perform such other functions and exercise such other
powers as may be delegated to it from time to time by the
Board of Directors.
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Section 4. Compensation and Option Committee.
The Compensation and Option Committee shall fix from time
to time the salaries of members of the Board of Directors
who are officers or employees of the Company and of all
Executive Vice Presidents, Group Vice Presidents and Vice
Presidents of the Company. It also shall perform such
functions as may be delegated to it under the provisions of
any bonus, supplemental compensation, special compensation
or stock option plan of the Company.
Section 5. Organization Review and Nominating Committee.
The Organization Review and Nominating Committee from time
to time shall consider and make recommendations to the Board
of Directors, to the Chairman of the Board of Directors and
to the Chief Operating Officer with respect to the
management organization of the Company, the nominations or
elections of directors and officers of the Company and the
appointments of such other employees of the Company as shall
be referred to the Committee.
The Committee from time to time shall consider the size and
composition of the Board of Directors and make
recommendations to the Board of Directors with respect to
such matters. Prior to the annual meeting of stockholders
each year, and prior to any special meeting of stockholders
at which a director is to be elected, the Committee shall
recommend to the Board of Directors persons proposed to
constitute the nominees whose election at such meeting will
be recommended by the Board of Directors.
The authority vested in the Committee by this section shall
not derogate from the power of individual members of the
Board of Directors to recommend or place in nomination
persons other than those recommended by the Committee.
The Committee also shall perform such other functions and
exercise such other powers as may be delegated to it from
time to time by the Board of Directors.
Section 6. Other Committees.
The Board of Directors, or any committee, officer or
employee of the Company may establish additional standing
committees or special committees to serve in an advisory
capacity or in such other capacities as may be permitted by
law, by the Certificate of Incorporation and by the By-Laws.
The members of any such committee need not be members of the
Board of Directors. Any committee established pursuant to
this Section 6 may be abolished by the person or body by
whom it was established as he, she or it may deem advisable.
Each such committee shall consist of two or more members,
the exact number being determined from time to time by such
person or body. Designations of members of each such
committee and, if desired, alternates for members, shall be
made by such person or body, at whose will all such members
and alternates shall serve. The chairman of each such
committee shall be designated by such person or body. Each
such committee shall have a secretary who shall be
designated by the chairman.
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Section 7. Rules and Procedures.
Each committee may fix its own rules and procedures and
shall meet at such times and places as may be provided by
such rules, by resolution of the committee, or by call of
the chairman or vice chairman. Notice of meeting of each
committee, other than of regular meetings provided for by
its rules or resolutions, shall be given to committee
members. The presence of one-third of its members, but not
less than two, shall constitute a quorum of any committee,
and all questions shall be decided by a majority vote of the
members present at the meeting. All action taken at each
committee meeting shall be recorded in minutes of the
meeting.
Section 8. Application of Article.
Whenever any provision of any other document relating to
any committee of the Company named therein shall be in
conflict with any provision of this Article IV, the
provisions of this Article IV shall govern, except that if
such other document shall have been approved by the
stockholders, voting as provided in the Certificate of
Incorporation, or by the Board of Directors, the provisions
of such other document shall govern.
ARTICLE V
OFFICERS
Section 1. Officers.
The Officers of the Company shall include a Chairman of the
Board of Directors and may include one or more Vice Chairmen
of the Board of Directors and a President, each of whom
shall be chosen from among the directors, and one or more
Executive Vice Presidents, one or more Group Vice
Presidents, one or more Vice Presidents, a Treasurer, a
Controller and a Secretary, each of whom shall be elected by
the Board of Directors to hold office until his or her
successor shall have been chosen and shall have qualified.
The Board of Directors may elect or appoint one or more
Assistant Treasurers, one or more Assistant Secretaries, and
such other officers as it may deem necessary, or desirable,
each of whom shall have such authority, shall perform such
duties and shall hold office for such term as may be
prescribed by the Board of Directors from time to time. Any
person may hold at one time more than one office.
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Section 2. Office of the Chief Executive.
The Chairman of the Board of Directors and such other
members as the Chief Executive Officer shall designate shall
constitute the Office of the Chief Executive. Subject to
the provisions of these By-Laws and to the direction of the
Board of Directors and the Chief Executive Officer, the
members of this Office shall share in the responsibilities
for the general management and control of the affairs and
business of the Company.
Section 3. Chairman of the Board of Directors.
The Chairman of the Board of Directors shall be the Chief
Executive Officer of the Company. He or she shall be a
member of the Office of the Chief Executive and, a subject
to the provisions of these By-Laws and to the direction of
the Board of Directors, shall have ultimate authority for
decisions relating to the general management and control of
the affairs and business of the Company and shall perform
all other duties and exercise all other powers commonly
incident to the position of Chief Executive Officer or which
are or from time to time may be delegated to him or her by
the Board of Directors, or which are or may at any time be
authorized or required by law. He or she shall preside at
all meetings of the Board of Directors. He or she may
redelegate from time to time and to the full extent
permitted by law, in writing, to officers or employees of
the Company any or all of such duties and powers, and any
such redelegation may be either general or specific.
Whenever he or she so shall delegate any of his or her
authority, he or she shall file a copy of the redelegation
with the Secretary of the Company.
Section 4. Vice Chairmen of the Board of Directors.
Subject to the provisions of these By-Laws and to the
direction of the Board of Directors and of the Chief
Executive Officer, the Vice Chairmen shall have such powers
and shall perform such duties as from time to time may be
delegated to them by the Board of Directors or by the Chief
Executive Officer, or which are or may at any time be
authorized or required by law.
Section 5. President.
Subject to the provisions of these By-Laws and to the
direction of the Board of Directors and of the Chief
Executive Officer, the President shall have such powers and
shall perform such duties as from time to time may be
delegated to him or her by the Board of Directors or by the
Chief Executive Officer, or which are or may at any time be
authorized or required by law.
Section 6. Chief Operating Officer.
The Chief Operating Officer shall be selected from among
the Vice Chairmen and the President by the Board of
Directors. Subject to the provisions of these By-Laws and
to the direction of the Board of Directors and of the Chief
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Executive Officer, he or she shall have such powers and
shall perform such duties as from time to time may be
delegated to him or her by the Board of Directors or by the
Chief Executive Officer, or which are or may at any time be
authorized or required by law. In the absence or disability
of the Chairman of the Board of Directors, or in the event
of, and during the period of, a vacancy in such office, the
Chief Operating Officer also shall be the Chief Executive
Officer.
Section 7. Executive Vice Presidents, Group Vice Presidents
and Vice Presidents.
Each of the Executive Vice Presidents, each of the Group
Vice Presidents and each of the other Vice Presidents shall
have such powers and shall perform such duties as may be
delegated to him or her by the Board of Directors, by the
Chairman of the Board of Directors or by the Chief Operating
Officer.
In addition, the Board of Directors shall designate one of
the Executive Vice Presidents, Group Vice Presidents, or
Vice Presidents as the Chief Financial Officer, who, among
his or her other powers and duties, shall provide and
maintain, subject to the direction of the Board of Directors
and the Finance Committee, financial and accounting controls
over the business and affairs of the Company. Such office
shall maintain, among others, adequate records of the
assets, liabilities and financial transactions of the
Company, and shall direct the preparation of financial
statements, reports and analyses. The Chief Financial
Officer shall perform such other duties and exercise such
other powers as are incident to such functions, subject to
the control of the Board of Directors.
Section 8. Treasurer and Assistant Treasurer.
The Treasurer, subject to the direction of the Board of
Directors, shall have the care and custody of all funds and
securities which may come into his or her hands. When
necessary or proper he or she shall endorse on behalf of the
Company, for collection, checks, notes and other
obligations, and shall deposit all funds of the Company in
such banks or other depositaries as may be designated by the
Board of Directors or by such officers or employees as may
be authorized by the Board of Directors so to designate. He
or she shall perform all acts incident to the office of
Treasurer, subject to the control of the Board of Directors.
He or she may be required to give a bond for the faithful
discharge of his or her duties, in such sum and upon such
conditions as the Board of Directors may require.
At the request of the Treasurer, any Assistant Treasurer,
in the case of the absence or inability to act of the
Treasurer, temporarily may act in his or her place. In the
case of the death of the Treasurer, or in the case of his or
her absence or inability to act without having designated an
Assistant Treasurer to act temporarily in his or her place,
the Assistant Treasurer so to perform the duties of the
Treasurer shall be designated by the Chairman of the Board
of Directors, the Chief Operating Officer or an Executive
Vice President.
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Section 9. Secretary and Assistant Secretary.
The Secretary shall keep the minutes of the meetings of the
stockholders and of the Board of Directors, and, when
required, the minutes of meetings of the committees, and
shall be responsible for the custody of all such minutes.
Subject to the direction of the Board of Directors, the
Secretary shall have custody of the stock ledgers and
documents of the Company. He or she shall have custody of
the corporate seal and shall affix and attest such seal to
any instrument whose execution under seal shall have been
duly authorized. He or she shall give notice of meetings
and, subject to the direction of the Board of Directors,
shall perform all other duties and enjoy all other powers
commonly incident to his or her office.
At the request of the Secretary, any Assistant Secretary,
in the case of the absence or inability to act of the
Secretary, temporarily may act in his or her place. In the
case of the death of the Secretary, or in the case of his or
her absence or inability to act without having designated an
Assistant Secretary to act temporarily in his or her place,
the Assistant Secretary or other person so to perform the
duties of the Secretary shall be designated by the Chairman
of the Board of Directors, the Chief Operating Officer or an
Executive Vice President.
Section 10. General Counsel.
The Company may have a General Counsel who shall be
appointed by the Board of Directors and who shall have
general supervision of all matters of a legal nature
concerning the Company.
Section 11. Controller.
The Controller shall have such powers and shall perform
such duties as may be delegated to him or her by the Board
of Directors, the Chairman of the Board of Directors, the
Chief Operating Officer or the appropriate Executive Vice
President, Group Vice President or Vice President.
Section 12. Salaries.
Salaries of officers, agents or employees shall be fixed
from time to time by the Board of Directors or by such
committee or committees, or person or persons, if any, to
whom such power shall have been delegated by the Board of
Directors. An employment contract, whether with an officer,
agent or employee, if expressly approved or specifically
authorized by the Board of Directors, may fix a term of
employment thereunder; and such contract, if so approved or
authorized, shall be valid and binding upon the Company in
accordance with the terms thereof, provided that this
provision shall not limit or restrict in any way the right
of the Company at any time to remove from office, discharge
or terminate the employment of any such officer, agent or
employee prior to the expiration of the term of employment
under any such contract, except that the Company shall not
thereby be relieved of any continuing liability for salary
or other compensation provided for in such contract.
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ARTICLE VI
RESIGNATIONS, REMOVALS AND VACANCIES
Section 1. Resignations.
Any director, officer or agent of the Company, or any
member of any committee, may resign at any time by giving
written notice to the Board of Directors, to the Chairman of
the Board of Directors, to a Vice Chairman of the Board of
Directors, to the President or to the Secretary of the
Company. Any such resignation shall take effect at the time
specified therein, or if the time be not specified therein,
then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective.
Section 2. Removals.
At any meeting thereof called for the purpose, the holders
of Common Stock and the holders of Class B Stock voting as
provided in subsection 1.6 of Article FOURTH of the
Certificate of Incorporation, as amended, may remove from
office or terminate the employment of any director, officer
or agent with or without cause; and the Board of Directors,
by vote of not less than a majority of the entire Board at
any meeting thereof called for the purpose, may, at any
time, remove from office or terminate the employment of any
officer, agent or member of any committee.
Section 3. Vacancies.
Subject to the last sentence of Section 1 of Article III,
any vacancy in the office of any director, officer or agent
through death, resignation, removal, disqualification,
increase in the number of directors or other cause may be
filled by the Board of Directors (in the case of vacancies
in the Board, by the affirmative vote of a majority of the
directors then in office, even though less than a quorum
remains) and the person so elected shall hold office until
his or her successor shall have been elected and shall have
qualified.
ARTICLE VII
CAPITAL STOCK-DIVIDENDS-SEAL
Section 1. Certificates of Shares.
The certificates for shares of the capital stock of the
Company shall be in such form, not inconsistent with the
Certificate of Incorporation, as amended, as shall be
approved by the Board of Directors. The certificates shall
be signed by the Chairman of the Board of Directors, a Vice
Chairman of the Board of Directors, the President, an
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Executive Vice President, a Group Vice President or a Vice
President, and also by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary. Any
and all signatures may be facsimiles.
All certificates shall bear the name of the person owning
the shares represented thereby, shall state the number of
shares represented by such certificate and the date of
issue; and such information shall be entered in the
Company's original stock ledger.
Section 2. Addresses of Stockholders.
It shall be the duty of every stockholder to notify the
Company of his or her post office address and of any change
therein. The latest address furnished by each stockholder
shall be entered on the original stock ledger of the Company
and the latest address appearing on such original stock
ledger shall be deemed conclusively to be the post office
address and the last-known post office address of such
stockholder. If any stockholder shall fail to notify the
Company of his or her post office address, it shall be
sufficient to send corporate notices to such stockholder at
the address, if any, understood by the Secretary to be his
or her post office address, or in the absence of such
address, to such stockholder, at the General Post Office in
the City of Wilmington, State of Delaware.
Section 3. Lost, Destroyed or Stolen Certificate.
Any person claiming a stock certificate in lieu of one
lost, destroyed or stolen, shall give the Company an
affidavit as to his, her or its ownership of the certificate
and of the facts which go to prove that it has been lost,
destroyed or stolen. If required by the Board of Directors,
he, she or it also shall give the Company a bond, in such
form as may be approved by the Board of Directors,
sufficient to indemnify the Company against any claim that
may be made against it on account of the alleged loss of the
certificate or the issuance of a new certificate.
Section 4. Fixing a Record Date.
The Board of Directors may fix in advance a date not
exceeding (i) sixty (60) days preceding the date of any
meeting of stockholders, or the date for payment of any
dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of stock
shall go into effect (other than conversions or exchanges
pursuant to Sections 2, 3 or 4 of Article FOURTH of the
Certificate of Incorporation, as amended), as a record date
for the determination of the stockholders entitled to notice
of and to vote at any such meeting and any adjournment
thereof, or entitled to payment of any such dividend or to
any such allotment of rights or to exercise the rights in
respect of any such change, or conversion or exchange of
stock (other than conversions or exchanges pursuant to
Sections 2, 3 or 4 of Article FOURTH of the Certificate of
Incorporation, as amended), or (ii), ten (10) days after
adoption of the resolution fixing such date, as a record
date for the determination of the stockholders entitled to
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consent in writing to corporate action; and in any such
case, such stockholders and only such stockholders, as shall
be stockholders of record on the date so fixed, shall be
entitled, subject to the provisions of Article FOURTH of the
Certificate of Incorporation, as amended, to such notice of
and to vote at such meeting and any adjournment thereof or
to receive payment of such dividend or to receive such
allotment of rights or to exercise such rights or to give
such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Company after such
record date.
Section 5. Regulations.
The Board of Directors shall have power and authority to
make all such rules and regulations not inconsistent with
any of the provisions of Sections 2, 3, 4 or 5 of Article
FOURTH of the Certificate of Incorporation, as amended, as
it may deem expedient, concerning the issue, transfer and
registration of certificates for shares of the stock of the
Company.
Section 6. Corporate Seal.
The corporate seal shall have inscribed thereon the name of
the Company, the year of its organization, and the words
"Corporate Seal" and "Delaware." If and when so authorized
by the Board of Directors, a duplicate of the seal may be
kept and used by the Secretary or Treasurer or by any
Assistant Secretary or Assistant Treasurer.
ARTICLE VIII
EXECUTION OF CONTRACTS AND OTHER DOCUMENTS
Section 1. Contracts, etc.
Except as otherwise prescribed in these By-Laws, such
officers, employees or agents of the Company as shall be
specified by the Board of Directors shall sign, in the name
and on behalf of the Company, all deeds, bonds, contracts,
mortgages and other instruments or documents, the execution
of which shall be authorized by the Board of Directors; and
such authority may be general or confined to specific
instances. Except as so authorized by the Board of
Directors, no officer, agent or employee of the Company
shall have power or authority to bind the Company by any
contract or engagement or to pledge, mortgage, sell or
otherwise dispose of its credit or any of its property or to
render it pecuniarily liable for any purpose or in any
amount.
Section 2. Checks, Drafts, etc.
Except as otherwise provided in these By-Laws, all checks,
drafts, notes, bonds, bills of exchange or other orders,
instruments or obligations for the payment of money shall be
-16-
<PAGE>
signed by such officer or officers, employee or employees,
or agent or agents, as the Board of Directors shall by
resolution direct. The Board of Directors may, in its
discretion, also provide by resolution for the
countersignature or registration of any or all such orders,
instruments or obligations for the payment of money.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Company shall begin the first day of
January in each year.
ARTICLE X
MISCELLANEOUS
Section 1. Original Stock Ledger.
As used in these By-Laws and in the Certificate of
Incorporation, as amended, the words "original stock ledger"
shall mean the record maintained by the Secretary of the
Company of the name and address of each of the holders of
shares of any class of stock of the Company, and the number
of shares and the numbers of the certificates for such
shares held by each of them, taking into account transfers
at the time made by and recorded on the transfer sheets of
each of the Transfer Agents of the Company although such
transfers may not then have been posted in the record
maintained by the Secretary.
Section 2. Notices and Waivers Thereof.
Whenever any notice whatever is required by these By-Laws
or by the Certificate of Incorporation, as amended, or by
any of the laws of the State of Delaware to be given to any
stockholder, director or officer, such notice, except as
otherwise provided by the laws of the State of Delaware, may
be given personally or by telephone or be given by
cablegram, facsimile transmission, mailgram, radiogram,
telegram or other form of recorded communication, addressed
to such stockholder at the address set forth as provided in
Section 2 of Article VII, or to such director or officer at
his or her Company location, if any, or at such address as
appears on the books of the Company, or the notice may be
given in writing by depositing the same in a post office, or
in a regularly maintained letter box, in a postpaid, sealed
wrapper addressed to such stockholder at the address set
forth in Section 2 of Article VII, or to such director or
officer at his or her Company location, if any, or such
address as appears on the books of the Company.
-17-
<PAGE>
Any notice given by cablegram, mailgram, radiogram or
telegram shall be deemed to have been given when it shall
have been delivered for transmission. Any notice given by
facsimile transmission or other form of recorded
communication shall be deemed to have been given when it
shall have been transmitted. Any notice given by mail shall
be deemed to have been given when it shall have been mailed.
A waiver of any such notice in writing, including by
cablegram, facsimile transmission, mailgram or telegram,
signed or dispatched by the person entitled to such notice
or by his or her duly authorized attorney, whether before or
after the time stated therein, shall be deemed equivalent to
the notice required to be given, and the presence at any
meeting of any person entitled to notice thereof shall be
deemed a waiver of such notice as to such person.
Section 3. Voting upon Stocks.
The Board of Directors (whose authorization in this
connection shall be necessary in all cases) may from time to
time appoint an attorney or attorneys or agent or agents of
the Company, or may at any time or from time to time
authorize the Chairman of the Board of Directors, any Vice
Chairman of the Board of Directors, the President, any
Executive Vice President, any Group Vice President, any Vice
President, the Treasurer or the Secretary to appoint an
attorney or attorneys or agent or agents of the Company, in
the name and on behalf of the Company, to cast the votes
which the Company may be entitled to cast as a stockholder
or otherwise in any other corporation or association, any of
the stock or securities of which may be held by the Company,
at meetings of the holders of the stock or other securities
of such other corporation or association, or to consent in
writing to any action by any such other corporation or
association, and the Board of Directors of any aforesaid
officer so authorized may instruct the person or persons so
appointed as to the manner of casting such votes or giving
such consent, and the Board of Directors or any aforesaid
officer so authorized may from time to time authorize the
execution and delivery, on behalf of the Company and under
its corporate seal, or otherwise, of such written proxies,
consents, waivers or other instruments as may be deemed
necessary or proper in the premises.
ARTICLE XI
AMENDMENTS
The Board of Directors shall have power to make, alter,
amend or repeal the By-Laws of the Company by vote of not
less than a majority of the entire Board at any meeting of
the Board. The holders of Common Stock and the holders of
Class B Stock voting as provided in subsection 1.6 of
Article FOURTH of the Certificate of Incorporation, as
amended, shall have power to make, alter, amend or repeal
the By-Laws at any regular or special meeting, if the
substance of such amendment be contained in the notice of
such meeting of stockholders.
-18-
Exhibit 10-C-5
AMENDMENT TO SUPPLEMENTAL COMPENSATION PLAN
-------------------------------------------
(Effective January 10, 1996)
Paragraph 12b of the Plan is amended by deleting the second
sentence thereof.
Exhibit 10-G-1
AMENDMENTS TO FORD MOTOR COMPANY DEFERRED
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
--------------------------------------------
(Effective as of January 1, 1996)
The second sentence of Section III is hereby amended to read as
follows:
"Any such person (a 'director') who elects to participate in
the Plan or whose compensation is or was subject to a
mandatory deferral pursuant to Section XXII of the Plan is
hereinafter called a 'Participant'."
The following new Section XXII is hereby added to the Plan:
"XXII. Mandatory Deferrals.
Notwithstanding anything contained in the Plan to the
contrary, the Board in its sole discretion may mandatorily
defer payment under the Plan of all or a portion of
compensation that is otherwise deferrable by Participants
pursuant to Section IV of the Plan. Any such compensation
which is mandatorily deferred pursuant to this Section XXII
shall be credited to the Participant's Account in the form
of Stock Units and shall be entitled to dividend equivalents
pursuant to Section V of the Plan. The value of Stock
Units attributable to a mandatory deferral shall be payable
in cash in a lump sum or in up to ten annual instalments, as
elected by the Participant pursuant to Section VII of the
Plan, on, or commencing on, January 10 of the year following
the year in which the Participant's service as a director
terminates or as soon thereafter as practicable. In the
event of a mandatory deferral pursuant to this Section XXII,
any election of a Participant to voluntarily defer
compensation pursuant to Section IV of the Plan shall apply
only to compensation which is not subject to a mandatory
deferral pursuant to this Section XXII."
Exhibit 10-H-1
DESCRIPTION OF AMENDMENTS TO
BENEFIT EQUALIZATION PLAN
-------------------------
Amendment adopted January 11, 1996:
The Benefit Equalization Plan (the "BEP") was amended
to allow employees to make investment elections in their BEP
savings plan account that are independent of investment
elections made with respect to their Savings and Stock
Investment Plan for Salaried Employees (the "SSIP")
accounts. Previously, BEP accounts were adjusted to reflect
elections made by employees under the SSIP. Such employees
may elect to have their "phantom" accounts under the
unfunded BEP be based on any of the investment elections
offered under the SSIP.
Amendment adopted January 25, 1996:
The BEP was amended to provide that the Company
matching contributions that would otherwise have been made
either to the SSIP or credited to the employee's BEP savings
plan account if the employee had not elected a base salary
deferral under the terms of the recently adopted Deferred
Compensation Plan ("DCP") will be provided under the BEP.
The unfunded BEP was amended to provide the benefit because
amounts of base salary that an employee elects to defer
under the DCP cannot under the Internal Revenue Code be used
to determine the amount of the benefit under the tax-
qualified SSIP.
Exhibit 10-K
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
As applicable to retirements of Eligible Executives
on or after January 1, 1992*
Section 1. Introduction. On January 1, 1985, the Company
established this Plan for the purpose of providing Eligible Executives
with a monthly Supplemental Benefit for their lifetime in the event of
their retirement from employment with the Company under certain
circumstances. The Plan also provides for the award of Conditional
Annuities to selected Eligible Executives under certain circumstances.
Section 2. Definitions. As used in the Plan, the following
terms shall have the following meanings, respectively:
2.01 "Affiliate" shall mean, as applied with respect to any
person or legal entity specified, a person or legal entity that
directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, the person or
legal entity specified.
2.02 "Committee" shall mean the Compensation and Option
Committee of Ford Motor Company.
2.03 "Company" shall mean Ford Motor Company, Ford Motor Credit
Company, and such of the subsidiaries of the Company as, with the
consent of the Company, shall have adopted the Plan.
2.04 "Credited Service" shall mean without duplication the years
and any fractional year of credited service at retirement, not
exceeding one year for any calendar year, of the Eligible Executive
under all the Retirement Plans.
2.05 "Designated Beneficiary" shall mean the beneficiary or
beneficiaries designated by an Eligible Executive or Eligible Retired
Executive in a writing filed with the Company (subject to such
limitations as to the classes and number of beneficiaries and
contingent beneficiaries and such other limitations as the Committee
may prescribe) to receive, in the event of the death of the Eligible
Executive or Eligible Retired Executive, the Death Benefits provided
in Section 4.04. An Eligible Executive or Eligible Retired Executive
shall be deemed to have designated as beneficiary or beneficiaries
under the Plan the person or persons who receive such Eligible
Executive's or Eligible Retired Executive's life insurance proceeds
under the Company-paid Basic Life Insurance Plan unless such Eligible
Executive or Eligible Retired Executive shall have assigned such life
insurance in which event the Death Benefits shall be paid to such
assignee; provided, however, that if the Eligible Executive or
Eligible Retired Executive shall have filed with the Company a written
designation of a different beneficiary or beneficiaries under the
Plan, such beneficiary form shall control. An Eligible Executive or
Eligible Retired Executive may from time to time revoke or change any
such designation of beneficiary and any designation of beneficiary
under the Plan shall be controlling over any testamentary or other
disposition; provided, however, that if the Committee shall be in
- --------------------
*See Appendix A for provisions applicable to retirements of Eligible
Executives on or after January 1, 1985 and prior to January 1, 1992
or retirements of Eligible Executives from certain former Company
Affiliates.
<PAGE>
-2-
doubt as to the right of any such beneficiary to receive any payment
under the Plan, the same may be paid to the legal representatives of
the Eligible Executive or Eligible Retired Executive, in which case
the Company, the Committee and the members thereof shall not be under
any further liability to anyone.
2.06 "Eligible Executive" shall mean a person who is the
Chairman of the Board, the Vice Chairman, the President, an Executive
Vice President or a Vice President of the Company (excluding any such
person who is an employee of a foreign Affiliate of the Company) or a
Company employee in Salary Grade 13 or its equivalent or above
(excluding a Company employee who is an employee of Jaguar Cars, a
division of the Company).
2.07 "Eligible Retired Executive" shall mean
(a) with respect to Supplemental Benefits, an Eligible Executive
who
(1) shall retire directly from Company employment (i) on
normal or disability retirement or (ii) with the approval of
the Company at or after age 55 on early retirement;
(2) will receive a normal, disability or early retirement
benefit under one or more Retirement Plans;
(3) has at least ten years of Credited Service without
duplication under all Retirement Plans; and
(4) has at least five continuous years of Eligibility
Service immediately preceding retirement (unless the
eligibility condition set forth in this subparagraph (4) is
waived by the Chairman of the Board or the President).
(b) with respect to Conditional Annuity awards, an Eligible
Executive (other than an Eligible Executive in Salary Grades 13
through 19 or its equivalent) who shall retire directly from
Company employment, (i) on normal or disability retirement or
(ii) with the approval of the Company at or after age 55 on early
retirement.
2.08 "Eligibility Service" shall mean Company service while an
Eligible Executive.
2.09 "FERCO" shall mean Ford Electronics and Refrigeration
Corporation.
2.10 "FERCO Retirement Plan" means the Salaried Retirement Plan
of FERCO as it may be amended.
2.11 "Final Five Year Average Base Salary" means the average of
the final five year-end Monthly Base Salaries immediately preceding
retirement of the Eligible Retired Executive.
2.12 "Final Three Year Average Base Salary" means the average of
the final three year-end Monthly Base Salaries immediately preceding
retirement or death of the Eligible Retired Executive.
<PAGE>
-3-
2.13 "General Retirement Plan" means the Ford Motor Company
General Retirement Plan as it may be amended.
2.14 "Monthly Base Salary" of an Eligible Executive means the
monthly base salary paid to such person while an Eligible Executive on
December 31, prior to giving effect to any salary reduction agreement
pursuant to an employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, to
which Section 125 or Section 402(e)(3) of the Internal Revenue Code of
1986, as amended, applies. It does not include supplemental
compensation or any other kind of extra or additional compensation.
2.15 "Plan" means the Supplemental Executive Retirement Plan of
Ford Motor Company, as amended.
2.16 "Retirement Plans" includes the General Retirement Plan and
the FERCO Retirement Plan.
2.17 "Subsidiary" shall mean, as applied with respect to any
person or legal entity specified, a person or legal entity a majority
of the voting stock of which is owned or controlled, directly or
indirectly, by the person or legal entity specified.
2.18 "Supplemental Compensation Plan" shall mean the
Supplemental Compensation Plan of Ford Motor Company.
Section 3. Supplemental Benefits.
3.01 Eligibility. An Eligible Retired Executive shall be
eligible to receive a Supplemental Benefit as provided herein.
3.02 Amount of Supplemental Benefit.
(a) Subject to any reductions pursuant to Subsection (b) below
and to any limitations and reductions pursuant to other provisions of
the Plan, the monthly Supplemental Benefit shall be an amount equal to
the Eligible Executive's Final Five Year Average Base Salary
multiplied by the Eligible Executive's years of Credited Service at
retirement, and further multiplied by the Applicable Percentage based
on the Eligible Executive's position or salary grade immediately
preceding retirement, as follows:
<PAGE>
-4-
For retirements on or after January 1, 1992 but prior to August 1,
1995
Status at Retirement Applicable Percentage
-------------------- ---------------------
Chairman, Vice Chairman, President .90%
Executive Vice President .80%
Vice President .70%
Non-Vice Presidents
- Salary Grade 21, 20, 19 .60%
- Salary Grade 18, 17, 16 .40%
- Salary Grade 15, 14, 13 .20%
For retirements on or after August 1, 1995
Status at Retirement Applicable Percentage
-------------------- ---------------------
Vice President Band
- Chairman, Vice Chairman, President .90%
- Executive Vice President .80%
- Group Vice President .75%
- Vice President .70%
Non-Vice President
- General Executive Band .60%
- Executive Band .40%
- Salary Grade 15, 14, 13 .20%
(b) For an Eligible Retired Executive who shall retire before age 62
the monthly Supplemental Benefit payable hereunder shall equal the amount
calculated in accordance with the immediately preceding Subsection (a)
reduced by 5/18 of 1% multiplied by the number of months from the later of
the date the Supplemental Benefit commences or age 55 in the case of
earlier receipt by reason of disability retirement to the first day of the
month after the Eligible Retired Executive would attain age 62.
3.03 Payments. Subject to the earning-out conditions set forth in
Section 5, Supplemental Benefits, in the amount determined under Section
3.02, shall be payable out of the Company's general funds monthly beginning
on the first day of the month when the Eligible Retired Executive's
retirement benefit under any Retirement Plan or under the Company's
Executive Separation Allowance Plan begins. Payments to an Eligible
Retired Executive hereunder shall cease at the end of the month in which
the Eligible Retired Executive dies.
<PAGE>
-5-
Section 4. Conditional Annuities.
---------------------
4.01 Eligibility. The Committee may, in its discretion, award to an
Eligible Executive (other than an Eligible Executive in Salary Grades 13
through 19) additional retirement income in the form of a Conditional
Annuity.
4.02 Amount of Conditional Annuity.
(a) In determining the amount of any Conditional Annuity to be
awarded to an Eligible Executive for any year, the Committee shall consider
the Company's profit performance and the amount of supplemental
compensation that is awarded to such Eligible Executive for such year.
Awards shall be made only for years in which the Committee has decided, for
reasons other than individual or corporate performance or termination of
employment, to award supplemental compensation to an Eligible Executive in
an amount which is less than would have been awarded if the historical
relationship to awards to other executives had been followed.
(b) The aggregate annual amount payable under the Conditional
Annuities awarded to any Eligible Executive shall not exceed an amount
equal to the Applicable Percentage of the average of such Eligible
Executive's Final Three Year Average Base Salary, determined in accordance
with the following table:
Applicable Percentage
---------------------
Number of Years for Chairman, All Other
which a Conditional Vice Chairman Eligible
Annuity is awarded and President Executives
------------------- ------------- ----------
[S] [C] [C]
1 30% 20%
2 35 25
3 40 30
4 45 35
5 or more 50 40
The percentage shall be reduced pro rata to the extent that service at
retirement is less than 30 years.
4.03 Payments.
(a) Subject to the earning-out conditions set forth in Section 5,
Conditional Annuities, in the amount determined under Section 4.02, shall
be payable out of the Company's general funds monthly beginning on the
first day of the month when the Eligible Retired Executive's retirement
benefit under any Retirement Plan or under the Company's Executive
Separation Allowance Plan begins. Except as provided in Section 4.04,
payments with respect to an Eligible Retired Executive hereunder shall
cease at the end of the month in which such Eligible Retired Executive
dies.
<PAGE>
-6-
(b) For an Eligible Executive who retires before age 65, the monthly
payment under any Conditional Annuity awarded to such Eligible Executive
shall equal the actuarial equivalent (based on factors determined by the
Company's independent consulting actuary) of the monthly amount payable for
retirement at age 65.
4.04 Death Benefits. Upon death before retirement but at or after
age 55, the Eligible Executive's Designated Beneficiary shall be paid a
lump sum equal to 30 times (representing 30 months) the aggregate monthly
amount payable under such Eligible Executive's Conditional Annuities if the
Eligible Executive had been age 55 at death, increased by one-third of one
month for each full month by which such Eligible Executive's age at death
shall exceed age 55. If death occurs within 120 months following
retirement, the monthly payments under the Conditional Annuity shall be
continued to the Designated Beneficiary for the remaining balance of the
120 month period following retirement.
Section 5. Earning Out Conditions. Anything herein contained to the
contrary notwithstanding, the right of any Eligible Retired Executive to
receive Supplemental Benefit or Conditional Annuity payments hereunder for
any month shall accrue only if, during the entire period from the date of
retirement to the end of such month, the Eligible Retired Executive shall
have earned out such payment by refraining from engaging in any activity
that is directly or indirectly in competition with any activity of the
Company or any Subsidiary or Affiliate thereof.
In the event of an Eligible Retired Executive's nonfulfillment of the
condition set forth in the immediately preceding paragraph, no further
payment shall be made to the Eligible Retired Executive or the Designated
Beneficiary; provided, however, that the nonfulfillment of such condition
may at any time (whether before, at the time of or subsequent to
termination of employment) be waived in the following manner:
(1) with respect to any such Eligible Retired Executive who at any
time shall have been a member of the Board of Directors, an Executive
Vice President, a Vice President, the Treasurer, the Controller or the
Secretary of the Company, such waiver may be granted by the Committee
upon its determination that in its sole judgment there shall not have
been and will not be any substantial adverse effect upon the Company
or any Subsidiary or Affiliate thereof by reason of the nonfulfillment
of such condition; and
(2) with respect to any other such Eligible Retired Executive, such
waiver may be granted by the Supplemental Compensation Award Committee
of Ford Motor Company (or any committee appointed by it for the
purpose) upon its determination that in its sole judgment there shall
not have been and will not be any such substantial adverse effect.
Anything herein contained to the contrary notwithstanding,
Supplemental Benefit and Conditional Annuity payments shall not be paid to
or with respect to any person as to whom it has been determined that such
person at any time (whether before or subsequent to termination of
employment) acted in a manner inimical to the best interests of the
Company. Any such determination shall be made by (i) the Committee with
respect to any Eligible Retired Executive who at any time shall have been a
member
<PAGE>
-7-
of the Board of Directors, an Executive Vice President, a Vice President,
the Treasurer, the Controller or the Secretary of the Company, and (ii) the
Supplemental Compensation Award Committee of Ford Motor Company (or any
committee appointed by it for the purpose) with respect to any other
Eligible Retired Executive, and shall apply to any amounts payable after
the date of the applicable committee's action hereunder, regardless of
whether the Eligible Retired Executive has commenced receiving Supplemental
Benefits hereunder. Conduct which constitutes engaging in an activity that
is directly or indirectly in competition with any activity of the Company
or any Subsidiary or Affiliate thereof shall be governed by the two
immediately preceding paragraphs of this Section 5 and shall not be subject
to any determination under this paragraph.
Section 6. General Provisions.
------------------
6.01 Administration and Interpretation. An otherwise Eligible
Executive's early retirement under the Plan is subject to approval by the
Executive Personnel Committee. Except as otherwise provided in the
preceding sentence and except as the committees specified in Sections 4 and
5 are authorized to administer the Plan in certain respects, the Vice
President-Human Resources and the Group Vice President and Chief Financial
Officer shall have full power and authority on behalf of the Company to
administer and interpret the Plan. All decisions with respect to the
administration and interpretation of the Plan shall be final and shall be
binding upon all persons.
6.02 Deductions. The Company may deduct from any payment of
Supplemental Benefits and/or Conditional Annuity awards to an Eligible
Retired Executive all amounts owing to it by such Eligible Retired
Executive for any reason, and all taxes required by law or government
regulation to be deducted or withheld.
6.03 No Contract of Employment. The Plan is an expression of the
Company's present policy with respect to Company executives who meet the
eligibility requirements set forth herein; it is not a part of any contract
of employment. No Eligible Executive, Designated Beneficiary or other
person shall have any legal or other right to any Supplemental Benefit or
Conditional Annuity.
6.04 Governing Law. Except as otherwise provided under federal
law, the Plan and all rights thereunder shall be governed, construed and
administered in accordance with the laws of the State of Michigan.
6.05 Amendment or Termination. The Company reserves the right
to modify or amend, in whole or in part, or to terminate this Plan, at
any time without notice.
<PAGE>
Appendix A
Applicable to retirements of Eligible Executives on or after
January 1, 1985 but prior to January 1, 1992, or retirements of
Eligible Executives from certain former Company Affiliates.
Section 1. Definitions. The terms used in this Appendix shall
have the same meaning as those in the Supplemental Executive
Retirement Plan, except as follows:
1.01 "Contributory Service" shall mean without duplication the
years and any fractional year of contributory service at
retirement, not exceeding one year for any calendar year, of the
Eligible Executive under all Retirement Plans.
1.02 "Eligible Executive" shall mean a person who is the Chairman
of the Board, the Vice Chairman, the President, an Executive Vice
President or a Vice President of the Company (excluding any such
person who is an employee of a foreign Affiliate of the Company)
or a Company employee in Salary Grade 13 or its equivalent or
above (Salary Grade 20 or its equivalent or above for Company
employees prior to January 1, 1989).
Section 2. Supplemental Benefits.
---------------------
2.01 Eligibility. An Eligible Retired Executive shall be
eligible to receive a Supplemental Benefit as provided herein.
2.02 Amount of Supplemental Benefit.
(a) Subject to any reductions pursuant to Subsection (b) below
and to any limitations and reductions pursuant to other provisions of
the Plan, the monthly Supplemental Benefit shall be an amount
determined as follows:
(1) For those participants who were Eligible Executives on
or after January 1, 1989 and retired prior to January 1,
1992, an amount equal to the Eligible Executive's Final Five
Year Average Base Salary multiplied by the Eligible
Executive's years of Contributory Service at retirement, and
further multiplied by the Applicable Percentage based on the
Eligible Executive's position or salary grade immediately
preceding retirement and on when the Contributory Service
occurred, as follows:
Status at Retirement Applicable Percentage
-------------------- ---------------------
Contributory Contributory
Service Service
before 1/1/89 from 1/1/89
------------- ------------
Chairman, Vice Chairman,
President .60% .90%
Executive Vice President .50% .80%
Vice Presidents
Salary Grade 23 .40% .70%
Salary Grade 22 .40% .70%
Salary Grade 21 .40% .70%
Salary Grade 20 .40% .70%
<PAGE>
-2-
Non-Vice Presidents
Salary Grade 21 .30% .60%
Salary Grade 20 .30% .60%
Salary Grade 19 .30% .60%
Salary Grade 18, 17, 16 .20% .40%
Salary Grade 15, 14, 13 .10% .20%
(2) For those participants who were Eligible Executives
prior to January 1, 1989 and who retired prior to January 1,
1992, the greater of (A) or (B):
(A) the Eligible Executive's Final Five Year Average Base
Salary multiplied by the Eligible Executive's Credited
Service, and further multiplied by the Applicable Percentage
based on the Eligible Executive's position or salary grade
immediately preceding retirement, as follows:
Status at Retirement Applicable Percentage
--------------------- ---------------------
Chairman, Vice Chairman,
President .50%
Executive Vice President .40%
Vice President
Salary Grade 23 .35%
Salary Grade 22 .30%
Salary Grade 21 .25%
Salary Grade 20 .20%
Non-Vice Presidents
Salary Grade 21 .25%
Salary Grade 20 .20%
(B) the Eligible Executive's Final Five Year Average Base
Salary multiplied by the Eligible Executive's Contributory
Service, and further multiplied by the Applicable Percentage
set forth in Section (a)(1) above based on the Eligible
Executive's position or salary grade immediately preceding
retirement and on when the Contributory Service occurred.
(b) For an Eligible Retired Executive who shall retire before
age 62 the monthly Supplemental Benefit payable hereunder shall equal
the amount calculated in accordance with the immediately preceding
Subsection (a) reduced by 5/18 of 1% multiplied by the number of
months from the later of the date the Supplemental Benefit commences
or age 55 in the case of earlier receipt by reason of disability
retirement to the first day of the month after the Eligible Retired
Executive would attain age 62.
<PAGE>
-3-
Section 3. Former Affiliates and Former Employees.
----------------------------------------
3.01 Ford Aerospace Corporation. An employee of Ford Aerospace
Corporation who was a Vice President of Ford Motor Company as of April
1, 1985 and retired May 1, 1985 shall be deemed to be an Eligible
Executive under the Plan only for Supplemental Benefits and shall be
eligible to receive such benefits under the Plan based on Credited
Service under the Salaried Retirement Plan of Ford Aerospace
Corporation.
3.02 Ford New Holland, Inc. The following shall be applicable
to former employees of Ford Tractor Operations who were transferred to
Ford New Holland (FNH) and who participated in the General Retirement
Plan for service through December 31, 1989 ("FNH Employees").
(a) Retirement-Eligible FNH Employees as of January 1, 1989.
A FNH Employee who was eligible to retire under the General
Retirement Plan on or prior to January 1, 1989, and who was in a
position equivalent to a Salary Grade 13 or above on December 31,
1989, and who retires directly from FNH shall be deemed to be an
Eligible Executive under the Plan only for Supplemental Benefits and
shall receive such benefits as are applicable under the terms of the
Plan in effect at the date of retirement, if retired prior to January
1, 1992, or the terms of the Plan in effect on January 1, 1992, if
retired on or after January 1, 1992; provided, however, that for
purposes of calculating the Supplemental Benefit, the Plan shall use
(i) the employee's position or salary grade at FNH as of December 31,
1989; (ii) the Final Five Year Average Base Salary immediately
preceding retirement of the Eligible Executive from FNH; and (iii) the
employee's Credited Service or Contributory Service, as applicable, as
of December 31, 1989.
(b) Non-Retirement Eligible Employees as of January 1, 1989.
A FNH Employee who was not eligible to retire under the General
Retirement Plan on or prior to January 1, 1989, and who was in a
position equivalent to a Salary Grade 13 or above on December 31,
1989, and who retires directly from FNH shall be deemed to be an
Eligible Executive under the Plan only for Supplemental Benefits and
shall receive such benefits as are applicable under the terms of the
Plan in effect as of January 1, 1989; provided, however, that for
purposes of calculating the Supplemental Benefit, the Plan shall use
(i) the employee's position or salary grade at FNH as of December 31,
1989; (ii) the Final Five Year Average Base Salary as of January 1,
1989; and (iii) the employee's Contributory Service as of December 31,
1989.
3.03 Sale of Favesa Operations to Lear Searing Corporation.
An Eligible Executive whose employment was transferred to Lear
Seating Corporation by reason of the sale of a portion of Plastic and
Trim Product Division's seat operations to Lear on November 1, 1993
and who was eligible to retire under the terms of the General
Retirement Plan as of December 31, 1993, shall retain eligibility to
receive a Supplemental Benefit, and shall receive such benefits as are
applicable under the terms of the Plan in effect as of December 31,
1993; provided, however that for purposes of calculating the
<PAGE>
-4-
Supplemental Benefit, the Plan shall use (i) the employee's position or
salary grade with the Company as of December 31, 1993; (ii) the Final Five
Year Average Base Salary as of December 31, 1993; and (iii) the employee's
Credited Service as of December 31, 1993.
Section 4. General. Except as otherwise provided in this
Appendix A, the terms of the Plan applicable to retirements of
Eligible Executives on or after January 1, 1992 shall be applicable to
the retirements of Eligible Executives on or after January 1, 1985 but
prior to January 1, 1992.
Exhibit 10-R-1
AMENDMENT NO. 1
dated as of November 15, 1995 to
SUPPORT AGREEMENT
dated as of October 1, 1993,
between Ford Motor Company ("Ford") and Ford
Credit Europe plc ("Ford Credit Europe")
WHEREAS, Ford and Ford Credit Europe have entered into
the Support Agreement referenced above (the "Support
Agreement") pursuant to which Ford has agreed to maintain a
certain level of its ownership of and the net worth of Ford
Credit Europe through 1996, and Ford Credit Europe has
agreed to continue to make available financing
accommodations to dealers in and of vehicles manufactured or
sold by Ford and other manufacturers; and
WHEREAS, The parties to the Support Agreement desire to
extend its term through the end of calendar year 1999 and
make certain changes to accommodate the potential indirect
ownership by Ford of its interest in Ford Credit Europe.
NOW, THEREFORE, in consideration of the foregoing and
of the mutual agreements hereinafter provided, the parties
hereto agree as follows:
1. The Support Agreement is hereby amended by deleting
the reference to the year "1996" in each of section 2(a) and
section 3 thereof and inserting in its place the year
"1999".
2. Section 2(a) of the Support Agreement shall be
further amended by inserting after the word "make" in the
first line thereof the following parenthetical:
"(or, if its interest in Ford Credit Europe is held through
an affiliate, shall cause such affiliate to make)".
3. Section 2(b) of the Support Agreement shall be
amended by inserting in the first, seventh and eighth lines
thereof after the word "Ford" (but not after "Ford's" in
the seventh line) the following parenthetical: "(or its
affiliate, as the case may be)".
4. The Support Agreement, as amended hereby, shall
remain in full force and effect in accordance with its
terms.
FORD CREDIT EUROPE plc FORD MOTOR COMPANY
By: /s/ James W. Bosscher By: /s/ Malcolm S. Macdonald
--------------------- ------------------------
Name: James W. Bosscher Name: Malcolm S. Macdonald
Title: Treasurer Title: Treasurer
Exhibit 10-T-1
AMENDMENTS TO FORD MOTOR COMPANY
DEFERRED COMPENSATION PLAN
--------------------------
The sixth and seventh sentences of paragraph (e) of Section 5 are
hereby amended, effective as of July 13, 1995, to read as
follows:
"Notwithstanding the foregoing, any Section 16 Person who
elects to defer any or part of his or her compensation under
the Plan based on Ford Stock Units may elect distribution of
that part of his or her Deferred Compensation which is based
on Ford Stock Units ("Ford Stock-Based Deferred Compensation")
only upon retirement. Any distribution schedule of a
participant who becomes a Section 16 Person subsequent
to having elected to defer any compensation under
the Plan based on Ford Stock Units shall automatically be
amended, as of the effective date of becoming a Section 16
Person, to provide for distribution of his or her Ford Stock-
Based Deferred Compensation upon retirement."
Paragraph (a) of Section 10 is hereby amended, effective as of
July 13, 1995, to read as follows:
"(a) General. Except as otherwise provided in paragraph
(b) of this Section 10 or in Section 12, or as otherwise
determined by the Committee, distribution of all or any part
of a participant's Deferred Compensation Account shall be
made on, or as soon thereafter as practicable, (i) March 15
of the year selected by the participant for distribution
with respect to the particular deferral if the participant
is an active employee of the Company on the distribution
date, (ii) the March 15 following death or termination for
reasons other than retirement, notwithstanding any prior
selection by the participant of a subsequent year for
distribution with respect to the particular deferral, (iii)
the March 15 following retirement if the participant
selected distribution upon retirement with respect to the
particular deferral and a lump sum distribution was
selected, or if the participant selected a particular year
for distribution with respect to the particular deferral but
retired prior to the year selected, or (iv) the March 15
following retirement with respect to the first annual
installment and continuing on the applicable number of
consecutive anniversaries of such date if ten annual
installments were selected by the participant with respect
to the particular deferral. Unless otherwise determined by
the Committee, a Deferred Compensation Account or part
thereof relating to a particular distribution shall be
valued, for purposes of distribution, as of the following
applicable date or as soon thereafter as practicable: March
15 of the year of distribution or the next preceding day for
which valuation information is available."
<PAGE>
-2-
Paragraph (f) of Section 1 is hereby amended, effective as of
October 1, 1995, to read as follows:
"(f) The term "Deferred Compensation Committee" shall mean
the committee comprised of the Vice President - Human
Resources, the Group Vice President and Chief Financial
Officer and the Vice President - General Counsel or such
other persons as may be designated members of such Committee
by the Compensation and Option Committee."
Exhibit 10-U
DESCRIPTION OF AMENDMENTS TO
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AND
EXECUTIVE SEPARATION ALLOWANCE PLAN
-----------------------------------
On January 25, 1996, the Supplemental Executive Retirement
Plan and the Executive Separation Allowance Plan were each
amended to include in the definition of compensation under such
plans deferrals made under the Deferred Compensation Plan.
Exhibit 11
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
-----------------------------------------------------------
IN ACCORDANCE WITH OPINION 15 OF THE ACCOUNTING PRINCIPLES BOARD
----------------------------------------------------------------
1995 1994 1993
-------------------------------- ------------------------------- --------------------------------
Income Income Income
Attributable Attributable Attributable
Avg. Shares to Common Avg. Shares to Common Avg. Shares to Common
of Common and Class B Stock of Common and Class B Stock of Common and Class B Stock
and Class B ----------------- and Class B ----------------- and Class B ------------------
Stock Per Stock Per Stock Per
Outstanding Total Share Outstanding Total Share Outstanding Total Share
-------------- -------- ------- ------------- ------- -------- ------------ -------- --------
(Mils.) (Mils.) (Mils.) (Mils.) (Mils.) (Mils.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Preliminary Earnings Per
Share Calculation 1,071 $3,839 $3.58 1,010 $5,021 $4.97 986 $2,241 $2.27
I. Primary Earnings Per Share
--------------------------
. Assuming exercise of
options 32 45 46
. Assuming purchase of shares
with proceeds of options (17) (27) (28)
. Uncommitted ESOP shares (2) (5) -
. Assuming issuance of shares
contingently issuable 2 2 2
----- ----- -----
Net Common Stock
Equivalents 15 15 20
----- ----- -----
Primary Earnings Per Share
Calculation 1,086 $3,839 $3.53a/ 1,025 $5,021 $4.90a/ 1,006 $2,241 $2.23a/
===== ====== ===== ===== ====== ===== ===== ====== =====
II. Fully Diluted Earnings
Per Share
----------------------
Primary Earnings Per Share
Calculation 1,086 $3,839 $3.53a/ 1,025 $5,021 $4.90a/ 1,006 $2,241 $2.23a/
. Assuming conversion of
convertible preferred
stock 110 141b/ 150 193b/ 150 193b/
. Reduction in shares
assumed to be
purchased with
option proceeds c/ 0 0 4
----- ------ ----- ------ ----- -----
Fully Diluted Earnings
Per Share Calculation 1,196 $3,980 $3.33 1,175 $5,214 $4.44 1,160 $2,434 $2.10
===== ====== ===== ===== ====== ===== ===== ====== =====
</TABLE>
- - - - - -
a/ The effect of common stock equivalents and/or other dilutive securities
wasnot material in this period; therefore, the amount presented on the
income statement is the Preliminary Earnings Per Share Calculation.
b/ Reflects the elimination of preferred dividends upon conversion.
c/ Incremental effect of dividing assumed option proceeds by the ending
price,rather than the average price, of Common Stock for each period when
the ending price exceeds the average price.
Share data have been restated to reflect the 2-for-1 stock split that became
effective June 6, 1994.
Exhibit 12
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
-------------------------------------------
(in millions)
For the Years Ended December 31
--------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings
Income/(Loss) before income taxes
and cumulative effects of changes
in accounting principles $ 6,705 $ 8,789 $ 4,003 $ (127) $(2,587)
Equity in net loss/(income) of
affiliates plus dividends from
affiliates 179 (182) (98) 26 69
Adjusted fixed charges a/ 10,556 8,122 7,648 8,113 9,360
------- ------- ------- ------- -------
Earnings $17,440 $16,729 $11,553 $ 8,012 $ 6,842
======= ======= ======= ======= =======
Combined Fixed Charges and
Preferred Stock Dividends
Interest expense b/ $10,121 $ 7,787 $ 7,351 $ 7,987 $ 9,326
Interest portion of rental expense c/ 396 265 266 185 124
Preferred stock dividend requirements
of majority owned subsidiaries d/ 199 160 115 77 56
------- ------- ------- ------- -------
Fixed charges 10,716 8,212 7,732 8,249 9,506
Ford preferred stock dividend
requirements e/ 459 472 442 317 26
------- ------- ------- ------- -------
Total combined fixed charges
and preferred stock dividends $11,175 $ 8,684 $ 8,174 $ 8,566 $ 9,532
======= ======= ======= ======= =======
Ratios
Ratio of earnings to fixed charges 1.6 2.0 1.5 f/ g/
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.6 1.9 1.4 h/ i/
</TABLE>
- - - - - -
a/ Fixed charges, as shown below, adjusted to exclude the amount of
interest capitalized during the period and preferred stock dividend
requirements of majority owned subsidiaries and trusts.
b/ Includes interest, whether expensed or capitalized, and amortization of
debt expense and discount or premium relating to any indebtedness.
c/ One-third of all rental expense is deemed to be interest.
d/ Preferred stock dividend requirements of Ford Holdings, Inc., increased
to an amount representing the pre-tax earnings which would be
required to cover such dividend requirements based on Ford's effective
income tax rates for all periods except 1992. The U.S. statutory
rate of 34% was used for 1992.
e/ Preferred stock dividend requirements of Ford Motor Company, increased
to an amount representing the pre-tax earnings which would be
required to cover such dividend requirements based on Ford's effective
income tax rates for all periods except 1992. The U.S. statutory
rate of 34% was used for 1992.
f/ Earnings inadequate to cover fixed charges by $237 million.
g/ Earnings inadequate to cover fixed charges by $2,664 million.
h/ Earnings inadequate to cover combined fixed charges and preferred stock
dividends by $554 million.
i/ Earnings inadequate to cover combined fixed charges and preferred stock
dividends by $2,690 million.
Exhibit 21
Ford Motor Company
SUBSIDIARIES OF THE REGISTRANT AS OF MARCH 15, 1996*
Jurisdiction of
Organization
---------------
Ford Argentina S.A. Argentina
Ford Capital B.V. The Netherlands
Ford Electronica Portuguesa, Ltd. Bermuda
Ford Electronics and Refrigeration Corporation Delaware, U.S.A.
Ford Electronics Manufacturing Corporation Canada
Ford Mercantil e Participacoes Ltda. Brazil
Ford Participacoes, Empreendimentos e Negocios Ltda. Brazil
Ford Brasil Ltda. Brazil
Ford Enhanced Investment Partnership Michigan, U.S.A
Ford Ensite International Inc. Canada
Ford Motor Company of Canada, Limited Canada
Ford Motor Company of Australia Limited Australia
Ford Motor Company of New Zealand Limited New Zealand
Essex Manufacturing Canada
Ford Lio Ho Motor Company Ltd. Taiwan
FLH Marketing Services Ltd. Taiwan
FLH Sales Limited Taiwan
AIC Corporation Japan
Ford Espana S.A. Spain
Ford Export Services B.V. The Netherlands
Ford FSG, Inc. Delaware, U.S.A.
Associates First Capital Corporation Delaware, U.S.A.
Associates Corporation of North America Delaware, U.S.A.
Ford Credit Europe plc England
Ford Bank AG Germany
Ford Credit Entidad de Financiacion, S.A. Spain
Ford Motor Credit Company Delaware, U.S.A.
Ford Credit Australia Limited Australia
Ford Credit Auto Receivables Corporation Delaware, U.S.A.
Ford Credit Canada Limited Canada
Ford New Holland Credit Company Delaware, U.S.A.
Primus Automotive Financial Services, Inc. New York, U.S.A.
Ford France S.A. France
Ford Holdings, Inc. Delaware, U.S.A.
Ford Leasing Development Company Delaware, U.S.A.
Ford Motor Land Development Corporation Delaware, U.S.A.
The American Road Insurance Company Michigan, U.S.A.
USL Capital Corporation Delaware, U.S.A.
Ford International Capital Corporation Delaware, U.S.A.
Ford Investment Partnership Michigan, U.S.A.
Ford Italiana S.p.A. Italy
Ford Motor Company (Japan), Ltd. Japan
Ford Motor Company Limited England
ACONA B.V. The Netherlands
Ford Motor Company, S.A. de C.V. Mexico
Ford Motor de Venezuela, S.A. Venezuela
Ford Motor Norge A/S Norway
Ford Werke AG Germany
Ford Werke AG & Co. Leasing KG Germany
Jaguar Limited England
The Hertz Corporation Delaware, U.S.A.
461 Other U.S. Subsidiaries
352 Other Non-U.S. Subsidiaries
*Subsidiaries are not shown by name in the above list if,
considered in the aggregate as a single subsidiary, they would
not constitute a significant subsidiary.
Exhibit 23
Coopers & Lybrand L.L.P.
CONSENT OF COOPERS & LYBRAND L.L.P.
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, 33-55487, 33-56785, 33-58255, 33-58785, 33-58861,
33-61107, 33-62227, 33-64605, and 33-64607 on Form S-8, and 2-42133,
33-32641, 33-40638, 33-43085, 33-55474, 33-55171 and 33-64247 on
Form S-3
We consent to the incorporation by reference in the above Registration
Statements of our report dated January 26, 1996 to the Board of Directors and
Stockholders of Ford Motor Company which is included in this Annual Report on
Form 10-K.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
400 Renaissance Center
Detroit, Michigan 48243
March 18, 1996
Exhibit 24
FORD MOTOR COMPANY
Certificate of Assistant Secretary
----------------------------------
The undersigned, T. J. DeZure, an Assistant Secretary of
FORD MOTOR COMPANY, a Delaware corporation (the "Company"), DOES
HEREBY CERTIFY that the following resolutions were adopted at a
meeting of the Board of Directors of the Company duly called and
held on March 14, 1996, and that the same are in full force and
effect:
RESOLVED, That preparation of an Annual Report of the
Company on Form 10-K for the year ended December 31, 1995
(the "10-K Report"), including exhibits and other documents,
to be filed with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as
amended, be and hereby is in all respects authorized and
approved; that the draft 10-K Report presented to this
meeting be and hereby is approved in all respects; that the
directors and appropriate officers of the Company, and each
of them, be and hereby are authorized to sign and execute in
their own behalf, or in the name and on behalf of the
Company, or both, as the case may be, the 10-K Report, and
any and all amendments thereto, with such changes therein as
such directors and officers may deem necessary, appropriate
or desirable, as conclusively evidenced by their execution
thereof; and that the appropriate officers of the Company,
and each of them, be and hereby are authorized to cause the
10-K Report and any such amendments, so executed, to be filed
with the Commission.
RESOLVED, That each officer and director who may be
required to sign and execute the 10-K Report or any amendment
thereto or document in connection therewith (whether in the
name and on behalf of the Company, or as an officer or
director of the Company, or otherwise), be and hereby is
authorized to execute a power of attorney appointing J. M.
Devine, D. R. Coulson, J. W. Martin, Jr., J. M. Rintamaki, L.
J. Ghilardi and Nadia A. Patino, and each of them, severally,
his or her true and lawful attorney or attorneys to sign in
his or her name, place and stead in any such capacity the 10-
K Report and any and all amendments thereto and documents in
connection therewith, and to file the same with the
Commission, each of said attorneys to have power to act with
or without the other, and to have full power and authority to
do and perform in the name and on behalf of each of said
officers and directors who shall have executed such power of
attorney, every act whatsoever which such attorneys, or any
of them, may deem necessary, appropriate or desirable to be
done in connection therewith as fully and to all intents and
purposes as such officers or directors might or could do in
person.
WITNESS my hand as of this 15th day of March, 1996.
/s/T. J. DeZure
-----------------------
T. J. DeZure
Assistant Secretary
(SEAL)
<PAGE>
POWER OF ATTORNEY WITH RESPECT TO
ANNUAL REPORT OF FORD MOTOR COMPANY ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------
Each of the undersigned, a director, officer or
employee of FORD MOTOR COMPANY, appoints each of J. M.
Devine, D. R. Coulson, J. W. Martin, Jr., J. M. Rintamaki,
L. J. Ghilardi and Nadia A. Patino his or her true and
lawful attorney and agent to do any and all acts and things
and execute any and all instruments which the attorney and
agent may deem necessary or advisable in order to enable
FORD MOTOR COMPANY to comply with the Securities Exchange
Act of 1934, and any requirements of the Securities and
Exchange Commission, in connection with the Annual Report of
FORD MOTOR COMPANY on Form 10-K for the year ended December
31, 1995 and any and all amendments thereto, as authorized
at a meeting of the Board of Directors of FORD MOTOR COMPANY
held on March 14, 1996, including, but not limited to, power
and authority to sign his or her name (whether on behalf of
FORD MOTOR COMPANY, or as a director, officer or employee of
FORD MOTOR COMPANY, or by attesting the seal of FORD MOTOR
COMPANY, or otherwise) to such instruments and to such
Annual Report and any amendments thereto, and to file them
with the Securities and Exchange Commission. The
undersigned ratifies and confirms all that any of the
attorneys and agents shall do or cause to be done by virtue
hereof. Any one of the attorneys and agents shall have, and
may exercise, all the powers conferred by this instrument.
Each of the undersigned has signed his or her name as
of the 14th day of March, 1996.
/s/Alex Trotman /s/Colby H. Chandler
- ------------------------- ---------------------------
(Alex Trotman) (Colby H. Chandler)
/s/Michael D. Dingman /s/Edsel B. Ford II
- ------------------------- ---------------------------
(Michael D. Dingman) (Edsel B. Ford II)
/s/William Clay Ford /s/William Clay Ford, Jr.
- ------------------------- ---------------------------
(William Clay Ford) (William Clay Ford, Jr.)
/s/Roberto C. Goizueta /s/Irvine O. Hockaday, Jr.
- ------------------------- ---------------------------
(Roberto C. Goizueta) (Irvine O. Hockaday, Jr.)
<PAGE>
/s/Marie-Josee Kravis /s/Drew Lewis
- ------------------------- ---------------------------
(Marie-Josee Kravis) (Drew Lewis)
/s/Ellen R. Marram /s/Kenneth H. Olsen
- ------------------------- ---------------------------
(Ellen R. Marram) (Kenneth H. Olsen)
/s/Carl E. Reichardt /s/Clifton R. Wharton, Jr.
- ------------------------- ---------------------------
(Carl E. Reichardt) (Clifton R. Wharton, Jr.)
/s/John M. Devine /s/Daniel R. Coulson
- ------------------------- ---------------------------
(John M. Devine) (Daniel R. Coulson)
<PAGE>
POWER OF ATTORNEY WITH RESPECT TO
ANNUAL REPORT OF FORD MOTOR COMPANY ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995
The undersigned, a director of FORD MOTOR COMPANY,
appoints each of J. M. Devine, D. R. Coulson, J. W. Martin,
Jr., J. M. Rintamaki, L. J. Ghilardi and Nadia A. Patino his
true and lawful attorney and agent to do any and all acts and things
and execute any and all instruments which the attorney and
agent may deem necessary or advisable in order to enable
FORD MOTOR COMPANY to comply with the Securities Exchange
Act of 1934, and any requirements of the Securities and
Exchange Commission, in connection with the Annual Report of
FORD MOTOR COMPANY on Form 10-K for the year ended December
31, 1995 and any and all amendments thereto, as authorized
at a meeting of the Board of Directors of FORD MOTOR COMPANY
held on March 14, 1996, including, but not limited to, power
and authority to sign his name (whether as a director, or by
attesting the seal of FORD MOTOR COMPANY, or otherwise) to
such instruments and to such Annual Report and any amendments
thereto, and to file them with the Securities and Exchange Commission.
The undersigned ratifies and confirms all that any of the
attorneys and agents shall do or cause to be done by virtue
hereof. Any one of the attorneys and agents shall have, and
may exercise, all the powers conferred by this instrument.
The undersigned has signed his name as of the 14th day
of March, 1996.
/s/John L. Thornton
----------------------------
John L. Thornton
