UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996 OR
------------------------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission file number 1-3950
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FORD MOTOR COMPANY
------------------
(Exact name of registrant as specified in its charter)
Incorporated in Delaware 38-0549190
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
The American Road, Dearborn, Michigan 48121
--------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 313-322-3000
------------
Indicate by checkmark 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 .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: As of September 30, 1996, the Registrant had outstanding
1,114,618,895 shares of Common Stock and 70,852,076 shares of Class B Stock.
Page 1 of 24
Exhibit index located on sequential page number 18
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
Third Quarter Nine Months
-------------------------- --------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- - United States 884 869 2,891 3,038
- - Outside United States 568 566 2,009 1,978
----- ----- ----- -----
Total 1,452 1,435 4,900 5,016
===== ===== ===== =====
Sales and revenues (in millions)
- - Automotive $26,459 $24,437 $ 86,518 $ 82,899
- - Financial Services 7,501 6,981 21,640 19,691
------- ------- -------- --------
Total $33,960 $31,418 $108,158 $102,590
======= ======= ======== ========
Net income/(loss) (in millions)
- - Automotive $ 15 $ (201) $ 1,265 $ 2,040
- - Financial Services 671* 558 1,977* 1,439
------- ------- -------- --------
Total $ 686 $ 357 $ 3,242 $ 3,479
======= ======= ======== ========
Capital expenditures (in millions)
- - Automotive $ 2,358 $ 2,254 $ 5,926 $ 6,204
- - Financial Services 149 76 349 223
------- ------- -------- --------
Total $ 2,507 $ 2,330 $ 6,275 $ 6,427
======= ======= ======== ========
Stockholders' equity at September 30
- - Total (in millions) $26,152 $24,955 $ 26,152 $ 24,955
- - After-tax return on Common and
Class B stockholders' equity 10.5% 5.4% 17.4% 20.9%
Automotive cash and marketable
securities at September 30 (in millions) $12,960 $12,241 $ 12,960 $ 12,241
Automotive debt at September 30
(in millions) $ 7,296 $ 6,829 $ 7,296 $ 6,829
Automotive after-tax return on sales 0.1% ** 1.5% 2.5%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,183 1,083 1,177 1,049
- - Number outstanding at September 30 1,185 1,090 1,185 1,090
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income/(loss) assuming full dilution
- - Automotive $ 0.00 $ (0.19) $ 1.02 $ 1.65
- - Financial Services 0.56 0.46 1.64 1.20
------- ------- -------- --------
Total $ 0.56 $ 0.27 $ 2.66 $ 2.85
======= ======= ======== ========
Cash dividends $ 0.385 $ 0.31 $ 1.085 $ 0.88
</TABLE>
- - - - - -
*Results in third quarter 1996 and nine months 1996 included a gain on
disposition of substantially all of USL Capital's assets ($76 million and $95
million, respectively); results in nine months 1996 included a write-down
relating to Ford's investment in Budget Rent a Car Corporation ($437 million)
and a gain on sale of The Associates' common stock ($650 million)
**Results in this period were a loss
2
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
------------------
For the Periods Ended September 30, 1996 and 1995
(in thousands)
Third Quarter Nine Months
---------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
North America
United States
Cars 387 377 1,228 1,333
Trucks 497 492 1,663 1,705
----- ----- ----- -----
Total United States 884 869 2,891 3,038
Canada 52 46 174 178
Mexico 13 3 39 21
----- ----- ----- -----
Total North America 949 918 3,104 3,237
Europe
Britain 100 105 376 371
Germany 84 93 330 325
France 42 40 147 124
Italy 30 31 129 139
Spain 27 33 114 129
Other countries 67 58 236 212
----- ----- ----- -----
Total Europe 350 360 1,332 1,300
Other international
Brazil 49 45 142 153
Australia 40 41 107 107
Taiwan 20 27 72 90
Japan 13 14 41 44
Argentina 12 13 43 34
Other countries 19 17 59 51
----- ----- ----- -----
Total other international 153 157 464 479
----- ----- ----- -----
Total worldwide vehicle unit sales 1,452 1,435 4,900 5,016
===== ===== ===== =====
</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.
3
<PAGE>
<TABLE>
<CAPTION>
Part I. Financial Information
------------------------------
Item 1. Financial Statements
- -----------------------------
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended September 30, 1996 and 1995
(in millions)
Third Quarter Nine Months
-------------------------- --------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
AUTOMOTIVE
Sales $26,459 $24,437 $86,518 $82,899
Costs and expenses (Note 2)
Costs of sales 24,926 23,271 79,941 75,154
Selling, administrative and other expenses 1,514 1,370 4,619 4,393
------- ------- ------- -------
Total costs and expenses 26,440 24,641 84,560 79,547
Operating income/(loss) 19 (204) 1,958 3,352
Interest income 188 171 589 594
Interest expense 155 151 537 491
------- ------- ------- -------
Net interest income 33 20 52 103
Equity in net loss of affiliated companies (68) (190) (43) (151)
Net expense from transactions with
Financial Services (25) (42) (62) (101)
------- ------- ------- -------
(Loss)/income before income taxes - Automotive (41) (416) 1,905 3,203
FINANCIAL SERVICES
Revenues 7,501 6,981 21,640 19,691
Costs and expenses
Interest expense 2,458 2,437 7,318 6,948
Depreciation 1,768 1,715 5,134 4,836
Operating and other expenses 1,559 1,421 4,522 4,049
Provision for credit and insurance losses 708 472 1,894 1,337
Asset write-downs and dispositions (Note 3) (235) - 437 -
------- ------- ------- -------
Total costs and expenses 6,258 6,045 19,305 17,170
Net revenue from transactions with Automotive 25 42 62 101
Gain on sale of The Associates'
common stock (Note 4) - - 650 -
------- ------- ------- -------
Income before income taxes - Financial Services 1,268 978 3,047 2,622
------- ------- ------- -------
TOTAL COMPANY
Income before income taxes 1,227 562 4,952 5,825
Provision for income taxes 474 157 1,581 2,198
------- ------- ------- -------
Income before minority interests 753 405 3,371 3,627
Minority interests in net income of subsidiaries 67 48 129 148
------- ------- ------- -------
Net income $ 686 $ 357 $ 3,242 $ 3,479
======= ======= ======= =======
Income attributable to Common and Class B Stock
after preferred stock dividends $ 670 $ 302 $ 3,191 $ 3,283
Average number of shares of Common and Class B
Stock outstanding 1,183 1,083 1,177 1,049
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Income $ 0.57 $ 0.28 $ 2.71 $ 3.13
Income assuming full dilution $ 0.56 $ 0.27 $ 2.66 $ 2.85
Cash dividends $ 0.385 $ 0.31 $ 1.085 $ 0.88
</TABLE>
The accompanying notes are part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Automotive
Cash and cash equivalents $ 3,461 $ 5,750
Marketable securities 9,499 6,656
-------- --------
Total cash and marketable securities 12,960 12,406
Receivables 3,525 3,321
Inventories (Note 5) 7,671 7,162
Deferred income taxes 3,287 2,709
Other current assets 3,526 1,483
Net current receivable from Financial Services 109 200
-------- --------
Total current assets 31,078 27,281
Equity in net assets of affiliated companies 2,484 2,248
Net property 32,605 31,273
Deferred income taxes 4,703 4,802
Other assets 7,196 7,168
-------- --------
Total Automotive assets 78,066 72,772
Financial Services
Cash and cash equivalents 5,295 2,690
Investments in securities 3,594 4,553
Net receivables and lease investments 158,386 149,694
Other assets 13,160 13,574
-------- --------
Total Financial Services assets 180,435 170,511
-------- --------
Total assets $258,501 $243,283
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 11,729 $ 11,260
Other payables 1,876 1,976
Accrued liabilities 17,058 13,392
Income taxes payable 600 316
Debt payable within one year 2,125 1,832
-------- --------
Total current liabilities 33,388 28,776
Long-term debt 5,171 5,475
Other liabilities 26,497 25,677
Deferred income taxes 1,468 1,186
-------- --------
Total Automotive liabilities 66,524 61,114
Financial Services
Payables 3,927 5,476
Debt 148,320 141,317
Deferred income taxes 4,206 3,831
Other liabilities and deferred income 8,583 6,116
Net payable to Automotive 109 200
-------- --------
Total Financial Services liabilities 165,145 156,940
Company-obligated mandatorily redeemable preferred securities of
a subsidiary trust holding solely junior subordinated debentures
of the Company (Note 6) 680 682
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate
liquidation preference of $724 million and $1,042 million) * *
Common Stock, par value $1.00 per share (1,115 and 1,089 million shares issued) 1,115 1,089
Class B Stock, par value $1.00 per share (71 million shares issued) 71 71
Capital in excess of par value of stock 5,202 5,105
Foreign currency translation adjustments and other 163 594
Earnings retained for use in business 19,601 17,688
-------- --------
Total stockholders' equity 26,152 24,547
-------- --------
Total liabilities and stockholders' equity $258,501 $243,283
======== ========
- - - - - -
*Less than $1 million
The accompanying notes are part of the financial statements.
5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended September 30, 1996 and 1995
(in millions)
Nine Months 1996 Nine Months 1995
---------------------- ----------------------
Financial Financial
Automotive Services Automotive Services
---------- --------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash and cash equivalents at January 1 $ 5,750 $ 2,690 $ 4,481 $ 1,739
Cash flows from operating activities before securities trading 8,462 10,839 6,796 9,171
Net (purchases)/sales of trading securities (2,844) (1,230) 1,982 256
------- -------- ------- --------
Net cash flows from operating activities 5,618 9,609 8,778 9,427
Cash flows from investing activities
Capital expenditures (5,926) (349) (6,204) (223)
Acquisitions of receivables and lease investments - (82,293) - (71,557)
Collections of receivables and lease investments - 62,469 - 51,210
Net acquisitions of daily rental vehicles - (1,995) - (1,529)
Net proceeds from USL Capital asset sales (Note 3) - 1,157 - -
Purchases of securities (6) (8,362) (47) (4,748)
Sales and maturities of securities 7 10,266 50 3,748
Proceeds from sales of receivables and lease investments - 1,011 - 2,728
Net investing activity with Financial Services (254) - (237) -
Other (523) (204) (400) (171)
------- -------- ------- --------
Net cash used in investing activities (6,702) (18,300) (6,838) (20,542)
Cash flows from financing activities
Cash dividends (1,328) - (1,120) -
Issuance of Common Stock 124 - 326 -
Issuance of Common Stock of a subsidiary (Note 4) - 1,897 - -
Changes in short-term debt 395 1,465 665 2,481
Proceeds from other debt 300 18,650 0 16,532
Principal payments on other debt (671) (10,407) (207) (7,931)
Net financing activity with Automotive - 254 - 237
Other (43) (266) 6 415
------- -------- ------- -------
Net cash (used in)/provided by financing activities (1,223) 11,593 (330) 11,734
Effect of exchange rate changes on cash (73) (206) 136 (21)
Net transactions with Automotive/Financial Services 91 (91) 394 (394)
------- -------- ------- --------
Net (decrease)/increase in cash and cash equivalents (2,289) 2,605 2,140 204
------- -------- ------- --------
Cash and cash equivalents at September 30 $ 3,461 $ 5,295 $ 6,621 $ 1,943
======= ======== ======= ========
</TABLE>
The accompanying notes are part of the financial statements.
6
<PAGE>
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
1. Financial Statements - The financial data presented herein are unaudited,
but in the opinion of management reflect those adjustments necessary for a
fair presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference should
be made to the financial statements contained in the registrant's Annual
Report on Form 10-K (the "10-K Report") for the year ended December 31,
1995. For purposes hereof, "Ford" or the "Company" means Ford Motor Company
and its majority owned subsidiaries unless the context requires otherwise.
Certain amounts for prior periods have been reclassified.
2. Selected Automotive costs and expenses are summarized as follows
(in millions):
Third Quarter Nine Months
------------------- -------------------
1996 1995 1996 1995
------ ------ ------ ------
Depreciation $687 $622 $1,966 $1,816
Amortization 828 731 2,278 2,072
3. Asset Write-downs and Dispositions
During third quarter 1996, USL Capital concluded a series of transactions
for the sale of substantially all of its assets, as well as certain assets
owned by Ford Credit and managed by USL Capital. Proceeds from the sale
were used to pay down related liabilities and debt.
The Company recorded a pre-tax charge in second quarter 1996 to recognize
the estimated value of its outstanding notes receivable from, and preferred
stock investment in, Budget Rent a Car Corporation ("BRAC"). The write-down
resulted from conclusions reached in a study of Ford's rental car business
strategy. In accordance with SFAS 114, the notes receivable write-down
reflected primarily the unsecured portion of financing provided to BRAC by
Ford. The preferred stock write-down reflected recognition of the fair
value of Ford's investment. The Company previously announced its intention
to acquire all of the outstanding common stock of BRAC at a future date,
subject to governmental review.
The effect of the USL Capital disposition and BRAC write-down on the
Company's results from operations are summarized below (in millions):
<TABLE>
<CAPTION>
Third Quarter 1996 Nine Months 1996
------------------------ -----------------------------
Income Net Income/(loss) Net
Before Taxes Income Before Taxes Income/(loss)
------------ ------ ------------ -------------
<S> <C> <C> <C> <C>
USL Capital disposition $235 $76 $ 263 $ 95
Budget Rent a Car Corporation write-down - - (700) (437)
---- --- ----- -----
Total $235 $76 $(437) $(342)
==== === ===== =====
</TABLE>
7
<PAGE>
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
4. Sale of The Associates' Common Stock - During May 1996, The Associates
completed an initial public offering of its common stock representing a
19.3% economic interest in The Associates (the "IPO"). The Company recorded
in second quarter 1996 a non-operating gain of $650 million resulting from
the IPO, to recognize the excess of the net proceeds from the IPO over the
proportionate share of the Company's investment in The Associates. The gain
was not subject to income taxes.
5. Automotive inventories are summarized as follows (in millions):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Raw materials, work in process and supplies $3,758 $3,717
Finished products 3,913 3,445
------ ------
Total inventories $7,671 $7,162
====== ======
U.S. inventories $2,929 $2,662
</TABLE>
6. Company-Obligated Mandatorily Redeemable Preferred Securities of a
Subsidiary Trust - The sole asset of Ford Motor Company Capital Trust I
(the "Trust"), which is the obligor on the Preferred Securities of such
Trust, is $632 million principal amount of 9% Junior Subordinated
Debentures due 2025 of Ford Motor Company.
8
<PAGE>
[Coopers & Lybrand L.L.P. letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Ford Motor Company
We have reviewed the consolidated balance sheet of Ford Motor Company and
Subsidiaries at September 30, 1996 and the related consolidated statement of
income and condensed consolidated statement of cash flows for the periods set
forth in the Ford Motor Company Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet at December 31, 1995 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended (not presented herein); and in our report dated
January 26, 1996, we expressed an unqualified opinion on those consolidated
financial statements.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
October 16, 1996
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS: THIRD QUARTER 1996 COMPARED WITH THIRD QUARTER 1995
Overview
- --------
Ford earned $686 million, or $0.56 per share of Common and Class B Stock (fully
diluted), in third quarter 1996. This compares with $357 million, or $0.27 per
share (fully diluted), in third quarter 1995. Results in third quarter 1996
included the net favorable effect of two one-time actions (discussed below)
totaling $37 million, or $0.03 per share. The Company's worldwide sales and
revenues were $34 billion, up $2.5 billion from a year ago. Vehicle unit
sales of cars and trucks were 1,452,000, up 17,000 units or 1%. Stockholders'
equity was $26.2 billion at September 30, 1996, compared with $24.5 billion at
December 31, 1995.
Automotive Operations
- ---------------------
Ford's worldwide Automotive operations earned $15 million in third quarter 1996
on sales of $26.5 billion, compared with a loss of $201 million in third quarter
1995 on sales of $24.4 billion. Improved Automotive results in the U.S. were
offset partially by increased losses in other markets.
In the U.S., Automotive operations earned a record $634 million in third quarter
1996 on sales of $17.7 billion, compared with $187 million a year ago on sales
of $16.8 billion. The increase in earnings was explained by higher margins
(reflecting improved sales mix), improved material costs and other operating
cost efficiencies, offset partially by higher product costs. Results in third
quarter 1996 included an initial charge of $39 million for special early
retirements and voluntary separation packages to selected U.S. salaried
employees.
In third quarter 1996, the seasonally-adjusted annual selling rate for the U.S.
car and truck industry was 15.4 million units, compared with 15.2 million units
in third quarter 1995. Ford's combined car and truck market share was 24.5% in
third quarter 1996, down 3/10 of a point from a year ago. Lower shares of small
and specialty cars were offset partially by strong acceptance of new product
offerings.
Outside the U.S., Automotive operations had a loss of $619 million in third
quarter 1996 on sales of $8.8 billion, compared with a loss of $388 million a
year ago on sales of $7.6 billion. The decline reflected primarily increased
losses in Europe and Brazil.
European Automotive operations had a loss of $472 million in third quarter 1996,
compared with a loss of $320 million in third quarter 1995. The higher loss
reflected costs associated with launching new products, adverse vehicle mix and
volume, and continued high marketing costs. High-volume launches are largely
completed. In addition, Ford is continuing to focus on cost reductions, and its
recently launched new products will strengthen its product offerings in Europe.
In third quarter 1996, the seasonally-adjusted annual selling rate for the
European car and truck industry was 14.6 million units, compared with 13.3
million units in third quarter 1995. Ford's combined car and truck market share
was 11.8% in third quarter 1996, down one point from a year ago, and down half a
point from full year 1995, reflecting primarily planned lower sales to daily
rental companies.
In South America, Ford had a loss of $226 million in third quarter 1996,
compared with a loss of $102 million a year ago. The decline reflected primarily
higher losses for operations in Brazil as a result of a long and costly launch
process following the dissolution of the Autolatina joint venture with
Volkswagen AG and higher levels of marketing costs. Losses in Brazil are
expected to continue in fourth quarter 1996 and in 1997. To improve the
competitiveness of its product offerings in Brazil, Ford plans to have three new
products (the Fiesta, Escort and Ranger) available for sale throughout most of
1997 and expects to introduce in 1997 a new, Brazilian-produced small car -- the
Ka.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned a record $671 million in
third quarter 1996, compared with $558 million in third quarter 1995. The
improvement reflected a one-time gain on sale of USL Capital's assets (discussed
below) and record earnings at The Associates and Hertz, offset partially by
lower results at Ford Credit.
Ford Credit's consolidated net income was $299 million in third quarter 1996,
compared with $357 million a year ago. The decrease resulted primarily from
higher credit losses and the effects of the recent Financial Services
reorganization (referred to on page 11 of Ford's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996). An improved net interest margin was a
partial offset. Credit losses as a percent of average net finance receivables
(including net investment in operating leases) were 0.89% in third quarter 1996,
compared with 0.48% in third quarter 1995. Ford Credit expects that the upward
trend in credit losses will continue through the remainder of 1996.
International operations managed by Ford Credit, but not included in its
consolidated results, earned $61 million in third quarter 1996, compared with
$69 million a year ago.
The Associates earned a record $230 million in third quarter 1996 (Ford's share
was $186 million), compared with $197 million a year ago. The increase reflected
primarily higher levels of earning assets, offset partially by higher credit
losses.
Hertz earned a record $74 million in third quarter 1996, compared with $65
million a year ago. The increase reflected primarily higher volume in car rental
and construction equipment rental and sales operations.
During third quarter 1996, USL Capital concluded a series of transactions for
the sale of substantially all of its assets, as well as certain assets owned by
Ford Credit and managed by USL Capital. Proceeds from the sale were used to pay
down related liabilities and debt. These transactions resulted in a gain in
third quarter 1996 of $235 million before taxes ($76 million after taxes).
Excluding the one-time gain on sale of assets, USL Capital earned $18 million in
third quarter 1996, compared with $31 million a year ago. The decline reflected
the absence of earnings from operations sold during the quarter.
Outlook
- -------
It is expected that the U.S. economy will continue to be healthy into 1997, with
a sustainable rate of growth and moderate inflation. The Company expects U.S.
car and truck industry sales to total 15.5 million units in full year 1996,
compared with 15.1 million units in 1995. In Europe, car and truck industry
sales are expected to total 14.2 million units in full year 1996, compared with
13.4 million units in 1995. Earnings for fourth quarter 1996 are expected to be
higher than earnings in fourth quarter 1995 (despite expected additional charges
of $300 million to $400 million after taxes for early retirement programs), but
earnings for full year 1996 might be lower than earnings in full year 1995.
Factors that could result in lower industry volumes than expected and, in turn,
lower earnings include an unexpected decline in the U.S. economy (or other major
markets), an outbreak of hostilities in the Middle East resulting in higher fuel
prices, or increases in interest rates. Other factors that could adversely
affect Ford's earnings include unfavorable market reception to new products,
production or launch problems associated with new products, or significant
escalation in marketing incentives.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
FIRST NINE MONTHS 1996 COMPARED WITH FIRST NINE MONTHS 1995
Overview
- --------
Ford earned $3,242 million, or $2.66 per share of Common and Class B Stock
(fully diluted), in first nine months 1996. This compares with $3,479 million,
or $2.85 per share (fully diluted), in first nine months 1995. Results in first
nine months 1996 included a net one-time gain of $308 million, or $0.25 per
share, relating to gain on sale of The Associates' common stock, write-down of
Ford's investment in Budget Rent a Car Corporation ("BRAC") (discussed below),
and gain on sale of USL Capital's assets. The Company's worldwide sales and
revenues were $108.2 billion, up $5.7 billion from a year ago. Vehicle unit
sales of cars and trucks were 4,900,000, down 116,000 units or 2%.
During May 1996, The Associates completed an initial public offering of its
common stock representing a 19.3% economic interest in The Associates (the
"IPO"). Ford recorded in second quarter 1996 a non-operating gain of $650
million resulting from the IPO, to recognize the excess of the net proceeds from
the IPO over the proportionate share of Ford's investment in The Associates. The
gain was not subject to income taxes.
The Company recorded a pre-tax charge in second quarter 1996 totaling $700
million ($437 million after taxes) to recognize the estimated value of its
outstanding notes receivable from, and preferred stock investment in, BRAC. The
write-down resulted from conclusions reached in a study of Ford's rental car
business strategy. In accordance with SFAS 114, the notes receivable write-down
reflected primarily the unsecured portion of financing provided to BRAC by Ford.
The preferred stock write-down reflected recognition of the fair value of Ford's
investment. The Company previously announced its intention to acquire all of the
outstanding common stock of BRAC at a future date, subject to governmental
review.
Automotive Operations
- ---------------------
Ford's worldwide Automotive operations earned $1,265 million in first nine
months 1996 on sales of $86.5 billion, compared with $2,040 million in first
nine months 1995 on sales of $82.9 billion. After-tax return on sales was 1.5%
in first nine months 1996, down one point from a year ago.
In the U.S., Automotive operations earned $1,379 million in first nine months
1996 on sales of $55.9 billion, compared with $1,675 million a year ago on sales
of $55.7 billion. The decline in earnings was explained by lower unit volume
(reflecting lower market share and dealer inventory rebalancing) and costs
associated with launching high-volume new products. Increased operating cost
efficiencies and improved sales mix were partial offsets.
In first nine months 1996, the seasonally-adjusted annual selling rate for the
U.S. car and truck industry was 15.6 million units, compared with 15 million
units a year ago. Ford's combined car and truck market share was 25% in first
nine months 1996, down 9/10 of a point from a year ago, and down 6/10 of a point
from full year 1995, reflecting primarily planned lower sales to daily rental
companies and reduced marketing support for low margin small cars.
Outside the U.S., Automotive operations had a loss of $114 million in first nine
months 1996 on sales of $30.6 billion, compared with a profit of $365 million a
year ago on sales of $27.2 billion. The decline reflected primarily lower
results in Brazil and Europe.
European Automotive operations had a loss of $203 million in first nine months
1996, compared with a profit of $164 million in first nine months 1995. The
lower results reflected primarily costs associated with launching new products
and adverse product line mix.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
In first nine months 1996, the seasonally-adjusted annual selling rate for the
European car and truck industry was 14.3 million units, compared with 13.4
million units a year ago. Ford's combined car and truck market share was 12% in
first nine months 1996, down half a point from a year ago, and down 3/10 of a
point from full year 1995.
Outside the U.S. and Europe, Automotive operations earned $89 million in first
nine months 1996, compared with $201 million a year ago. The decline reflected
primarily costs associated with launching new products and other costs
associated with new operations in Brazil and other emerging markets.
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned $1,977 million in first nine
months 1996, compared with $1,439 million in first nine months 1995. Results in
first nine months 1996 included a net one-time gain of $308 million relating to
gain on sale of The Associates' common stock, write-down of Ford's investment in
BRAC, and gain on sale of USL Capital's assets ($95 million). The improvement
also reflected record earnings at The Associates and Hertz, offset partially by
lower results at Ford Credit.
Ford Credit's consolidated net income was $924 million in first nine months
1996, compared with $986 million a year ago. The decrease reflected primarily
the same factors as those described in the discussion of third quarter results
of operations. International operations managed by Ford Credit, but not included
in its consolidated results, earned $190 million in first nine months 1996,
compared with $200 million a year ago.
The Associates earned a record $623 million in first nine months 1996 (Ford's
share was $555 million), compared with $529 million a year ago. Hertz earned a
record $123 million in first nine months 1996, compared with $84 million a year
ago. These changes reflected primarily the same factors as those described in
the discussion of third quarter results of operations. Excluding a one-time gain
on sale of USL Capital's assets, USL Capital earned $99 million in first nine
months 1996, compared with $87 million a year ago.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
- ---------------------
Automotive cash and marketable securities were $13 billion at September 30,
1996, up $554 million from December 31, 1995. The Company paid $1,328 million in
cash dividends on its Common Stock, Class B Stock and Preferred Stock during
first nine months 1996.
Automotive capital expenditures were $5.9 billion in first nine months 1996,
down $278 million from the same period a year ago. For full year 1996, Ford's
spending for product change is projected to be about the same compared with
1995; however, as a percent of sales, such spending is expected to be at lower
levels.
Automotive debt at September 30, 1996 totaled $7.3 billion, which was 21% of
total capitalization (stockholders' equity and Automotive debt), compared with
$7.3 billion, or 22% of total capitalization, at December 31, 1995.
At October 1, 1996, Ford had long-term contractually committed global credit
agreements under which $8.4 billion is available from various banks through June
30, 2001. 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 October 1, 1996.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
- ------------------------------------------------------------------------
Financial Services Operations
- -----------------------------
Financial Services cash and investments in securities totaled $8.9 billion at
September 30, 1996, up $1.6 billion from December 31, 1995, reflecting primarily
net proceeds from the sale of USL Capital's assets.
Net receivables and lease investments were $158.4 billion at September 30, 1996,
up $8.7 billion from December 31, 1995. The increase reflected continued growth
in earning assets at Ford Credit and The Associates, offset partially by the
sale of USL Capital's assets.
Total debt was $148.3 billion at September 30, 1996, up $7 billion from December
31, 1995. The increase resulted from higher debt levels required to finance
growth in earning assets at The Associates, Ford Credit and Hertz, offset
partially by a decrease in debt at USL Capital as a result of the sale of USL
Capital's assets.
At October 1, 1996, Financial Services had a total of $48.9 billion of
contractually committed support facilities. Of these facilities, $24 billion
(excluding the $8.4 billion of Ford's credit facilities) are contractually
committed global credit agreements under which $19.7 billion and $4.3 billion
are available to Ford Credit and Ford Credit Europe, respectively, from various
banks; 62% and 76%, respectively, of such facilities are available through June
30, 2001. The entire $19.7 billion may be used, at Ford Credit's option, by any
subsidiary of Ford Credit, and the entire $4.3 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 October 1, 1996, none of the Ford Credit global facilities
were in use; $544 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 October 1, 1996 consisted of $22.3
billion of contractually committed support facilities available to various
affiliates in the U.S. and $2.6 billion of contractually committed support
facilities available to various affiliates outside the U.S.; at October 1, 1996,
approximately $1.3 billion of these facilities were in use.
OTHER FINANCIAL INFORMATION
Coopers & Lybrand L.L.P., Ford's independent public accountants, performed a
limited review of the financial data presented on pages 4 through 8 inclusive.
The review was performed in accordance with standards for such reviews
established by the American Institute of Certified Public Accountants. The
review did not constitute an audit; accordingly, Coopers & Lybrand L.L.P. did
not express an opinion on the aforementioned data. The financial data include
any material adjustments or disclosures proposed by Coopers & Lybrand L.L.P. as
a result of their review.
14
<PAGE>
Part II. Other Information
--------------------------
Item 5. Other Information
- --------------------------
Ford and the United Automobile Workers ("UAW") have entered into a new
collective bargaining agreement that will expire on September 14, 1999. The new
agreement includes provisions that will increase Ford's labor costs by
approximately 4% per year over the term of the contract, in respect of its
employees who are UAW members. Ford's existing agreement with the Canadian
Automobile Workers ("CAW") was scheduled to expire on September 14, 1996, but
has been extended pending negotiations of a new agreement. It is not known
whether Ford will be able to reach a new agreement with the CAW without a work
stoppage. If there should be a protracted work stoppage, Ford's profits could be
substantially adversely affected.
-15-
<PAGE>
<TABLE>
<CAPTION>
Supplemental Schedule
Ford Motor Company
CONDENSED FINANCIAL INFORMATION OF SUBSIDIARY
---------------------------------------------
(in millions)
Ford Capital B.V.
- -----------------
September 30, December 31,
1996 1995
------------ ------------
(unaudited)
<S> <C> <C>
Current assets $1,772 $1,251
Noncurrent assets 3,378 4,662
------ ------
Total assets $5,150 $5,913
====== ======
Current liabilities $1,005 $ 626
Noncurrent liabilities 3,552 4,661
Minority interests in net
assets of subsidiaries 18 22
Stockholder's equity 575 604
------ ------
Total liabilities and
stockholder's equity $5,150 $5,913
====== ======
</TABLE>
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------ -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Sales and other revenue $508 $614 $2,083 $1,960
Operating income 45 61 56 190
Income before income taxes 30 46 14 145
Net income/(loss) 21 25 (22) 108
</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.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
--------
Please refer to the Exhibit Index on page 18.
(b) Reports on Form 8-K
-------------------
The Registrant filed the following Current Reports on Form 8-K during
the quarter ended September 30, 1996:
Current Report on Form 8-K dated July 11, 1996 relating to a dividend
increase and other one-time actions.
Current Report on Form 8-K dated July 17, 1996 relating to Ford's
second quarter 1996 financial results.
Current Report on Form 8-K dated August 6, 1996 relating to Ford's
7 1/2% debentures due August 1, 2026 in the aggregate principal
amount of $250 million.
Current Report on Form 8-K dated September 9, 1996 relating to Ford's
operations in Brazil.
Current Report on Form 8-K dated September 30, 1996 relating to the
new collective bargaining agreement between Ford and the United
Automobile Workers union.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORD MOTOR COMPANY
----------------------------------
(Registrant)
Date: October 30, 1996 By: /s/ D. R. Coulson
------------------ -----------------------------------
D. R. Coulson
Director of Accounting
Ford Automotive Operations
(principal accounting officer)
17
<PAGE>
EXHIBIT INDEX
-------------
Sequential
Page Number
Designation Description at Which Found
- ----------- ------------------------------------------ --------------
Exhibit 10.1 Amendment to Ford Motor Company Restricted 19
Stock Plan for Non-Employee Directors, effective
as of August 1, 1996.
Exhibit 10.2 Amendments to Ford Motor Company Deferred Compensation 20
Plan, effective as of October 1, 1996.
Exhibit 11 Ford Motor Company and Subsidiaries Computation 21-22
of Primary and Fully Diluted Earnings Per Share
in Accordance with Opinion 15 of the Accounting
Principles Board.
Exhibit 12 Ford Motor Company and Subsidiaries Calculation 23
of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.
Exhibit 15 Letter of Coopers & Lybrand L.L.P., Independent Public 24
Accountants, dated October 30, 1996 relating to
Financial Information.
18
<PAGE>
Exhibit 10.1
AMENDMENT TO FORD MOTOR COMPANY
RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(Effective as of August 1, 1996)
A new paragraph (g) of Article 6 is hereby added to the Plan to read as follows:
"6(g) Stock Equivalents. Notwithstanding the provisions of Articles 5 and 6
or any other provision of the Plan, the grant under the Plan to a Director
who resides or works in a country that taxes grants of Restricted Stock
shall not be represented initially by certificates for shares of Common
Stock but shall be represented by rights approximately equivalent to the
rights (other than voting rights) that such Director would have received
under the Plan, and subject to the same restrictions, terms, conditions and
provisions of the Plan that apply to grants of Restricted Stock, if
certificates for shares of Common Stock had been issued in the name of such
Director in accordance with Article 5 and paragraph (b) of this Article 6
(such rights being hereinafter called "Stock Equivalents"). Subject to the
provisions of Article 9 hereof and the other terms and provisions of the
Plan, any Director who holds Stock Equivalents shall be entitled to receive
the same amount of cash that such Director would have received as dividends
if certificates for shares of Common Stock had been issued in the name of
such Director pursuant to Article 5 and paragraph (b) of this Article 6
covering the number of shares equal to the number of shares to which
such Stock Equivalents relate. Upon expiration of the applicable
restriction period relating to any Stock Equivalents granted hereunder,
certificates for the number of shares of Common Stock equal to the number
of shares represented by such Stock Equivalents shall be delivered to such
Director as soon as practicable, free of all restrictions and restrictive
legends. Notwithstanding any other provision of the Plan to the contrary,
in the event that a Director who holds Stock Equivalents granted pursuant
to this paragraph (g) of this Article 6 relocates to a country that does
not tax grants of Restricted Stock, such Director's Stock Equivalents shall
be replaced with an equivalent number of shares of Common Stock having the
same terms, conditions and restrictions as those shares of Common Stock
generally awarded by the Company under the Plan."
19
<PAGE>
Exhibit 10.2
AMENDMENTS TO FORD MOTOR COMPANY
DEFERRED COMPENSATION PLAN
--------------------------
(Effective as of October 1, 1996)
Paragraph (a) of Section 5 is hereby amended to read as follows:
"(a) Supplemental Compensation Deferrals. A participant's decision to
defer payment of supplemental compensation under the Plan must be made
prior to October 31 of the performance year for which the supplemental
compensation is determined."
The sixth and seventh sentences of paragraph (e) of Section 5 are hereby
deleted.
Paragraph (b) of Section 7 is hereby amended to read as follows:
"(b) Eligible Participants. Active employees and retired participants
are eligible to redesignate."
Paragraph (f)(ii) of Section 7 is hereby deleted.
The last sentence of paragraph (b) of Section 10 is hereby deleted.
20
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
Page 1 of 2
Ford Motor Company and Subsidiaries
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
-----------------------------------------------------------
IN ACCORDANCE WITH OPINION 15 OF THE ACCOUNTING PRINCIPLES BOARD
----------------------------------------------------------------
Third Quarter 1996 Third Quarter 1995
-------------------------------- -------------------------------
Income Income
Attributable Attributable
Avg. Shares to Common Avg. Shares to Common
of Common and Class B Stock of Common and Class B Stock
and Class B ------------------ and Class B -----------------
Stock Per Stock Per
Outstanding Total Share Outstanding Total Share
----------- --------- ------- ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
(Mils.) (Mils.) (Mils.) (Mils.)
Preliminary Earnings Per Share Calculation 1,183 $670 $0.57 1,083 $302 $0.28
I. Primary Earnings Per Share
--------------------------
. Assuming exercise of options 49 47
. Assuming purchase of shares with proceeds of
options (34) (31)
. Assuming issuance of shares contingently issuable 2 2
. Uncommitted ESOP shares (7) (2)
----- -----
Net Common Stock Equivalents 10 16
----- -----
Primary Earnings Per Share Calculation 1,193 $670 $0.56a/ 1,099 $302 $0.27a/
===== ==== ===== ===== ==== =====
II. Fully Diluted Earnings Per Share
--------------------------------
Primary Earnings Per Share Calculation 1,193 $670 $0.56 1,099 $302 $0.27
. Assuming conversion of convertible preferred
stock 16 5b/ 101 32b/
. Reduction in shares assumed to be purchased
with option proceeds c/ 0 1
----- ---- ----- ----
Fully Diluted Earnings Per Share Calculation 1,209 $675 $0.56 1,201 $334 $0.27d/
===== ==== ===== ===== ==== =====
</TABLE>
- - - - - -
a/ The effect of common stock equivalents and/or other dilutive securities was
not 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.
d/ The effect on earnings per share of the assumed conversion of convertible
preferred stock was anti-dilutive and, accordingly, is excluded in the Fully
Diluted Earnings Per Share Calculation for the period indicated.
21
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
Page 2 of 2
Ford Motor Company and Subsidiaries
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
-----------------------------------------------------------
IN ACCORDANCE WITH OPINION 15 OF THE ACCOUNTING PRINCIPLES BOARD
----------------------------------------------------------------
Nine Months 1996 Nine Months 1995
-------------------------------- -------------------------------
Income Income
Attributable Attributable
Avg. Shares to Common Avg. Shares to Common
of Common and Class B Stock of Common and Class B Stock
and Class B ------------------ and Class B -----------------
Stock Per Stock Per
Outstanding Total Share Outstanding Total Share
----------- --------- ------- ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
(Mils.) (Mils.) (Mils.) (Mils.)
Preliminary Earnings Per Share Calculation 1,177 $3,191 $2.71 1,049 $3,283 $3.13
I. Primary Earnings Per Share
--------------------------
. Assuming exercise of options 57 33
. Assuming purchase of shares with proceeds
of options (41) (18)
. Assuming issuance of shares contingently issuable 2 2
. Uncommitted ESOP shares (6) (3)
----- -----
Net Common Stock Equivalents 12 14
----- -----
Primary Earnings Per Share Calculation 1,189 $3,191 $2.68a/ 1,063 $3,283 $3.09a/
===== ====== ===== ===== ====== =====
II. Fully Diluted Earnings Per Share
Primary Earnings Per Share Calculation 1,189 $3,191 $2.68 1,063 $3,283 $3.09
. Assuming conversion of convertible preferred
stock 20 20b/ 130 125b/
. Reduction in shares assumed to be purchased
with option proceeds c/ 0 3
----- ------ ----- ------
Fully Diluted Earnings Per Share Calculation 1,209 $3,211 $2.66 1,196 $3,408 $2.85
===== ====== ===== ===== ====== =====
</TABLE>
- - - - - -
a/ The effect of common stock equivalents and/or other dilutive securities was
not 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.
22
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------------------------------
(in millions)
Nine For the Years Ended December 31
Months ------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings
- --------
Income/(loss) before income taxes
and cumulative effects of changes
in accounting principles $ 4,952 $ 6,705 $ 8,789 $ 4,003 $ (127) $(2,587)
Equity in net loss/(income) of
affiliates plus dividends from
affiliates 69 179 (182) (98) 26 69
Adjusted fixed charges a/ 8,229 10,556 8,122 7,648 8,113 9,360
------- ------- ------- ------- ------ -------
Earnings $13,250 $17,440 $16,729 $11,553 $8,012 $ 6,842
======= ======= ======= ======= ====== =======
Combined Fixed Charges and
Preferred Stock Dividends
Interest expense b/ $ 7,814 $10,121 $ 7,787 $ 7,351 $7,987 $ 9,326
Interest portion of rental expense c/ 297 396 265 266 185 124
Preferred stock dividend requirements of
majority owned subsidiaries and
trusts d/ 41 199 160 115 77 56
------- ------- ------- ------- ------ -------
Fixed charges 8,152 10,716 8,212 7,732 8,249 9,506
Ford preferred stock dividend
requirements e/ 75 459 472 442 317 26
------- ------- ------- ------- ------ -------
Total combined fixed charges
and preferred stock dividends $ 8,227 $11,175 $ 8,684 $ 8,174 $8,566 $ 9,532
======= ======= ======= ======= ====== =======
Ratios
Ratio of earnings to fixed charges 1.6 1.6 2.0 1.5 f/ g/
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.6 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. (applicable for
1991 through 1995) were 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 were 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.
23
<PAGE>
Exhibit 15
[Coopers & Lybrand L.L.P. letterhead]
Ford Motor Company
The American Road
Dearborn, Michigan
Re: Ford Motor Company Registration Statement Nos. 2-95018, 2-95020,
33-9722, 33-14951, 33-19036, 33-36043, 33-36061, 33-39402, 33-50087,
33-50194, 33-50238, 33- 54304, 33-54344, 33-54348, 33-54275, 33-54283,
33-54735, 33-54737, 33-55847, 33-56785, 33-58255, 33-58785, 33-58861,
33-61107, 33-62227, 33-64605, 33-64607, 333-02401 and 333-02735 on
Form S-8; and 2-42133, 33-32641, 33-40638, 33-43085, 33-55474,
33-55171, 33-64247 and 333-14297 on Form S-3
We are aware that our report dated October 16, 1996 accompanying the
unaudited interim financial information of Ford Motor Company for the
periods ended September 30, 1996 and 1995 and included in the Ford
Motor Company Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 will be incorporated by reference in the
Registration Statements. Pursuant to Rule 436(c) under the Securities
Act of 1933, this report should not be considered a part of the
Registration Statements prepared or certified by us within the meaning
of Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
October 30, 1996
24
