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 March 31, 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 March 31, 1996, the Registrant had
outstanding 1,103,722,406 shares of Common Stock and 70,852,076 shares
of Class B Stock.
Page 1 of 20
Exhibit index located on sequential page number 17
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Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
<TABLE>
<CAPTION>
First Quarter
--------------------------
1996 1995
-------- --------
(unaudited)
<S> <C> <C>
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- - United States 940 1,087
- - Outside United States 698 683
----- -----
Total 1,638 1,770
===== =====
Sales and revenues (in millions)
- - Automotive $29,333 $28,601
- - Financial Services 6,928 6,182
------- -------
Total $36,261 $34,783
======= =======
Net income (in millions)
- - Automotive $ 142 $ 1,141
- - Financial Services 511 409
------- -------
Total $ 653 $ 1,550
======= =======
Capital expenditures (in millions)
- - Automotive $ 1,789 $ 2,131
- - Financial Services 113 67
------- -------
Total $ 1,902 $ 2,198
======= =======
Stockholders' equity at March 31
- - Total (in millions) $24,540 $23,552
- - After-tax return on Common and
Class B stockholders' equity 10.7% 30.9%
Automotive cash, cash equivalents
and marketable securities at
March 31 (in millions) $12,937 $13,254
Automotive debt at March 31
(in millions) $ 7,175 $ 7,102
Automotive after-tax return on sales 0.5% 4.0%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,168 1,025
- - Number outstanding at March 31 1,175 1,027
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income $ 0.54 $ 1.44
Income assuming full dilution
- - Automotive $ 0.11 $ 0.94
- - Financial Services 0.42 0.34
------- -------
Total $ 0.53 $ 1.28
======= =======
Cash dividends $ 0.35 $ 0.26
</TABLE>
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<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
------------------
For the Periods Ended March 31, 1996 and 1995
(in thousands)
First Quarter
-----------------------
1996 1995
------- -------
(unaudited)
<S> <C> <C>
North America
United States
Cars 378 509
Trucks 562 578
----- -----
Total United States 940 1,087
Canada 50 65
Mexico 12 11
----- -----
Total North America 1,002 1,163
Europe
Germany 118 118
Britain 118 104
Italy 56 52
France 51 44
Spain 48 48
Other countries 84 77
----- -----
Total Europe 475 443
Other international
Brazil 47 62
Australia 32 31
Taiwan 31 28
Japan 16 16
Argentina 16 10
Other countries 19 17
----- -----
Total other international 161 164
----- -----
Total worldwide vehicle unit sales 1,638 1,770
===== =====
</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-
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<CAPTION>
Part I. Financial Information
------------------------------
Item 1. Financial Statements
- -----------------------------
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended March 31, 1996 and 1995
(in millions)
First Qurter
------------------------
1996 1995
-------- --------
(unaudited)
<S> <C> <C>
AUTOMOTIVE
Sales $29,333 $28,601
Costs and expenses (Note 2)
Costs of sales 27,546 25,431
Selling, administrative and other expenses 1,472 1,388
------- -------
Total costs and expenses 29,018 26,819
Operating income 315 1,782
Interest income 184 207
Interest expense 172 166
------- -------
Net interest income 12 41
Equity in net (loss)/income of affiliated companies (52) 20
Net expense from transactions with Financial Services (20) (23)
------- -------
Income before income taxes - Automotive 255 1,820
FINANCIAL SERVICES
Revenues 6,928 6,182
Costs and expenses
Interest expense 2,421 2,167
Depreciation 1,691 1,521
Operating and other expenses 1,428 1,336
Provision for credit and insurance losses 576 422
------- -------
Total costs and expenses 6,116 5,446
Net revenue from transactions with Automotive 20 23
------- -------
Income before income taxes - Financial Services 832 759
------- -------
TOTAL COMPANY
Income before income taxes 1,087 2,579
Provision for income taxes 413 988
------- -------
Income before minority interests 674 1,591
Minority interests in net income of subsidiaries 21 41
------- -------
Net income $ 653 $ 1,550
======= =======
Income attributable to Common and Class B Stock
after preferred stock dividends $ 634 $ 1,478
Average number of shares of Common and Class B
Stock outstanding 1,168 1,025
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Income $ 0.54 $ 1.44
Income assuming full dilution $ 0.53 $ 1.28
Cash dividends $ 0.35 $ 0.26
</TABLE>
The accompanying notes are part of the financial statements.
-4-
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<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
March 31, December 31,
1996 1995
------------ ------------
ASSETS (unaudited)
<S> <C> <C>
Automotive
Cash and cash equivalents $ 6,074 $ 5,750
Marketable securities 6,863 6,656
-------- --------
Total cash, cash equivalents and marketable securities 12,937 12,406
Receivables 3,463 3,321
Inventories (Note 3) 7,182 7,162
Deferred income taxes 2,952 2,709
Other current assets 2,206 1,483
Net current receivable from Financial Services 134 200
-------- --------
Total current assets 28,874 27,281
Equity in net assets of affiliated companies 2,157 2,248
Net property 31,446 31,273
Deferred income taxes 4,584 4,802
Other assets 7,285 7,168
-------- --------
Total Automotive assets 74,346 72,772
Financial Services
Cash and cash equivalents 2,066 2,690
Investments in securities 4,470 4,553
Net receivables and lease investments 153,467 149,694
Other assets 13,655 13,574
-------- --------
Total Financial Services assets 173,658 170,511
-------- --------
Total assets $248,004 $243,283
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 11,635 $ 11,260
Other payables 1,704 1,976
Accrued liabilities 13,584 13,392
Income taxes payable 351 316
Debt payable within one year 1,676 1,832
-------- --------
Total current liabilities 28,950 28,776
Long-term debt 5,499 5,475
Other liabilities 27,631 25,677
Deferred income taxes 1,206 1,186
-------- --------
Total Automotive liabilities 63,286 61,114
Financial Services
Payables 3,479 5,476
Debt 145,628 141,317
Deferred income taxes 4,123 3,831
Other liabilities and deferred income 6,133 6,116
Net payable to Automotive 134 200
-------- --------
Total Financial Services liabilities 159,497 156,940
Company-obligated mandatorily redeemable preferred securities of
a subsidiary trust (aggregate principal amount of $632 million) 681 682
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate liquidation
preference of $833 million and $1,042 million) * *
Common Stock, par value $1.00 per share (1,105 and 1,089 million shares issued) 1,105 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 5,129 5,105
Foreign currency translation adjustments and other 322 594
Earnings retained for use in business 17,913 17,688
-------- --------
Total stockholders' equity 24,540 24,547
-------- --------
Total liabilities and stockholders' equity $248,004 $243,283
======== ========
- - - - - -
*Less than $1 million
The accompanying notes are part of the financial statements.
</TABLE>
-5-
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<CAPTION>
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended March 31, 1996 and 1995
(in millions)
First Quarter 1996 First Quarter 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 2,916 3,014 3,650 3,284
Net (purchases)/sales of trading securities (197) 281 4,289 324
------- -------- ------- --------
Net cash flows from operating activities 2,719 3,295 7,939 3,608
Cash flows from investing activities
Capital expenditures (1,789) (113) (2,131) (67)
Acquisitions of receivables and lease investments - (28,164) - (23,988)
Collections of receivables and lease investments - 20,949 - 15,839
Net acquisitions of daily rental vehicles - (989) - (781)
Purchases of securities (10) (3,433) (18) (1,818)
Sales and maturities of securities 0 3,217 9 1,337
Proceeds from sales of receivables - 1,775 - 0
Net investing activity with Financial Services (3) - (174) -
Other (97) 209 (442) (127)
------- -------- ------- --------
Net cash used in investing activities (1,899) (6,549) (2,756) (9,605)
Cash flows from financing activities
Cash dividends (428) - (338) -
Issuance of Common Stock 40 - 96 -
Changes in short-term debt (158) 34 217 2,408
Proceeds from issuance of other debt 14 6,126 0 6,674
Principal payments on other debt (3) (3,462) (207) (3,239)
Net financing activity with Automotive - 3 - 174
Other 1 43 6 190
------- -------- ------- --------
Net cash (used in)/provided by financing activities (534) 2,744 (226) 6,207
Effect of exchange rate changes on cash (28) (48) 178 163
Net transactions with Automotive/Financial Services 66 (66) 317 (317)
------- -------- ------- --------
Net increase/(decrease) in cash and cash equivalents 324 (624) 5,452 56
------- -------- ------- --------
Cash and cash equivalents at March 31 $ 6,074 $ 2,066 $ 9,933 $ 1,795
======= ======== ======= ========
</TABLE>
The accompanying notes are part of the financial statements.
-6-
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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):
First Quarter
----------------------------
1996 1995
---------- ----------
Depreciation $636 $589
Amortization 764 712
3. Automotive inventories are summarized as follows (in millions):
March 31, December 31,
1996 1995
------------ ------------
Raw materials, work in process and supplies $3,564 $3,717
Finished products 3,618 3,445
------ -------
Total inventories $7,182 $7,162
====== =======
U.S. inventories $2,902 $2,662
-7-
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<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 March 31, 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
March 31, 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
April 15, 1996
-8-
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- ----------------------------------------------------------
RESULTS OF OPERATIONS: FIRST QUARTER 1996 COMPARED WITH FIRST
QUARTER 1995
Overview
- --------
Ford Motor Company earned $653 million, or $0.54 per share of
Common and Class B Stock, in the first quarter of 1996. This
compares with $1,550 million, or $1.44 per share, in the first
quarter of 1995. Fully diluted earnings per share were $0.53 in
the first quarter of 1996, compared with $1.28 a year ago. The
Company's worldwide sales and revenues were $36.3 billion, up $1.5
billion from a year ago. Vehicle unit sales of cars and trucks
were 1,638,000, down 132,000 units or 7%. Stockholders' equity was
$24.5 billion at March 31, 1996, about equal to December 31, 1995.
Automotive Operations
- ---------------------
Ford's worldwide Automotive operations earned $142 million in the
first quarter of 1996 on sales of $29.3 billion, compared with
$1,141 million in the first quarter of 1995 on sales of
$28.6 billion. Overall, the decline reflected lower unit volume
from dealer inventory rebalancing, costs associated with
introducing high volume new products in North America and Europe,
and lower results in Brazil.
In the U.S., Automotive operations earned $48 million in the first
quarter of 1996 on sales of $18.7 billion, compared with
$825 million a year ago on sales of $19.6 billion. The decline in
earnings was explained by lower unit volume (reflecting dealer
inventory rebalancing) and costs associated with introducing high
volume new products (the F-150 pickup truck, Taurus and Sable);
cost efficiencies were a partial offset. U.S. Automotive after-
tax return on sales was 0.3% in the first quarter of 1996, down 3.9
points from a year ago.
In the first quarter of 1996, the seasonally-adjusted annual
selling rate for the U.S. car and truck industry was 15.7 million
units, compared with 15.2 million units in the first quarter of
1995. The Company expects U.S. car and truck industry sales to
total 15.4 million units in the full year, compared with
15.1 million units in 1995. Ford's car share was 21.4% in the
first quarter of 1996, down 9/10 of a point from the first quarter
a year ago, but up half a point from full year 1995. Ford's truck
share was 31.4%, down 9/10 of a point from a year ago, and down
half a point from full year 1995. Ford's combined car and truck
market share was 25.8%, down 8/10 of a point from a year ago, but
up 2/10 of a point from full year 1995.
Outside the U.S., Automotive operations earned $94 million in the
first quarter of 1996 on sales of $10.6 billion, compared with
$316 million a year ago on sales of $9 billion. The decline
reflected primarily lower results in Brazil and Europe.
European Automotive operations earned $73 million in the first
quarter of 1996, compared with $165 million in the first quarter of
1995. The decline reflected primarily costs associated with
introducing the all-new Fiesta.
In the first quarter of 1996, the seasonally-adjusted annual
selling rate for the European car and truck industry was
14.2 million units, compared with 13.4 million units in the first
quarter of 1995. The Company expects European car and truck
industry sales to total 13.8 million units in the full year,
compared with 13.4 million units in 1995. Ford's car share was 12%
in the first quarter of 1996, down 1/10 of a point from the first
quarter a year ago, but up 1/10 of a point from full year 1995.
Ford's truck share was 13.2%, down 2.4 points from a year ago, and
down 1.6 points from full year 1995. Ford's combined car and truck
market share was 12.2%, down 3/10 of a point from a year ago, and
down 1/10 of a point from full year 1995.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
- ----------------------------------------------------------
Outside the U.S. and Europe, Automotive operations earned $21
million in the first quarter of 1996, compared with $151 million a
year ago. The decrease reflected primarily unfavorable results for
operations in Brazil, which continue to be affected by the lack of
a domestically produced small car. The Company has reestablished
manufacturing capacity in Brazil for small cars and plans to
introduce a version of the Ford Fiesta in the second quarter of
1996, which should assist in improving Ford's performance in Brazil
in the second half of 1996.
Financial Services Operations
- -----------------------------
The Company's Financial Services operations earned a record $511
million in the first quarter of 1996, compared with $409 million in
the first quarter of 1995. The improvement reflected record
earnings at The Associates and USL Capital, higher earnings at Ford
Credit, and the elimination of dividend payments to holders of Ford
Holdings' voting preferred stock (see below).
Ford Credit's consolidated net income was $293 million in the first
quarter of 1996, compared with $288 million a year ago. The
increase reflected higher levels of earning assets and improved net
interest margins, offset partially by 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 in the first quarter
of 1996 included $49 million from equity in the net income of
affiliated companies, primarily Ford Holdings, compared with
$59 million a year ago. International operations managed by Ford
Credit, but not included in its consolidated results, earned $68
million in the first quarter of 1996, compared with $65 million a
year ago.
The Associates, including its international affiliates, earned a
record $192 million in the first quarter of 1996, compared with
$168 million a year ago. The increase reflected higher levels of
earning assets, improved net interest margins and improved
operating cost performance, offset partially by higher credit
losses.
USL Capital earned a record $40 million in the first quarter of
1996, compared with $26 million a year ago. The increase reflected
higher gains on asset sales and higher levels of earning assets.
Hertz earned $9 million, up $9 million from a year ago. American
Road earned $5 million, equal to a year ago.
Financial Services Reorganization - Recent Developments
- -------------------------------------------------------
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 Ford FSG, Inc. ("FFSGI") to
own primarily all of the Financial Services affiliates. 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. 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 of 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").
-10-
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
- ----------------------------------------------------------
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.
Accordingly, Ford Credit's results in the first quarter of 1996
included the equity in the net income of Ford Holdings through
February 1996. Thereafter, in February 1996, Ford contributed to
FFSGI all of its interest in Ford Credit in exchange for additional
shares of Class F Stock of FFSGI. Also, in March 1996, Ford
Holdings contributed American Road to FFSGI, which in turn
contributed it to Ford Credit. Accordingly, the assets and
liabilities of American Road were included in Ford Credit's
consolidated balance sheet at March 31, 1996; beginning April 1,
1996, the results of operations and cash flows of American Road
will be included in Ford Credit's consolidated statements of income
and cash flows. In addition, in May 1996, Ford contributed to
FFSGI certain of its international Financial Services affiliates
managed by Ford Credit in exchange for additional stock of FFSGI.
The percentage of economic interests of FFSGI held by Ford and Ford
Holdings are based upon the relative value of the entities
contributed to FFSGI by Ford and Ford Holdings. Currently, those
percentages are approximately 80% for Ford and 20% for Ford
Holdings.
In early May 1996, The Associates completed an initial public
offering of its common stock representing a 19.3% economic interest
in The Associates (the "IPO"). Substantially all of the net
proceeds from the IPO were used to repay indebtedness of The
Associates, which was incurred to repay an intercompany debt owed
to FFSGI in the amount of $1.75 billion. Prior to the completion
of the IPO, Ford contributed to The Associates certain
international affiliates owned by Ford but managed by The
Associates. The Company expects to recognize a gain in the second
quarter from the IPO.
As announced by Ford in the fourth quarter of 1995, Ford is
investigating the sale of all or part of USL Capital.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
- ---------------------
Automotive cash and marketable securities were $12.9 billion at
March 31, 1996, up $531 million from December 31, 1995. The
Company paid $428 million in cash dividends on its Common Stock,
Class B Stock and Preferred Stock during the first three months of
1996.
Automotive capital expenditures were $1.8 billion in the first
three months of 1996, down $342 million from the same period a year
ago. For the 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 March 31, 1996 totaled $7.2 billion, which was
22% of total capitalization (stockholders' equity and Automotive
debt), compared with $7.3 billion, also 22% of total
capitalization, at December 31, 1995.
At March 31, 1996, 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 March 31, 1996.
In addition, at March 31, 1996, Ford Brasil Ltda. had $198 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 March 31, 1996.
-11-
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<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
$6.5 billion at March 31, 1996, down $707 million from December 31,
1995.
Net receivables and lease investments were $153.5 billion at March
31, 1996, up $3.8 billion from December 31, 1995. The increase
reflected continued growth in earning assets at Ford Credit and
The Associates.
Total debt was $145.6 billion at March 31, 1996, up $4.3 billion
from December 31, 1995. The increase resulted from higher debt
levels required to finance growth in earning assets at The
Associates and Ford Credit, and to fund the payment to holders of
Ford Holdings' voting preferred stock; the preferred stock was
cancelled in December 1995.
At March 31, 1996, Financial Services had a total of $49.3 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 March 31, 1996, none of the Ford
Credit global facilities were in use; $709 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 March 31, 1996 consisted of $22.8 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 March 31, 1996, approximately $1.2 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 7 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.
-12-
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<PAGE>
Part II. Other Information
---------------------------
Item 1. Legal Proceedings
- --------------------------
Product Matters
- ---------------
With respect to the lawsuits 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, referred to in the
second paragraph on page 24 of the 10-K Report, the damages
specified by the plaintiffs in these actions, including both actual
and punitive damages, aggregated approximately $658 million at
March 31, 1996.
With respect to the lawsuits for damages involving the alleged
propensity of Bronco II utility vehicles to roll over, referred to
in the third paragraph on page 24 of the 10-K Report, the damages
specified in these actions, including both actual and punitive
damages, aggregated approximately $1.1 billion at March 31, 1996.
With respect to the lawsuits for damages involving asbestos,
referred to in the fifth paragraph on page 24 of the 10-K Report,
the damages specified by plaintiffs in these actions, including
both actual and punitive damages, aggregated approximately $1.7
billion at March 31, 1996.
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.
Other Matters
- -------------
With respect to the patent infringement lawsuit in federal court in
Nevada in which an individual patent owner is seeking damages and
an injunction for alleged infringement of four U.S. patents
characterized as covering machine vision inspection technologies,
including bar code reading, referred to in the second full
paragraph on page 25 of the 10-K Report, on April 11, 1996, the
district court judge issued an order adopting the magistrate
judge's recommendation and granting Ford's motion to dismiss the
case. The judge indicated that he will issue a separate opinion
supporting the order and issue a judgment "in due course."
With respect to the seven purported nationwide class action
lawsuits involving an alleged defective ignition switch equipped on
numerous Ford vehicle lines, referred to in the first paragraph on
page 26 of the 10-K Report, an eighth such suit has been filed.
With respect to the investigations by the Safety Administration and
Transport Canada of ignition switch fires in certain Ford vehicles,
referred to in the second paragraph on page 26 of the 10-K Report,
Ford has agreed to notify owners of approximately 8.7 million 1988-
1993 model year vehicles (including 248,000 vehicles previously recalled
in Canada) of a safety recall to replace the ignition switch equipped
on such vehicles. Ford does not expect the aggregate cost of the recall
to have a significant effect on 1996 results.
-13-
<PAGE>
<PAGE>
Item 5. Other Information
- --------------------------
Governmental Standards
- ----------------------
Mobile Source Emissions Control -- With respect to the discussion
of California vehicle emission control standards on page 16 of the
10-K Report, the California Air Resources Board took action at its
March 1996 board meeting approving the elimination of the "zero-
emission vehicles" mandate until the 2003 model year. This will
become final after submission and review by California's Office of
Administrative Law.
Motor Vehicle Fuel Economy -- With respect to the discussion of
light truck corporate average fuel economy ("CAFE") on page 18 of
the 10-K Report, the Safety Administration has established the
referenced 20.7 miles per gallon CAFE standard for model years
1996 through 1998.
Other Matters
- -------------
Mazda Motor Corporation -- As announced on April 12, 1996, Ford has
agreed to increase its investment in Mazda Motor Corporation
("Mazda") from its existing 24.5% ownership interest to a 33.4%
ownership interest by purchasing from Mazda newly-issued shares of
common stock of Mazda for an aggregate purchase price of
approximately $500 million. In connection with this agreement,
which is subject to governmental approvals, Mazda has agreed to
coordinate more closely with Ford its strategies and plans,
particularly in the areas of product development, manufacturing and
distribution of vehicles, so as to improve the competitiveness and
economies of scale of both companies. Henry Wallace, a former Ford
executive and currently an executive vice president of Mazda, has
been elected as Mazda's president effective in late June 1996.
Ford and Mazda will remain separate companies with separate
identities. Ford will not be responsible for any of Mazda's
liabilities, debts or other obligations, and Mazda's operating
results and financial position will not be consolidated with those
of Ford; Mazda will continue to be reflected in Ford's consolidated
financial statements on an equity basis.
-14-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Supplemental Schedule
Ford Motor Company
CONDENSED FINANCIAL INFORMATION OF SUBSIDIARY
---------------------------------------------
(in millions)
March 31, December 31,
Ford Capital B.V. 1996 1995
- ----------------- ------------ ------------
<S> <C> <C>
(unaudited)
Current assets $1,448 $1,251
Noncurrent assets 4,635 4,662
------ ------
Total assets $6,083 $5,913
====== ======
Current liabilities $1,435 $ 626
Noncurrent liabilities 4,059 4,661
Minority interests in net
assets of subsidiaries 19 22
Stockholder's equity 570 604
------ ------
Total liabilities and
stockholder's equity $6,083 $5,913
====== ======
First Quarter First Quarter
1996 1995
------------- -------------
(unaudited)
Sales and other revenue $822 $656
Operating (loss)/income (3) 77
(Loss)/income before income taxes (17) 64
Net (loss)/income (29) 56
</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.
-15-
<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
Please refer to the Exhibit Index on page 17.
(b) Reports on Form 8-K
The Registrant filed the following Current Reports on Form 8-K
during the quarter ended March 31, 1996:
Current Report on Form 8-K dated January 31, 1996 included
information relating to Ford's 1995 financial results.
Current Report on Form 8-K dated February 12, 1996 included
the consolidated financial statements of Ford and its
subsidiaries for the year ended December 31, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORD MOTOR COMPANY
-------------------------------------
(Registrant)
Date: May 13, 1996 By: /s/ D. R. Coulson
----------------------------------
D. R. Coulson
Director of Accounting
Ford Automotive Operations
(principal accounting officer)
-16-
<PAGE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential
Page Number
Designation Description at Which Found
- ----------- ----------------------------------------------------------- --------------
<S> <C> <C>
Exhibit 11 Ford Motor Company and Subsidiaries Computation of Primary 18
and Fully Diluted Earnings Per Share in Accordance with
Opinion 15 of the Accounting Principles Board.
Exhibit 12 Ford Motor Company and Subsidiaries Calculation of Ratio of 19
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
Exhibit 15 Letter of Coopers & Lybrand L.L.P., Independent Public 20
Accountants, dated May 10, 1996 relating to Financial
Information.
</TABLE>
-17-
<PAGE>
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
----------------------------------------------------------------
First Quarter 1996 First Quarter 1995
-------------------------------- ---------------------------------
Income Income
Avg. Shares Attributable Avg. Shares Attributable
of Common to Common of Common to Common
and Class B and Class B Stock and Class B and Class B Stock
Stock ----------------- Stock -----------------
Outstanding Total Share Outstanding Total Share
----------- ------ ----- ----------- ----- -----
(Mils.) (Mils.) (Mils.) (Mils.)
<S> <C> <C> <C> <C> <C> <C>
Preliminary Earnings Per Share Calculation 1,168 $634 $0.54 1,025 $1,478 $1.44
I. Primary Earnings Per Share
--------------------------
. Assuming exercise of options 44 34
. Assuming purchase of shares with proceeds of options (29) (20)
. Assuming issuance of shares contingently issuable 2 2
. Uncommitted ESOP shares (4) (4)
----- -----
Net Common Stock Equivalents 13 12
----- -----
Primary Earnings Per Share Calculation 1,181 $634 $0.54 a/ 1,037 $1,478 $1.43 a/
===== ==== ===== ===== ====== =====
II. Fully Diluted Earnings Per Share
--------------------------------
Primary Earnings Per Share Calculation 1,181 $634 $0.54 1,037 $1,478 $1.43
. Assuming conversion of convertible preferred stock 26 8 b/ 150 48 b/
. Reduction in shares assumed to be purchased
with option proceeds c/ 4 1
----- ---- ----- ------
Fully Diluted Earnings Per Share Calculation 1,211 $642 $0.53 1,188 $1,526 $1.28
===== ==== ===== ===== ====== =====
</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.
-18-
<PAGE>
<TABLE>
<capiton>
Exhibit 12
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------------------------------
(in millions)
First For the Years Ended December 31
Quarter ---------------------------------------------------
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 $1,087 $ 6,705 $ 8,789 $ 4,003 $ (127) $(2,587)
Equity in net loss/(income) of affiliates
plus dividends from affiliates 58 179 (182) (98) 26 69
Adjusted fixed charges a/ 2,718 10,556 8,122 7,648 8,113 9,360
------ ------- ------- ------- ------ -------
Earnings $3,863 $17,440 $16,729 $11,553 $8,012 $ 6,842
====== ======= ======= ======= ====== =======
Combined Fixed Charges and
Preferred Stock Dividends
- --------------------------
Interest expense b/ $2,607 $10,121 $ 7,787 $ 7,351 $7,987 $ 9,326
Interest portion of rental expense c/ 99 396 265 266 185 124
Preferred stock dividend requirements of
majority owned subsidiaries and trusts d/ 14 199 160 115 77 56
------ ------- ------- ------- ------ -------
Fixed charges 2,720 10,716 8,212 7,732 8,249 9,506
Ford preferred stock dividend requirements e/ 30 459 472 442 317 26
------ ------- ------- ------- ------ -------
Total combined fixed charges
and preferred stock dividends $2,750 $11,175 $ 8,684 $ 8,174 $8,566 $ 9,532
====== ======= ======= ======= ====== =======
Ratios
- ------
Ratio of earnings to fixed charges 1.4 1.6 2.0 1.5 f/ g/
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.4 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) 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.
-19-
<PAGE>
<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; 2-42133,
33-32641, 33-40638, 33-43085, 33-55474, 33-55171 and 33-64247
on Form S-3
We are aware that our report dated April 15, 1996 accompanying the
unaudited interim financial information of Ford Motor Company for the
periods ended March 31, 1996 and 1995 and included in the Ford Motor
Company Quarterly Report on Form 10-Q for the quarter ended
March 31, 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
May 10, 1996
