<PAGE> 1
Filed Pursuant to rule 424(b)(5)
Registration Statement Nos. 333-14297
333-52485
THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AND IS SUBJECT TO COMPLETION OR
AMENDMENT.
SUBJECT TO COMPLETION, DATED AUGUST 28, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 21, 1998)
(FORD LOGO)
FORD MOTOR COMPANY
$
% DEBENTURES DUE , 2028
------------------------
The % Debentures due , 2028 (the "Debentures") are offered
for sale in the United States, Europe and Asia. See "Underwriting." Interest on
the % Debentures is payable semiannually on and of
each year, commencing on . The Debentures may not be
redeemed by Ford Motor Company ("Ford") prior to maturity unless certain events
occur involving United States taxation. See "Description of
Debentures -- Redemption".
The Debentures will be represented by one or more global debentures (the
"Global Debentures") registered in the name of the Depository's nominee.
Beneficial interests in the Global Debentures will be shown on, and transfers
thereof will be effected only through, records maintained by the Depository and
its participants, including the U.S. Depositaries for Cedel and Euroclear.
Except as described herein, Debentures in definitive form will not be issued.
The Debentures will trade in the Depository's Same-Day Funds Settlement System
until maturity, and secondary market trading activity for the Debentures will,
therefore, settle in immediately available funds. All payments of principal and
interest will be made by Ford in immediately available funds. See "Description
of Debentures -- Same-Day Settlement and Payment" and "-- Global Clearance and
Settlement Procedures".
Application has been made to the Luxembourg Stock Exchange and to the Stock
Exchange of Singapore Limited (the "Singapore Stock Exchange" and together with
the Luxembourg Stock Exchange the "Exchanges") for permission to deal in, and
for listing of, the Debentures on such Exchanges.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=========================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) FORD(1)(3)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Per Debenture............................. % % %
- ---------------------------------------------------------------------------------------------------------
Total..................................... $ $ $
=========================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from , 1998.
(2) Ford has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $ to be paid by Ford.
------------------------
The Debentures are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, and subject to
approval of certain legal matters by Shearman & Sterling, counsel for the
Underwriters, and certain other conditions. The Underwriters reserve the right
to withdraw or cancel such offer and to reject orders in whole or in part. It is
expected that delivery of the Global Debentures will be made in book-entry form
only on or about , 1998 through the facilities of the Depository,
Cedel and Euroclear, against payment therefor in immediately available funds.
------------------------
MERRILL LYNCH & CO. LEHMAN BROTHERS
------------------------
The date of this Prospectus Supplement is , 1998.
<PAGE> 2
THE LUXEMBOURG STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF
THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM
OR IN RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT AND
THE PROSPECTUS.
THE SINGAPORE STOCK EXCHANGE ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS
OF ANY OF THE STATEMENTS OR OPINIONS MADE OR REPORTS CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS. ADMISSION TO THE OFFICIAL
LIST IS NOT TO BE TAKEN AS AN INDICATION OF THE MERITS OF THE ISSUER OR OF THE
DEBENTURES.
THIS PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS INCLUDE PARTICULARS
GIVEN IN COMPLIANCE WITH THE REQUIREMENTS OF THE SINGAPORE STOCK EXCHANGE FOR
THE PURPOSE OF GIVING INFORMATION WITH REGARD TO FORD. FORD ACCEPTS FULL
RESPONSIBILITY FOR THE ACCURACY OF THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND ACCOMPANYING PROSPECTUS AND CONFIRMS, HAVING MADE ALL REASONABLE
INQUIRIES, THAT TO THE BEST OF ITS KNOWLEDGE AND BELIEF THERE ARE NO OTHER FACTS
THE OMISSION OF WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING IN ANY MATERIAL
RESPECT.
OFFERS AND SALES OF THE DEBENTURES ARE SUBJECT TO RESTRICTIONS IN RELATION
TO THE UNITED KINGDOM, JAPAN AND SINGAPORE, DETAILS OF WHICH ARE SET OUT IN
"UNDERWRITING" BELOW. THE DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PROSPECTUS AND THE OFFERING OF THE DEBENTURES IN CERTAIN OTHER
JURISDICTIONS MAY ALSO BE RESTRICTED BY LAW.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, DEBENTURES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
In this Prospectus Supplement and accompanying Prospectus, unless otherwise
specified or the context otherwise requires, references to "dollars", "$" and
"U.S.$" are to United States dollars.
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<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 10-K Report"), Ford's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998 (the "1998 10-Q Reports") and Ford's
Current Reports on Form 8-K dated January 27, 1998, February 2, 1998 (the
"February 8-K Report"), March 2, 1998, March 13, 1998, April 7, 1998, April 8,
1998, April 16, 1998 and June 23, 1998, are incorporated in this Prospectus
Supplement by reference. All documents filed by Ford pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus Supplement and prior to the termination of the offering of the
Debentures shall be deemed to be incorporated by reference into this Prospectus
Supplement and to be a part hereof from the date of filing such documents.
The financial statements which are incorporated in this Prospectus
Supplement and accompanying Prospectus by reference to the 1997 10-K Report and
the February 8-K Report have been audited by PricewaterhouseCoopers LLP (f/k/a
Coopers & Lybrand L.L.P.) ("PricewaterhouseCoopers"), 400 Renaissance Center,
Detroit, Michigan 48243, independent certified public accountants, to the extent
indicated in their reports therein, and have been so incorporated in reliance
upon the report of that firm, given on their authority as experts in accounting
and auditing.
PricewaterhouseCoopers have given and not withdrawn their written consent
to the issue of this Prospectus Supplement and the accompanying Prospectus with
the incorporation by reference herein of their report dated January 26, 1998 in
the 1997 10-K Report and in the February 8-K Report on the audited financial
statements of Ford for the financial years ended December 31, 1997.
This Prospectus Supplement and accompanying Prospectus, together with the
documents incorporated by reference herein, will be available free of charge at
the office of Banque Internationale a Luxembourg S.A., 69 route d'Esch L-1470,
Luxembourg.
S-3
<PAGE> 4
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF FORD
Michael D. Dingman
Director
William Clay Ford, Jr.
Director
William Clay Ford
Director
Irvine O. Hockaday, Jr.
Director
Marie-Josee Kravis
Director
Ellen R. Marram
Director
Homer A. Neal
Director
Carl E. Reichardt
Director
John L. Thornton
Director
Alex Trotman
Chairman of the Board, President and Chief Executive Officer
W. Wayne Booker
Vice Chairman
Edward E. Hagenlocker
Vice Chairman (Chairman, Visteon Automotive Systems)
John M. Devine
Executive Vice President and Chief Financial Officer
Jacques A. Nasser
Executive Vice President (President, Ford Automotive Operations)
Peter J. Pestillo
Executive Vice President -- Corporate Relations
Kenneth Whipple
Executive Vice President
Carlos E. Mazzorin
Group Vice President -- Purchasing
Richard Parry-Jones
Group Vice President -- Product Development
Robert L. Rewey
Group Vice President -- Marketing, Sales and Service
Charles W. Szuluk
Group Vice President (President, Visteon Automotive Systems)
Robert H. Transou
Group Vice President -- Manufacturing
Gurminder S. Bedi
Vice President -- Truck Vehicle Center
William W. Boddie
Vice President -- Small and Medium Car Vehicle Center
Kenneth R. Dabrowski
Vice President -- Quality and Process Leadership
James D. Donaldson
Vice President, Ford (President, Ford of Europe Incorporated)
Wayne S. Doran
Vice President, Ford (Chairman, Ford Motor Land Development Corporation)
Edsel B. Ford II
Vice President and Director
Ronald E. Goldsberry
Vice President -- General Manager, Ford Customer Service Division
Elliott S. Hall
Vice President -- Civic and External Affairs
John T. Huston
Vice President -- Powertrain Operations
Mark W. Hutchins
Vice President -- General Manager, Lincoln-Mercury Division
Martin I. Inglis
Vice President -- Product and Business Strategy
Kenneth K. Kohrs
Vice President -- Large and Luxury Car Vehicle Center
Vaughn A. Koshkarian
Vice President, Ford (Chairman and Chief Operating Officer, Ford Motor (China)
Ltd.)
S-4
<PAGE> 5
Robert O. Kramer
Vice President -- Human Resources
Roman J. Krygier
Vice President -- Advanced Manufacturing Engineering
Malcolm S. Macdonald
Vice President and Treasurer
John W. Martin, Jr.
Vice President -- General Counsel
J. C. Mays
Vice President -- Design
John P. McTague
Vice President -- Technical Affairs
James E. Miller
Vice President
Janet G. Mullins
Vice President -- Washington Affairs
James G. O'Connor
Vice President -- General Manager, Ford Division
James J. Padilla
Vice President (President, Ford Brazil and Argentina)
Helen O. Petrauskaus
Vice President -- Environmental and Safety Engineering
William F. Powers
Vice President -- Research
Neil W. Ressler
Vice President -- Advance Vehicle Technology
John M. Rintamaki
Secretary
Ross H. Roberts
Vice President, Ford (President, Ford
Investment Enterprise Corporation)
Dennis E. Ross
Vice President and Chief Tax Officer
David W. Scott
Vice President -- Public Affairs
William A. Swift
Vice President and Controller, Ford Automotive Operations
David W. Thursfield
Vice President -- Vehicle Operations
Henry D.G. Wallace
Vice President (Chief Financial Officer and Vice President, European Strategic
Planning)
Robert J. Womac
Vice President (Executive Vice President, Operations, Visteon Automotive
Systems)
All of the officers listed above are full-time employees of Ford or its
subsidiaries.
USE OF PROCEEDS
The net proceeds from the sale of the Debentures will be used for general
corporate purposes of Ford or its affiliates. Net proceeds to be paid to Ford
will be U.S. $ .
S-5
<PAGE> 6
CAPITALIZATION
The capitalization of Ford and its subsidiaries at June 30, 1998 is as
follows (in millions of U.S. dollars):
<TABLE>
<CAPTION>
JUNE 30,
1998
--------
(UNAUDITED)
<S> <C>
AUTOMOTIVE
Debt payable within one year, including the current portion
of long-term debt......................................... $ 855
Long-term debt.............................................. 7,365
Minority interests in net assets of subsidiaries............ 102
FINANCIAL SERVICES
Debt........................................................ 115,750
Minority interests in net assets of subsidiaries............ 361
Ford-obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely junior subordinated
debentures of Ford........................................ 678
STOCKHOLDER'S EQUITY
Preferred Stock, par value $1.00 per share (aggregate
liquidation preference of $177 million)................... *
Common Stock, par value $1.00 per share
Issued and outstanding -- 1,150 million shares............ 1,150
Class B Stock, par value $1.00 per share
Issued and outstanding -- 71 million shares............... 71
Capital in excess of par value of stock..................... 5,337
Accumulated other comprehensive income...................... (1,496)
ESOP loan and treasury stock................................ (680)
Earnings retained for use in business....................... 18,688
--------
TOTAL STOCKHOLDER'S EQUITY.................................. 23,070
--------
TOTAL CAPITALIZATION........................................ $148,181
========
</TABLE>
- ---------------
* Less than 1 million.
In addition to the $ aggregate principal amount of Debentures
being offered hereby, Ford has issued $500,000,000 aggregate principal amount of
long-term debt securities since June 30, 1998. Except as set forth herein, there
has been no material change in the capitalization of Ford since June 30, 1998 to
the date of this Prospectus Supplement.
S-6
<PAGE> 7
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus. The Debentures are part of the $3,000,000,000 aggregate
principal amount of Debt Securities of Ford, $700,000,000 of which was
registered in October 1996 and $2,300,000,000 of which was registered in May
1998, to be issued on terms to be determined at the time of sale. In addition to
the Debentures offered hereby, Debt Securities in the aggregate principal amount
of $500,000,000 previously have been sold.
GENERAL
The Debentures will initially be limited to $ aggregate
principal amount. Ford may, without the consent of the holders of the
Debentures, create and issue additional debentures ranking pari passu with the
Debentures in all respects so that such further debentures shall be consolidated
and form a single series with the Debentures and shall have the same terms as to
status, redemption or otherwise as the Debentures. No additional debentures may
be issued if an Event of Default has occurred with respect to the Debentures.
The Debentures will be unsecured obligations of Ford and will mature on
, 2028. The Debentures will bear interest from , 1998 at the
rate per annum set forth on the cover page of this Prospectus Supplement,
payable on and of each year, commencing , to the persons
in whose names the Debentures are registered at the close of business on the
preceding and , respectively, subject to certain exceptions.
The Debentures are not subject to redemption prior to maturity unless
certain events occur involving United States taxation. In such event, the
Debentures will be redeemed at a redemption price of 100% of their principal
amount plus accrued and unpaid interest to the date of redemption. See
"Description of Debentures -- Redemption."
BOOK-ENTRY, DELIVERY AND FORM
The Debentures will be issued in the form of one or more fully registered
Global Debentures which will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (the "Depository") and registered in the name
of Cede & Co., the Depository's nominee. Beneficial interests in the Global
Debentures will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as direct and indirect
participants in the Depository. Investors may elect to hold interests in the
Global Debentures through either the Depository (in the United States) or Cedel
Bank, societe anonyme ("Cedel") or Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System ("Euroclear") (in Europe)
if they are participants of such systems, or indirectly through organizations
which are participants in such systems. Cedel and Euroclear will hold interests
on behalf of their participants through customers' securities accounts in
Cedel's and Euroclear's names on the books of their respective depositaries,
which in turn will hold such interests in customers' securities accounts in the
depositaries' names on the books of the Depository. Citibank, N.A. will act as
depositary for Cedel and The Chase Manhattan Bank will act as depositary for
Euroclear (in such capacities, the "U.S. Depositaries"). Beneficial interests in
the Global Debentures will be held in denominations of $1,000 and integral
multiples thereof. Except as set forth below, the Global Debentures may be
transferred, in whole and not in part, only to another nominee of the Depository
or to a successor of the Depository or its nominee.
The Depository has advised as follows: It is a limited-purpose trust
company which holds securities for its participating organizations (the
"Participants") and facilitates the settlement among Participants of securities
transactions in such securities through electronic book-entry changes in its
Participants' accounts. Participants include securities brokers and dealers
(including the Underwriters), banks and trust companies, clearing corporations
and certain other
S-7
<PAGE> 8
organizations. Access to the Depository's system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depository only through Participants or
indirect participants.
The Depository advises that its established procedures provide that (i)
upon issuance of the Debentures by Ford, the Depository will credit the accounts
of Participants designated by the Underwriters with the principal amounts of the
Debentures purchased by the Underwriters, and (ii) ownership of interests in the
Global Debentures will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depository, the Participants
and the indirect participants. The laws of some states require that certain
persons take physical delivery in definitive form of securities which they own.
Consequently, the ability to transfer beneficial interests in the Global
Debentures is limited to such extent.
So long as a nominee of the Depository is the registered owner of the
Global Debentures, such nominee for all purposes will be considered the sole
owner or holder of the Debentures under the Indenture. Except as provided below,
owners of beneficial interests in the Global Debentures will not be entitled to
have Debentures registered in their names, will not receive or be entitled to
receive physical delivery of Debentures in definitive form, and will not be
considered the owners or holders thereof under the Indenture (as defined in the
accompanying Prospectus).
Neither Ford, the Trustee, any Paying Agent nor the Security Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Debentures, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Debentures registered in the name of
the Depository's nominee will be made by the Trustee to the Depository. Under
the terms of the Indenture, Ford and the Trustee will treat the persons in whose
names the Debentures are registered as the owners of such Debentures for the
purpose of receiving payment of principal and interest on such Debentures and
for all other purposes whatsoever. Therefore, neither Ford, the Trustee nor any
Paying Agent has any direct responsibility or liability for the payment of
principal or interest on the Debentures to owners of beneficial interests in the
Global Debentures. The Depository has advised Ford and the Trustee that its
present practice is to credit the accounts of the Participants on the
appropriate payment date in accordance with their respective holdings in
principal amount of beneficial interests in the Global Debentures as shown on
the records of the Depository, unless the Depository has reason to believe that
it will not receive payment on such payment date. Payments by Participants and
indirect participants to owners of beneficial interests in the Global Debentures
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of the Participants
or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by Ford within 90 days,
Ford will issue Debentures in definitive form in exchange for the Global
Debentures. In addition, Ford may at any time determine not to have the
Debentures represented by Global Debentures and, in such event, will issue
Debentures in definitive form in exchange for the Global Debentures. In either
instance, an owner of a beneficial interest in the Global Debentures will be
entitled to have Debentures equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical delivery of
such Debentures in definitive form. Debentures so issued in definitive form will
be issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons.
Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants
S-8
<PAGE> 9
through electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel provides to
Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters. Indirect access to Cedel
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel Participant
either directly or indirectly.
Distributions with respect to Debentures held beneficially through Cedel
will be credited to cash accounts of Cedel Participants in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for Cedel.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Debentures held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear. In the event definitive Debentures are issued, Ford
will appoint a paying agent and transfer agent in Luxembourg and Singapore.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be made
by Ford in immediately available funds.
S-9
<PAGE> 10
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Debentures will trade in the Depository's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Debentures will therefore
be required by the Depository to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Debentures.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Debentures will be made in immediately available
funds. Secondary market trading between Depository Participants will occur in
the ordinary way in accordance with Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedel and Euroclear and will be settled using
the procedures applicable to conventional eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through Cedel
or Euroclear Participants, on the other, will be effected by the Depository in
accordance with the Depository rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving Debentures in the Depository, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the Depository. Cedel Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of Debentures received in Cedel
or Euroclear as a result of a transaction with a Depository Participant will be
made during subsequent securities settlement processing and dated the business
day following the Depository settlement date. Such credits or any transactions
in such Debentures settled during such processing will be reported to the
relevant Euroclear or Cedel Participants on such business day. Cash received in
Cedel or Euroclear as a result of sales of Debentures by or through a Cedel
Participant or a Euroclear Participant to a Depository Participant will be
received with value on the Depository settlement date but will be available in
the relevant Cedel or Euroclear cash account only as of the business day
following settlement in the Depository.
Although the Depository, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Debentures among participants of
the Depository, Cedel and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
PAYMENT OF ADDITIONAL AMOUNTS
Ford will, subject to the exceptions and limitations set forth below, pay
as additional interest on each series of Debentures, such additional amounts as
are necessary in order that the net payment by Ford or a paying agent of the
principal of and interest on the Debentures to a holder who is a non-United
States person (as defined below), after deduction for any present or future tax,
assessment or governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, will not be less than the amount
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<PAGE> 11
provided in the Debentures to be then due and payable; provided, however, that
the foregoing obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in trade or business in
the United States or having or having had a permanent establishment in
the United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax; or
(d) being or having been a "10-percent shareholder" of Ford as
defined in section 871(h)(3) of the United States Internal Revenue Code
or any successor provision;
(2) to any holder that is not the sole beneficial owner of the
Debenture, or a portion thereof, or that is a fiduciary or partnership, but
only to the extent that a beneficiary or settlor with respect to the
fiduciary, a beneficial owner or member of the partnership would not have
been entitled to the payment of an additional amount had the beneficiary,
settlor, beneficial owner or member received directly its beneficial or
distributive share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Debenture,
if compliance is required by statute, by regulation of the United States
Treasury Department or by an applicable income tax treaty to which the
United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by Ford or a paying agent from the payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Debenture, if such payment can be made without such withholding by
any other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
The Debentures are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "Payment of Additional
Amounts" and under the heading "Description of Notes -- Redemption", Ford shall
not be required to make any payment with respect to any tax, assessment or
governmental charge imposed by any government or a political subdivision or
taxing authority thereof or therein.
As used under this heading "Payment of Additional Amounts" and under the
headings "Description of Notes -- Redemption", "Certain United States Tax
Documentation Requirements" and "United States Taxation of Non-United States
Persons" the term "United States" means the
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<PAGE> 12
United States of America (including the States and the District of Columbia) and
its territories, its possessions and other areas subject to its jurisdiction,
"United States person" means any individual who is a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or any estate or trust the income of
which is subject to United States federal income taxation regardless of its
source and "non-United States person" means a person who is not a United States
person.
REDEMPTION
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this Prospectus Supplement, Ford
becomes or will become obligated to pay additional amounts as described herein
under the heading "Payment of Additional Amounts" or (b) any act is taken by a
taxing authority of the United States on or after the date of this Prospectus
Supplement, whether or not such act is taken with respect to Ford or any
affiliate, that results in a substantial probability that Ford will or may be
required to pay such additional amounts, then Ford may, at its option, redeem,
as a whole, but not in part, Debentures on not less than 30 nor more than 60
days' prior notice, at a redemption price equal to 100% of their principal
amount, together with interest accrued thereon to the date fixed for redemption;
provided that Ford determines, in its business judgment, that the obligation to
pay such additional amounts cannot be avoided by the use of reasonable measures
available to it, not including substitution of the obligor under the Debentures.
No redemption pursuant to (b) above may be made unless Ford shall have received
an opinion of independent counsel to the effect that an act taken by a taxing
authority of the United States results in a substantial probability that it will
or may be required to pay the additional amounts described herein under the
heading "Payment of Additional Amounts" and Ford shall have delivered to the
Trustee a certificate, signed by a duly authorized officer, stating that based
on such opinion Ford is entitled to redeem the Debentures pursuant to their
terms.
NOTICES
Notices to holders of the Debentures will be published in Authorized
Newspapers in The City of New York, in London, and, so long as the Debentures
are listed on the Luxembourg Stock Exchange, in Luxembourg and on the Singapore
Stock Exchange, in Singapore. It is expected that publication will be made in
The City of New York in The Wall Street Journal, in London in the Financial
Times, in Luxembourg in the Luxemburger Wort and in Singapore in the Business
Times. Any such notice shall be deemed to have been given on the date of such
publication or, if published more than once, on the date of the first such
publication.
APPLICABLE LAW AND SERVICE OF PROCESS
The Debentures and the Indenture will be governed by and construed in
accordance with the laws of the State of New York. Ford has designated CT
Corporation System in New York City as the authorized agent to receive service
of process in the State of New York.
CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of a Debenture will generally be subject to the 30%
United States federal withholding tax that generally applies to payments of
interest on a registered form debt obligation issued by a United States person,
unless one of the following steps is taken to obtain an exemption from or
reduction of the tax:
Exemption for Non-United States persons (IRS Form W-8). A beneficial owner
of a Debenture that is a non-United States person (other than certain persons
that are related to Ford through stock ownership as described in clauses (x)(a)
and (b) of Paragraph (i) under "United States Taxation of Non-United States
Persons -- Income and Withholding Tax") can obtain an exemption
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<PAGE> 13
from the withholding tax by providing a properly completed IRS Form W-8
(Certificate of Foreign Status). Copies of IRS Form W-8 may be obtained from the
Luxembourg listing agent.
Exemption for Non-United States persons with effectively connected income
(IRS Form 4224). A beneficial owner of a Debenture that is a non-United States
person, including a non-United States corporation or bank with a United States
branch, that conducts a trade or business in the United States with which
interest income on a Debenture is effectively connected, can obtain an exemption
from the withholding tax by providing a properly completed IRS Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States).
Exemption or reduced rate for Non-United States persons entitled to the
benefits of a treaty (IRS Form 1001). A beneficial owner of a Debenture that is
a non-United States person entitled to the benefits of an income tax treaty to
which the United States is a party can obtain an exemption from or reduction of
the withholding tax (depending on the terms of the treaty) by providing a
properly completed IRS Form 1001 (Ownership, Exemption or Reduced Rate
Certificate).
Exemption for United States Persons (IRS Form W-9). A beneficial owner of a
Debenture that is a United States person can obtain a complete exemption from
the withholding tax by providing a properly completed IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
United States federal income tax reporting procedure. A beneficial owner of
a Debenture, or, in the case of IRS Forms 1001 and 4224, its agent, is required
to submit the appropriate IRS Form under applicable procedures to the person
through which the owner directly holds the Debenture. For example, if the
beneficial owner is listed directly on the books of Euroclear or Cedel as the
holder of the Debenture, the IRS Form must be provided to Euroclear or Cedel, as
the case may be. Each other person through which a Debenture is held must
submit, on behalf of the beneficial owner, the IRS Form (or in certain cases a
copy thereof) under applicable procedures to the person through which it holds
the Debenture, until the IRS Form is received by the United States person who
would otherwise be required to withhold United States federal income tax from
interest on the Debenture. For example, in the case of Debentures held through
Euroclear or Cedel, the IRS Form (or a copy thereof) must be received by the
U.S. Depositary of such clearing agency. Applicable procedures include
additional certification requirements, described in clause (x)(c)(B) of
Paragraph (i) under "United States Taxation of Non-United States Persons --
Income and Withholding Tax", if a beneficial owner of the Debenture provides an
IRS Form W-8 to a securities clearing organization, bank or other financial
institution that holds the Debenture on its behalf.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 1999, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
EACH HOLDER OF A DEBENTURE SHOULD BE AWARE THAT IF IT DOES NOT PROPERLY
PROVIDE THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF PERMISSIBLE, A COPY OF
SUCH FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED BY THE UNITED STATES
PERSON OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL INCOME TAX, INTEREST
ON THE DEBENTURE MAY BE SUBJECT TO UNITED STATES WITHHOLDING TAX AT A 30% RATE
AND THE HOLDER (INCLUDING THE BENEFICIAL OWNER) WILL NOT BE ENTITLED TO ANY
ADDITIONAL AMOUNTS FROM FORD DESCRIBED UNDER THE HEADING "DESCRIPTION OF
DEBENTURES -- PAYMENT OF ADDITIONAL AMOUNTS" WITH RESPECT TO SUCH TAX. SUCH TAX,
HOWEVER, MAY IN CERTAIN CIRCUMSTANCES BE ALLOWED AS A REFUND OR AS A CREDIT
AGAINST SUCH HOLDER'S UNITED STATES FEDERAL INCOME TAX. THE FOREGOING DOES NOT
DEAL WITH ALL ASPECTS OF FEDERAL INCOME TAX WITHHOLDING THAT MAY BE RELEVANT TO
FOREIGN HOLDERS OF THE DEBENTURES. INVESTORS ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS FOR SPECIFIC ADVICE CONCERNING THE OWNERSHIP AND DISPOSITION OF
DEBENTURES.
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<PAGE> 14
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
INCOME AND WITHHOLDING TAX
In the opinion of Sullivan & Cromwell, special tax counsel to the Company,
and Shearman & Sterling, counsel for the Underwriters, under United States
federal tax law as of the date of this Prospectus Supplement, and subject to the
discussion of backup withholding below:
(i) payments of principal and interest on a Debenture that is
beneficially owned by a non-United States person will not be subject to
United States federal withholding tax; provided, that in the case of
interest, (x) (a) the beneficial owner does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of Ford entitled to vote, (b) the beneficial owner is not a controlled
foreign corporation that is related to Ford through stock ownership, and
(c) either (A) the beneficial owner of the Debenture certifies to the
person otherwise required to withhold United States federal income tax from
such interest, under penalties of perjury, that it is not a United States
person and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Debenture certifies to the person otherwise
required to withhold United States federal income tax from such interest,
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof; (y) the
beneficial owner is entitled to the benefits of an income tax treaty under
which the interest is exempt from United States federal withholding tax and
the beneficial owner of the Debenture or such owner's agent provides an IRS
Form 1001 claiming the exemption; or (z) the beneficial owner conducts a
trade or business in the United States to which the interest is effectively
connected and the beneficial owner of the Debenture or such owner's agent
provides an IRS Form 4224; provided that in each such case, the relevant
certification or IRS Form is delivered pursuant to applicable procedures
and is properly transmitted to the person otherwise required to withhold
United States federal income tax, and none of the persons receiving the
relevant certification or IRS Form has actual knowledge that the
certification or any statement on the IRS Form is false;
(ii) a non-United States person will not be subject to United States
federal withholding tax on any gain realized on the sale, exchange or
redemption of a Debenture unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the case
of an individual, the holder is present in the United States for 183 days
or more in the taxable year in which the sale, exchange or redemption
occurs and certain other conditions are met; and
(iii) a Debenture owned by an individual who at the time of death is
not a citizen or resident of the United States will not be subject to
United States federal estate tax as a result of such individual's death if
the individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Ford entitled to
vote and the income on the Debenture would not have been effectively
connected with a U.S. trade or business of the individual.
Interest on a Debenture that is effectively connected with the conduct of a
trade or business in the United States by a holder of a Debenture who is a
non-United States person, although exempt from United States withholding tax,
may be subject to United States income tax as if such interest was earned by a
United States person.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest made on a Debenture and the proceeds of the sale of a
Debenture within the United States to non-corporate holders of the Debentures,
and "backup withholding" at a rate of 31% will apply to such payments if the
holder fails to provide an accurate taxpayer identification number in the manner
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<PAGE> 15
required or to report all interest and dividends required to be shown on its
federal income tax returns.
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by Ford or a paying agent to a non-United States person
on a Debenture if, in the case of interest, the IRS Form described in clause (y)
or (z) in Paragraph (i) under "Income and Withholding Tax" has been provided
under applicable procedures, or, in the case of interest or principal, the
certification described in clause (x)(c) in Paragraph (i) under "Income and
Withholding Tax" and a certification that the beneficial owner satisfies certain
other conditions have been supplied under applicable procedures, provided that
the payor does not have actual knowledge that the certifications are incorrect.
Payments of the proceeds from the sale of a Debenture made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale of
a Debenture to or through the United States office of a broker are subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies that it is a non-United States person and that it satisfies
certain other conditions or otherwise establishes an exemption from information
reporting and backup withholding.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 1999, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on a Debenture that is beneficially owned by a non-United States
person will be reported annually on IRS Form 1042S, which must be filed with the
Internal Revenue Service and furnished to such beneficial owner.
------------------------------
INFORMATION CONCERNING FORD
Ford was incorporated in Delaware in 1919 and acquired the business of a
Michigan company, also known as Ford Motor Company, incorporated in 1903 to
produce automobiles designed and engineered by Henry Ford. Ford is the world's
largest producer of trucks and the second largest producer of cars and trucks
combined. Ford and its subsidiaries also engage in automotive-related
businesses, such as, financing and renting vehicles and manufacturing automotive
components and systems.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the design,
manufacture, assembly and sale of cars and trucks and related parts and
accessories. Substantially all of Ford's automotive products are marketed
through retail dealerships, most of which are privately owned and financed.
The primary activities of the Financial Services segment consist of
financing operations, vehicle and equipment leasing and rental operations, and
insurance operations. These activities are conducted primarily through Ford's
subsidiaries, Ford Motor Credit Company ("Ford Credit") and The Hertz
Corporation ("Hertz").
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<PAGE> 16
SELECTED FINANCIAL DATA AND OTHER DATA
The following table sets forth selected financial data and other data
concerning Ford:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
OR AT JUNE 30 YEARS ENDED OR AT DECEMBER 31
------------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(IN MILLIONS EXCEPT PER SHARE AND UNIT SALES AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
INFORMATION
Automotive
Sales................................. $ 60,385 $ 62,842 $122,935 $118,023 $110,496 $107,137 $ 91,568
Operating income...................... 4,728 4,148 6,946 2,516 3,281 5,826 1,432
Net income............................ 3,286 2,739 4,714 1,655 2,056 3,913 1,008
Financial Services Revenues............. 13,488 14,737 30,692 28,968 26,641 21,302 16,953
Income before gain on spin-off of The
Associates and income taxes......... -- -- -- -- -- -- --
Gain on spin-off of The Associates.... 15,955 -- -- -- -- -- --
Income before income taxes............ 17,403 2,029 3,857 4,222 3,539 2,792 2,712
Net income............................ 16,741 1,260 2,206 2,791 2,083 1,395 1,521
Total Ford
Net income............................ 20,027 3,999 6,920 4,446 4,139 5,308 2,529
Amounts Per Share of Common Stock and
Class B Stock After Preferred Stock
Dividends*
Basic earnings per share.............. 16.47 3.34 5.75 3.73 3.58 4.97 2.27
Diluted earnings per share............ 16.11 3.27 5.62 3.64 3.33 4.44 2.10
Cash dividends........................ 0.84 0.805 1.645 1.47 1.23 0.91 0.80
CONSOLIDATED BALANCE SHEET INFORMATION
Automotive
Total assets.......................... 86,921 83,328 85,079 79,658 72,772 68,639 61,737
Debt payable within one year.......... 855 1,624 1,129 1,661 1,832 155 932
Long-term debt -- noncurrent
portion............................. 7,365 6,695 7,047 6,495 5,475 7,103 7,084
Financial Services
Total assets.......................... 141,350 188,088 194,018 183,209 170,511 150,983 137,201
Debt.................................. 115,750 155,531 160,071 150,205 141,317 123,713 103,960
Deposit accounts**.................... -- -- -- -- -- -- 10,549
Total Ford
Total assets.......................... 228,271 271,416 279,097 262,867 243,283 219,622 198,938
Debt.................................. 123,970 163,850 168,247 158,361 148,624 130,971 122,525
Stockholders' equity.................. 23,070 29,113 30,734 26,762 24,547 21,659 15,574
Cash dividends........................ 4,274 987 2,020 1,800 1,559 1,205 1,086
OTHER DATA
Total Ford
Capital expenditures.................. 4,011 3,751 8,717 8,651 8,997 8,546 6,814
Depreciation and amortization of
special tools....................... 6,892 6,395 13,583 12,791 11,719 9,336 7,468
Worldwide vehicle unit sales of cars,
trucks and tractors (in
thousands).......................... 3,507 3,560 6,943 6,653 6,606 6,853 6,184
</TABLE>
- ------------
* Share data have been restated to reflect the 2-for-1 stock split that became
effective June 6, 1994.
** Deposit accounts relate to First Nationwide Financial Corporation (for
1993).
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<PAGE> 17
FINANCIAL REVIEW
OVERVIEW
Ford's worldwide net income was $2,381 million in second quarter 1998, or
$1.91 per diluted share of Common and Class B Stock, compared with $2,530
million, or $2.06 per diluted share in second quarter 1997. Excluding the
earnings contribution of Associates First Capital Corporation ("The Associates")
of $197 million, and a net one-time gain of $100 million, Ford's second quarter
1997 operating earnings were $2,233 million, or $1.82 per diluted share. Ford's
worldwide sales and revenues were $37.3 billion in second quarter 1998, down $3
billion from a year ago. Vehicle unit sales of cars and trucks were 1,786,000,
down 93,000 units. Stockholders' equity was $23.1 billion at June 30, 1998, down
$7.7 billion compared with December 31, 1997, reflecting primarily The
Associates spin-off.
The Associates is a consumer and commercial finance organization in which
Ford owned an 80.7% economic interest. On April 7, 1998, Ford's interest in The
Associates was spun-off to its stockholders. As a result of the spin-off, in the
first quarter of 1998 Ford realized a gain of $15,955 million based on the fair
value of The Associates as of March 12, 1998, the record date for determining
stockholders to participate in the spin-off. For further details on the
spin-off, see Ford's quarterly report on Form 10-Q for the first quarter of
1998.
RESULTS OF OPERATIONS
Ford's worldwide net income for the Automotive sector in second quarter
1998 and 1997 and first half 1998 and 1997 was as follows (in millions):
<TABLE>
<CAPTION>
SECOND QUARTER FIRST HALF
------------------------- -------------------------
1998 1998
O/(U) O/(U)
1998 1997 1997 1998 1997 1997
---- ---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
North American Automotive.................. $1,655 $1,441 $214 $2,665 $2,461 $204
Automotive Outside North America
Europe.............................. 310 157 153 540 262 278
South America....................... 14 25 (11) (31) (22) (9)
Other............................... 72 112 (40) 112 38 74
------ ------ ---- ------ ------ ----
Total Automotive Outside
North America....................... 396 294 102 621 278 343
------ ------ ---- ------ ------ ----
Total Automotive Sector.......... $2,051 $1,735 $316 $3,286 $2,739 $547
====== ====== ==== ====== ====== ====
</TABLE>
The Automotive sector includes Automotive operations and Visteon Automotive
Systems, Ford's automotive systems enterprise.
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<PAGE> 18
Ford's worldwide net income for the Financial Services group in second
quarter 1998 and 1997 and first half 1998 and 1997 was as follows (in millions):
<TABLE>
<CAPTION>
SECOND QUARTER FIRST HALF
--------------------- ----------------------------
1998 1998
O/(U) O/(U)
1998 1997 1997 1998 1997 1997
---- ---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Ford Credit............................... $300 $279 $ 21 $ 578 $ 555 $ 23
Hertz..................................... 75 54 21 110 74 36
Gain on Hertz IPO......................... -- 269 (269) -- 269 (269)
Minority Interests, Eliminations, and
Other................................... (45) (4) (41) (79) (27) (52)
---- ---- ----- ------- ------ -------
Financial Services (excluding The
Associates)........................ 330 598 (268) 609 871 (262)
The Associates............................ -- 197 (197) 177* 389 (212)
Gain on Spin-off of The Associates........ -- -- -- 15,955 -- 15,955
---- ---- ----- ------- ------ -------
Total Financial Services........ $330 $795 $(465) $16,741 $1,260 $15,481
==== ==== ===== ======= ====== =======
Memo: Ford's share of earnings in Hertz... $ 60 $ 45 $ 15 $ 89 $ 65 $ 24
</TABLE>
- ---------------
* Through March 12, 1998
SECOND QUARTER 1998 COMPARED WITH SECOND QUARTER 1997
Automotive Sector
Worldwide earnings for Ford's Automotive sector were $2,051 million in
second quarter 1998 on sales of $31.3 billion, compared with $1,735 million in
second quarter 1997 on sales of $32.8 billion. Excluding a one-time charge of
$169 million for restructuring actions in second quarter 1997, earnings in
second quarter 1998 increased $147 million compared with a year ago. The
improvement in earnings reflects primarily continued cost reductions and
improved product mix, offset partially by lower market share and higher
marketing incentives. Adjusted for constant volume and mix, total automotive
costs were down $900 million compared with second quarter a year ago. In second
half 1998, a sizable restructuring charge is expected to be incurred for a
voluntary retirement/separation program to be offered to employees in the coming
months.
Automotive sector earnings in North America were $1,655 million in second
quarter 1998, up $214 million compared with a year ago. The increase reflected
primarily cost reductions and nonrecurrence of second quarter 1997 restructuring
actions, offset partially by lower market share. The after-tax return on sales
was 7.3% in second quarter 1998, up 1.1 points from a year ago.
The seasonally-adjusted annual selling rate for the U.S. car and truck
industry was 16.5 million units in second quarter 1998, up from 14.8 million
units in second quarter 1997. Ford expects car and truck industry sales for
full-year 1998 to be slightly higher than the 15.5 million units in 1997. Ford's
combined U.S. car and truck share was 24% in second quarter 1998, down 1.6
points from a year ago, reflecting primarily the discontinuation of five
low-margin vehicle lines and reduced low-margin fleet business.
Automotive sector earnings in Europe were $310 million, up $153 million
compared with second quarter a year ago. The improvement reflected primarily
cost reductions and higher dealer stocks. Higher marketing incentives were a
partial offset.
The seasonally-adjusted annual selling rate for the European car and truck
industry was 15.4 million units in second quarter 1998, up from 14.6 million
units in second quarter 1997. European car and truck industry sales for
full-year 1998 are expected to be higher than the 15 million units in 1997.
Ford's combined European car and truck market share was 10.4% in second quarter
1998, down 1.3 points from a year ago. The decline reflects primarily new model
launches by competitors and Ford production constraints.
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<PAGE> 19
Automotive sector earnings in South America were $14 million in second
quarter 1998, down $11 million compared with second quarter a year ago. In
second quarter 1998, the seasonally-adjusted annual selling rate for the
Brazilian car and truck industry totaled 1.7 million units, compared with 2.1
million units in second quarter a year ago. For full-year 1998, Ford expects car
and truck industry sales in Brazil to be lower than the 1.9 million units in
1997. Ford's combined car and truck share in Brazil was 13.8% in second quarter
1998, down 4/10 of a point from second quarter 1997.
Visteon earned $241 million on revenues of $4,725 million in second quarter
1998, compared with $210 million on revenues of $4,720 million in second quarter
a year ago. The improvement in earnings reflects primarily continuing cost
reductions. The after-tax return on sales was 5.1% in second quarter 1998, up
7/10 of a point from a year ago.
Financial Services Group
With the completion of The Associates spin-off, Financial Services group
earnings now reflect primarily the results of Ford Credit and Ford's share of
the earnings of Hertz.
Earnings at Ford Credit in second quarter 1998 were $300 million, up $21
million compared with second quarter a year ago. The increase reflects primarily
improved yields, lower credit loss reserve requirements, and increased gains on
receivable sales. Higher depreciation expense for leased vehicles (reflecting
lower-than-anticipated residual values on leased vehicles) and increased
operating costs were partial offsets. Compared with a year ago, lower financing
margins resulted from higher depreciation expense for leased vehicles, which is
expected to continue to adversely affect Ford Credit's earnings for the
remainder of 1998.
Earnings at Hertz in second quarter 1998 were a record $75 million (of
which $60 million was Ford's share), up $21 million from the same period a year
ago. The increase reflects primarily higher revenues in U.S. car rental
operations.
FIRST HALF 1998 COMPARED WITH FIRST HALF 1997
Ford's operating earnings were $3,895 million, or $3.14 per diluted share
of Common and Class B Stock, in first half 1998, compared with $3,510 million,
or $2.87 per diluted share, in first half 1997 excluding The Associates.
Operating results in first half 1998 exclude a one-time gain of $15,955
million, or $12.90 per diluted share, resulting from the spin-off of The
Associates, and a one-time earnings per share reduction of $0.07 per share
resulting from the premium paid to repurchase the company's Series B Cumulative
Preferred Stock. Results in first half 1997 include a one-time gain of $269
million on the initial public offering of the common stock of Hertz, offset
partially by a one-time charge of $169 million for restructuring actions.
Including one-time factors, Ford's reported earnings in first half 1998 were
$20,027 million, or $16.11 per diluted share, compared with $3,999 million, or
$3.27 per diluted share, in first half 1997. Ford's results in first half 1998
include Ford's share of The Associates' earnings through March 12, the record
date for the spin-off of The Associates.
Ford's worldwide sales and revenues in first half 1998 were $73.9 billion,
down $3.7 billion from a year ago. Vehicle unit sales of cars and trucks were
3,507,000, down 53,000 units.
Automotive Sector
Worldwide earnings for Ford's Automotive sector were $3,286 million in
first half 1998 on sales of $60.4 billion, compared with $2,739 million in first
half 1997 on sales of $62.8 billion. The increase was more than explained by
cost reductions.
Earnings for the Automotive sector in North America were $2,665 million in
first half 1998, up $204 million from first half 1997. The increase reflected
primarily cost reductions, higher industry
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<PAGE> 20
volume, vehicle mix improvements, and nonrecurrence of 1997 restructuring
actions, offset partially by lower market share and increased marketing
incentives. The North American Automotive after-tax return on sales was 6.2% in
first half 1998, up 7/10 of a point from a year ago.
The seasonally-adjusted annual selling rate for the U.S. car and truck
industry was 16 million units in first half 1998, compared with 15.3 million
units in first half 1997. Ford's combined U.S. car and truck market share was
24.2%, down 1.2 points compared with a year ago, reflecting primarily the
discontinuation of five low-margin vehicle lines and reduced low-margin fleet
business.
Automotive sector earnings in Europe in first half 1998 were $540 million,
up $278 million from first half a year ago, reflecting primarily cost reductions
and improved volume and mix, offset partially by higher marketing incentives.
The seasonally-adjusted annual selling rate for the European car and truck
industry was 15.6 million units in first half 1998, up from 14.4 million units
in first half 1997. Ford's combined European car and truck market share was 11%
in first half 1998, down 6/10 of a point from a year ago.
Automotive sector losses in South America were $31 million in first half
1998, compared with a loss of $22 million in first half a year ago. In first
half 1998, the seasonally-adjusted annual selling rate for the Brazilian car and
truck industry totaled 1.6 million units, compared with 2 million units in first
half 1997. Ford's combined car and truck share in Brazil was 13.7% in first half
1998, up one point from first half 1997.
Visteon earned $430 million on revenues of $9,103 million in first half
1998, compared with $356 million on revenues of $8,873 million in first half a
year ago. The improvement in earnings reflects primarily continuing cost
reductions. The after-tax return on sales was 4.7% in first half 1998, up 7/10
of a point from a year ago.
Financial Services Group
Higher earnings at Ford Credit and Hertz in first half 1998, compared with
first half 1997, reflected primarily the same factors as those described in the
discussion of second quarter results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Sector
Automotive cash and marketable securities were $22.3 billion at June 30,
1998, up $1.4 billion from December 31, 1997. Ford paid $1 billion in quarterly
cash dividends on its Common Stock, Class B Stock and Preferred Stock during
first half 1998, and $3.2 billion in cash dividends related to The Associates
spin-off .
Automotive capital expenditures were $3.8 billion in first half 1998, up
$275 million from the same period a year ago. Capital expenditures were 6.2% of
sales in first half 1998, up 7/10 of a point from first half a year ago.
Automotive debt at June 30, 1998 totaled $8.2 billion, which was 26% of
total capitalization (stockholders' equity and Automotive debt), compared with
21% of total capitalization at year-end 1997. The increase in the ratio in 1998
reflects the reduction in stockholders' equity resulting from The Associates
spin-off.
At July 1, 1998, Ford had long-term contractually committed global credit
agreements under which $8.5 billion is available from various banks; 94% of such
commitments are available through June 30, 2003. The entire $8.5 billion may be
used, at Ford's option, by any affiliate of Ford; however, any borrowing by an
affiliate will be guaranteed by Ford. Ford also has the ability to transfer on a
nonguaranteed basis $8.3 billion of such credit lines in varying portions to
Ford Credit and FCE Bank plc (formerly known as Ford Credit Europe plc). In
addition, at July 1, 1998,
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<PAGE> 21
$485 million of contractually committed credit facilities were available to
various Automotive affiliates outside the U.S. Approximately $74 million of
these facilities were in use at July 1, 1998.
Financial Services Group
The Associates spin-off explains primarily the declines discussed below.
Financial Services cash and investments in securities totaled $3.3 billion
at June 30, 1998, down $574 million from December 31, 1997.
Net receivables and lease investments were $124.9 billion at June 30, 1998,
down $50.6 billion from December 31, 1997.
Total debt was $115.8 billion at June 30, 1998, down $44.3 billion from
December 31, 1997.
Outstanding commercial paper at June 30, 1998 totaled $40.9 billion at Ford
Credit and $2 billion at Hertz, with an average remaining maturity of 22 days
and 24 days, respectively.
At July 1, 1998, Financial Services had a total of $27.9 billion of
contractually committed support facilities (excluding the $8.3 billion available
under Ford's global credit agreements). Of these facilities, $23.9 billion are
contractually committed global credit agreements under which $19.1 billion and
$4.8 billion are available to Ford Credit and FCE Bank, respectively, from
various banks; 58% and 75%, respectively, of such facilities are available
through June 30, 2003. The entire $19.1 billion may be used, at Ford Credit's
option, by any subsidiary of Ford Credit, and the entire $4.8 billion may be
used, at FCE Bank's option, by any subsidiary of FCE Bank. Any borrowings by
such subsidiaries will be guaranteed by Ford Credit or FCE Bank, as the case may
be. At July 1, 1998, $205 million of the Ford Credit global facilities were in
use and $738 million of the FCE Bank global facilities were in use. Other than
the global credit agreements, the remaining portion of the Financial Services
support facilities at July 1, 1998 consisted of $2.1 billion of contractually
committed support facilities available to Hertz in the U.S., and $1.9 billion of
contractually committed support facilities available to various affiliates
outside the U.S.; at July 1, 1998, approximately $967 million of these
facilities were in use. Furthermore, banks provide $1.5 billion of liquidity
facilities to support the asset-backed commercial paper program of a Ford Credit
sponsored special purpose entity.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities," was issued by
the Financial Accounting Standards Board in June 1998. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires recognition of all derivatives as either assets
or liabilities on the balance sheet and measurement of those instruments at fair
value. If certain conditions are met, a derivative may be designated
specifically as (a) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment (a fair value
hedge), (b) a hedge of the exposure to variable cash flows of a forecasted
transaction (a cash flow hedge), or (c) a hedge of the foreign currency exposure
of a net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. Ford anticipates having each of these types of hedges, and will
comply with requirements of SFAS 133 when adopted.
This Statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Ford expects to adopt SFAS 133 beginning January
1, 2000. The effect of adopting SFAS 133 is not expected to be material.
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities," was issued by the American Institute of Certified Public
Accountants in April 1998. Effective for fiscal years beginning after December
15, 1998, this SOP provides guidance on the financial reporting of
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<PAGE> 22
start-up costs and organization costs. It requires start-up activities and
organization costs to be expensed as incurred. Presently, Ford expenses start-up
costs and organization costs as incurred.
YEAR 2000 DATE CONVERSION
An issue affecting Ford and most other companies is whether computer
systems and applications will recognize and process the year 2000 and beyond.
Ford has a central office to coordinate the identification, evaluation and
implementation of changes to systems and applications to achieve compliance with
the year 2000 date conversion. Ford is in the process of assessing and
implementing necessary changes for all areas of Ford's business which could be
impacted; these include such areas as business computer systems, technical
infrastructure, dealership systems, plant floor equipment, building
infrastructure, end-user computing, affiliates, suppliers and vehicle
components.
Ford has investigated the impact of the year 2000 issue on its vehicle
components and does not anticipate any effect on the operational safety or
performance of its vehicles. The electronic functionality of such components
generally is based on engine cycles or the time elapsed since the vehicle was
started, not any particular date. While Ford will continue to investigate its
vehicle components, at present it does not anticipate any significant exposure
related to the year 2000 issue for its current or future products.
Ford has established accelerated conversion centers in various regions of
the world, and is using these centers, as well as external resources, to address
the year 2000 issue. Ford plans to have necessary modifications made to most of
its critical systems and applications by the end of 1998 and to complete testing
during 1999. Ford, however, has little to no control over whether its suppliers
or dealers will make the appropriate modifications to their systems and
applications on a timely basis. Ford is working actively through the Automotive
Industry Action Group with other manufacturers in assessing and monitoring
supplier readiness. In addition, Ford will rely to a certain extent on equipment
suppliers for the modifications that must be made to certain Ford manufacturing
equipment.
Based on assessments completed to date and compliance plans in process,
Ford does not expect that the year 2000 issue, including the cost of making its
critical systems and applications compliant, will have a material effect on its
business operations, consolidated financial condition, cash flows, or results of
operations. However, if appropriate modifications are not made by Ford's
suppliers or dealers on a timely basis, or if Ford's actual costs or timing for
the year 2000 date conversion differ materially from its present estimates,
Ford's operations and financial results could be significantly adversely
affected.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Ford is exposed to a variety of market risks, including the effects of
changes in foreign currency exchange rates, interest rates and commodity prices.
For Automotive operations, purchases and sales of finished vehicles and
production parts, debt and other payables, subsidiary dividends, and investments
in subsidiaries are frequently denominated in foreign currencies, thereby
creating exposures to changes in exchange rates. In addition, Ford also is
exposed to changes in prices of commodities used in its Automotive operations.
To ensure funding over business and economic cycles and to minimize overall
borrowing costs, Financial Services operations issue debt and other payables
with various maturity and interest rate structures. The maturity and interest
rate structures frequently differ from the invested assets. Exposures to
fluctuations in interest rates are created by the difference in maturities of
liabilities versus the maturities of assets.
These financial exposures are monitored and managed by Ford as an integral
part of Ford's overall risk management program, which recognizes the
unpredictability of financial markets and seeks to reduce the potentially
adverse effect on Ford's results. The effect of changes in exchange rates,
interest rates and commodity prices on Ford's earnings generally has been small
relative to
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<PAGE> 23
other factors that also affect earnings, such as unit sales and operating
margins. For more information on these financial exposures, see Note 1 (pages
FS-9 and FS-10) and Note 14 (pages FS-27 and FS-28) of the Notes to Financial
Statements included in the 1997 10-K Report.
Ford's interest rate risk and its foreign currency exchange rate risk
(risks related to commodity derivative positions are not material) is quantified
as follows.
Interest Rate Risk -- Interest rate swaps (including those with a
currency swap component) are used by Ford, primarily in its Financial
Services operations, to mitigate the effects of interest rate fluctuations
on earnings by changing the characteristics of debt to match the
characteristics of assets. Ford uses a model to assess the sensitivity of
its earnings to changes in market interest rates. The model recalculates
earnings by adjusting the rates associated with variable rate instruments
on the repricing date and adjusting the rates on fixed rate instruments
scheduled to mature in the subsequent twelve months, effective on their
scheduled maturity date. Interest income and interest expense are then
recalculated based on the revised rates. Assuming an instantaneous increase
or decrease of one percentage point in interest rates applied to all
financial instruments and leased assets, Ford's after-tax earnings would
change by $30 million over a 12-month period.
Foreign Currency Risk -- Ford principally uses derivative financial
instruments to hedge assets, liabilities and firm commitments denominated
in foreign currencies. Ford uses a value-at-risk (VAR) analysis to assess
its exposure to changes in foreign currency exchange rates. The primary
assumptions used in the VAR analysis are as follows:
- A Monte Carlo simulation was used to calculate changes in the value
of currency derivative instruments (forwards and options) and all
significant underlying exposures. The simulation generated currency rate
scenarios over an 18-month exposure horizon and a one-month holding period.
- The VAR analysis calculates the potential risk, with a 99%
confidence level, on firm commitment exposures (cash flows), including the
effects of foreign currency derivatives. (Translation exposures were not
included in the VAR analysis.) The model assumes currency prices are
generally normally distributed and draws volatility data from the currency
markets.
- Estimates of correlations of market factors primarily are drawn from
the JP Morgan RiskMetrics(TM) dataset as of December 31, 1997.
Based on the overall Ford currency exposure at December 31, 1997, including
derivative positions, currency movements are projected to affect pre-tax cash
flow by less than $250 million, with a 99% confidence level.
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<PAGE> 24
INDUSTRY DATA AND MARKET SHARE
The following table shows the U.S. industry retail deliveries of cars and
trucks for the periods indicated:
<TABLE>
<CAPTION>
U.S. INDUSTRY RETAIL DELIVERIES
(MILLIONS OF UNITS)
----------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30* YEARS ENDED DECEMBER 31
-------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars..................................... 4.2 4.2 8.3 8.6 8.6 9.0 8.5
Trucks................................... 4.0 3.6 7.2 6.9 6.5 6.4 5.7
</TABLE>
- ---------------
* Seasonally adjusted annual rates
The following table shows Ford's U.S. car and truck market shares for the
periods indicated:
<TABLE>
<CAPTION>
FORD U.S. CAR AND TRUCK MARKET SHARES
----------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30 YEARS ENDED DECEMBER 31
-------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars................................... 19.6% 19.9% 19.5% 20.6% 20.9% 21.8% 22.3%
Trucks................................. 29.2 31.8 31.2 31.1 31.9 30.1 30.5
Combined............................... 24.2 25.4 25.0 25.2 25.6 25.2 25.5
</TABLE>
For additional information regarding Ford, see the 1997 10-K Report.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for Ford were as follows for
each of the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED DECEMBER 31
ENDED ----------------------------------------------------------------------------
JUNE 30, 1998 1997 1996 1995 1994 1993
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
5.7* 2.0 1.6 1.6 2.0 1.5
</TABLE>
- ---------------
* Earnings used in calculation of this ratio include the $15,955 million gain on
spin-off of The Associates. Excluding this gain, the ratio would have been
2.4.
For purposes of the ratio, "earnings" include the income before income
taxes of Ford and its majority-owned subsidiaries and trusts, whether or not
consolidated, its proportionate share of any fifty-percent-owned companies, and
any income received from less-than-fifty-percent-owned companies and fixed
charges. "Fixed charges" consist of interest on borrowed funds, preferred stock
dividend requirements of majority-owned subsidiaries and trusts, amortization of
debt discount, premium, and issuance expense, and one-third of all rental
expense (the proportion deemed representative of the interest factor).
S-24
<PAGE> 25
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement relating to the Debentures, Ford has agreed to sell to
each of the Underwriters named below (the "Underwriters"), and each of the
Underwriters has severally agreed to purchase, the principal amount of the
Debentures set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITERS OF DEBENTURES
------------ ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Lehman Brothers Inc. .......................................
--------------
Total.......................................... $
==============
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Underwriters are committed to take and pay for all of the
Debentures, if any are taken.
The Underwriters have advised Ford that they propose to offer all or part
of the Debentures directly to purchasers at the initial public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
securities dealers at such price less a concession not in excess of % of the
principal amount of the Debentures. The Underwriters may allow, and such dealers
may reallow, to certain brokers and dealers a concession not in excess of %
of the principal amount of the Debentures. After the Debentures are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the Underwriters.
The Debentures are offered for sale in the United States, Europe and Asia.
Each of the Underwriters has agreed that it will not offer, sell or deliver
any of the Debentures, directly or indirectly, or distribute this Prospectus
Supplement or the accompanying Prospectus or any other offering material
relating to the Debentures, in or from any jurisdiction except under
circumstances that will to the best knowledge and belief of such Underwriter
result in compliance with the applicable laws and regulations thereof and which
will not impose any obligations on Ford except as set forth in the Underwriting
Agreement and the Pricing Agreement.
Each Underwriter acknowledges that this Prospectus Supplement and
accompanying Prospectus has not been registered with the Registrar of Companies
in Singapore and that the Debentures are offered in Singapore pursuant to an
exemption invoked under section 106C of the Companies Act, Chapter 50 of
Singapore (the "Singapore Companies Act"). Accordingly, each Underwriter has
represented and agreed that the Debentures may not be offered or sold, nor may
this Prospectus Supplement and accompanying Prospectus or any other offering
document or material relating to the Debentures be circulated or distributed,
directly or indirectly, to the public or any member of the public in Singapore
other than (1) to an institutional investor or other body or person specified in
section 106C of the Singapore Companies Act, or (2) to a sophisticated investor
specified in section 106D of the Singapore Companies Act, or (3) otherwise
pursuant to, and in accordance with the conditions of section 106E(2) of the
Singapore Companies Act or any other applicable exemption invoked under Division
5A of Part IV of the Singapore Companies Act.
Each of the Underwriters has agreed that it has not offered or sold, and it
will not offer or sell, directly or indirectly, any of the Debentures in or to
residents of Japan or to any persons for reoffering or resale, directly or
indirectly, in Japan or to any resident of Japan except pursuant to an exemption
from the registration requirements of the Securities and Exchange Law available
thereunder and in compliance with the other relevant laws of Japan.
Each Underwriter has represented and agreed that (a) it has not offered or
sold, and, prior to the expiration of the period of six months from the closing
date for the issue of the Debentures, will
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<PAGE> 26
not offer or sell any Debentures to persons in the United Kingdom, except to
those persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purpose of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995, (b) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986, with
respect to anything done by it in relation to the Debentures in, from or
otherwise involving the United Kingdom, and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issue of the Debentures to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom the
document may otherwise lawfully be issued or passed on.
Purchasers of the Debentures may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page hereof.
The Debentures are a new issue of securities with no established trading
market. Ford has been advised by the Underwriters that they intend to make a
market in the Debentures, but they are not obligated to do so and may
discontinue such market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Debentures.
In connection with the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Debentures. Specifically, the Underwriters may over-allot in connection with the
offering, creating a syndicate short position. In addition, the Underwriters may
bid for, and purchase, Debentures in the open market to cover syndicate shorts
or to stabilize the price of the Debentures. Finally, the underwriting syndicate
may reclaim selling concessions allowed for distributing the Debentures in the
offering if the syndicate repurchases previously distributed Debentures in
syndicate covering transactions, stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the Debentures
above independent market levels. The Underwriters are not required to engage in
any of these activities, and may end any of them at any time.
All secondary trading in the Debentures will settle in immediately
available funds. See "Description of Debentures -- Same-Day Settlement and
Payment" and "-- Global Clearance and Settlement Procedures".
It is expected that delivery of the Debentures will be made against payment
therefor on or about , 1998, which is the fifth business day following
the date hereof (such settlement cycle being herein referred to as "T+5").
Purchasers of Debentures should note that the ability to settle secondary market
trades of the Debentures effected on the date of pricing and the next succeeding
business day may be affected by the T+5 settlement.
Ford has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
S-26
<PAGE> 27
GENERAL INFORMATION
Application has been made to list the Debentures on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of Ford and a legal notice relating to the
issuance of the Debentures have been deposited prior to listing with Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may
be obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture and Ford's
current Annual and Quarterly Reports, as well as all future Annual Reports and
Quarterly Reports, so long as any of the Debentures are outstanding, will be
made available for inspection at the main office of Banque Internationale a
Luxembourg S.A. in Luxembourg. Banque Internationale a Luxembourg S.A. will act
as intermediary between the Luxembourg Stock Exchange and Ford and the holders
of the Debentures. In addition, copies of the Annual Reports and Quarterly
Reports of Ford may be obtained free of charge at such office.
Application has also been made to list the Debentures on the Singapore
Stock Exchange. So long as any of the Debentures remain outstanding, copies of
the Indenture, this Prospectus Supplement, the accompanying Prospectus, and the
Certificate of Incorporation and By-Laws of Ford will be available for
inspection at the offices of The Chase Manhattan Bank, 150 Beach Road, Gateway
West, 31st Floor, Singapore 189720. In addition, copies of all documents
incorporated in this document by reference and copies of all future annual
reports and quarterly reports of Ford Credit may be obtained, free of charge, at
the offices of The Chase Manhattan Bank in Singapore.
Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
the financial position of Ford since June 30, 1998.
Various legal, arbitration or administrative proceedings are pending or may
be instituted in the future against Ford and its subsidiaries, some of which
could result in Ford being required to make substantial expenditures. For a
discussion of various legal and other proceedings affecting Ford, see the
discussions of legal proceedings in the 1997 10-K Report and the 1998 10-Q
Reports. Except as otherwise disclosed or contemplated in the 1997 10-K Report
or the 1998 10-Q Reports, neither Ford nor any of its subsidiaries is involved
in litigation, arbitration, or administrative proceedings relating to claims or
amounts that are material in the context of the issue of the Debentures and Ford
is not aware of any such litigation, arbitration, or administrative proceedings
pending or threatened.
Ford accepts responsibility for the information contained in this
Prospectus Supplement and accompanying Prospectus.
Resolutions relating to the issue and sale of the Debentures were adopted
by the Board of Directors of Ford on March 12, 1998.
The Debentures have been assigned Euroclear and Cedel Common Code No.
, International Security Identification Number (ISIN)
and CUSIP No. .
------------------------
S-27
<PAGE> 28
FORD MOTOR COMPANY
DEBT SECURITIES
Ford Motor Company has registered with the Securities and Exchange
Commission $3,000,000,000 aggregate principal amount of its Debt Securities
consisting of notes and/or debentures, denominated in United States dollars or
any other currency, to be offered from time to time in one or more series, on
terms to be determined at or prior to the time of sale. The Prospectus
Supplement accompanying this Prospectus sets forth, with respect to the
particular series of Debt Securities for which this Prospectus and the
Prospectus Supplement are being delivered, the specific title, the aggregate
principal amount, the authorized denominations, the currencies of issue and
payment, the initial public offering price, the maturity, the interest rate or
rates (which may be either fixed or variable), if any, and/or method of
determination thereof, the time of payment of any interest, any redemption,
extension or early repayment terms, any provision for sinking fund payments, the
net proceeds to Ford and other specific terms relating to such series of Debt
Securities.
Ford will sell the Debt Securities to or through underwriters, and may also
sell the Debt Securities directly to other purchasers or through agents. See
"Plan of Distribution". In addition, the Debt Securities may be sold to dealers
at the applicable price to the public set forth in the Prospectus Supplement
relating to a particular series of Debt Securities who later resell to
investors. Such dealers may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). If any agents of
Ford or any underwriters are involved in the sale of any Debt Securities, the
names of such agents or underwriters and any applicable commissions or discounts
are set forth in the accompanying Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is May 21, 1998.
<PAGE> 29
AVAILABLE INFORMATION
Ford is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). As used herein,
"Ford" or the "Company" refers to Ford Motor Company and its subsidiaries unless
the context otherwise requires. Such reports, proxy and information statements
and other information can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the following Regional Offices of the Commission: 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison St., Suite 1400, Chicago, Illinois 60661-2511. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically,
such as Ford. The address of the Commission's Web site is http://www.sec.gov.
Such reports, proxy and information statements and other information of or
concerning Ford also can be inspected and copied at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Ford has filed with the Commission two Registration Statements
(Registration Nos. 333-14297 and 333-52485) under the Securities Act with
respect to the securities offered hereby (the "Registration Statements"). This
Prospectus does not contain all the information set forth in the Registration
Statements and the exhibits and schedules thereto, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission. The
information so omitted may be obtained from the Commission's principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford's Annual Report on Form 10-K for the year ended December 31, 1997
("Ford's 1997 10-K Report"), Ford's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 ("Ford's 1998 10-Q Report"), and Ford's Current
Reports on Form 8-K dated January 27, 1998, February 2, 1998, March 2, 1998,
March 13, 1998, April 7, 1998, April 8, 1998 and April 16, 1998 have been filed
with the Commission and are incorporated in this Prospectus by reference. All
documents filed by Ford pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
the offering of the Debt Securities shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
and superseded, to constitute a part of this Prospectus.
Ford undertakes to provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference in this Prospectus, other than exhibits to
such documents. Written or telephonic requests for such documents should be
directed to Ford Motor Company, The American Road, Dearborn, Michigan 48121
Attention: Shareholder Relations Department (telephone number 800-555-5259 (in
the U.S. and Canada) or 313-845-8540).
------------------------
THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED
INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH
SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED
IN THE INCORPORATED DOCUMENTS.
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<PAGE> 30
FORD MOTOR COMPANY
Ford was incorporated in Delaware in 1919 and acquired the business of a
Michigan company, also known as Ford Motor Company, incorporated in 1903 to
produce automobiles designed and engineered by Henry Ford. Ford is the world's
largest producer of trucks and the second largest producer of cars and trucks
combined. Ford and its subsidiaries also engage in automotive-related
businesses, such as, financing and renting vehicles and manufacturing automotive
components and systems.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the design,
manufacture, assembly and sale of cars and trucks and related parts and
accessories. Substantially all of Ford's automotive products are marketed
through retail dealerships, most of which are privately owned and financed.
The primary activities of the Financial Services segment consist of
financing operations, vehicle and equipment leasing and rental operations, and
insurance operations. These activities are conducted primarily through the
following subsidiaries: Ford Motor Credit Company and The Hertz Corporation.
The principal executive offices of Ford are located at The American Road,
Dearborn, Michigan 48121, telephone number 313-322-3000.
3
<PAGE> 31
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for Ford was as follows for the
first three months of 1998 and each of the years 1993-1997:
<TABLE>
<CAPTION>
THREE MONTHS YEARS ENDED DECEMBER 31
ENDED --------------------------------
MARCH 31, 1998 1997 1996 1995 1994 1993
- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
8.0* 2.0 1.6 1.6 2.0 1.5
</TABLE>
- -------------------------
* Earnings used in calculation of this ratio include the $15,955 million gain on
the spin-off of Ford's interest in Associates First Capital Corporation.
Excluding this gain, the ratio would have been 2.0.
For purposes of the ratio, "earnings" include the income before income
taxes of Ford and its majority-owned subsidiaries and trusts, whether or not
consolidated, its proportionate share of any fifty-percent-owned companies, and
any income received from less-than-fifty-percent-owned companies and fixed
charges. "Fixed charges" consist of interest on borrowed funds, preferred stock
dividend requirements of majority-owned subsidiaries and trusts, amortization of
debt discount, premium, and issuance expense, and one-third of all rental
expense (the proportion deemed representative of the interest factor).
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Debt Securities will be
used for general corporate purposes of Ford or its affiliates. In the event the
net proceeds of any series of Debt Securities are intended to be used to repay
outstanding indebtedness of Ford or its affiliates, the Prospectus Supplement
which accompanies this Prospectus will specify the interest rate and maturity
date of such indebtedness to be repaid and, if such indebtedness was incurred
within one year, such Prospectus Supplement also will describe the use of the
proceeds of such indebtedness if other than short-term borrowings used for
working capital.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued in one or more series under an
Indenture dated as of February 15, 1992, as supplemented by a First Supplemental
Indenture dated as of December 5, 1996 and as may be further supplemented from
time to time (the "Indenture"), between Ford and The Bank of New York, Trustee.
The term "Trustee", as used herein, shall mean The Bank of New York and, if at
any time there is more than one Trustee acting under the Indenture, the term
"Trustee" as used herein with respect to Indenture Securities (as defined below)
of any particular series shall mean the Trustee with respect to the Indenture
Securities of such series. The following statements with respect to the Debt
Securities are subject to the detailed provisions of the Indenture, which is
filed as an exhibit to the Registration Statements, and the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Parenthetical references below
are to the Indenture or the Form of Security contained therein and, whenever any
particular provision of the Indenture or any term used therein is referred to,
such provision or term is incorporated by reference as a part of the statement
in connection with which such reference is made, and the statement in connection
with which such reference is made is qualified in its entirety by such
reference.
The particular terms of each series of Debt Securities, as well as any
modification or addition to the general terms of the Debt Securities as herein
described, which may be applicable to a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities and will be set forth in a filing with the Commission. Accordingly,
for a description of the terms of a particular series of Debt Securities,
reference must be made to both the Prospectus Supplement relating to such series
and to the description of Debt Securities set forth in this Prospectus.
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<PAGE> 32
GENERAL
The Debt Securities offered hereby will be limited to $3,000,000,000
aggregate principal amount or the equivalent thereof in any currency, although
the Indenture provides that additional debt securities may be issued thereunder
up to the aggregate principal amount, which is not limited by the Indenture,
authorized from time to time by the Board of Directors of Ford. So long as a
single Trustee is acting for the benefit of the holders of all the Debt
Securities offered hereby and any such additional debt securities issued under
the Indenture, the Debt Securities and any such additional debt securities are
herein collectively referred to as the "Indenture Securities". The Indenture
also provides that there may be more than one Trustee under the Indenture, each
with respect to one or more different series of Indenture Securities. See also
"Trustee" herein. At any time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture Securities" as used herein
shall mean the one or more series with respect to which each respective Trustee
is acting, and the powers and trust obligations of each such Trustee as
described herein shall extend only to the one or more series of Indenture
Securities for which it is acting as Trustee. The effect of the provisions
contemplating that there might be more than one Trustee acting for different
series of Indenture Securities is that, in that event, those Indenture
Securities (whether of one or more than one series) for which each Trustee is
acting would be treated as if issued under a separate indenture.
The Prospectus Supplement which accompanies this Prospectus sets forth a
description of the particular series of Debt Securities being offered thereby,
including: (1) the designation or title of such Debt Securities; (2) the
aggregate principal amount of such Debt Securities; (3) the percentage of their
principal amount at which such Debt Securities will be offered; (4) the date or
dates on which the principal of such Debt Securities will be payable; (5) the
rate or rates (which may be either fixed or variable) and/or the method of
determination of such rate or rates at which such Debt Securities shall bear
interest, if any; (6) the date or dates from which any such interest shall
accrue, or the method of determination of such date or dates, and the date or
dates on which any such interest shall be payable; (7) the terms for redemption,
extension or early repayment of such Debt Securities, if any; (8) the
denominations in which such Debt Securities are authorized to be issued; (9) the
currencies in which such Debt Securities are issued or payable; (10) the
provisions for a sinking fund, if any; (11) any additional restrictive covenants
of Ford included for the benefit of the holders of such Debt Securities; (12)
any additional Event of Default with respect to such Debt Securities; (13)
whether such Debt Securities are issuable as a Global Security (as defined in
the Indenture); (14) any provisions in modification of, in addition to or in
lieu of the defeasance and covenant defeasance provisions in respect of the Debt
Securities and (15) any other term or provision relating to such Debt Securities
which is not inconsistent with the provisions of the Indenture.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement relating to any such series of Debt Securities.
The Debt Securities will be unsecured obligations of Ford and will rank
pari passu with all other unsecured and unsubordinated indebtedness of Ford
(parent company only).
Except as otherwise provided in the Prospectus Supplement, principal (and
premium, if any) and interest, if any, will be payable at an office or agency to
be maintained by Ford in New York City, except that at the option of Ford
interest may be paid by check mailed to, or by wire transfer to the account of,
the person entitled thereto. (Form of Security and Sections 10.01 and 10.02.)
Except as otherwise provided in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and may
be presented for registration of transfer or exchange at the corporate trust
office of the Trustee. No service charge will be made for any
5
<PAGE> 33
transfer or exchange of the Debt Securities, but Ford may require payment of a
sum to cover any tax or other governmental charge payable in connection
therewith. (Section 3.05.)
The Indenture contains no provisions that would afford holders of Debt
Securities protection in the event of a highly leveraged transaction or a change
in control of Ford.
SUBSIDIARIES
The term "subsidiary of Ford" is defined in the Indenture as a corporation
a majority of the outstanding voting stock of which is owned, directly or
indirectly, by Ford and/or one or more subsidiaries of Ford. The term
"Manufacturing Subsidiary" is defined in the Indenture as a subsidiary of Ford
which owns or leases a Principal Domestic Manufacturing Property (as defined
below). (Section 1.01.)
LIMITATION ON LIENS
If Ford or any Manufacturing Subsidiary shall incur, suffer to exist or
guarantee any Debt (as defined in the Indenture) secured by a Mortgage (as
defined in the Indenture) on any Principal Domestic Manufacturing Property of
Ford or any Manufacturing Subsidiary or on any shares of stock of or Debt of any
Manufacturing Subsidiary, Ford will secure or cause such Manufacturing
Subsidiary to secure the Indenture Securities equally and ratably with (or prior
to) such secured Debt, unless, after giving effect thereto, the aggregate amount
of all such Debt so secured, together with all Attributable Debt (as defined
below) in respect of sale and leaseback transactions involving Principal
Domestic Manufacturing Properties, would not exceed 5% of the Consolidated Net
Tangible Automotive Assets of Ford and its consolidated subsidiaries. This
restriction will not apply to Debt secured by (a) Mortgages on property of, or
on any shares of stock of or Debt of, any corporation existing at the time such
corporation becomes a Manufacturing Subsidiary, (b) Mortgages in favor of Ford
or a Manufacturing Subsidiary, (c) Mortgages in favor of governmental bodies to
secure progress or certain advance payments, (d) Mortgages on property, shares
of stock or Debt existing at the time of acquisition thereof (including
acquisition through merger or consolidation) and certain purchase money
Mortgages, and (e) any extension, renewal or replacement of any Mortgage
referred to in the foregoing clauses (a) through (d), inclusive. (Section
10.04.) "Principal Domestic Manufacturing Property" is defined in the Indenture
to include principal automotive and related manufacturing or assembly plants
owned or leased by Ford or a subsidiary of Ford and located within the United
States. "Attributable Debt" is defined in the Indenture to mean the total net
amount of rent (discounted at the rate of 9.5% per annum compounded annually)
required to be paid during the remaining term of any lease. "Consolidated Net
Tangible Automotive Assets" is defined in the Indenture to mean the aggregate
amount of Ford's automotive assets after deducting current liabilities and
certain intangibles plus Ford's equity in the net assets of its financial
services subsidiaries after deducting certain intangibles. (Section 1.01.)
MERGER AND CONSOLIDATION
The Indenture provides that no consolidation or merger of Ford with or into
any other corporation shall be permitted and no sale or conveyance of its
property as an entirety, or substantially as an entirety, may be made to another
corporation if, as a result thereof, any Principal Domestic Manufacturing
Property of Ford or any Manufacturing Subsidiary or any shares of stock or Debt
of any Manufacturing Subsidiary would thereupon become subject to a Mortgage,
unless the Indenture Securities shall be equally and ratably secured with (or
prior to) the Debt secured by such Mortgage, or unless such Mortgage could be
created pursuant to Section 10.04 (see "Limitation on Liens" above) without
equally and ratably securing the Indenture Securities. (Section 8.03.)
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<PAGE> 34
LIMITATION ON SALES AND LEASEBACKS
Neither Ford nor any Manufacturing Subsidiary may enter into any sale and
leaseback transaction involving any Principal Domestic Manufacturing Property
unless (a) Ford or such Manufacturing Subsidiary could create Debt secured by a
mortgage pursuant to Section 10.04 (see "Limitation on Liens" above) on the
Principal Domestic Manufacturing Property to be leased in an amount equal to the
Attributable Debt with respect to the sale and leaseback transaction without
equally and ratably securing the Indenture Securities, or (b) Ford, within 120
days after the sale or transfer shall have been made, applies to the retirement
of its Funded Debt (as defined in the Indenture) an amount (subject to credits
for certain voluntary retirements of Funded Debt of Ford) equal to the greater
of (i) the net proceeds of the sale of the Principal Domestic Manufacturing
Property leased pursuant to such arrangement or (ii) the fair market value of
the Principal Domestic Manufacturing Property so leased. This restriction will
not apply to any sale and leaseback transaction (a) between Ford and a
Manufacturing Subsidiary or between Manufacturing Subsidiaries or (b) involving
the taking back of a lease for a period of three years or less. (Section 10.05.)
EVENTS OF DEFAULT AND NOTICE THEREOF
The Indenture defines an Event of Default with respect to any series of
Indenture Securities as being any one of the following events: (a) failure to
pay interest for 30 days after becoming due; (b) failure to pay principal or
premium, if any, for five business days after becoming due at maturity, upon
redemption or otherwise; (c) failure to make a sinking fund payment for five
days after becoming due; (d) failure to perform any other covenant of Ford
(other than a covenant included in the Indenture solely for the benefit of one
or more series of Indenture Securities other than such series or a covenant a
default in the performance of which would be covered by clause (f) below) for 90
days after notice; (e) certain events of bankruptcy, insolvency or
reorganization of Ford; and (f) any other Event of Default provided with respect
to Indenture Securities of such series. No Event of Default provided with
respect to a particular series of Indenture Securities (except as to events
described in clauses (d) and (e)) necessarily constitutes an Event of Default
with respect to any other series of Indenture Securities. (Section 5.01.)
If an Event of Default in respect of a particular series of Indenture
Securities outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of the Indenture
Securities outstanding of such series may declare the principal amount (or, if
the Indenture Securities of such series are Original Issue Discount Securities
(as defined in the Indenture), such portion of the principal amount as may be
specified in the terms of such series) of all of the Indenture Securities of
such series to be due and payable immediately. At any time after such a
declaration of acceleration in respect of a particular series of Indenture
Securities has been made, but before a judgment or decree for the payment of
money due upon acceleration has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of the Indenture Securities outstanding
of such series may, under certain circumstances, waive all defaults and rescind
and annul such declaration and its consequences if all Events of Default in
respect of the Indenture Securities of such series, other than the non-payment
of principal due solely by such declaration of acceleration, have been cured or
waived as provided in the Indenture. (Section 5.02.)
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of a particular series of Indenture
Securities, give the holders of such series notice of all uncured defaults known
to it (the term "default" to include the events specified above without grace
periods); provided that, except in the case of default in the payment of the
principal of, or any premium, interest or mandatory sinking fund payment, with
respect to, any of the Indenture Securities of such series, the Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the holders of such series.
(Section 6.01.)
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<PAGE> 35
Pursuant to the terms of the Indenture, Ford is required to furnish to the
Trustee annually a brief certificate of the principal executive, financial or
accounting officer of Ford as to his knowledge of Ford's compliance (determined
without regard to any period of grace or requirement of notice) with all
conditions and covenants under the Indenture and, if a default exists
thereunder, specifying the nature of such default. (Section 10.06.)
The Indenture provides that the holders of a majority in aggregate
principal amount of all Indenture Securities of a particular series then
outstanding will have the right to waive certain defaults in respect of such
series and, subject to certain limitations, to direct the time, method and place
of conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (Sections 5.12 and
5.13.) The Indenture is deemed under the Trust Indenture Act to provide that, in
case an Event of Default in respect of a particular series of Indenture
Securities shall occur (which shall not have been cured or waived), the Trustee
will be required to exercise such of its rights and powers under the Indenture,
and to use the degree of care and skill in their exercise, that a prudent man
would exercise or use in the conduct of his own affairs, but otherwise need only
perform such duties as are specifically set forth in the Indenture. Subject to
such provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of
such series unless they shall have offered to the Trustee reasonable security or
indemnity. (Section 6.02.)
DEFEASANCE AND COVENANT DEFEASANCE
Except as otherwise provided in the Prospectus Supplement, Ford may elect
(a) to defease a series of Indenture Securities with the effect that Ford will
be discharged from any and all obligations with respect to such series of
Indenture Securities (except for the obligation to issue Indenture Securities of
such series in definitive registered form in exchange for a global security
under certain circumstances, to register the transfer or exchange of such
Indenture Securities, to replace temporary or mutilated, destroyed, lost or
stolen Indenture Securities, to maintain an office or agency in respect of the
Indenture Securities and to hold moneys for payment in trust) ("defeasance")
and/or (b) to be released from its obligations with respect to such series of
Indenture Securities under Sections 8.03, 10.04 and 10.05 of the Indenture
(being the obligations described under "Merger and Consolidation", "Limitation
on Liens", and "Limitation on Sales and Leasebacks", respectively) and, if
provided pursuant to Section 3.01 of the Indenture, the obligations of Ford with
respect to any other covenant, and any omission to comply with such obligations
shall not constitute a default or an Event of Default with respect to Indenture
Securities of such series ("covenant defeasance"), in either case upon the
irrevocable deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations (as defined in the Indenture) which through the payment of principal
and interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of, and premium, interest and mandatory sinking
fund payments, if any, with respect to, such Indenture Securities, on the
scheduled due dates therefor. Such a trust may only be established if, among
other things, Ford has delivered to the Trustee an Opinion of Counsel (as
specified in the Indenture) to the effect that the holders of such Indenture
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance or covenant defeasance
had not occurred. Such opinion, in the case of defeasance under clause (a)
above, must refer to and be based on a ruling of the Internal Revenue Service or
a change in applicable Federal income tax law occurring after the date of the
first issuance of Indenture Securities. (Article Fourteen.)
In the event Ford effects covenant defeasance with respect to Indenture
Securities of any series and the Indenture Securities of such series are
declared due and payable because of the occurrence of any Event of Default other
than the Event of Default described in clause (d) under "Events of Default and
Notice Thereof" with respect to sections 8.03, 10.04 and 10.05 of the Indenture
(which
8
<PAGE> 36
Sections would no longer be applicable to Indenture Securities of that series)
or described in clause (d) or (f) under "Events of Default and Notice Thereof"
with respect to any other covenant with respect to which there has been
defeasance, the amount of money and U.S. Government Obligations on deposit with
the Trustee will be sufficient to pay amounts due on the Indenture Securities of
such series when they become due but may not be sufficient to pay amounts due on
the Indenture Securities of such series at the time of the acceleration
resulting from such Event of Default. However, the Company and Ford would remain
liable to make payment of such amount due at the time of acceleration.
The Prospectus Supplement may further describe any provision in
modification of, in addition to or in lieu of the provisions described under
this caption "Defeasance and Covenant Defeasance".
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture, the rights and obligations of Ford
and the rights of the holders of a particular series thereunder may be modified
by Ford with the consent of the holders of not less than 66 2/3% in aggregate
principal amount of the Indenture Securities of such series then outstanding of
each series affected by such modification; but no such modification may be made
which would (i) extend the fixed maturity of any Indenture Security of such
series, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, without the consent of the holder of each
Indenture Security of such series so affected; or (ii) reduce the above-stated
percentage of Indenture Securities of such series, the consent of the holders of
which is required to modify or alter the Indenture, without the consent of the
holders of all Indenture Securities of such series then outstanding. (Section
9.02.)
TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Indenture Securities and a successor Trustee may be appointed to act with
respect to such one or more series. (Section 6.08.) In the event that there
shall be two or more persons acting as Trustee with respect to different series
of Indenture Securities, each such Trustee shall be a trustee of a trust or
trusts under the Indenture separate and apart from the trust or trusts
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Indenture Securities for
which it is acting as Trustee. (Section 6.09.)
CONCERNING THE BANK OF NEW YORK
The Bank of New York, Trustee under the Indenture, is also the trustee
under indentures covering a number of outstanding issues of notes and debentures
of certain of Ford's subsidiaries, is a depositary of Ford and certain of its
subsidiaries, has from time to time made loans to Ford and certain of its
subsidiaries, has from time to time purchased receivables from Ford and certain
of its subsidiaries, and has performed other services for such companies in the
normal course of its business. The Bank of New York's principal corporate trust
office is located at 101 Barclay Street, New York, New York 10286 and its
telephone number is 800-524-4458.
PLAN OF DISTRIBUTION
Ford may sell the Debt Securities to or through underwriters and also may
sell the Debt Securities directly to one or more other purchasers or through
agents.
The Prospectus Supplement sets forth the terms of the offering of the
particular series of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
Ford has entered into arrangements with respect to the sale of such series of
Debt Securities, (ii) the initial public offering or purchase price of such
series of Debt
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<PAGE> 37
Securities, (iii) any underwriting discounts, commissions and other items
constituting underwriters' compensation from Ford and any other discounts,
concessions or commissions allowed or reallowed or paid by any underwriters to
other dealers, (iv) any commissions paid to any agents, (v) the net proceeds to
Ford, and (vi) the securities exchanges, if any, on which such series of Debt
Securities will be listed. The Debt Securities of each series will be
consecutively numbered, beginning with the number one.
If underwriters are used in a sale of any Debt Securities, such Debt
Securities will be acquired for their own account and may be resold from time to
time in one or more transactions including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement relating to a particular
series of Debt Securities, the obligations of the underwriters to purchase such
series of Debt Securities will be subject to certain conditions precedent and
each of the underwriters with respect to such series of Debt Securities will be
obligated to purchase all of the Debt Securities of such series allocated to it
if any such Debt Securities are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The Debt Securities may also be offered and sold by Ford directly or
through agents designated by Ford from time to time. Unless otherwise indicated
in the Prospectus Supplement, any such agent or agents will be acting on a best
efforts basis for the period of its or their appointment. Any agent
participating in the distribution of the Debt Securities may be deemed to be an
"underwriter", as that term is defined in the Securities Act, of the Debt
Securities so offered and sold. The Debt Securities may also be sold to dealers
at the applicable price to the public set forth in the Prospectus Supplement
relating to a particular series of Debt Securities who later resell to
investors. Such dealers may be deemed to be "underwriters" within the meaning of
the Securities Act.
If so indicated in the Prospectus Supplement relating to a particular
series of Debt Securities, Ford will authorize underwriters or agents to solicit
offers by certain institutions to purchase Debt Securities of such series from
Ford pursuant to delayed delivery contracts providing for payment and delivery
at a future date. Such contracts will be subject only to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set forth
the commission payable for solicitation of such contracts.
Underwriters and agents may be entitled, under agreements entered into with
Ford, to indemnification by Ford against certain civil liabilities, including
liabilities under the Securities Act.
LEGAL OPINIONS
The legality of the Debt Securities will be passed on for Ford by J. M.
Rintamaki, Esq., Secretary and an Assistant General Counsel of Ford or other
counsel satisfactory to any underwriters or agents, and for any underwriters or
agents by Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022.
Mr. Rintamaki is a full-time employee of Ford and owns, and holds options to
purchase, shares of Common Stock of Ford. Shearman & Sterling have in the past
provided, and may continue to provide, legal services to Ford and its
subsidiaries.
EXPERTS
The financial statements which are incorporated in this Prospectus by
reference to Ford's 1997 10-K Report have been audited by Coopers & Lybrand
L.L.P., independent certified public accountants, to the extent indicated in
their report therein, and have been so incorporated in reliance on the report of
that firm given on their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information of the Company
for the period ending March 31, 1998, incorporated in this Prospectus by
reference to Ford's 1998 10-Q Report, Coopers & Lybrand L.L.P. have reported
that they have applied limited procedures in accordance with
10
<PAGE> 38
professional standards for a review of such information. However, their report,
included in Ford's 1998 10-Q Report, states that they did not audit and they do
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the Securities Act
of 1933 for their report on the unaudited interim financial information because
such report does not constitute a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
Sections 7 and 11 of such Act.
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<PAGE> 39
PRINCIPAL OFFICES OF
FORD MOTOR COMPANY
The American Road
Dearborn, Michigan 48121
TRUSTEE
The Bank of New York
101 Barclay Street
New York, New York 10286
LUXEMBOURG STOCK EXCHANGE LISTING AGENT
Banque Internationale a Luxembourg S.A.
69 route d'Esch
L-1470 Luxembourg
LEGAL ADVISERS
<TABLE>
<S> <C>
To Ford Motor Company as to Special United States Tax Counsel to
United States Law Ford Motor Company
J. M. RINTAMAKI SULLIVAN & CROMWELL
Secretary and Assistant General Counsel 125 Broad Street
Ford Motor Company New York, New York 10004
The American Road
Dearborn, Michigan 48121
To the Underwriters To the Issue
as to United States Law as to Singapore Law
SHEARMAN & STERLING YOONG & PARTNERS
599 Lexington Avenue 11 Collyer Quay #05-06
New York, New York 10022 The Arcade
Singapore 049317
</TABLE>
AUDITORS TO
FORD MOTOR COMPANY
PRICEWATERHOUSECOOPERS LLP
400 Renaissance Center
Detroit, Michigan 48243
<PAGE> 40
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED BY THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF FORD SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, OR THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents By
Reference.......................... S-3
Directors and Principal Executive
Officers of Ford................... S-4
Use of Proceeds...................... S-5
Capitalization....................... S-6
Description of Debentures............ S-7
Certain United States Tax
Documentation Requirements......... S-12
United States Taxation of Non-United
States Persons..................... S-14
Information Concerning Ford.......... S-15
Selected Financial Data and Other
Data............................... S-16
Financial Review..................... S-17
Industry Data and Market Share....... S-24
Ratio of Earnings to Fixed Charges... S-24
Underwriting......................... S-25
General Information.................. S-27
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Ford Motor Company................... 3
Ratio of Earnings to Fixed Charges... 4
Use of Proceeds...................... 4
Description of Debt Securities....... 4
Plan of Distribution................. 9
Legal Opinions....................... 10
Experts.............................. 10
</TABLE>
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[FORD LOGO]
FORD MOTOR COMPANY
$
% DEBENTURES
DUE , 2028
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
, 1998
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