Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 18, 1999
----------------
FORD MOTOR CREDIT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-6368 38-1612444
- ----------------------- ----------------------- -------------------
(State or other juris- (Commission File Number (IRS Employer
diction of incorporation Number) Identification No.)
The American Road, Dearborn, Michigan 48121
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
<PAGE>
<PAGE 2>
ITEM 5. Other Events.
The news release dated October 18, 1999 of Ford Motor Credit Company
is filed as Exhibit 99.1 to this Current Report on Form 8-K and is
incorporated by reference herein.
The news release dated October 18, 1999 of Ford Motor Company is filed
as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by
reference herein.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
EXHIBITS
Designation Description Method of Filing
- ----------- ----------- ----------------
Exhibit 99.1 News release dated Filed with this Report.
October 18, 1999 of
Ford Motor Credit
Company with attachment.
Exhibit 99.2 News release dated Filed with this Report.
October 18, 1999 of
Ford Motor Company
with attachments.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the date indicated.
FORD MOTOR CREDIT COMPANY
(Registrant)
Date: October 19, 1999 By:/s/R. P. Conrad
-----------------
R. P. Conrad
Assistant Secretary
<PAGE>
<PAGE 3>
EXHIBIT INDEX
Designation Description
- ----------- -----------
Exhibit 99.1 News release dated
October 18, 1999 of
Ford Motor Credit
Company with
attachment.
Exhibit 99.2 News release dated
October 18, 1999 of
Ford Motor Company
with attachments.
Exhibit 99.1
Contact: Dan Jarvis
313-594-1096
FORD CREDIT EARNS $317 MILLION IN THE THIRD QUARTER, UP 16 PERCENT
DEARBORN, Mich., October 18, 1999 -- Ford Credit earned $317 million in the
third quarter of this year, up $45 million or 16 percent, from a year ago,
Chairman and Chief Executive Officer Philippe Paillart announced today. Earnings
in the first nine months of 1999 were $952 million, up $102 million or 12%,
compared with a year ago.
Compared with the third quarter of 1998, the increase in earnings reflects
higher financing volumes and improved credit loss performance, offset partially
by costs related to employee separation programs.
"Our third quarter results have put us solidly on track to meet our milestone of
10 percent earnings growth for the year," said Paillart. "We are pleased with
our earnings performance so far this year and anticipate ending the year on a
healthy note."
Ford Credit's total net finance receivables increased to $134.0 billion at
September 30, compared with $120.1 billion a year earlier.
As the world's largest automotive finance company, Ford Credit provides vehicle
financing in 36 countries for more than nine million customers and 11,000
automotive dealers.
# # #
10/18/99
<PAGE>
<TABLE>
Ford Motor Credit Company and Consolidated Subsidiaries
OPERATING HIGHLIGHTS
<CAPTION>
Third Quarter
1999 1998
<S> <C> <C>
Income (in Millions)
Income Before Income Taxes $ 516.1 $ 467.8
Net Income 316.9 272.4
Memo: Depreciation Expense $ 1,864.8 $ 1,791.7
Market Share
Ford Retail & Lease United States 52.6% 50.3 %
Europe 33.3 36.0
Ford Wholesale United States 83.8% 84.5%
Europe 96.6 93.5
Contract Volume - New and Used Retail/Lease (in Thousands)
United States 860 774
Europe 211 209
Other International 130 123
--- ---
Total Contract Volume 1,201 1,105
===== =====
Assets (in Millions)
Net Finance Receivables $ 100,088.4 $ 84,700.6
Net Investment in Operating Leases 33,891.0 35,434.7
-------- --------
Total Net Finance Receivables $ 133,979.4 $ 120,135.3
Other Assets 13,897.8 6,488.0
-------- -------
Total Assets $ 147,877.2 $ 126,623.3
========= =========
Liabilities and Stockholder's Equity (in Millions)
Liabilities
Debt - Short Term $ 47,420.9 $ 43,916.1
Debt - Long Term 76,894.9 60,748.3
-------- --------
Total Debt $ 124,315.8 $ 104,664.4
Other Liabilities 12,122.2 10,875.8
-------- --------
Total Liabilities $ 136,438.0 $ 115,540.2
========= =========
Minority Interests in Net Assets of Subsidiaries 408.3 387.1
Stockholder's Equity 11,030.9 10,696.0
-------- --------
Total Liabilities and Stockholder's Equity $ 147,877.2 $ 126,623.3
========= =========
</TABLE>
Exhibit 99.2
FORD NEWS RELEASE
Media Information Center, 14441 Rotunda Drive, Suite 185, Dearborn, MI 48120
Telephone: (800) 665-1515; Fax: (313) 845-7512
Internet: http://media.ford.com
Contact: Media Inquiries Securities Analysts Shareholder Inquiries
Jim Cain Mike Holland (800) 555-5259 or
313-322-3428 313-323-8221 (313) 845-8540
For Release October 18, 1999.
FORD EARNS $1.1 BILLION IN THIRD QUARTER, UP 11 PERCENT; 14TH CONSECUTIVE
QUARTER OF IMPROVEMENT
DEARBORN, MI, October 18, 1999 -- Ford Motor Company [NYSE: F] today reported
record third quarter earnings of $1,114 million, or 90 cents per diluted share
of common and Class B stock, up 11 percent -- the company's 14th consecutive
quarter of improved operating earnings. These earnings include a non-recurring
profit reduction of $125 million to adjust post-retirement healthcare and life
insurance liabilities at Visteon Automotive Systems to reflect an actuarial
valuation completed during the third quarter of 1999. Third quarter 1998
earnings were $1,001 million, or 80 cents per diluted share.
For the first nine months of 1999, Ford reported record earnings of $5,431
million, or $4.39 per diluted share. In the first nine months of 1998, Ford
earned $21,028 million, including a non-cash gain of $15,955 million resulting
from the spin-off of The Associates and Ford's share of The Associates earnings
of $177 million. Excluding these items, Ford earned $4,896 million in the
period.
"We continued our strong earnings momentum, despite very competitive markets
worldwide, by building our brands, leveraging the synergies offered by our
global scale and maintaining a rigorous cost discipline," said Jac Nasser,
president and chief executive officer. "Our consumer strategy will build
consumer loyalty to our broad portfolio of products and services and grow the
company from today's very strong base. We are transforming Ford to maximize the
returns on our brand, manufacturing and technology investments to add superior
shareholder value."
Ford continues to strengthen its portfolio of brands, and took several
initiatives in the third quarter, and early in the fourth quarter, that will
sharpen the company's consumer focus and build shareholder value.
<PAGE>
These include:
o Establishing strategic business units to accelerate the company's
consumer-driven transformation and growth strategy.
o Negotiating new tentative labor agreement with the United Auto Workers and
ratified contract with the Canadian Auto Workers.
o Increasing the common and Class B stock dividend by nine percent.
o Creating a marketing alliance with The Hartford and Ford Credit to offer
Ford Motor Company-branded insurance products for Ford, Lincoln and
Mercury owners.
o Becoming Microsoft Corp.'s first partner in a proposed new MSN CarPoint
joint venture that will create a better way for consumers to configure and
order vehicles on the Internet.
o Achieving more than half a million confirmed customer orders in Europe for
the Ford Focus less than 12 months since its introduction.
o Establishing a new Jaguar Formula One racing team.
o Launching two all-new models in North America -- the Ford Focus and Ford
Excursion - and unveiling a re-styled and upgraded 2000-model year Ford
Fiesta at the Frankfurt Motor Show.
o Signing a cooperative agreement with PSA Peugeot Citroen to develop
direct-injection diesel engines for passenger cars and commercial vehicles
in Europe.
AUTOMOTIVE OPERATIONS
Net income from worldwide automotive operations was $690 million in the third
quarter of 1999, including the $125 million adjustment for retiree benefits.
This compares with earnings of $646 million in the third quarter of 1998.
For the first nine months of 1999, net income from automotive operations was
$4,272 million, including the retiree benefits adjustment, compared with net
income of $3,932 million in the year-ago period.
Automotive revenue in the third quarter of 1999 was $31.3 billion, up $4.8
billion. After-tax return on sales (ROS) was 2.2 percent in the third quarter,
down 0.3 points. The decline was more than accounted for by the retiree benefit
adjustment. For the first nine months, automotive revenue was $99.2 billion,
up $12.3 billion. ROS was 4.3 percent, compared with an ROS of 4.6 percent in
the first nine months of 1998.
<PAGE>
At the end of the third quarter, automotive cash was a record $25.7 billion, up
from $22.9 billion in the same period a year ago. Net cash was $12.9 billion,
down from $13.1 billion a year ago. Ford's strong operating cash flow largely
offset the company's spending on acquisitions.
Total costs were down $300 million in the quarter, marking Ford's eleventh
consecutive quarter in which total costs were lower at constant volume and mix,
compared with the year-ago period. In the first nine months of 1999, Ford
reduced its total costs by $700 million at constant volume and mix.
North America: Automotive earnings were $1,004 million in the third quarter of
1999, up $104 million, or 12 percent from a year ago. Ford's third quarter ROS
in North America was 4.5 percent, equal to 1998.
Nine-month earnings were a record $4,561 million in 1999, versus $3,565 million
in the same period a year ago, up 28 percent. For the first nine months of
1999, ROS was 6.3 percent, up 0.6 points compared with 1998.
Record Ford Motor Company and industry sales in the United States in the first
nine months of the year have been driven by a firm job market, good income
growth, relatively high consumer confidence levels and low borrowing costs. In
addition to higher volumes, Ford's year-to-date and third quarter results
reflect an improved mix of light trucks and luxury cars, and lower total costs,
offset in the third quarter by costs related to employee separation programs.
Europe: Automotive results were a loss of $171 million in the third quarter of
1999, compared with a loss of $273 million in the year-ago period.
For the first nine months of 1999, automotive earnings in Europe were $83
million. In the first nine months of 1998, Ford earned $267 million. Based on
the present forecast, Ford does not expect to achieve its 1999 milestone for
Europe to improve operating earnings year-over-year. The lower nine month
results reflect lower volumes, vehicle mix and market share for Ford-branded
vehicles, primarily Mondeo and Fiesta, offset partially by lower total costs,
the success of the Ford Focus, improved results at Jaguar and the contribution
of Volvo Car. The improvement in third quarter results reflect lower costs and
improved share of premium vehicle segments, offset partially by lower share for
Ford-branded vehicles.
<PAGE>
South America: Automotive results were a loss of $72 million in the third
quarter of 1999, compared with a loss of $44 million a year ago. For the first
nine months of 1999, Ford lost $357 million in South America, compared with a
loss of $75 million in the same period a year ago.
Ford's sales volume in South America in both the third quarter and the first
nine months of 1999 continue to be adversely impacted by the weak local economy
of Brazil, the largest vehicle market in the region. Ford has also suffered
periodic work stoppages in Brazil. Nevertheless, Ford remains committed to the
region, and expects to break ground on a new assembly plant in the Brazilian
state of Bahia in the fourth quarter. This plant will utilize state of the art
technology and manufacturing processes to build an all new vehicle.
VISTEON AUTOMOTIVE SYSTEMS
In the third quarter of 1999, Visteon Automotive Systems earned $155 million
and ROS was 3.6 percent. These earnings exclude the effect of the adjustment
for retiree benefits which has been reflected retroactively in Visteon's
financial statements. In the third quarter of 1998, Visteon earned $148
million and ROS was 3.6 percent. Visteon's earnings are included in Ford's
current and historical automotive results.
For the first nine months of 1999, Visteon earned $640 million, excluding the
retiree benefits adjustment, and ROS was 4.5 percent. Year-to-date, Visteon
also won future new business contracts worth $1.7 billion annually. Non-Ford
customers account for 36 percent of the new business contracts. In the first
nine months of 1998, Visteon earned $574 million and ROS was 4.3 percent.
FORD CREDIT
Ford Credit earned $317 million in the third quarter of this year, up $45
million, or 16 percent, from a year ago. Earnings in the first nine months of
1999 were $952 million, up $102 million, or 12 percent, compared with a year
ago. Compared with the third quarter of 1998, the increase in earnings reflects
higher financing volumes and improved credit loss performance, offset partially
by costs related to employee separation programs.
HERTZ
The Hertz Corporation [NYSE: HRZ] earned a record $139 million in the third
quarter of 1999, compared with $119 million a year ago. Ford's share of Hertz'
third quarter 1999 earnings was $113 million. In the first nine months of 1999,
Hertz earned a record $276 million, up $47 million; Ford's share was $224
million.
# # #
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
Third Quarter Nine Months
---------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- - North America 1,050 993 3,507 3,174
- - Outside North America 549 496 1,795 1,835
----- ----- ----- -----
Total 1,599 1,489 5,302 5,009
----- ----- ----- -----
----- ----- ----- -----
Sales and revenues (in millions)
- - Automotive $ 31,338 $ 26,494 $ 99,192 $ 86,879
- - Financial Services 6,635 6,146 18,948 19,634
--------- --------- --------- ---------
Total $ 37,973 $ 32,640 $ 118,140 $ 106,513
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (in millions)
- - Automotive $ 690 $ 646 $ 4,272 $ 3,932
- - Financial Services (excl. The Associates) 424 355 1,159 964
----------- --------- --------- ---------
Subtotal 1,114 1,001 5,431 4,896
- - The Associates - - - 177
- - Gain on spin-off of The Associates - - - 15,955
--------- --------- --------- ---------
Total $ 1,114 $ 1,001 $ 5,431 $ 21,028
--------- --------- --------- ---------
--------- --------- --------- ---------
Capital expenditures (in millions)
- - Automotive $ 1,931 $ 1,908 $ 5,024 $ 5,668
- - Financial Services 150 147 435 398
--------- --------- --------- ---------
Total $ 2,081 $ 2,055 $ 5,459 $ 6,066
--------- --------- --------- ---------
--------- --------- --------- ---------
Automotive capital expenditures as a
percentage of sales 6.2% 7.2% 5.1% 6.5%
Stockholders' equity at September 30
- - Total (in millions) $ 26,921 $ 23,718 $ 26,921 $ 23,718
- - After-tax return on Common and
Class B stockholders' equity 16.8% 17.2% 28.7% 28.0%
Automotive net cash at September 30
(in millions)
- - Cash and marketable securities $ 25,703 $ 22,911 $ 25,703 $ 22,911
- - Debt 12,819 9,822 12,819 9,822
--------- --------- --------- ---------
Automotive net cash $ 12,884 $ 13,089 $ 12,884 $ 13,089
--------- --------- --------- ---------
--------- --------- --------- ---------
After-tax return on sales
- - North American Automotive 4.5% 4.5% 6.3% 5.7%
- - Total Automotive 2.2% * 2.5% 4.3% * 4.6%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,209 1,212 1,210 1,211
- - Number outstanding at September 30 1,208 1,210 1,208 1,210
Common Stock price (per share)
(adjusted to reflect The Associates
spin-off)
- - High $58-5/8 $61-7/16 $67-7/8 $61-7/16
- - Low 46-1/4 40-5/8 46-1/4 28-15/32
AMOUNTS PER SHARE OF COMMON AND CLASS B
STOCK AFTER PREFERRED STOCK DIVIDENDS
Income assuming dilution
- - Automotive $ 0.56 $ 0.52 $ 3.45 $ 3.16
- - Financial Services (excl. The Associates) 0.34 0.28 0.94 0.78
--------- --------- --------- ---------
Subtotal 0.90 0.80 4.39 3.94
- - The Associates - - - 0.14
- - Premium on Series B Preferred Stock repurchase - - - (0.07)
- - Gain on spin-off of The Associates - - - 12.89
--------- --------- --------- ---------
Total $ 0.90 $ 0.80 $ 4.39 $ 16.90
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash dividends $ 0.46 $ 0.42 $ 1.38 $ 1.26
_ _ _ _ _
* Total Automotive after-tax return on sales, excluding a $125 million profit reduction for Visteon postretirement health care and
life insurance liabilities, was 2.6% in the third quarter of 1999 and 4.5% for the first nine months of 1999.
</TABLE>
FS-1
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
------------------
For the Periods Ended September 30, 1999 and 1998
(in thousands)
Third Quarter Nine Months
------------------------ --------------------------
1999 1998 1999 1998
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
North America
United States
Cars 376 377 1,228 1,136
Trucks 596 545 2,015 1,770
----- ----- ----- -----
Total United States 972 922 3,243 2,906
Canada 50 51 188 193
Mexico 28 20 76 75
----- ----- ----- -----
Total North America 1,050 993 3,507 3,174
Europe
Britain 134 105 396 396
Germany 72 78 273 301
Italy 39 31 149 149
Spain 38 27 135 109
France 37 35 129 117
Other countries 100 71 353 282
----- ----- ----- -----
Total Europe 420 347 1,435 1,354
Other international
Brazil 35 50 90 144
Australia 32 34 96 98
Taiwan 13 17 45 65
Argentina 16 22 44 81
Japan 8 6 25 20
Other countries 25 20 60 73
----- ----- ----- -----
Total other international 129 149 360 481
----- ----- ----- -----
Total worldwide vehicle unit sales 1,599 1,489 5,302 5,009
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Vehicle unit sales generally are reported worldwide on a "where sold" basis and
include sales of all Ford-badged units, as well as units manufactured by Ford
and sold to other manufacturers.
Prior period restated to correct reported unit sales.
FS-2
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended September 30, 1999 and 1998
(in millions)
Third Quarter Nine Months
-------------------------- --------------------------
1999 1998 1999 1998
---------- ----------- ----------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
AUTOMOTIVE
Sales $31,338 $26,494 $99,192 $86,879
Costs and expenses (Note 2)
Costs of sales 28,070 23,848 86,211 75,358
Selling, administrative and other expenses 2,258 1,869 6,686 6,016
------- ------- ------- -------
Total costs and expenses 30,328 25,717 92,897 81,374
Operating income 1,010 777 6,295 5,505
Interest income 356 322 1,044 962
Interest expense 390 198 1,029 605
------- ------- ------- -------
Net interest income (34) 124 15 357
Equity in net income/(loss) of affiliated companies 15 23 65 31
Net expense from transactions with
Financial Services (17) (56) (62) (143)
------- ------- ------- -------
Income before income taxes - Automotive 974 868 6,313 5,750
FINANCIAL SERVICES
Revenues 6,635 6,146 18,948 19,634
Costs and expenses
Interest expense 1,988 1,830 5,701 6,025
Depreciation 2,333 2,220 6,881 6,415
Operating and other expenses 1,206 1,114 3,304 3,783
Provision for credit and insurance losses 383 393 1,146 1,461
------- ------- ------- -------
Total costs and expenses 5,910 5,557 17,032 17,684
Net revenue from transactions with Automotive 17 56 62 143
Gain on spin-off of The Associates (Note 5) - - - 15,955
------- ------- ------- -------
Income before income taxes - Financial Services 742 645 1,978 18,048
------- ------- ------- -------
TOTAL COMPANY
Income before income taxes 1,716 1,513 8,291 23,798
Provision for income taxes 569 482 2,772 2,646
------- ------- ------- -------
Income before minority interests 1,147 1,031 5,519 21,152
Minority interests in net income of subsidiaries 33 30 88 124
------- ------- ------- -------
Net income $ 1,114 $ 1,001 $ 5,431 $21,028
------- ------- ------- -------
------- ------- ------- -------
Income attributable to Common and Class B Stock
after preferred stock dividends $ 1,110 $ 997 $ 5,420 $20,925
Average number of shares of Common and Class B
Stock outstanding 1,209 1,212 1,210 1,211
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic Income (Note 6) $ 0.92 $ 0.82 $ 4.49 $ 17.29
Diluted Income (Note 6) $ 0.90 $ 0.80 $ 4.39 $ 16.90
Cash dividends $ 0.46 $ 0.42 $ 1.38 $ 1.26
</TABLE>
The accompanying notes are part of the financial statements.
Prior period costs of sales and selling, administrative and other expenses were
reclassified.
FS-3
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
September 30, December 31,
1999 1998
--------------- ----------------
(unaudited)
<S> <C> <C>
ASSETS
Automotive
Cash and cash equivalents $ 4,039 $ 3,685
Marketable securities 21,664 20,120
-------- --------
Total cash and marketable securities 25,703 23,805
Receivables 3,922 2,604
Inventories (Note 7) 7,218 5,656
Deferred income taxes 3,377 3,239
Other current assets 3,651 3,405
Current receivable from Financial Services 910 0
-------- --------
Total current assets 44,781 38,709
Equity in net assets of affiliated companies 2,514 2,401
Net property 41,356 37,320
Deferred income taxes 3,682 3,175
Other assets 12,538 7,139
-------- --------
Total Automotive assets 104,871 88,744
Financial Services
Cash and cash equivalents 1,239 1,151
Investments in securities 733 968
Net receivables and lease investments 141,139 132,567
Other assets 17,723 13,227
Receivable from Automotive 1,985 888
-------- --------
Total Financial Services assets 162,819 148,801
-------- --------
Total assets $267,690 $237,545
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 13,656 $ 13,368
Other payables 4,453 2,755
Accrued liabilities 20,546 16,925
Income taxes payable 1,590 1,404
Debt payable within one year 1,429 1,121
Current payable to Financial Services 0 70
-------- --------
Total current liabilities 41,674 35,643
Long-term debt 11,390 8,713
Other liabilities 33,509 30,133
Deferred income taxes 1,294 751
Payable to Financial Services 1,985 818
-------- --------
Total Automotive liabilities 89,852 76,058
Financial Services
Payables 3,655 3,555
Debt 131,973 122,324
Deferred income taxes 7,217 5,488
Other liabilities and deferred income 6,487 6,034
Payable to Automotive 910 0
-------- --------
Total Financial Services liabilities 150,242 137,401
Company-obligated mandatorily redeemable preferred securities of a subsidiary
trust holding solely junior subordinated debentures of the Company (Note 8) 675 677
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate liquidation preference
of $177 million) * *
Common Stock, par value $1.00 per share (1,151 million shares issued) 1,151 1,151
Class B Stock, par value $1.00 per share (71 million shares issued) 71 71
Capital in excess of par value of stock 5,017 5,283
Accumulated other comprehensive income (1,861) (1,670)
ESOP loan and treasury stock (865) (1,085)
Earnings retained for use in business 23,408 19,659
-------- --------
Total stockholders' equity 26,921 23,409
-------- --------
Total liabilities and stockholders' equity $267,690 $237,545
-------- --------
-------- --------
- - - - -
*Less than $1 million
</TABLE>
The accompanying notes are part of the financial statements.
FS-4
<PAGE>
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended September 30, 1999 and 1998
(in millions)
Nine Months 1999 Nine Months 1998
--------------------------- --------------------------
Financial Financial
Automotive Services Automotive Services
------------- ----------- ------------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash and cash equivalents at January 1 $ 3,685 $ 1,151 $ 6,316 $ 1,618
Cash flows from operating activities before securities trading 11,909 7,908 11,570 11,060
Net sales/(purchases) of trading securities (1,248) (148) (3,473) (114)
-------- -------- ------- --------
Net cash flows from operating activities 10,661 7,760 8,097 10,946
Cash flows from investing activities
Capital expenditures (5,024) (435) (5,668) (398)
Purchase of leased assets - - (110) -
Acquisitions of receivables and lease investments - (61,657) - (62,031)
Collections of receivables and lease investments - 40,800 - 44,147
Net acquisitions of daily rental vehicles - (2,025) - (1,854)
Purchases of securities (1,681) (759) (341) (1,838)
Sales and maturities of securities 1,385 988 570 1,229
Proceeds from sales of receivables and lease investments - 9,520 - 8,146
Net investing activity with Financial Services (430) - 187 -
Cash paid for acquisitions (Note 4) (6,342) - - -
Other 286 (4) (80) (768)
-------- -------- ------- --------
Net cash used in investing activities (11,806) (13,572) (5,442) (13,367)
Cash flows from financing activities
Cash dividends (1,682) (3) (4,787) (4)
Issuance/(Purchases) of Common Stock (265) - 207 -
Preferred stock - Series B repurchase, Series A redemption - - (420) -
Changes in short-term debt 36 (2,210) 518 (1,063)
Proceeds from issuance of other debt 3,128 26,925 2,279 19,245
Principal payments on other debt (192) (18,796) (1,273) (14,745)
Net financing activity with Automotive - 430 - (187)
Spin-off of The Associates cash - - - (508)
Other 340 (62) (851) (218)
-------- -------- ------- --------
Net cash (used in)/provided by financing activities 1,365 6,284 (4,327) 2,520
Effect of exchange rate changes on cash (53) (197) (49) 70
Net transactions with Automotive/Financial Services 187 (187) 552 (552)
-------- -------- ------- --------
Net increase/(decrease) in cash and cash equivalents 354 88 (1,169) (383)
-------- -------- ------- --------
Cash and cash equivalents at September 30 $ 4,039 $ 1,239 $ 5,147 $ 1,235
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
The accompanying notes are part of the financial statements.
FS-5
<PAGE>
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
1. Financial Statements - The financial data presented herein are unaudited,
but in the opinion of management reflect those adjustments necessary for a
fair presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference should
be made to the financial statements contained in the registrant's Annual
Report on Form 10-K (the "10-K Report") for the year ended December 31,
1998. For purposes of Notes to Financial Statements, "Ford" or the
"Company" means Ford Motor Company and its majority owned subsidiaries
unless the context requires otherwise. Certain amounts for prior periods
were reclassified to conform with present period presentation.
2. Selected Automotive costs and expenses are summarized as follows
(in millions):
<TABLE>
<CAPTION> Third Quarter Nine Months
--------------------- ---------------------
1999 1998 1999 1998
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Depreciation $874 $719 $2,422 $2,078
Amortization 627 755 1,789 2,093
Dissolution of AutoEuropa Joint Venture - Effective January 1, 1999, our
joint venture for the production of minivans with Volkswagen AG in
Portugal (AutoEuropa) was dissolved resulting in a $255 million pre-tax
gain ($165 million after-tax) in the first quarter of 1999.
</TABLE>
3. Visteon Postretirement Adjustments - During the third quarter of 1999,
actuarial valuations of postretirement health care and life insurance
benefits for certain Visteon operations were completed by an external
actuary. The valuations revealed that the operations' estimated liability
for these benefits was under-accrued, beginning with the original
recognition of these costs in 1992 when we adopted SFAS 106 "Employers'
Accounting for Postretirement Benefits Other Then Pensions". We increased
the affected operations' balance sheet liability to recognize the accrual
shortfall. We reported the adjustment in total Automotive sector and
reduced third quarter results by $125 million after-tax. Visteon reflected
the adjustment in its results on a restated basis.
4. Acquisitions
Purchase of AB Volvo's Worldwide Passenger Car Business - On March
31, 1999, we purchased Volvo Car for approximately $6.45 billion. The
acquisition price consisted of a cash payment of approximately $2
billion on March 31, 1999, a deferred payment obligation to AB Volvo
of approximately $1.6 billion due March 31, 2001, and Volvo Car
automotive net indebtedness of approximately $2.9 billion. Most
automotive indebtedness was repaid on April 12, 1999. The purchase
price payment and automotive debt repayments were funded from our
cash reserves.
The acquisition has been accounted for as a purchase. The assets
purchased, liabilities assumed and the results of operations, since
the date of acquisition, are included in our financial statements on
a consolidated basis.
The purchase price for Volvo Car has been allocated, on a preliminary
basis, to the assets acquired and liabilities assumed based on the
estimated fair values as of the acquisition date. The excess of the
purchase price over the estimated fair value of net assets acquired
is approximately $2.5 billion and is being amortized on a
straight-line basis over 40 years. The purchase price allocation
included a write-up of inventory to fair value; the sale of this
inventory in the second quarter of 1999 resulted in a one-time
increase in cost of sales of $146 million after-tax.
Purchase of Kwik-Fit Holdings plc - During the third quarter of 1999,
we completed the purchase of all the outstanding stock of Kwik-Fit
Plc ("Kwik-Fit"). Kwik-Fit is Europe's largest independent vehicle
maintenance and light repair chain, with over 1,600 service centers
in the United Kingdom, Ireland, and continental Europe. The
acquisition price was approximately $1.6 billion and consisted of
cash payments of approximately $1.4 billion and loan notes to certain
Kwik-Fit shareholders of approximately $0.2 billion, redeemable
beginning on April 30, 2000 and on any subsequent interest payment
dates. The purchase price payments were funded from our cash reserves.
The acquisition has been accounted for as a purchase. The assets
purchased, liabilities assumed and the results of operations, since
the date of acquisition, are included in our financial statements on
a consolidated basis.
The purchase price for Kwik-Fit has been allocated, on a preliminary
basis, to the assets acquired and liabilities assumed based on the
estimated fair values as of the acquisition date. The excess of the
purchase price over the estimated fair value of the net assets
acquired is approximately $1.5 billion and is being amortized on a
straight-line basis over 30 years.
FS-6
<PAGE>
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
4. Acquisitions (continued)
Purchase of Plastic Omnium - On June 30, 1999, we purchased (through
Visteon) Plastic Omnium's automotive interior business for
approximately $500 million. The automotive interior business of
Plastic Omnium has 14 facilities in four countries in Europe: France,
Spain, Italy and the UK. The purchase was funded from our cash
reserves.
The acquisition has been accounted for as a purchase. The assets
purchased, liabilities assumed and the results of operations, since
the date of acquisition, are included in our financial statements on
a consolidated basis.
The purchase price for Plastic Omnium has been allocated, on a
preliminary basis, to the assets acquired and liabilities assumed
based on estimated fair values as of the acquisition date. The excess
of the purchase price over the estimated fair value of net assets
acquired is approximately $300 million and is being amortized on a
straight-line basis over 20 years.
Assuming the acquisitions described above had taken place on January 1,
1999 and 1998, Ford (Automotive and Financial Services) pro forma revenue,
net income, and earnings per share for the third quarter and nine months
ended September 30, 1999 would not be materially affected. For the third
quarter and nine months ended September 30, 1998, unaudited pro forma
revenue would have been $35.9 billion and $116.6 billion, respectively.
Net income and earnings per share for these periods would not be
materially affected.
5. Spin-off of The Associates - On March 2, 1998, our Board of Directors
approved the spin-off of Associates First Capital Corporation ("The
Associates") by declaring a dividend on Ford's outstanding shares of
Common and Class B Stock consisting of Ford's 80.7% interest (279.5
million shares) in The Associates. The Board of Directors also declared a
dividend in cash on shares of Company stock held in U.S. employee savings
plans equal to the market value of The Associates stock distributed per
share of the Company's Common and Class B Stock. Both the spin-off
dividend and the cash dividend were paid on April 7, 1998 to stockholders
of record on March 12, 1998.
Holders of Ford Common and Class B Stock on the record date received
0.262085 shares of The Associates common stock for each share of Ford
stock, and participants in U.S. employee savings plans on the record date
received $22.12 in cash per share of Ford stock, based on the
volume-weighted average price of The Associates stock of $84.3849 per
share on April 7, 1998. The total value of the distribution (including the
$3.2 billion cash dividend) was $26.8 billion or $22.12 per share of Ford
stock.
As a result of the spin-off of The Associates, Ford realized a gain of
$15,955 million based on the fair value of The Associates as of the record
date, March 12, 1998, in the first quarter of 1998. Ford received a ruling
from the U.S. Internal Revenue Service that the distribution qualified as
a tax-free transaction for U.S. federal income tax purposes.
The Company's results in the first quarter of 1998 include Ford's share of
The Associates earnings through the record date, March12 ($177 million, or
$0.14 a share).
FS-7
<PAGE>
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
(unaudited)
6. Income Per Share of Common and Class B Stock - Basic income per share of
Common and Class B Stock is calculated by dividing the income attributable
to Common and Class B Stock by the average number of shares of Common and
Class B Stock outstanding during the applicable period, adjusted for
shares issuable under employee savings and compensation plans.
The Company had Series A Preferred Stock convertible into Common Stock
until January 9, 1998. Other obligations, such as stock options, are
considered to be dilutive potential common stock. The calculation of
diluted income per share of Common and Class B Stock takes into account
the effect of dilutive potential common stock.
Income per share of Common and Class B Stock was as follows (in millions,
except per share amounts):
<TABLE>
<CAPTION>
Third Quarter 1999 Third Quarter 1998
----------------------- -----------------------
Income Shares Income Shares
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $1,114 1,209 $ 1,001 1,212
Preferred stock dividend requirements (4) - (4) -
Issuable and uncommitted ESOP shares - (3) - (3)
------ ----- ------- -----
Basic income and shares $1,110 1,206 $ 997 1,209
Basic income per share $ 0.92 $ 0.82
----------------------
Basic income and shares $1,110 1,206 $ 997 1,209
Net dilutive effect of options - 25 - 31
Convertible preferred stock and other (1) - - -
------ ----- ------- -----
Diluted income and shares $1,109 1,231 $ 997 1,240
Diluted income per share $ 0.90 $ 0.80
------------------------
Nine Months 1999 Nine Months 1998
----------------------- -----------------------
Income Shares Income Shares
----------- ---------- ---------- ----------
Net income $5,431 1,210 $21,028 1,211
Preferred stock dividend requirements (11) - (103) -
Issuable and uncommitted ESOP shares - (4) - (1)
------ ----- ------ -----
Basic income and shares $5,420 1,206 $20,925 1,210
Basic income per share $ 4.49 $ 17.29
Basic income and shares $5,420 1,206 $20,925 1,210
Net dilutive effect of options - 29 - 28
Convertible preferred stock and other (1) - (1) -
------ ----- ------- -----
Diluted income and shares $5,419 1,235 $20,924 1,238
Diluted income per share $ 4.39 $ 16.90
</TABLE>
7. Automotive Inventories are summarized as follows (in millions):
September 30, December 31,
1999 1998
------------ ------------
Raw materials, work in process and supplies $2,989 $2,887
Finished products 4,229 2,769
------ ------
Total inventories $7,218 $5,656
------ ------
------ ------
U.S. inventories $2,400 $1,832
8. Company-Obligated Mandatorily Redeemable Preferred Securities of a
Subsidiary Trust - The sole asset of Ford Motor Company Capital Trust I
(the "Trust"), which is the obligor on the Preferred Securities of such
Trust, is $632 million principal amount of 9% Junior Subordinated
Debentures due 2025 of Ford Motor Company.
<PAGE>
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
9. Comprehensive Income - Other comprehensive income includes foreign
currency translation adjustments, minimum pension liability adjustments,
and net unrealized gains and losses on investments in equity securities.
Total comprehensive income is summarized as follows (in millions):
<TABLE>
<CAPTION>
Third Quarter Nine Months
----------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net income $1,114 $1,001 $5,431 $21,028
Other comprehensive income 312 281 (191) 13
------ ------ ------ -------
Total comprehensive income $1,426 $1,282 $5,240 $21,041
------ ------ ------ -------
------ ------ ------ -------
</TABLE>
10. Segment Information - Ford has identified four primary operating segments:
Automotive, Visteon, Ford Credit and Hertz. Segment selection was based
upon internal organizational structure, the way in which these operations
are managed and their performance evaluated by management and our Board of
Directors, the availability of separate financial results and materiality
considerations. Segment detail is summarized as follows (in millions):
<TABLE>
<CAPTION>
Automotive Sector Financial Services Sector
----------------------- ----------------------------------- Total Total
Third Quarter Auto- Ford Other Elims/ Auto Fin Svcs
motive Visteon Credit Hertz Fin Svcs Other Sector Sector
----------- ----------- ----------- ----------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999
- ----
Revenues
External customer $ 30,645 $ 761 $ 5,034 $ 1,339 $ 258 $ (64) $ 31,338 $ 6,635
Intersegment 647 3,839 98 9 43 (4,636) 0 0
-------- ------- -------- ------- ------- -------- -------- --------
Total Revenues $ 31,292 $ 4,600 $ 5,132 $ 1,348 $ 301 $ (4,700) $ 31,338 $ 6,635
-------- ------- -------- ------- ------- -------- -------- --------
-------- ------- -------- ------- ------- -------- -------- --------
Net income $ 657 $ 155 $ 317 $ 139 $ (6) $ (148) b/ $ 690 $ 424
1998
- ----
Revenues
External customer $ 26,191 $ 377 $ 4,603 $ 1,220 $ 316 $ (67) $ 26,494 $ 6,146
Intersegment 496 3,720 72 8 34 (4,330) 0 0
-------- ------- -------- ------- ------- -------- -------- --------
Total Revenues $ 26,687 $ 4,097 $ 4,675 $ 1,228 $ 350 $ (4,397) $ 26,494 $ 6,146
-------- ------- -------- ------- ------- -------- -------- --------
-------- ------- -------- ------- ------- -------- -------- --------
Net income $ 496 $ 148 $ 272 $ 119 $ (13) $ (21) $ 646 $ 355
Automotive Sector Financial Services Sector
----------------------- ----------------------------------- Total Total
Nine Months Auto- Ford Other Elims/ Auto Fin Svcs
motive Visteon Credit Hertz Fin Svcs Other Sector Sector
----------- ----------- ----------- ----------------------- ----------- ----------- -----------
1999
- -----
Revenues
External customer $ 97,787 $ 1,627 $ 14,825 $ 3,528 $ 594 $ (221) $ 99,192 $ 18,948
Intersegment 3,352 12,808 246 25 136 (16,567) 0 0
-------- ------- -------- ------- ------- -------- -------- --------
Total Revenues $101,139 $14,435 $ 15,071 $ 3,553 $ 730 $(16,788) $ 99,192 $ 18,948
-------- ------- -------- ------- ------- -------- -------- --------
-------- ------- -------- ------- ------- -------- -------- --------
Net income $ 3,749 $ 640 $ 952 $ 276 $ (15) $ (171) b/ $ 4,272 $ 1,159
Total assets $ 97,554 $11,941 $147,877 $10,159 $12,264 $(12,105) $104,871 $162,819
1998
- ----
Revenues
External customer $ 86,099 $ 1,046 $ 13,881 $ 3,158 $ 2,578 $ (249) $ 86,879 $ 19,634
Intersegment 2,983 12,154 204 23 138 (15,502) 0 0
-------- ------- -------- ------- ------- -------- -------- --------
Total Revenues $ 89,082 $13,200 $ 14,085 $ 3,181 $ 2,716 $(15,751) $ 86,879 $ 19,634
-------- ------- -------- ------- ------- --------- -------- --------
-------- ------- -------- ------- ------- --------- -------- --------
Net income $ 3,352 $ 574 $ 850 $ 229 $16,103 a/$ (80) $ 3,932 $ 17,096
Total assets $ 82,472 $ 9,342 $126,623 $ 8,951 $ 9,634 $ (8,508) $ 88,242 $140,272
_ _ _ _ _
</TABLE>
a/ Includes $15,955 non-cash gain (not taxed) on spin-off of The Associates in
the first quarter of 1998 (Note 5).
b/ Includes $125 million after-tax charge related to postretirement health
care and life insurance adjustments at certain Visteon operations (Note 3).
"Other Financial Services" data is an aggregation of miscellaneous smaller
Financial Services Sector business components, including Ford Motor Land
Development Corporation, Ford Leasing Development Company, Ford Leasing
Corporation, and Granite Management Corporation, and certain unusual
transactions (footnoted). Also included is data for The Associates, which was
spun-off from Ford in 1998.
"Eliminations/Other" data includes intersegment eliminations and minority
interest calculations. Interest income for the operating segments in the
Financial Services Sector is reported as "Revenue". Included in the Visteon
segment's external customer revenues are sales to outside fabricators for
inclusion in components sold to Ford's Automotive segment.
FS-8
