Ford's 2002 Operating Results Improve By $1.7 Billion Vs. Prior Year
Ford's 2002 Operating Results Improve By $1.7 Billion Vs. Prior Year
-- Full-year profit of 47 cents per share, excluding unusual items.
-- Fourth-quarter profit of 8 cents per share, excluding unusual items.
-- Full-year Ford Credit profit of $1.38 billion, excluding unusual items.
-- Positive full-year automotive cash flow, excluding tax refunds.
-- Strong liquidity with $25 billion of automotive gross cash.
-- Exceeded 2002 non-product cost reduction milestone of $2 billion.
DEARBORN, Mich., Jan. 21 /PRNewswire-FirstCall/ --
Ford Motor Company today reported a net loss, including unusual
items and results from discontinued operations, of $980 million, or 55 cents
per share, for full-year 2002.
On an operating basis, Ford earned $872 million, or 47 cents per share, in
2002. This excludes charges related to Statement of Financial Accounting
Standard (SFAS) Nos. 142 and 133, the sale of Kwik-Fit, restructuring actions
and other unusual items not related to results from discontinued operations.
In 2001, Ford reported a net loss of $5.45 billion, or $3.02 per share.
Excluding charges for restructuring actions and other unusual items in 2001,
the loss was $782 million, or 44 cents per share.
Revenue for 2002 was $162.6 billion, up more than 1 percent from $160.8
billion a year ago. Vehicle unit sales were 6,980,000, down slightly from
7,008,000 in 2001.
"In the first year of our turnaround, Ford improved its operating results
by about $1.7 billion," said Chairman and CEO Bill Ford. "Our earnings
performance demonstrates that we are making solid progress toward the goals
outlined in our Revitalization Plan. In 2002, we exceeded nearly all our
commitments and are on track to reach our mid-decade target of an annual
$7 billion pre-tax operating profit."
Ford realized success in a number of areas throughout 2002:
-- Overall quality performance and customer satisfaction improved by all
internal and external measures, in all major regions.
-- U.S. retail share improved during the year.
-- Ford Credit improved its operating results, lowered its leverage and
paid $450 million in dividends, net of the January 2002 capital contribution.
-- Ford Motor Company has the world's best-selling car (Ford Focus), truck
(F-Series) and SUV (Explorer).
-- Ford was the best-selling brand of cars and trucks in the U.S. for the
16th year in a row.
-- The F-Series pickup was the top-selling truck for the 26th consecutive
year and the Ford Explorer was the industry's best-selling SUV in the U.S. for
the 12th year in a row.
-- Jaguar had its fourth consecutive record sales year in the U.S., with
year-over-year sales improvement of 37 percent, and Land Rover enjoyed a U.S.
sales record in 2002 with sales up 51 percent.
-- Products such as the Ford Thunderbird, Ford F-Series Super Duty,
Lincoln Town Car and Volvo XC90 received accolades from customers and awards
from a number of third-party sources.
"Now, as we move into 2003, we are accelerating our efforts. As we just
demonstrated at the North American International Auto Show in Detroit, we have
a lot of exciting new products coming and we are well on our way to the
product-led recovery we've been talking about for the last 12 months," said
Mr. Ford.
Ford Motor Company, in its centennial year, will introduce an all-new
F-150 pickup truck with five differentiated series that will span the full
range of consumer wants and needs. In addition, Ford Motor Company will
introduce new minivans for the Ford and Mercury brands in North America, the
Ford Transit Connect (commercial vehicle) and the Ford StreetKa (Ford's first
European two-seat roadster) in Europe, and an all-new Jaguar XJ sedan. The
first units of the Ford GT high-performance sports car also will be produced
this summer.
FOURTH QUARTER
Ford reported a net loss of $130 million, or 7 cents per share, for the
fourth quarter of 2002. This is an improvement from 2001 of $4.9 billion
($2.74 per share). Excluding charges for restructuring actions and other
unusual items, Ford earned $150 million, or 8 cents per share. This is an
improvement from 2001 of $1 billion (56 cents per share).
The non-recurring restructuring actions include primarily:
-- Reduction of 950 positions at Jaguar, Land Rover and Volvo;
-- Genk (Belgium) rationalization and transfer of Transit production to
Ford Otosan in Turkey;
-- Improvements in Cologne (Germany) as a result of restructuring die-
casting and forging operations, and other manufacturing actions.
Total revenue in the fourth quarter was $41.6 billion, up $869 million
from a year ago, despite a decline in the number of units sold. Worldwide
vehicle unit sales fell slightly in the fourth quarter to 1,791,000 from
1,813,000 a year ago.
The following discussion of fourth-quarter and full-year results excludes
unusual items and includes results from discontinued operations in both years.
The discontinued operations resulted from holding certain non-core businesses
for sale. These include primarily Ford's automotive recycling business in the
U.S., the TH!NK electric vehicle business and the all-makes fleet leasing
business in Europe, Australia and New Zealand.
AUTOMOTIVE OPERATIONS
Ford's worldwide automotive operations posted a loss of $539 million,
compared with a loss of $1.96 billion in 2001. Worldwide automotive revenue
was $134.4 billion, an increase of nearly three percent versus a year ago.
In the fourth quarter, Ford's worldwide automotive operations incurred a
loss of $191 million on revenue of $34.7 billion, compared with a loss of
$803 million on revenue of $33.6 billion in the fourth quarter of 2001.
Automotive gross cash at Dec. 31, 2002 totaled $25.3 billion, including
$2.7 billion of pre-funding for employee benefit expenses through a Voluntary
Employee Beneficiary Association (VEBA) trust. Gross cash exceeded automotive
debt by $11.1 billion at year-end, $7.2 billion better than at Dec. 31, 2001.
The company's full-year automotive operating cash flow, excluding tax refunds,
was positive.
North America: The loss in 2002 for Ford's automotive operations in North
America was $559 million on revenue of $94.1 billion. In 2001, those
operations had a loss of $2.15 billion on revenue of $90.8 billion. The full-
year improvement was primarily a result of the non-recurrence of costs
associated with the customer safety initiative to replace Firestone tires and
the re-stocking of dealer inventories, which were well below an optimal level
at the end of 2001.
In the fourth quarter, Ford's North America automotive operations posted a
loss of $124 million, compared with a loss of $916 million a year ago. The
improvement reflected better cost performance, net revenue and mix, offset
partially by lower volume. Revenue was $23.3 billion, compared with $23.2
billion in 2001.
Europe: In Europe, Ford's automotive operations earned $12 million during
the full year in 2002, compared with a profit of $266 million in 2001.
Revenue was $32.1 billion, an increase from $31.9 billion a year ago.
Automotive operations in Europe incurred a loss of $139 million on revenue
of $9.2 billion in the fourth quarter of 2002. This compares with a fourth
quarter 2001 profit of $61 million on revenue of $8.5 billion. The decline in
earnings for both the fourth quarter and full year reflected a leaner product
mix and lower dealer stocks, offset partially by higher market share.
South America: Ford automotive operations in South America incurred a loss
of $296 million during full-year 2002, compared with the full-year loss of
$225 million in 2001, more than explained by the effects of currency
devaluation. Revenue was $1.6 billion, down from $2.2 billion in 2001.
Fourth quarter 2002 losses were $11 million on revenue of $354 million.
This compares with a fourth quarter 2001 loss of $46 million on revenue of
$466 million.
Rest-of-world: Ford's automotive operations in the rest of the world
earned a full-year profit in 2002 of $304 million, compared with $156 million
in 2001. The improvement reflected better performance at Mazda and Ford's
Asia-Pacific operations. Revenue in 2002 was $6.6 billion, up $700 million
from 2001.
In the fourth quarter of 2002, profits were $83 million, down from
earnings of $98 million in 2001. Revenue was $1.8 billion compared to
$1.5 billion during the same time period in 2001.
FORD CREDIT
Ford Motor Credit Company reported earnings of $1.38 billion in 2002, up
$175 million from a profit of $1.2 billion a year ago. Return on equity was
9 percent in 2002, compared with 7 percent in 2001. The increase in earnings
reflected primarily a lower provision for credit losses, offset partially by
the net unfavorable impact of receivables sales and lower net financing
margins. The provision for credit losses in 2002 was $3 billion, compared
with $3.4 billion in 2001. At year end, the allowance for credit losses was
$3.2 billion -- 2.47 percent of end-of-period receivables.
In the fourth quarter of 2002, Ford Credit earned $382 million, up
$376 million from the same period a year earlier. The improvement reflected a
lower provision for credit losses and the net favorable impact of receivables
sales, offset partially by lower net financing margins.
Ford Credit paid a dividend to Ford Motor Company of $700 million in
December. For the full year, Ford Credit's dividends, net of a January 2002
capital contribution, were $450 million.
HERTZ
Hertz reported full-year 2002 earnings of $127 million, up from $23
million in 2001. Hertz earned $16 million in the fourth quarter, compared to
a loss of $58 million in the fourth quarter of 2001. The full-year and
fourth-quarter improvements when compared to 2001 reflected increases in
pricing and cost reductions.
OUTLOOK
"Although the outlook for the U.S. economy continues to be uncertain, we
are looking for 2003 to be another good year for car and truck sales," said
Allan Gilmour, Ford vice chairman and chief financial officer. "Throughout
this year, Ford Motor Company will remain focused on improving total cost and
will accelerate its implementation of the key Revitalization Plan elements. I
am pleased with the significant progress we made in 2002, and I am confident
that our progress will continue into 2003 and beyond."
Ford is estimating that industry demand will be about 16.5 million
vehicles in the U.S. Its North American production plans call for producing
1,035,000 cars and trucks in the first quarter -- up 25,000 units from
production plans released earlier this month.
Investors can hear a review of fourth quarter and full-year 2002 results
by Bill Ford, Allan Gilmour and President and Chief Operating Officer Nick
Scheele on the Internet at http://www.shareholder.ford.com or http://www.streetevents.com .
The presentation will begin at 9 a.m. EST, Jan. 21.
Ford Motor Company, headquartered in Dearborn, Michigan, is the world's
second largest automaker, with approximately 335,000 employees in 200 markets
on six continents. Its automotive brands include Aston Martin, Ford, Jaguar,
Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related
services include Ford Credit, Quality Care and Hertz. Ford Motor Company will
officially observe its 100th anniversary on June 16, 2003.
Statements included or incorporated by reference herein may constitute
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve a number of risks,
uncertainties, and other factors that could cause actual results to differ
materially from those stated, including, without limitation:
-- greater price competition in the U.S. and Europe resulting from
currency fluctuations, industry overcapacity or other factors;
-- a significant decline in industry sales, particularly in the U.S. or
Europe, resulting from slowing economic growth, geo-political events or other
factors;
-- lower-than-anticipated market acceptance of new or existing products;
-- work stoppages at key Ford or supplier facilities or other
interruptions of supplies;
-- the discovery of defects in vehicles resulting in delays in new model
launches, recall campaigns or increased warranty costs;
-- increased safety, emissions, fuel economy or other regulation resulting
in higher costs and/or sales restrictions;
-- unusual or significant litigation or governmental investigations
arising out of alleged defects in our products or otherwise;
-- worse-than-assumed economic and demographic experience for our post-
retirement benefit plans (e.g., investment returns, interest rates, health
care cost trends, benefit improvements);
-- currency or commodity price fluctuations;
-- a market shift from truck sales in the U.S.;
-- economic difficulties in South America or Asia;
-- reduced availability of or higher prices for fuel;
-- labor or other constraints on our ability to restructure our business;
-- a change in our requirements under long-term supply arrangements under
which we are obligated to purchase minimum quantities or pay minimum amounts;
-- a further credit rating downgrade;
-- inability to access debt or securitization markets around the world at
competitive rates or in sufficient amounts;
-- higher-than-expected credit losses;
-- lower-than-anticipated residual values for leased vehicles;
-- increased price competition in the rental car industry and/or a general
decline in business or leisure travel due to terrorist attacks, act of war or
measures taken by governments in response thereto that negatively affect the
travel industry; and
-- our inability to implement the Revitalization Plan.
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended December 31, 2002 and 2001
(in millions)
Fourth Quarter Full Year
2002 2001 2002 2001
(unaudited) (unaudited)
AUTOMOTIVE
Sales $34,661 $33,593 $134,425 $130,827
Costs and expenses
Costs of sales 32,401 37,200 125,137 128,417
Selling, administrative
and other expenses 2,679 2,707 9,819 9,805
Total costs and expenses 35,080 39,907 134,956 138,222
Operating income/(loss) (419) (6,314) (531) (7,395)
Interest income 173 149 834 765
Interest expense 331 372 1,368 1,376
Net interest income/(expense) (158) (223) (534) (611)
Equity in net income/
(loss) of affiliated companies 6 (170) (91) (856)
Income/(loss) before
income taxes - Automotive (571) (6,707) (1,156) (8,862)
FINANCIAL SERVICES
Revenues 6,919 7,118 28,161 29,927
Costs and expenses
Interest expense 1,715 2,134 7,456 9,441
Depreciation 2,609 2,583 10,240 10,164
Operating and other expenses 1,248 1,337 5,080 5,221
Provision for credit and
insurance losses 753 1,527 3,276 3,661
Total costs and expenses 6,325 7,581 26,052 28,487
Income/(loss) before
income taxes -
Financial Services 594 (463) 2,109 1,440
TOTAL COMPANY
Income/(loss) before
income taxes 23 (7,170) 953 (7,422)
Provision for/(benefit from)
income taxes (48) (2,130) 302 (2,097)
Income/(loss) before
minority interests 71 (5,040) 651 (5,325)
Minority interests in net
income/(loss) of subsidiaries 82 (9) 367 24
Income/(loss) from
continuing operations (11) (5,031) 284 (5,349)
Cumulative effect of change
in accounting principle - - (1,002) -
Income/(loss) from discontinued/
held-for-sale operations (15) (37) (63) (104)
Loss on disposal of
discontinued/held-for-sale
operations (104) - (199) -
Net income/(loss) $(130) $(5,068) $(980) $(5,453)
Income/(loss) attributable to
Common and Class B Stock
after Preferred Stock
dividends $(134) $(5,072) $(995) $(5,468)
Average number of shares of
Common and Class B
Stock outstanding 1,833 1,810 1,819 1,820
AMOUNTS PER SHARE OF COMMON
AND CLASS B STOCK
Basic income
Income/(loss) from
continuing operations $(0.01) $(2.79) $0.15 $(2.96)
Cumulative effect of change
in accounting principle - - (0.55) -
Income/(loss) from
discontinued/held-for-sale
operations (0.01) (0.02) (0.04) (0.06)
Loss on disposal of
discontinued/held-for-sale
operations (0.05) - (0.11) -
Net income/(loss) $(0.07) $(2.81) $(0.55) $(3.02)
Diluted income
Income/(loss) from
continuing operations $(0.01) $(2.79) $0.15 $(2.96)
Cumulative effect of change
in accounting principle - - (0.55) -
Income/(loss) from
discontinued/held-for-sale
operations (0.01) (0.02) (0.03) (0.06)
Loss on disposal of
discontinued/held-for-sale
operations (0.05) - (0.11) -
Net income/(loss) $(0.07) $(2.81) $(0.54) $(3.02)
Cash dividends $0.10 $0.15 $0.40 $1.05
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
As of December 31, 2002 and 2001
(in millions)
2002 2001
ASSETS (unaudited) (unaudited)
Automotive
Cash and cash equivalents $5,180 $4,064
Marketable securities 17,464 10,949
Total cash and marketable securities 22,644 15,013
Receivables, net 2,065 2,181
Inventories 6,980 6,127
Deferred income taxes 3,462 2,595
Other current assets 4,551 6,153
Current receivable from Financial Services 1,062 938
Total current assets 40,764 33,007
Equity in net assets of affiliated companies 2,470 2,450
Net property 36,364 33,022
Deferred income taxes 11,694 5,981
Goodwill 4,805 5,213
Other intangible assts 812 1,125
Other assets 10,783 7,153
Assets of discontinued and
held-for-sale operations 98 368
Total Automotive assets 107,790 88,319
Financial Services
Cash and cash equivalents $7,070 $3,133
Investments in securities 807 628
Finance receivables, net 96,910 110,190
Net investment in operating leases 40,055 45,388
Retained interest in sold receivables 17,618 12,548
Goodwill 752 1,042
Other intangible assts 248 223
Other assets 16,763 9,224
Assets of discontinued and
held-for-sale operations 2,406 2,136
Receivable from Automotive 4,803 3,712
Total Financial Services assets 187,432 188,224
Total assets $295,222 $276,543
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $14,606 $15,620
Other payables 2,485 4,224
Accrued liabilities 27,557 24,258
Debt payable within one year 557 302
Total current liabilities 45,205 44,404
Long-term debt 13,607 13,467
Other liabilities 46,886 30,873
Deferred income taxes 303 362
Liabilities of discontinued and
held-for-sale operations 225 162
Payable to Financial Services 4,803 3,712
Total Automotive liabilities 111,029 92,980
Financial Services
Payables 2,724 1,484
Debt 148,058 153,034
Deferred income taxes 11,644 9,686
Other liabilities and deferred income 8,614 9,165
Liabilities of discontinued and
held for sale operations 831 798
Payable to Automotive 1,062 938
Total Financial Services liabilities 172,933 175,105
Company-obligated mandatorily redeemable
preferred securities of a subsidiary
trusts holding solely junior subordinated
debentures of the Company 5,670 672
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share
(aggregate liquidation preference
of $177 million) * *
Common Stock, par value $0.01 per share
(1,837 million shares issued) 18 18
Class B Stock, par value $0.01 per share
(71 million shares issued) 1 1
Capital in excess of par value of stock 5,420 6,001
Accumulated other comprehensive income/(loss) (6,531) (5,913)
Treasury stock (1,977) (2,823)
Earnings retained for use in business 8,659 10,502
Total stockholders' equity 5,590 7,786
Total liabilities and stockholders' equity $295,222 $276,543
- - - - -
*Less than $1 million
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended December 31, 2002 and 2001
(in millions)
2002 2001
Automotive Financial Automotive Financial
Services Services
(unaudited) (unaudited)
Cash and cash equivalents
at January 1 $4,064 $3,133 $3,360 $1,417
Cash flows from operating
activities before
securities trading 9,487 15,375 7,456 13,172
Net sales/(purchases)
of trading securities (6,206) (23) 1,143 120
Net cash flows from
operating activities 3,281 15,352 8,599 13,292
Cash flows from
investing activities
Capital expenditures (6,776) (502) (6,301) (651)
Acquisitions of other
companies - - - (737)
Acquisitions of receivables
and lease investments - (81,806) - (94,061)
Collections of receivables
and lease investments - 45,777 - 45,110
Net acquisitions of
daily rental vehicles - (1,846) - (1,412)
Purchases of securities (3,446) (609) (12,489) (734)
Sales and maturities
of securities 3,445 479 13,866 759
Proceeds from sales of
receivables and
lease investments - 41,289 - 41,419
Proceeds from sale
of businesses 257 - - -
Net investing activity
with Financial Services 1,053 - 186 -
Cash paid for acquisitions (289) - (1,998) -
Other - 407 367 250
Net cash (used in)/
provided by investing
activities (5,756) 3,189 (6,369) (10,057)
Cash flows from
financing activities
Cash dividends (743) - (1,929) -
Net sales/(purchases)
of Common Stock 287 - (1,385) -
Proceeds from mandatorily
redeemable convertible
preferred securities 4,900 - - -
Preferred Stock -
Series B redemption (177) - - -
Changes in short-term debt (25) (14,136) 38 (18,274)
Proceeds from issuance
of other debt 318 15,524 2,063 44,193
Principal payments
on other debt (859) (15,760) (1,122) (26,204)
Net financing activity
with Automotive - (1,053) - (186)
Other (23) 361 261 (249)
Net cash (used in)/
provided by financing
activities 3,678 (15,064) (2,074) (720)
Effect of exchange rate
changes on cash 37 336 (101) (151)
Net transactions with
Automotive/Financial
Services (124) 124 649 (649)
Net increase in cash
and cash equivalents 1,116 3,937 704 1,716
Cash and cash equivalents
at December 31 $5,180 $7,070 $4,064 $3,133