Ford Reports 2nd Quarter Net Profit of $417 Million, on Track for Full Year
- Second quarter net income of $417 million, or 22 cents a share. - Automotive cash, marketable securities, loaned securities and VEBA assets of $28.7 billion -- up $3.4 billion from year-end 2002. - Achieved more than $1.9 billion* in automotive cost performance improvement during first half of 2003 -- more than triple the company's full year target.
DEARBORN, Mich., July 16 -- Ford Motor Company today reported net income of $417 million, or 22 cents a share, for the second quarter of 2003.
This compares with net income of $570 million, or 29 cents a share, in the second quarter of 2002.
Ford had pre-tax profits of $718 million during the second quarter of 2003, compared with pre-tax profits of $1 billion in the second quarter of 2002.
During the first half of 2003, Ford had pre-tax profits of $2.1 billion, compared with pre-tax profits of $1 billion during the same period a year ago.
Second quarter 2003 revenue declined to $40.7 billion from $42.2 billion in the second quarter of 2002. Worldwide vehicle unit sales in the 2003 second quarter were 1,717,000, down about 7 percent from 1,854,000 a year ago.
"Our second quarter financial performance and our achievements in the past 18 months since we announced our Revitalization Plan demonstrate that we are delivering the results that are needed to keep the company solidly on track," said Bill Ford, chairman and CEO. "We remain committed to our product-led Revitalization Plan, and we are moving ahead as promised with an exciting lineup of new vehicles coming to market -- the first of which is the new Ford F-150 pickup, arriving in dealerships very soon."
AUTOMOTIVE SECTOR
On a pre-tax basis, Ford's worldwide automotive sector reported a profit of $3 million during the second quarter of 2003, compared with earnings of $403 million a year ago.
Worldwide automotive revenue declined by $1 billion from $35.2 billion during the second quarter of 2002 to $34.2 billion in the second quarter of 2003.
Automotive cash, marketable securities, loaned securities and Voluntary Employee Beneficiary Association (VEBA) assets at June 30 rose to $28.7 billion, up from $26.6 billion at the end of the first quarter, and up from $25.3 billion at the end of 2002.
NORTH AMERICA AUTOMOTIVE
North America Automotive reported a profit of $445 million on a pre-tax basis, compared with a pre-tax profit of $921 million in the second quarter of 2002. The decline reflected lower production volume and lower net pricing, offset partially by strong cost performance.
North America Automotive revenue in the second quarter of 2003 was $20.7 billion, down about 10 percent from $23.1 billion in the second quarter of 2002. North America vehicle unit sales were down 12.5 percent in the second quarter of 2003 when compared with the second quarter of 2002.
INTERNATIONAL AUTOMOTIVE
The 2003 second-quarter pre-tax loss for International Automotive was $411 million, compared with a loss of $371 million during the second quarter of 2002.
Second-quarter 2003 revenue for International Automotive increased to $13.5 billion, compared with $11.8 billion during the second quarter last year.
Ford Europe: Ford Europe incurred a pre-tax loss of $525 million in the second quarter of 2003, compared with a pre-tax loss of $18 million during the same period a year ago. The decline in earnings is primarily explained by lower net pricing, unfavorable mix, lower industry volume and dealer stock reductions, offset partially by improved cost performance and market share. Ford Europe's revenue in the second quarter rose 6 percent to $5.2 billion, compared with $4.9 billion during the second quarter of 2002.
Ford South America: The pre-tax loss for Ford South America narrowed to $69 million during the second quarter from a loss of $198 million during the second quarter a year ago, primarily reflecting favorable exchange (largely the non-recurrence of currency devaluation a year ago), improved net pricing and market share. Revenue in South America was $435 million in the second quarter, compared with $426 million in the second quarter of 2002.
Ford Asia-Pacific: During the second quarter of 2003, Ford Asia-Pacific incurred a pre-tax loss of $28 million, compared with a pre-tax loss of $53 million in the 2002 second quarter. The improvement reflected favorable net pricing and the successful launch of the new Australian Falcon. Revenue rose to $1.4 billion, compared with $1.0 billion during the second quarter of 2002.
Premier Automotive Group (PAG): PAG reported pre-tax earnings of $166 million in the second quarter of 2003, compared with a pre-tax loss of $122 million during the second quarter of 2002. PAG benefited from both cost and revenue improvements, with growing market acceptance of the Volvo XC90 and the recently introduced Jaguar XJ. Second-quarter revenue for PAG was $6.4 billion, up from $5.5 billion a year ago.
FORD CREDIT
Ford Motor Credit Company reported net income of $401 million in the second quarter of 2003, up $71 million from earnings of $330 million in the same period a year earlier. On a pre-tax basis, Ford Credit earned $661 million in the second quarter of 2003 compared with $519 million in the second quarter of 2002. The increase in earnings primarily reflects higher income related to securitizations and a lower provision for credit losses, offset partially by the impact of lower receivables.
HERTZ
Hertz reported pre-tax earnings of $57 million in the second quarter, compared with $72 million during the same period a year ago. Strong cost performance was more than offset by unfavorable pricing and lower volume.
OUTLOOK
"Once again, we have proven that we are committed to our financial milestones," said Allan Gilmour, vice chairman. "We continue to surpass our cost performance targets, and we continue to strengthen the balance sheet. We are focused on achieving our goals and are working through the significant challenges we face during the second half of the year and 2004."
Ford expects a loss of about 15 cents a share in the third quarter of 2003. This expectation reflects lower planned production volumes in the third quarter. The company remains committed to its full year earnings guidance of 70 cents a share. These guidance figures do not include adverse effects that are likely to occur from the adoption in the third quarter of a new accounting standard (Financial Interpretation 46), which requires consolidation of certain entities that were previously unconsolidated.
Investors and media can hear a review of second quarter results by Allan Gilmour, vice chairman and Don Leclair, newly appointed chief financial officer, via conference call at 800-299-0148 (617-801-9711 for international dial-in) or on the Internet at http://www.shareholder.ford.com/ . Supporting presentation material will be available at the same Internet address. The presentation will begin at 8:30 a.m. EDT, July 16.
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 celebrated 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.
*Reconciliation of Automotive Cost Performance To Cost Of Sales & Selling, Administrative & Other Expense
2nd Qtr. 1st Half
(Bils.) (Bils.)
Total 2002 Cost and Expenses $(34.6) $(66.8)
2003 B/(W) 2002
- Volume, Mix and Exchange-Related Cost Changes $(0.9) $(2.7)
- Automotive Year-Over-Year Cost Performance $ 1.3 $ 1.9
B/(W) 2002 $ 0.4 $(0.8)
Total 2003 Cost and Expenses $(34.2) $(67.6)
Ford Motor Company and Subsidiaries
SECTOR STATEMENT OF INCOME
For the Periods Ended June 30, 2003 and 2002
(in millions, except per share amounts)
Second Quarter First Half
2003 2002 2003 2002
(unaudited) (unaudited)
AUTOMOTIVE
Sales $34,182 $35,197 $68,382 $67,368
Costs and expenses
Cost of sales 31,684 32,245 62,768 62,168
Selling, administrative
and other expenses 2,472 2,365 4,785 4,673
Total costs and expenses 34,156 34,610 67,553 66,841
Operating income/(loss) 26 587 829 527
Interest income 134 171 282 283
Interest expense 229 336 542 697
Net interest income/(expense) (95) (165) (260) (414)
Equity in net income/(loss)
of affiliated companies 72 (19) 93 (80)
Income/(loss) before
income taxes - Automotive 3 403 662 33
FINANCIAL SERVICES
Revenues 6,488 7,010 13,176 14,300
Costs and expenses
Interest expense 1,598 1,885 3,242 3,873
Depreciation 2,277 2,540 4,844 5,101
Operating and other expenses 1,219 1,214 2,425 2,652
Provision for credit and
insurance losses 679 771 1,272 1,731
Total costs and expenses 5,773 6,410 11,783 13,357
Income/(loss) before income
taxes - Financial Services 715 600 1,393 943
TOTAL COMPANY
Income/(loss) before
income taxes 718 1,003 2,055 976
Provision for/(benefit from)
income taxes 195 289 531 269
Income/(loss) before
minority interests 523 714 1,524 707
Minority interests in net
income of subsidiaries 98 95 200 168
Income/(loss) from
continuing operations 425 619 1,324 539
Income/(loss) from
discontinued/held-for-sale
operations (3) (9) (6) (21)
Loss on disposal of
discontinued/held-for-sale
operations (5) (40) (5) (40)
Cumulative effect of change in
accounting principle - - - (1,002)
Net income/(loss) $417 $570 $1,313 $(524)
Income/(loss) attributable to
Common and Class B Stock
after Preferred Stock
dividends $417 $567 $1,313 $(531)
Average number of shares of
Common and Class B
Stock outstanding 1,832 1,813 1,832 1,810
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic income/(loss)
Income/(loss) from
continuing operations $0.23 $0.34 $0.72 $0.29
Income/(loss) from
discontinued/held-for-sale
operations - (0.01) - (0.01)
Loss on disposal of
discontinued/held-for-sale
operations - (0.02) - (0.02)
Cumulative effect of change
in accounting principle - - - (0.55)
Net income/(loss) $0.23 $0.31 $0.72 $(0.29)
Diluted income/(loss)
Income/(loss) from
continuing operations $0.22 $0.31 $0.67 $0.29
Income/(loss) from
discontinued/held-for-sale
operations - - - (0.01)
Loss on disposal of
discontinued/held-for-sale
operations - (0.02) - (0.02)
Cumulative effect of change
in accounting principle - - - (0.55)
Net income/(loss) $0.22 $0.29 $0.67 $(0.29)
Cash dividends $0.10 $0.10 $0.20 $0.20
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended June 30, 2003 and 2002
(in millions, except per share amounts)
Second Quarter First Half
2003 2002 2003 2002
(unaudited) (unaudited)
Sales and revenues
Automotive sales $34,182 $35,197 $68,382 $67,368
Financial Services revenue 6,488 7,010 13,176 14,300
Total sales and revenues 40,670 42,207 81,558 81,668
Automotive interest income 134 171 282 283
Costs and expenses
Cost of sales 31,684 32,245 62,768 62,168
Selling, administrative
and other expenses 5,968 6,119 12,054 12,426
Interest expense 1,827 2,221 3,784 4,570
Provision for credit and
insurance losses 679 771 1,272 1,731
Total costs and expenses 40,158 41,356 79,878 80,895
Automotive equity in net
income/(loss) of
affiliated companies 72 (19) 93 (80)
Income/(loss) before
income taxes 718 1,003 2,055 976
Provision for/(benefit from)
income taxes 195 289 531 269
Income/(loss) before
minority interests 523 714 1,524 707
Minority interests in net
income/(loss) of subsidiaries 98 95 200 168
Income/(loss) from
continuing operations 425 619 1,324 539
Income/(loss) from
discontinued/held-for-sale
operations (3) (9) (6) (21)
Loss on disposal of
discontinued/held-for-sale
operations (5) (40) (5) (40)
Cumulative effect of
change in accounting principle - - - (1,002)
Net income/(loss) $417 $570 $1,313 $(524)
Income/(loss) attributable to
Common and Class B Stock
after Preferred Stock
dividends $417 $567 $1,313 $(531)
Average number of shares of
Common and Class B
Stock outstanding 1,832 1,813 1,832 1,810
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic income/(loss)
Income/(loss) from
continuing operations $0.23 $0.34 $0.72 $0.29
Income/(loss) from
discontinued/held-for-sale
operations - (0.01) - (0.01)
Loss on disposal of
discontinued/held-for-sale
operations - (0.02) - (0.02)
Cumulative effect of change
in accounting principle - - - (0.55)
Net income/(loss) $0.23 $0.31 $0.72 $(0.29)
Diluted income/(loss)
Income/(loss) from
continuing operations $0.22 $0.31 $0.67 $0.29
Income/(loss) from
discontinued/held-for-sale
operations - - - (0.01)
Loss on disposal of
discontinued/held-for-sale
operations - (0.02) - (0.02)
Cumulative effect of change
in accounting principle - - - (0.55)
Net income/(loss) $0.22 $0.29 $0.67 $(0.29)
Cash dividends $0.10 $0.10 $0.20 $0.20
Ford Motor Company and Subsidiaries
SECTOR BALANCE SHEET
(in millions)
June 30, December 31,
2003 2002
ASSETS (unaudited)
Automotive
Cash and cash equivalents $7,486 $5,180
Marketable securities 14,992 17,464
Loaned securities 4,647 -
Total cash, marketable and
loaned securities 27,125 22,644
Receivables 2,438 2,065
Inventories 8,448 6,980
Deferred income taxes 3,188 3,462
Other current assets 6,316 4,551
Current receivable from Financial Services 1,329 1,062
Total current assets 48,844 40,764
Equity in net assets of affiliated companies 2,558 2,470
Net property 38,054 36,364
Deferred income taxes 12,112 11,694
Goodwill 5,094 4,805
Other intangible assets 830 812
Assets of discontinued/held-for-sale operations - 98
Other assets 11,240 10,783
Total Automotive assets 118,732 107,790
Financial Services
Cash and cash equivalents 10,198 7,070
Investments in securities 692 807
Finance receivables, net 109,319 97,030
Net investment in operating leases 36,273 40,055
Retained interest in sold receivables 14,530 17,618
Goodwill 762 752
Other intangible assets 244 248
Assets of discontinued/held-for-sale operations - 2,406
Other assets 16,768 16,643
Receivable from Automotive 4,273 4,803
Total Financial Services assets 193,059 187,432
Total assets $311,791 $295,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $15,885 $14,606
Other payables 3,326 2,485
Accrued liabilities 31,509 27,644
Debt payable within one year 479 557
Total current liabilities 51,199 45,292
Long-term debt 14,001 13,607
Other liabilities 49,252 46,886
Deferred income taxes 177 303
Liabilities of discontinued/held-for-sale
operations 27 138
Payable to Financial Services 4,273 4,803
Total Automotive liabilities 118,929 111,029
Financial Services
Payables 2,621 1,890
Debt 154,958 148,058
Deferred income taxes 11,623 11,644
Other liabilities and deferred income 8,578 9,448
Liabilities of
discontinued/held-for-sale operations - 831
Payable to Automotive 1,329 1,062
Total Financial Services liabilities 179,109 172,933
Company-obligated mandatorily redeemable
preferred securities of subsidiary
trusts holding solely junior subordinated
debentures of the Company 5,669 5,670
Stockholders' equity
Capital stock
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 5,396 5,420
Accumulated other comprehensive income/(loss) (5,065) (6,531)
Treasury stock (1,872) (1,977)
Earnings retained for use in business 9,606 8,659
Total stockholders' equity 8,084 5,590
Total liabilities and
stockholders' equity $311,791 $295,222
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, December 31,
2003 2002
(unaudited)
ASSETS
Cash and cash equivalents $17,684 $12,250
Marketable securities 15,684 18,271
Loaned securities 4,647 -
Receivables 2,438 2,065
Finance receivables, net 109,319 97,030
Net investment in operating leases 36,273 40,055
Retained interest in sold receivables 14,530 17,618
Inventories 8,448 6,980
Equity in net assets of affiliated companies 3,596 3,569
Net property 39,634 37,935
Deferred income taxes 15,320 15,213
Goodwill 5,856 5,557
Other intangible assets 1,074 1,060
Assets of discontinued/held-for-sale
operations - 2,504
Other assets 31,686 29,250
Total assets $306,189 $289,357
LIABILITIES AND STOCKHOLDERS' EQUITY
Payables $21,832 $18,981
Accrued liabilities 29,117 25,088
Debt 169,438 162,222
Other liabilities and deferred income 57,547 56,276
Deferred income taxes 14,475 14,561
Liabilities of discontinued/held-for-sale
operations 27 969
Total liabilities 292,436 278,097
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts
holding solely junior subordinated
debentures of the Company 5,669 5,670
Stockholders' equity
Capital stock
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 5,396 5,420
Accumulated other comprehensive income/(loss) (5,065) (6,531)
Treasury stock (1,872) (1,977)
Earnings retained for use in business 9,606 8,659
Total stockholders' equity 8,084 5,590
Total liabilities and
stockholders' equity $306,189 $289,357
Ford Motor Company and Subsidiaries
CONDENSED SECTOR STATEMENT OF CASH FLOWS
For the Periods Ended June 30, 2003 and 2002
(in millions)
First Half 2003 First Half 2002
Financial Financial
Automotive Services Automotive Services
(unaudited) (unaudited)
Cash and cash equivalents
at January 1 $5,180 $7,070 $4,064 $3,133
Cash flows from operating
activities before
securities trading 5,748 8,444 8,096 8,082
Net sales/(purchases) of
trading securities 10 (380) (3,766) (60)
Net cash flows from
operating activities 5,758 8,064 4,330 8,022
Cash flows from investing activities
Capital expenditures (3,415) (118) (2,936) (300)
Acquisitions of receivables
and lease investments - (28,962) - (44,454)
Collections of receivables
and lease investments - 18,800 - 27,078
Net acquisitions of daily
rental vehicles - (1,545) - (1,896)
Purchases of securities (4,255) (319) (1,030) (320)
Sales and maturities
of securities 2,093 376 898 268
Proceeds from sales of
receivables and lease
investments - 13,573 - 19,430
Proceeds from sale
of businesses 77 204 - -
Net investing activity
with Financial Services 1,867 - 29 -
Cash paid for acquisitions - - (22) -
Other 489 (37) (45) 426
Net cash (used in)/provided
by investing activities (3,144) 1,972 (3,106) 232
Cash flows from financing activities
Cash dividends (366) - (369) -
Net sales/(purchases) of
Common Stock (3) - 92 -
Proceeds from mandatorily
redeemable convertible
preferred securities - - 4,900 -
Changes in short-term debt (119) (2,342) (91) (6,929)
Proceeds from issuance
of other debt 825 7,720 265 12,359
Principal payments on
other debt (548) (12,395) (691) (13,965)
Repayment of debt from
discontinued operations - 1,421 - -
Net financing activity
with Automotive - (1,867) - (29)
Other (5) 48 (14) 478
Net cash (used in)/provided
by financing activities (216) (7,415) 4,092 (8,086)
Effect of exchange rate
changes on cash 175 240 75 249
Net transactions with
Automotive/Financial Services (267) 267 (1,001) 1,001
Net increase/(decrease)
in cash and cash
equivalents 2,306 3,128 4,390 1,418
Cash and cash equivalents
at June 30 $7,486 $10,198 $8,454 $4,551
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended June 30, 2003 and 2002
(in millions)
First Half
2003 2002
(unaudited) (unaudited)
Cash and cash equivalents at January 1 $12,250 $7,197
Cash flows from operating activities before
securities trading 14,192 16,178
Net sales/(purchases) of trading securities (370) (3,826)
Net cash flows from operating activities 13,822 12,352
Cash flows from investing activities
Capital expenditures (3,533) (3,236)
Acquisitions of receivables and
lease investments (28,962) (44,454)
Collections of receivables and
lease investments 18,800 27,078
Net acquisitions of daily rental vehicles (1,545) (1,896)
Purchases of securities (4,574) (1,350)
Sales and maturities of securities 2,469 1,166
Proceeds from sales of receivables and
lease investments 13,573 19,430
Proceeds from sale of businesses 281 -
Cash paid for acquisitions - (22)
Other 452 381
Net cash (used in)/provided by
investing activities (3,039) (2,903)
Cash flows from financing activities
Cash dividends (366) (369)
Net sales/(purchases) of Common Stock (3) 92
Proceeds from mandatorily redeemable convertible
preferred securities - 4,900
Changes in short-term debt (2,461) (7,020)
Proceeds from issuance of other debt 8,545 12,624
Principal payments on other debt (12,943) (14,656)
Repayment of debt from discontinued operations 1,421 -
Other 43 464
Net cash (used in)/provided by financing
activities (5,764) (3,965)
Effect of exchange rate changes on cash 415 324
Net increase/(decrease) in cash and
cash equivalents 5,434 5,808
Cash and cash equivalents at June 30 $17,684 $13,005