-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I/1sx/Vjlk3E+2VWu3MVYkl2DUQrbC5pXpF2jMVqZqKSymfp+mybTI4se/o/lm25 XXqQY/VXTMIHmn5tFxmYMw== 0000037996-05-000148.txt : 20050414 0000037996-05-000148.hdr.sgml : 20050414 20050414104446 ACCESSION NUMBER: 0000037996-05-000148 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20050414 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050414 DATE AS OF CHANGE: 20050414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORD MOTOR CO CENTRAL INDEX KEY: 0000037996 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 380549190 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03950 FILM NUMBER: 05749696 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: DEARBORN STATE: MI ZIP: 48126 BUSINESS PHONE: 3133223000 MAIL ADDRESS: STREET 1: ONE AMERICAN RD CITY: DEARBORN STATE: MI ZIP: 48126 8-K 1 e041305cover.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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: April 14, 2005 -------------- (Date of earliest event reported) FORD MOTOR COMPANY ------------------ (Exact name of registrant as specified in its charter) Delaware -------- (State or other jurisdiction of incorporation) 1-3950 38-0549190 ------ ---------- (Commission File Number) (IRS Employer Identification No.) One American Road, Dearborn, Michigan 48126 ------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 313-322-3000 ------------ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 140.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) -2- Item 8.01. Other Events. - ----------------------- On April 5, 2005, Moody's Investors Service, Inc. ("Moody's") placed the long-term ratings of Ford Motor Company ("Ford"), presently "Baa1", and Ford Motor Credit Company ("Ford Credit"), presently "A3", under review for possible downgrade. Ford Credit's short-term rating, presently "P-2", is not under review and was affirmed. The Moody's press release announcing this action is filed as Exhibit 99.1 hereto. On April 8, 2005, Standard & Poor's Ratings Services, a division of McGraw-Hill Companies, Inc. ("S & P") affirmed the ratings of Ford, Ford Credit, and all related entities, presently "BBB-" for long-term debt and "A-3" for short-term debt, and at the same time revised the outlook on the companies to negative from stable. The S & P press release announcing this action is filed as Exhibit 99.2 hereto. On April 11, 2005, Dominion Bond Rating Service Limited ("DBRS") placed the ratings of Ford under review with negative implications, but confirmed the ratings of Ford Credit and Ford Credit Canada Limited ("Ford Credit Canada") both with stable trends. The long- and short-term ratings of all three companies presently are "BBB (high)" and "R-1 (low)", respectively. The DBRS press releases announcing these actions are filed as Exhibits 99.3 and 99.4. On April 11, 2005, Fitch, Inc. ("Fitch") revised the ratings outlook of Ford, Ford Credit, Hertz, and related entities to negative from stable. The present long- and short-term ratings for all companies are "BBB+" and "F2", respectively. The Fitch press release announcing this action is filed as Exhibit 99.5. Ford Credit's principal subsidiary in Canada, Ford Credit Canada has suspended offering its medium term notes in Canada until further notice. The notes, which are guaranteed by Ford Credit, had been offered pursuant to Ford Credit Canada's Short Form Prospectus and Prospectus Supplement each dated December 16, 2004. Ford Credit Canada will continue to offer debt securities pursuant to its euro medium term note program and its commercial paper program. During April 2005, we are conducting regularly scheduled semi-annual meetings with these credit rating agencies. Further rating actions could occur at any time, including following those meetings. -3- Item 9.01. Financial Statements and Exhibits. - -------------------------------------------- EXHIBITS -------- Designation Description Method of Filing - ----------- ----------- ---------------- Exhibit 99.1 Moody's Press Release dated April 5, 2005 Filed with this Report Exhibit 99.2 S & P Press Release dated April 8, 2005 Filed with this Report Exhibit 99.3 DBRS Press Release dated April 11, 2005 Filed with this Report Exhibit 99.4 DBRS Press Release dated April 11, 2005 Filed with this Report Exhibit 99.5 Fitch Press Release dated April 11, 2005 Filed with this Report 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 hereunto duly authorized. FORD MOTOR COMPANY ------------------ (Registrant) Date: April 14, 2005 By: /s/Kathryn S. Lamping --------------------- Kathryn S. Lamping Assistant Secretary -4- EXHIBIT INDEX ------------- Designation Description - ----------- ----------- Exhibit 99.1 Moody's Press Release dated April 5, 2005 Exhibit 99.2 S & P Press Release dated April 8, 2005 Exhibit 99.3 DBRS Press Release dated April 11, 2005 Exhibit 99.4 DBRS Press Release dated April 11, 2005 Exhibit 99.5 Fitch Press Release dated April 11, 2005 EX-99.1 2 e041305ex991.txt Exhibit 99.1 New York, April 05, 2005 -- Moody's Investors Service placed the Baa1 long-term rating of Ford Motor Company and the A3 long-term rating of Ford Motor Credit Company under review for possible downgrade. Ford Credit's short-term rating is not under review and is affirmed at Prime-2. Moody's is also reviewing the Baa2 long-term and Prime-2 short-term ratings of Hertz Corporation for possible downgrade. The review of the Ford rating is prompted by Moody's concerns about the company's ability to achieve its 2006 profit before tax target of $7 billion (approximately $4 billion from automotive operations and $3 billion from Ford Credit) and sustain credit metrics that are solidly supportive of the Baa1rating. Despite the important operational and financial progress that Ford continues to make since the 2002 implementation of its revitalization program, Moody's sees increasing risk that the company might not achieve the 2006 earnings target. These risks are reflected in: 1) Ford's rising health care costs that currently exceed $4 billion per year; 2) the severe underperformance of Ford's Premier Automotive Group due to the sizable loses at Jaguar; 3) the likelihood that Ford will have to shoulder a material financial burden in connection with a restructuring of Visteon; 4) a North American market share position that remains under increasing pressure; and, 5) Ford's recent recognition that rising competitive pressures will result in its 2005 earnings coming in near the low end of its guidance range. The notable positive accomplishments of Ford under its revitalization program include: 1) exceeding most of its cost reduction objectives; 2) a steady improvement in earnings and cash generation that will likely continue into 2006; 3) a major new product initiative that began in late 2004 and will continue into 2006; 4) the maintenance of a $23 billion automotive liquidity position; and 5) the solid performance of Ford Credit. Despite these positives, Moody's remains concerned that the earnings and cash flow levels likely to be achieved in 2006 may not be sufficiently robust to support a Baa1 rating. The review of Ford Credit's A3 senior unsecured rating is driven by the review of the Ford Motor Company rating and considers Moody's continuing one notch rating differential between the credits. Moody's ratings incorporate the business and financial interrelationships that exist between Ford Credit and its parent that influence Ford Credit's performance and financial condition. The one-notch rating differential is based on Moody's view that the unsecured creditors of Ford Credit are likely to experience better asset recovery than are the unsecured creditors of the parent company, were the companies to come under significant stress. Ford Credit's stand-alone profile also factors into the ratings. Management's efforts to improve credit quality are producing results, as reflected in 2004 earnings, as tighter underwriting has led to reduced loss frequency. Used car values continued to recover from prior lows, also improving loss performance and contributing to a lower loss provision. Ford Credit's liquidity is strong and it maintains access to diverse funding sources. Leverage continues to be high relative to historical levels. The review of Hertz is based on the ownership and operational ties between Hertz and Ford. Hertz is a 100%-owned subsidiary of Ford, it purchases 35% of its annual rental fleet from Ford, and Ford provides Hertz with a $500 million committed line of credit. Moody's review of the Ford rating will focus on: 1) the likelihood that Ford can reach its 2006 PBT target of $7 billion, and sustain healthy operating performance despite continued cyclicality; 2) the assumptions underlying Ford's intermediate-term forecasts, particularly with respect to market share, pricing, mix and fuel prices in North America; 3) the company's ability to contend with rising health care costs; and 4) the strategy for reversing the losses at Jaguar and for helping to restore a competitive operating model at Visteon. The review of Hertz will focus on the degree to which its credit profile might be compromised by further operational or financial stress at Ford. Ford Motor Company, headquartered in Dearborn, Michigan, is the world's second largest automobile manufacturer. Ford Motor Credit Company, also headquartered in Dearborn, Michigan, is the world's largest auto finance company. EX-99.2 3 e041305ex992.txt Exhibit 99.2 Research Update: Ford Motor Co., Ford Motor Credit Corp. Outlook Negative On Earnings Guidance Revision Publication date: 08-Apr-2005 Primary Credit Analyst(s): Scott Sprinzen, New York (1) 212-438-7812; scott_sprinzen@standardandpoors.com Credit Rating: BBB-/Negative/A-3 Rationale On April 8, 2005, Standard & Poor's Ratings Services revised the rating outlook on Ford Motor Co., Ford Motor Credit Co. (Ford Credit), and all related entities to negative from stable, reflecting heightened concerns regarding Ford's profit potential in the wake of the company's significantly revised earnings and cash flow guidance for 2005. At the same time, Standard & Poor's affirmed its 'BBB-' long-term and 'A-3' short-term ratings on the companies. Consolidated debt outstanding totaled $173 billion at Dec. 31, 2004. Ford has disclosed that it now expects earnings per share of only $1.25 to $1.50 (before special items) in 2005, instead of its previous guidance of $1.75 to $1.95. Management also expects Ford's automotive operations to have no better than breakeven pretax earnings this year (before special items), in contrast to the previous goal of $1.5 billion in pretax earnings. In addition, Ford has said it no longer expects to achieve its earlier goal of $7 billion pretax earnings as early as 2006. We now view the rating as weak. The rating can tolerate several quarters of weak profitability and cash flow, but only under the assumption that financial performance will improve to more satisfactory levels thereafter. The rating could be lowered at any point if we came to doubt that Ford was on a trajectory to realizing such improvement. Although Ford is expected to maintain strong liquidity, this is not sufficient to offset heightened concerns about its competitive position and business prospects. U.S. light-vehicle sales have been basically flat to date this year compared with those of the same period last year, and industry sales remain relatively robust. Yet, Ford's sales performance in the U.S. has eroded significantly. Its U.S. light-vehicle unit sales from January through March were off 5.2%, meaning its U.S. market share has continued to deteriorate--reaching 19.1% in March--and necessitating substantial production cuts. Ford's F-series pickup, which was renewed starting in late 2003, continues to sell very well, but customer reception of its other new products has been mixed. Moreover, sales of Ford's midsize, large, and luxury sport utility vehicles (SUVs) have plummeted. These products had contributed highly disproportionately to Ford's earnings. However, industrywide demand for SUVs has evidently stalled, partially explained by persistent high gasoline prices. In addition, competition has intensified due to a proliferation of new SUVs. Ford has suffered from the aging of its SUV product line, which will be replaced by a family of new products during 2006 and 2007, but it is questionable whether these will generate the profit margins the company has enjoyed historically. Ford's automotive operations have also been adversely affected by higher commodity costs and escalating health care expenses. Taking account of massive restructuring charges and other special items, Ford's automotive operations have not been profitable since 2000. Moreover, Ford continues to negotiate with its ailing former affiliate and largest -1- supplier, Visteon Corp., regarding yet another restructuring of the agreements governing the relationship between the two companies. Ford created in 2004 a $600 million reserve against a receivable from Visteon. Also, Ford recently disclosed that it has agreed to provide various forms of additional support to Visteon, including accelerated payment terms, subsidizing capital spending by Visteon, and granting $25 million per month of labor cost subsidies. We assume Ford will need to record substantial additional charges related to further actions to support Visteon. Although Ford's aggregate auto earnings have been poor in recent years, the effect on overall results has been mitigated by soaring profits at Ford's financial services units, principally Ford Credit. (Ford Credit's profitability is artificially bolstered inasmuch as auto finance incentives require consumers to finance through Ford Credit: Ford then reimburses Ford Credit for the cost of the incentive.) Ford Credit has benefited from lower credit losses, record-low funding costs, and improved performance on lease residuals. Also, Ford Credit's reported results have benefited to an exaggerated extent from a significant reduction in accruals for credit losses and depreciation related to vehicles under operating leases. With the nonrecurrence of such accounting effects, the adverse effect of rising interest rates, and the downsizing of Ford Credit's finance assets outstanding, Ford Credit is unlikely to be able to sustain earnings at recent record levels. However, we believe management's targeted pretax earnings of just over $3 billion for 2005 (down from $4.4 billion in 2004) should be achievable and that Ford Credit will be able to earn at least $2.5 billion per year on a sustainable basis. Ford's automotive cash flow (after capital expenditures, and before pension and VEBA contributions, and dividends from Ford Credit) has also been mediocre, totaling $1.0 billion in 2004. Although we now expect automotive cash flow will be little better than breakeven in 2005, Ford Credit is expected to continue generating substantial cash in 2005, and dividends to the parent of approximately $1.5 billion to $2.0 billion per year should be sustainable (compared with $4.3 billion in 2004), based on Ford Credit's cash generation. Ford has a large, unfunded pension liability that totaled $12.3 billion at year-end 2004. The liability size has remained basically stable for the past year due to the measurement effect of a lower discount rate, despite contributions totaling $2.3 billion during 2004 and favorable investment portfolio returns. More troubling is Ford's massive unfunded retiree medical liability--$32.4 billion at year-end 2004--which has continued to grow, even with the benefit of the new Medicare prescription drug program, VEBA contributions of $2.8 billion during 2004, and substantial direct (i.e., pay-as-you-go) cash expenditures. Short-term credit factors. Ford's short-term rating is 'A-3', as is Ford Credit's. Ford's fundamental challenges are both short- and long-term in nature. However, the company's liquidity and financial flexibility minimize any potential for financial stress in the near term. Ford's automotive cash flow (after capital expenditures, and before pension and VEBA contributions, and dividends from Ford Credit) is now expected to be little better than breakeven in 2005, although Ford Credit is expected to generate several billion dollars of cash. Ford has high operating leverage and volatile financial performance. Consequently, there is relatively poor visibility to near-term earnings and cash flow. Key aspects of Ford's financial flexibility and liquidity are as follows: - A large liquidity position--Cash, marketable securities, and short-term VEBA funds totaled $23.6 billion at Dec. 31, 2004 (excluding Ford Credit); - Moderate near-term, parent-level debt maturities--Long-term debt has an exceptionally high average maturity of about 25 years; - No ERISA-mandated pension fund contributions for the next few -2- years, nor the need to make contributions to avoid Pension Benefit Guaranty Corp. variable-rate premiums; - $7.2 billion (as of Dec. 31, 2004) of committed credit facilities with various banks, 80% of which are committed through June 2009; and - The potential for Ford to monetize its investment in Hertz if Ford were to experience liquidity pressure. Ford Credit has substantial ongoing funding needs. As of Dec. 31, 2004, short-term debt (including current maturities of long-term debt) totaled $61.9 billion, not including maturing off-balance-sheet securitizations. We continue to rate Ford Credit the same as Ford. We regard Ford Credit and Ford as a single economic entity with effectively the same default risk, given their strategic importance to each other, Ford's ability to influence Ford Credit's actions, and the ultimate risk that, in the unlikely event Ford were to file for bankruptcy, this would precipitate a bankruptcy filing by Ford Credit. (Note: this is not to say, however, that in a bankruptcy reorganization, recoveries for Ford and Ford Credit debtholders would be the same. Barring substantive consolidation, recoveries for Ford Credit debtholders would likely be superior, given the more liquid nature of Ford Credit's assets.) Reflecting the close link between Ford Credit and Ford, Ford Credit's funding flexibility has suffered in recent years from the deterioration in Ford's credit quality. Thus, unsecured commercial paper outstanding totaled only about $9 billion at Dec. 31, 2004, down from more than $40 billion prior to 2001. Also, Ford Credit's unsecured credit spreads have been extremely volatile. This has made public term debt issuance relatively uneconomical at times, and it puts in question the extent to which Ford Credit can rely on future access to the public unsecured debt market. However, Ford Credit has bolstered liquidity by taking the following actions: - Accumulating a large cash position ($12.7 billion at Dec. 31, 2004); - Increasing its presence in the less credit-sensitive retail market by expanding its retail bond and floating-rate demand note programs; - Diversifying its securitization funding channels by expanding its international securitization programs and establishing additional commercial paper conduit programs; and - Tapping the nascent whole-loan market. Ford Credit and its majority-owned subsidiaries had $13.8 billion of global credit lines (including $6.9 billion of Ford bank lines that Ford Credit can use at Ford's option) as of Dec. 31, 2004. Ford Credit also had approximately $18 billion of committed liquidity facilities that supported two asset-backed commercial paper programs. Ford Credit also has entered into agreements with several bank-sponsored asset-backed commercial paper issuers under which such issuers are committed to purchase from Ford Credit, at its option, up to $9.7 billion in aggregate of receivables. Ford Credit's borrowing agreements contain no significant financial covenants, rating triggers, or material adverse change clauses. Likewise, Ford Credit's and Ford's other financing arrangements contain no significant credit triggers. Ford Credit's asset composition is highly liquid, given that about half of its total gross receivables are due within one year and that a substantial portion of receivables are typically repaid before contractual maturity dates. Reflecting Ford Credit's efforts to tighten underwriting standards and Ford's de-emphasis on finance incentives as a marketing technique, management has forecast that Ford Credit's managed receivables outstanding (excluding whole-loan sales and discontinued operations) will total $160 billion to $165 billion in the near term, down from $168 billion at year-end 2004, $175 billion at year-end 2003, and $191 billion at year-end 2001. This liquidation of assets will free up cash and reduce near-term -3- funding requirements. However, Ford Credit is constrained in its ability to further reduce the size of its portfolio, given the need for it to support Ford's marketing efforts. Outlook We now view the rating as weak. The rating can tolerate several quarters of weak profitability and cash flow, but only under the assumption that financial performance will improve to more satisfactory levels thereafter. The rating could be lowered at any point if we came to doubt that Ford was on a trajectory to realizing such improvement. (In keeping with our policies, the rating would not necessarily be placed on CreditWatch prior to a downgrade.) Although Ford is expected to maintain strong liquidity, this is not sufficient to offset heightened concerns about its competitive position and business prospects.
Ratings List Ford Motor Co. To From Corporate credit rating BBB-/Negative/A-3 BBB-/Stable/A-3 Ford Motor Credit Co. Corporate credit rating BBB-/Negative/A-3 BBB-/Stable/A-3
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. -4- EX-99.3 4 e041305ex993.txt Exhibit 99.3 Ford Mtr Co: DBRS Places Ford Motor Company Under Review 2005-04-11 09:27 (New York) DOMINION BOND RATING SERVICE LIMITED ("DBRS-T") FORD MOTOR CO ("F-BHDNPX3") - - DBRS Places Ford Motor Company Under Review - - with Negative Implications //st Ford Motor Company Rating Trend Rating Action Debt Rated R-1 (low) Stb Under Review - Negative Commercial Paper BBB (high) Stb Under Review - Negative Long-Term Debt //et Dominion Bond Rating Service ("DBRS") has placed the ratings of Ford Motor Company ("Ford" or the "Company") "Under Review with Negative Implications". The rating actions principally reflect the Company's disappointing operating performance. On April 8, 2005, Ford announced that results at its automotive operations are deteriorating and pre-tax profit excluding special items for the full year in 2005 is expected to be break-even at best due to worse than expected performance in its North American operations. Ford continues to lose market share in North America despite the introduction of a number of new products. In addition, rising material costs and health care expenses are going to add to margin pressure. Moreover, market conditions are expected to worsen. The prospect of higher and sustained gasoline prices and increased use of incentives by competitors will put more pressure on Ford's automotive operations, particularly in North America. For more information on this credit or on this industry, visit www.dbrs.com or contact us at: info@dbrs.com. EX-99.4 5 e041305ex994.txt Exhibit 99.4 dbrs.com Press Release Ford Motor Credit Company & Ford Motor Credit Canada Limited Confirms at BBB (high) & R-1 (low) Date of Release: April 11, 2005
Issuer Debt Rated Rating Action Rating Trend Notes Latest Event - ---------------------------------------------------------------------------------------------------------------------------- Ford Credit Canada Limited Commercial Paper (guar. by Confirmed R-1 (low) Stb last rpt. 2004- Apr 11, 2005 Ford Motor Credit Co.) 11-23 Ford Motor Credit Company Commercial Paper Confirmed R-1 (low) Stb last rpt. 2004- Apr 11, 2005 11-23 Ford Credit Canada Limited Senior Long-Term Debt (guar. Confirmed BBB (high) Stb last rpt. 2004- Apr 11, 2005 by Ford Motor Credit Co.) 11-23 Ford Motor Credit Company Senior Long-Term Debt Confirmed BBB (high) Stb last rpt. 2004- Apr 11, 2005 11-23 - -----------------------------------------------------------------------------------------------------------------------------
Dominion Bond Rating Service ("DBRS") has confirmed the ratings of Ford Motor Credit Company ("Ford Credit" or the "Company") and Ford Motor Credit Canada Limited ("Ford Credit Canada"), all with Stable trends. Ford Motor Company ("Ford"), Ford Credit's wholly owned parent, announced on April 8, 2005, that results at its automotive operations are deteriorating and pre-tax profit excluding special items for the full year in 2005 is expected to be break-even at best due to worse than expected performance in its North American operations. Ford continues to lose market share in North America despite the introduction of a number of new products. In addition, rising material costs and health care expenses are going to add to margin pressure. Moreover, market conditions are expected to worsen. The prospect of higher and sustained gasoline prices and increased use of incentives by competitions will put more pressure on Ford's automotive operations, particularly in North America. DBRS has confirmed the ratings of Ford Credit and Ford Credit Canada, all with Stable trends, but has placed the ratings of Ford "Under Review with Negative Implications", reflecting the weakening operating results and outlook. While DBRS's ratings for captive finance companies are typically equivalent to the credit strength of the operating parent (parent), DBRS policies have always provided the opportunity whereby a captive finance company (captive) could be rated higher than the parent. Key general considerations for such an event include the following: (1) The value and first claim ability of the captive assets; (2) The relationship between the captive and the parent; (3) The stand-alone strength of the captive; and (4) The level of ratings in the credit spectrum. Based on an evaluation of these factors and all the related sub-factors, DBRS has concluded that at the present time, the ratings for Ford Credit and Ford Credit Canada should be slightly higher than the base ratings for Ford. Along with these considerations, DBRS continues to heavily weigh the strength of the parent in assessing the ratings of this and any other captive subsidiary (driven first and foremost by the captive's heavy dependence on the parent for products), which meaningfully limits the degree to which captives can be rated above their respective parent companies. For more information on this credit or on this industry, visit www.dbrs.com or contact us at: info@dbrs.com. EX-99.5 6 e041305ex995.txt Exhibit 99.5 Fitch Revises Rating Outlook on Ford to Negative 2005-04-11 10:04 (New York) CHICAGO--(BUSINESS WIRE)--April 11, 2005 Fitch Ratings has revised the Rating Outlook of Ford, Ford Credit, Hertz and related entities (see below) to Negative from Stable. The Outlook revision reflects the effect of further production cutbacks on Ford's consolidated operating results, continuing price competition in key market segments, shifting consumer buying patterns away from mid-size and large SUVs (which have comprised a significant component of Ford's automotive profitability) and cost pressures. These factors have further compressed margins, already weak for the rating category, and Ford now expects automotive operations to be breakeven at best. Future rating decisions will focus on Ford's ability to restore margins through stabilization of market shares, the ability to retain pricing on new and recent product introductions, and further success in cost reduction programs. Ford's difficulties have occurred despite being in a relatively favorable part of its product cycle and during a period of solid economic growth. The success of the company's core F-Series and several new product offerings (most notably the new Mustang) have not been sufficient to improve consolidated operating results in light of less successful new car introductions and continuing price competition. In particular, the truck market has recently experienced higher incentive levels, and product and capacity expansions in this segment indicate no let-up in competitive pressures in this key segment. Ford's recent announcement highlights the sensitivity of operating cash flows to SUV volumes and pricing in the truck market, and pressures in these areas will persist. Ford also continues to struggle with losses at its PAG unit, primarily in its Jaguar operations. Despite several restructuring programs, losses have been persisted. Ford has announced production cutbacks for the remainder of 2005 in response to slowing sales of mid-size and large SUVs that have shown double-digit sales declines for the first quarter. Ford's high fixed cost structure, continuing escalation in health care costs, and the full roll-in of steel and other commodity costs in 2005 indicate that margin restoration will be difficult to achieve in the near term. Ford has made progress in reducing its fixed cost structure, but as share losses continue and production is reduced, Ford will be challenged to keep pace in reducing fixed costs. Stabilizing share losses over the near term will be a key determinant in future rating decisions. Ford maintains very strong liquidity, with cash and short-term VEBA of $23.6 billion at yearend 2004 at Ford Motor and an additional $12.7 billion at Ford Credit. Ford modestly reduced debt in 2004 and contributed $5 billion to its pension and long-term VEBA accounts, benefiting from strong profitability at Ford Credit and a dividend to Ford Motor of $4.3 billion. Ford Motor has an extended maturity schedule with minimal debt maturities over the next five years. Ford's credit profile also benefits from its holdings in well-performing Hertz and, to a lesser degree, Mazda. Health care costs remain a key competitive disadvantage for Ford and GM, and led by GM, are likely to seek concessions prior to the official contract re-opening in 2007. The current level of steel prices is viewed by Fitch as a cyclical issue, however, and margins may benefit over the near term as steel prices moderate. Top-line improvement will be dependent on the performance of recent and new product introductions, and the ability of Ford to retain pricing. This will remain a challenge, particularly in the key truck market where pricing incentives and new transplant capacity and product introductions presage an increasingly competitive market. -1- Ford and Visteon are expected to reach an agreement in which Fitch expects that the vast majority of the restructuring costs will be borne by Ford. These charges are likely to be significant, but can be comfortably absorbed by Ford's substantial liquidity. However the agreement is structured, the question remains how quickly Ford and Visteon can establish cost competitiveness at these operations. As the bulk of cost savings will be derived through employment reductions and facility closures/divestitures, progress is expected to be gradual but could result in a more competitive supply base over time. Fitch has revised The Rating Outlook to Negative from Stable on the following ratings: Ford Motor Co. -- Senior debt 'BBB+'; -- Preferred stock 'BBB-'; -- Commercial paper 'F2'. Ford Motor Credit Co. -- Senior debt 'BBB+'; -- Commercial paper 'F2'. FCE Bank PLC -- Senior debt 'BBB+'; -- Short-term 'F2'. Ford Credit Canada Ltd. -- Senior debt 'BBB+'; -- Commercial paper 'F2'. Ford Credit Australia Ltd. -- Senior debt 'BBB+'; -- Commercial paper 'F2'. Ford Credit Co. of New Zealand Ltd. -- Senior debt 'BBB+'; -- Commercial paper 'F2'. Ford Capital B.V. -- Senior debt 'BBB+'. Ford Motor Credit Co. of Puerto Rico, Inc. -- Commercial paper 'F2'. Ford Holdings Inc. -- Senior debt 'BBB+'. -2- Ford Motor Co. S.A. de C.V. -- Senior debt 'BBB+'; -- Short-term 'F2'. PRIMUS Financial Services (Japan) -- Senior debt 'BBB+'; -- Short-term 'F2'. The Hertz Corp. -- Senior debt 'BBB+'; -- Commercial paper 'F2'. Hertz Canada Ltd. -- Commercial paper 'F2'. Hertz Australia Pty. Ltd. -- Commercial paper 'F2'. Hertz Finance Centre Plc -- Commercial paper 'F2'. -3- -----END PRIVACY-ENHANCED MESSAGE-----