PRESENTATION

For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us,” or similar references mean Ford Motor Company, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise. We also make reference to Ford Motor Credit Company LLC, herein referenced to as Ford Credit. Our financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, instructions to Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X.

In the opinion of management, these unaudited financial statements reflect a fair statement of our results of operations and financial condition for the periods, and at the dates, presented. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K Report”). We reclassified certain prior year amounts in our consolidated financial statements to conform to the current year presentation.

Change in Presentation

Effective January 1, 2018, we changed our reportable segments to reflect the manner in which we now manage our business. Based on recent changes to our organization structure and how our Chief Operating Decision Maker (“CODM”) reviews operating results and makes decisions about resource allocation, we now have three reportable segments that represent the primary businesses reported in our consolidated financial statements: Automotive, Mobility, and Ford Credit. See Note 18 for a description of our new segment presentation.

Change in Accounting

We carry inventory on our consolidated balance sheet that is comprised of finished products, raw materials, work-in-process, and supplies. As of January 1, 2018, we changed our accounting method for U.S. inventories to a first-in, first-out basis from a last-in, first-out basis. We believe this change in accounting method is preferable as it is consistent with how we manage our business, results in a uniform method to value our inventory across all regions in our business, and improves comparability with our peers. The effect of this change was immaterial on our consolidated income statement, balance sheet, and statement of cash flow amounts for the interim period ended June 30, 2018.

We have retrospectively applied this change in accounting method to all prior periods. As of December 31, 2016, the cumulative effect of the change increased Retained earnings by $559 million.

The effect of this change on our consolidated financial statements was as follows (in millions except for per share amounts):



	For the periods ended June 30, 2017
	Second Quarter							First Half
	Previously Reported		As Revised		Effect of Change Higher/(Lower)			Previously Reported		As Revised		Effect of Change Higher/(Lower)
Income Statement

Cost of Sales	$	33,349	$	33,342	$	(7	)	$	66,057	$	66,042	$	(15	)
Income before income taxes	2,259		2,266		7			4,502		4,517		15
Provision for/ (Benefit from) income taxes	209		211		2			858		863		5
Net income	2,050		2,055		5			3,644		3,654		10
Net income attributable to Ford Motor Company	2,042		2,047		5			3,629		3,639		10
Basic earning per share attributable to Ford Motor Company	0.51		0.51		—			0.91		0.92		0.01
Diluted earning per share attributable to Ford Motor Company	0.51		0.51		—			0.91		0.91		—



	December 31, 2017
	Previously Reported		As Revised		Effect of Change Higher/(Lower)
Balance Sheet

Inventories	$	10,277	$	11,176	$	899
Deferred income taxes (assets)	10,973		10,762		(211		)
Retained earnings	21,218		21,906		688

NOTE 1. PRESENTATION (Continued)

Argentina

In June 2018, as a result of the three-year cumulative consumer price index exceeding 100%, Argentina was classified as having a highly inflationary economy. We are presently evaluating the impact of accounting for our Argentina operations as highly inflationary beginning on July 1, 2018.