-----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, AZZsrxY28KipJikxD93vHqKar7LN0LWpVUQrKj5/GlN7VzN19CTbBI4yVDtX08S8 PA5Pas7zFLoQB61yYyt8ng== 0000037996-96-000017.txt : 19960514 0000037996-96-000017.hdr.sgml : 19960514 ACCESSION NUMBER: 0000037996-96-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NYSE 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03950 FILM NUMBER: 96561146 BUSINESS ADDRESS: STREET 1: THE AMERICAN RD CITY: DEARBORN STATE: MI ZIP: 48121 BUSINESS PHONE: 3133223000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE - --- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR ------------------------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- --------- Commission file number 1-3950 --------------- Ford Motor Company ------------------ (Exact name of registrant as specified in its charter) Incorporated in Delaware 38-0549190 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) The American Road, Dearborn, Michigan 48121 - -------------------------------------- -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 313-322-3000 ------------- Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ------ ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of March 31, 1996, the Registrant had outstanding 1,103,722,406 shares of Common Stock and 70,852,076 shares of Class B Stock. Page 1 of 20 Exhibit index located on sequential page number 17 Ford Motor Company and Subsidiaries HIGHLIGHTS ----------
First Quarter -------------------------- 1996 1995 -------- -------- (unaudited) Worldwide vehicle unit sales of cars and trucks (in thousands) - - United States 940 1,087 - - Outside United States 698 683 ----- ----- Total 1,638 1,770 ===== ===== Sales and revenues (in millions) - - Automotive $29,333 $28,601 - - Financial Services 6,928 6,182 ------- ------- Total $36,261 $34,783 ======= ======= Net income (in millions) - - Automotive $ 142 $ 1,141 - - Financial Services 511 409 ------- ------- Total $ 653 $ 1,550 ======= ======= Capital expenditures (in millions) - - Automotive $ 1,789 $ 2,131 - - Financial Services 113 67 ------- ------- Total $ 1,902 $ 2,198 ======= ======= Stockholders' equity at March 31 - - Total (in millions) $24,540 $23,552 - - After-tax return on Common and Class B stockholders' equity 10.7% 30.9% Automotive cash, cash equivalents and marketable securities at March 31 (in millions) $12,937 $13,254 Automotive debt at March 31 (in millions) $ 7,175 $ 7,102 Automotive after-tax return on sales 0.5% 4.0% Shares of Common and Class B Stock (in millions) - - Average number outstanding 1,168 1,025 - - Number outstanding at March 31 1,175 1,027 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK AFTER PREFERRED STOCK DIVIDENDS Income $ 0.54 $ 1.44 Income assuming full dilution - - Automotive $ 0.11 $ 0.94 - - Financial Services 0.42 0.34 ------- ------- Total $ 0.53 $ 1.28 ======= ======= Cash dividends $ 0.35 $ 0.26
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Ford Motor Company and Subsidiaries VEHICLE UNIT SALES ------------------ For the Periods Ended March 31, 1996 and 1995 (in thousands) First Quarter ----------------------- 1996 1995 ------- ------- (unaudited) North America United States Cars 378 509 Trucks 562 578 ----- ----- Total United States 940 1,087 Canada 50 65 Mexico 12 11 ----- ----- Total North America 1,002 1,163 Europe Germany 118 118 Britain 118 104 Italy 56 52 France 51 44 Spain 48 48 Other countries 84 77 ----- ----- Total Europe 475 443 Other international Brazil 47 62 Australia 32 31 Taiwan 31 28 Japan 16 16 Argentina 16 10 Other countries 19 17 ----- ----- Total other international 161 164 ----- ----- Total worldwide vehicle unit sales 1,638 1,770 ===== =====
Vehicle unit sales 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. -3-
Part I. Financial Information ------------------------------ Item 1. Financial Statements - ----------------------------- Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME -------------------------------- For the Periods Ended March 31, 1996 and 1995 (in millions) First Qurter ------------------------ 1996 1995 -------- -------- (unaudited) AUTOMOTIVE Sales $29,333 $28,601 Costs and expenses (Note 2) Costs of sales 27,546 25,431 Selling, administrative and other expenses 1,472 1,388 ------- ------- Total costs and expenses 29,018 26,819 Operating income 315 1,782 Interest income 184 207 Interest expense 172 166 ------- ------- Net interest income 12 41 Equity in net (loss)/income of affiliated companies (52) 20 Net expense from transactions with Financial Services (20) (23) ------- ------- Income before income taxes - Automotive 255 1,820 FINANCIAL SERVICES Revenues 6,928 6,182 Costs and expenses Interest expense 2,421 2,167 Depreciation 1,691 1,521 Operating and other expenses 1,428 1,336 Provision for credit and insurance losses 576 422 ------- ------- Total costs and expenses 6,116 5,446 Net revenue from transactions with Automotive 20 23 ------- ------- Income before income taxes - Financial Services 832 759 ------- ------- TOTAL COMPANY Income before income taxes 1,087 2,579 Provision for income taxes 413 988 ------- ------- Income before minority interests 674 1,591 Minority interests in net income of subsidiaries 21 41 ------- ------- Net income $ 653 $ 1,550 ======= ======= Income attributable to Common and Class B Stock after preferred stock dividends $ 634 $ 1,478 Average number of shares of Common and Class B Stock outstanding 1,168 1,025 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Income $ 0.54 $ 1.44 Income assuming full dilution $ 0.53 $ 1.28 Cash dividends $ 0.35 $ 0.26
The accompanying notes are part of the financial statements. -4-
Ford Motor Company and Subsidiaries CONSOLIDATED BALANCE SHEET -------------------------- (in millions) March 31, December 31, 1996 1995 ------------ ------------ ASSETS (unaudited) Automotive Cash and cash equivalents $ 6,074 $ 5,750 Marketable securities 6,863 6,656 -------- -------- Total cash, cash equivalents and marketable securities 12,937 12,406 Receivables 3,463 3,321 Inventories (Note 3) 7,182 7,162 Deferred income taxes 2,952 2,709 Other current assets 2,206 1,483 Net current receivable from Financial Services 134 200 -------- -------- Total current assets 28,874 27,281 Equity in net assets of affiliated companies 2,157 2,248 Net property 31,446 31,273 Deferred income taxes 4,584 4,802 Other assets 7,285 7,168 -------- -------- Total Automotive assets 74,346 72,772 Financial Services Cash and cash equivalents 2,066 2,690 Investments in securities 4,470 4,553 Net receivables and lease investments 153,467 149,694 Other assets 13,655 13,574 -------- -------- Total Financial Services assets 173,658 170,511 -------- -------- Total assets $248,004 $243,283 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $ 11,635 $ 11,260 Other payables 1,704 1,976 Accrued liabilities 13,584 13,392 Income taxes payable 351 316 Debt payable within one year 1,676 1,832 -------- -------- Total current liabilities 28,950 28,776 Long-term debt 5,499 5,475 Other liabilities 27,631 25,677 Deferred income taxes 1,206 1,186 -------- -------- Total Automotive liabilities 63,286 61,114 Financial Services Payables 3,479 5,476 Debt 145,628 141,317 Deferred income taxes 4,123 3,831 Other liabilities and deferred income 6,133 6,116 Net payable to Automotive 134 200 -------- -------- Total Financial Services liabilities 159,497 156,940 Company-obligated mandatorily redeemable preferred securities of a subsidiary trust (aggregate principal amount of $632 million) 681 682 Stockholders' equity Capital stock Preferred Stock, par value $1.00 per share (aggregate liquidation preference of $833 million and $1,042 million) * * Common Stock, par value $1.00 per share (1,105 and 1,089 million shares issued) 1,105 1,089 Class B Stock, par value $1.00 per share (71 million shares issued) 71 71 Capital in excess of par value of stock 5,129 5,105 Foreign currency translation adjustments and other 322 594 Earnings retained for use in business 17,913 17,688 -------- -------- Total stockholders' equity 24,540 24,547 -------- -------- Total liabilities and stockholders' equity $248,004 $243,283 ======== ======== - - - - - - *Less than $1 million The accompanying notes are part of the financial statements.
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Ford Motor Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- For the Periods Ended March 31, 1996 and 1995 (in millions) First Quarter 1996 First Quarter 1995 ---------------------- ---------------------- Financial Financial Automotive Services Automotive Services ---------- --------- ---------- --------- (unaudited) (unaudited) Cash and cash equivalents at January 1 $ 5,750 $ 2,690 $ 4,481 $ 1,739 Cash flows from operating activities before securities trading 2,916 3,014 3,650 3,284 Net (purchases)/sales of trading securities (197) 281 4,289 324 ------- -------- ------- -------- Net cash flows from operating activities 2,719 3,295 7,939 3,608 Cash flows from investing activities Capital expenditures (1,789) (113) (2,131) (67) Acquisitions of receivables and lease investments - (28,164) - (23,988) Collections of receivables and lease investments - 20,949 - 15,839 Net acquisitions of daily rental vehicles - (989) - (781) Purchases of securities (10) (3,433) (18) (1,818) Sales and maturities of securities 0 3,217 9 1,337 Proceeds from sales of receivables - 1,775 - 0 Net investing activity with Financial Services (3) - (174) - Other (97) 209 (442) (127) ------- -------- ------- -------- Net cash used in investing activities (1,899) (6,549) (2,756) (9,605) Cash flows from financing activities Cash dividends (428) - (338) - Issuance of Common Stock 40 - 96 - Changes in short-term debt (158) 34 217 2,408 Proceeds from issuance of other debt 14 6,126 0 6,674 Principal payments on other debt (3) (3,462) (207) (3,239) Net financing activity with Automotive - 3 - 174 Other 1 43 6 190 ------- -------- ------- -------- Net cash (used in)/provided by financing activities (534) 2,744 (226) 6,207 Effect of exchange rate changes on cash (28) (48) 178 163 Net transactions with Automotive/Financial Services 66 (66) 317 (317) ------- -------- ------- -------- Net increase/(decrease) in cash and cash equivalents 324 (624) 5,452 56 ------- -------- ------- -------- Cash and cash equivalents at March 31 $ 6,074 $ 2,066 $ 9,933 $ 1,795 ======= ======== ======= ========
The accompanying notes are part of the financial statements. -6- 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, 1995. For purposes hereof, "Ford" or the "Company" means Ford Motor Company and its majority owned subsidiaries unless the context requires otherwise. Certain amounts for prior periods have been reclassified. 2. Selected Automotive costs and expenses are summarized as follows (in millions): First Quarter ---------------------------- 1996 1995 ---------- ---------- Depreciation $636 $589 Amortization 764 712 3. Automotive inventories are summarized as follows (in millions): March 31, December 31, 1996 1995 ------------ ------------ Raw materials, work in process and supplies $3,564 $3,717 Finished products 3,618 3,445 ------ ------- Total inventories $7,182 $7,162 ====== ======= U.S. inventories $2,902 $2,662 -7- Coopers & Lybrand L.L.P. letterhead REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders Ford Motor Company We have reviewed the consolidated balance sheet of Ford Motor Company and Subsidiaries at March 31, 1996 and the related consolidated statement of income and condensed consolidated statement of cash flows for the periods set forth in the Ford Motor Company Quarterly Report on Form 10-Q for the quarter ended March 31, 1996. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet at December 31, 1995 and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated January 26, 1996, we expressed an unqualified opinion on those consolidated financial statements. /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Detroit, Michigan April 15, 1996 -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ---------------------------------------------------------- RESULTS OF OPERATIONS: FIRST QUARTER 1996 COMPARED WITH FIRST QUARTER 1995 Overview - -------- Ford Motor Company earned $653 million, or $0.54 per share of Common and Class B Stock, in the first quarter of 1996. This compares with $1,550 million, or $1.44 per share, in the first quarter of 1995. Fully diluted earnings per share were $0.53 in the first quarter of 1996, compared with $1.28 a year ago. The Company's worldwide sales and revenues were $36.3 billion, up $1.5 billion from a year ago. Vehicle unit sales of cars and trucks were 1,638,000, down 132,000 units or 7%. Stockholders' equity was $24.5 billion at March 31, 1996, about equal to December 31, 1995. Automotive Operations - --------------------- Ford's worldwide Automotive operations earned $142 million in the first quarter of 1996 on sales of $29.3 billion, compared with $1,141 million in the first quarter of 1995 on sales of $28.6 billion. Overall, the decline reflected lower unit volume from dealer inventory rebalancing, costs associated with introducing high volume new products in North America and Europe, and lower results in Brazil. In the U.S., Automotive operations earned $48 million in the first quarter of 1996 on sales of $18.7 billion, compared with $825 million a year ago on sales of $19.6 billion. The decline in earnings was explained by lower unit volume (reflecting dealer inventory rebalancing) and costs associated with introducing high volume new products (the F-150 pickup truck, Taurus and Sable); cost efficiencies were a partial offset. U.S. Automotive after- tax return on sales was 0.3% in the first quarter of 1996, down 3.9 points from a year ago. In the first quarter of 1996, the seasonally-adjusted annual selling rate for the U.S. car and truck industry was 15.7 million units, compared with 15.2 million units in the first quarter of 1995. The Company expects U.S. car and truck industry sales to total 15.4 million units in the full year, compared with 15.1 million units in 1995. Ford's car share was 21.4% in the first quarter of 1996, down 9/10 of a point from the first quarter a year ago, but up half a point from full year 1995. Ford's truck share was 31.4%, down 9/10 of a point from a year ago, and down half a point from full year 1995. Ford's combined car and truck market share was 25.8%, down 8/10 of a point from a year ago, but up 2/10 of a point from full year 1995. Outside the U.S., Automotive operations earned $94 million in the first quarter of 1996 on sales of $10.6 billion, compared with $316 million a year ago on sales of $9 billion. The decline reflected primarily lower results in Brazil and Europe. European Automotive operations earned $73 million in the first quarter of 1996, compared with $165 million in the first quarter of 1995. The decline reflected primarily costs associated with introducing the all-new Fiesta. In the first quarter of 1996, the seasonally-adjusted annual selling rate for the European car and truck industry was 14.2 million units, compared with 13.4 million units in the first quarter of 1995. The Company expects European car and truck industry sales to total 13.8 million units in the full year, compared with 13.4 million units in 1995. Ford's car share was 12% in the first quarter of 1996, down 1/10 of a point from the first quarter a year ago, but up 1/10 of a point from full year 1995. Ford's truck share was 13.2%, down 2.4 points from a year ago, and down 1.6 points from full year 1995. Ford's combined car and truck market share was 12.2%, down 3/10 of a point from a year ago, and down 1/10 of a point from full year 1995. -9- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) - ---------------------------------------------------------- Outside the U.S. and Europe, Automotive operations earned $21 million in the first quarter of 1996, compared with $151 million a year ago. The decrease reflected primarily unfavorable results for operations in Brazil, which continue to be affected by the lack of a domestically produced small car. The Company has reestablished manufacturing capacity in Brazil for small cars and plans to introduce a version of the Ford Fiesta in the second quarter of 1996, which should assist in improving Ford's performance in Brazil in the second half of 1996. Financial Services Operations - ----------------------------- The Company's Financial Services operations earned a record $511 million in the first quarter of 1996, compared with $409 million in the first quarter of 1995. The improvement reflected record earnings at The Associates and USL Capital, higher earnings at Ford Credit, and the elimination of dividend payments to holders of Ford Holdings' voting preferred stock (see below). Ford Credit's consolidated net income was $293 million in the first quarter of 1996, compared with $288 million a year ago. The increase reflected higher levels of earning assets and improved net interest margins, offset partially by higher credit losses. Depreciation costs increased as a result of continued growth in operating leases; the related lease revenues more than offset the increased depreciation. Ford Credit's results in the first quarter of 1996 included $49 million from equity in the net income of affiliated companies, primarily Ford Holdings, compared with $59 million a year ago. International operations managed by Ford Credit, but not included in its consolidated results, earned $68 million in the first quarter of 1996, compared with $65 million a year ago. The Associates, including its international affiliates, earned a record $192 million in the first quarter of 1996, compared with $168 million a year ago. The increase reflected higher levels of earning assets, improved net interest margins and improved operating cost performance, offset partially by higher credit losses. USL Capital earned a record $40 million in the first quarter of 1996, compared with $26 million a year ago. The increase reflected higher gains on asset sales and higher levels of earning assets. Hertz earned $9 million, up $9 million from a year ago. American Road earned $5 million, equal to a year ago. Financial Services Reorganization - Recent Developments - ------------------------------------------------------- In late 1995, Ford began a reorganization of its Financial Services group in order to align more closely under a single subsidiary legal ownership of the Financial Services affiliates with management responsibility for such affiliates. As part of the reorganization, Ford Holdings formed Ford FSG, Inc. ("FFSGI") to own primarily all of the Financial Services affiliates. In December 1995, Ford Holdings merged with Ford Holdings Capital Corporation, a wholly owned subsidiary of Ford Holdings, which resulted in the cancellation of all of the voting preferred stock of Ford Holdings. At the time, 55% of the common stock of Ford Holdings was owned by Ford and 45% was owned by Ford Credit. After the formation of FFSGI, Ford Holdings contributed its interest in The Associates to FFSGI in exchange for 100% of the common stock of FFSGI and the assumption by FFSGI of certain debt of Ford Holdings. Thereafter, Ford contributed to FFSGI all of its interest in Ford Credit Europe. In exchange for this contribution, Ford received a class of common stock of FFSGI that has controlling voting power of FFSGI but otherwise is equal to all other common stock of FFSGI as to the payment of dividends, etc. (the "Class F Stock"). -10- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) - ---------------------------------------------------------- In February 1996, substantially all of the shares of Ford Holdings' common stock owned by Ford Credit were repurchased by Ford Holdings in exchange for the issuance of a promissory note by Ford Holdings. Accordingly, Ford Credit's results in the first quarter of 1996 included the equity in the net income of Ford Holdings through February 1996. Thereafter, in February 1996, Ford contributed to FFSGI all of its interest in Ford Credit in exchange for additional shares of Class F Stock of FFSGI. Also, in March 1996, Ford Holdings contributed American Road to FFSGI, which in turn contributed it to Ford Credit. Accordingly, the assets and liabilities of American Road were included in Ford Credit's consolidated balance sheet at March 31, 1996; beginning April 1, 1996, the results of operations and cash flows of American Road will be included in Ford Credit's consolidated statements of income and cash flows. In addition, in May 1996, Ford contributed to FFSGI certain of its international Financial Services affiliates managed by Ford Credit in exchange for additional stock of FFSGI. The percentage of economic interests of FFSGI held by Ford and Ford Holdings are based upon the relative value of the entities contributed to FFSGI by Ford and Ford Holdings. Currently, those percentages are approximately 80% for Ford and 20% for Ford Holdings. In early May 1996, The Associates completed an initial public offering of its common stock representing a 19.3% economic interest in The Associates (the "IPO"). Substantially all of the net proceeds from the IPO were used to repay indebtedness of The Associates, which was incurred to repay an intercompany debt owed to FFSGI in the amount of $1.75 billion. Prior to the completion of the IPO, Ford contributed to The Associates certain international affiliates owned by Ford but managed by The Associates. The Company expects to recognize a gain in the second quarter from the IPO. As announced by Ford in the fourth quarter of 1995, Ford is investigating the sale of all or part of USL Capital. LIQUIDITY AND CAPITAL RESOURCES Automotive Operations - --------------------- Automotive cash and marketable securities were $12.9 billion at March 31, 1996, up $531 million from December 31, 1995. The Company paid $428 million in cash dividends on its Common Stock, Class B Stock and Preferred Stock during the first three months of 1996. Automotive capital expenditures were $1.8 billion in the first three months of 1996, down $342 million from the same period a year ago. For the full year 1996, Ford's spending for product change is projected to be about the same compared with 1995; however, as a percent of sales, such spending is expected to be at lower levels. Automotive debt at March 31, 1996 totaled $7.2 billion, which was 22% of total capitalization (stockholders' equity and Automotive debt), compared with $7.3 billion, also 22% of total capitalization, at December 31, 1995. At March 31, 1996, Ford had long-term contractually committed global credit agreements under which $8.4 billion is available from various banks at least through June 30, 2000. The entire $8.4 billion may be used, at Ford's option, by any affiliate of Ford; however, any borrowing by an affiliate will be guaranteed by Ford. In addition, Ford has the ability to transfer on a nonguaranteed basis the entire $8.4 billion in varying portions to Ford Credit and Ford Credit Europe. These facilities were unused at March 31, 1996. In addition, at March 31, 1996, Ford Brasil Ltda. had $198 million of contractually committed credit facilities with various banks ranging in maturity from June 1996 to December 1996. None of these facilities were in use at March 31, 1996. -11- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) - ---------------------------------------------------------- Financial Services Operations - ----------------------------- Financial Services cash and investments in securities totaled $6.5 billion at March 31, 1996, down $707 million from December 31, 1995. Net receivables and lease investments were $153.5 billion at March 31, 1996, up $3.8 billion from December 31, 1995. The increase reflected continued growth in earning assets at Ford Credit and The Associates. Total debt was $145.6 billion at March 31, 1996, up $4.3 billion from December 31, 1995. The increase resulted from higher debt levels required to finance growth in earning assets at The Associates and Ford Credit, and to fund the payment to holders of Ford Holdings' voting preferred stock; the preferred stock was cancelled in December 1995. At March 31, 1996, Financial Services had a total of $49.3 billion of contractually committed support facilities. Of these facilities, $23.8 billion (excluding the $8.4 billion of Ford credit facilities) are contractually committed global credit agreements under which $19.8 billion and $4 billion are available to Ford Credit and Ford Credit Europe, respectively, from various banks; 62% and 75%, respectively, of such facilities are available through June 30, 2000. The entire $19.8 billion may be used, at Ford Credit's option, by any subsidiary of Ford Credit, and the entire $4 billion may be used, at Ford Credit Europe's option, by any subsidiary of Ford Credit Europe. Any borrowings by such subsidiaries will be guaranteed by Ford Credit or Ford Credit Europe, as the case may be. At March 31, 1996, none of the Ford Credit global facilities were in use; $709 million of the Ford Credit Europe global facilities were in use. Other than the global credit agreements, the remaining portion of the Financial Services support facilities at March 31, 1996 consisted of $22.8 billion of contractually committed support facilities available to various affiliates in the U.S. and $2.7 billion of contractually committed support facilities available to various affiliates outside the U.S.; at March 31, 1996, approximately $1.2 billion of these facilities were in use. OTHER FINANCIAL INFORMATION Coopers & Lybrand L.L.P., Ford's independent public accountants, performed a limited review of the financial data presented on pages 4 through 7 inclusive. The review was performed in accordance with standards for such reviews established by the American Institute of Certified Public Accountants. The review did not constitute an audit; accordingly, Coopers & Lybrand L.L.P. did not express an opinion on the aforementioned data. The financial data include any material adjustments or disclosures proposed by Coopers & Lybrand L.L.P. as a result of their review. -12- Part II. Other Information --------------------------- Item 1. Legal Proceedings - -------------------------- Product Matters - --------------- With respect to the lawsuits for damages arising out of automobile accidents where plaintiffs claim that the injuries resulted from (or were aggravated by) alleged defects in the occupant restraint systems in vehicle lines of various model years, referred to in the second paragraph on page 24 of the 10-K Report, the damages specified by the plaintiffs in these actions, including both actual and punitive damages, aggregated approximately $658 million at March 31, 1996. With respect to the lawsuits for damages involving the alleged propensity of Bronco II utility vehicles to roll over, referred to in the third paragraph on page 24 of the 10-K Report, the damages specified in these actions, including both actual and punitive damages, aggregated approximately $1.1 billion at March 31, 1996. With respect to the lawsuits for damages involving asbestos, referred to in the fifth paragraph on page 24 of the 10-K Report, the damages specified by plaintiffs in these actions, including both actual and punitive damages, aggregated approximately $1.7 billion at March 31, 1996. In most of the actions described in the foregoing paragraphs, no dollar amount of damages is specified or the specific amount referred to is only the jurisdictional minimum. It has been Ford's experience that in cases that allege a specific amount of damages in excess of the jurisdictional minimum, such amounts, on average, bear little relation to the actual amounts of damages paid by Ford in such cases, which generally are, on average, substantially less than the amounts originally claimed. Other Matters - ------------- With respect to the patent infringement lawsuit in federal court in Nevada in which an individual patent owner is seeking damages and an injunction for alleged infringement of four U.S. patents characterized as covering machine vision inspection technologies, including bar code reading, referred to in the second full paragraph on page 25 of the 10-K Report, on April 11, 1996, the district court judge issued an order adopting the magistrate judge's recommendation and granting Ford's motion to dismiss the case. The judge indicated that he will issue a separate opinion supporting the order and issue a judgment "in due course." With respect to the seven purported nationwide class action lawsuits involving an alleged defective ignition switch equipped on numerous Ford vehicle lines, referred to in the first paragraph on page 26 of the 10-K Report, an eighth such suit has been filed. With respect to the investigations by the Safety Administration and Transport Canada of ignition switch fires in certain Ford vehicles, referred to in the second paragraph on page 26 of the 10-K Report, Ford has agreed to notify owners of approximately 8.7 million 1988- 1993 model year vehicles (including 248,000 vehicles previously recalled in Canada) of a safety recall to replace the ignition switch equipped on such vehicles. Ford does not expect the aggregate cost of the recall to have a significant effect on 1996 results. -13- Item 5. Other Information - -------------------------- Governmental Standards - ---------------------- Mobile Source Emissions Control -- With respect to the discussion of California vehicle emission control standards on page 16 of the 10-K Report, the California Air Resources Board took action at its March 1996 board meeting approving the elimination of the "zero- emission vehicles" mandate until the 2003 model year. This will become final after submission and review by California's Office of Administrative Law. Motor Vehicle Fuel Economy -- With respect to the discussion of light truck corporate average fuel economy ("CAFE") on page 18 of the 10-K Report, the Safety Administration has established the referenced 20.7 miles per gallon CAFE standard for model years 1996 through 1998. Other Matters - ------------- Mazda Motor Corporation -- As announced on April 12, 1996, Ford has agreed to increase its investment in Mazda Motor Corporation ("Mazda") from its existing 24.5% ownership interest to a 33.4% ownership interest by purchasing from Mazda newly-issued shares of common stock of Mazda for an aggregate purchase price of approximately $500 million. In connection with this agreement, which is subject to governmental approvals, Mazda has agreed to coordinate more closely with Ford its strategies and plans, particularly in the areas of product development, manufacturing and distribution of vehicles, so as to improve the competitiveness and economies of scale of both companies. Henry Wallace, a former Ford executive and currently an executive vice president of Mazda, has been elected as Mazda's president effective in late June 1996. Ford and Mazda will remain separate companies with separate identities. Ford will not be responsible for any of Mazda's liabilities, debts or other obligations, and Mazda's operating results and financial position will not be consolidated with those of Ford; Mazda will continue to be reflected in Ford's consolidated financial statements on an equity basis. -14-
Supplemental Schedule Ford Motor Company CONDENSED FINANCIAL INFORMATION OF SUBSIDIARY --------------------------------------------- (in millions) March 31, December 31, Ford Capital B.V. 1996 1995 - ----------------- ------------ ------------ (unaudited) Current assets $1,448 $1,251 Noncurrent assets 4,635 4,662 ------ ------ Total assets $6,083 $5,913 ====== ====== Current liabilities $1,435 $ 626 Noncurrent liabilities 4,059 4,661 Minority interests in net assets of subsidiaries 19 22 Stockholder's equity 570 604 ------ ------ Total liabilities and stockholder's equity $6,083 $5,913 ====== ====== First Quarter First Quarter 1996 1995 ------------- ------------- (unaudited) Sales and other revenue $822 $656 Operating (loss)/income (3) 77 (Loss)/income before income taxes (17) 64 Net (loss)/income (29) 56
Ford Capital B.V., a wholly owned subsidiary of Ford Motor Company, was established primarily for the purpose of raising funds through the issuance of commercial paper and debt securities. Ford Capital B.V. also holds shares of the capital stock of Ford Nederland B.V., Ford Motor Company (Belgium) B.V., and Ford Motor Company A/S (Denmark). Substantially all of the assets of Ford Capital B.V., other than its ownership interests in subsidiaries, represent receivables from Ford Motor Company or its consolidated subsidiaries. -15- Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits Please refer to the Exhibit Index on page 17. (b) Reports on Form 8-K The Registrant filed the following Current Reports on Form 8-K during the quarter ended March 31, 1996: Current Report on Form 8-K dated January 31, 1996 included information relating to Ford's 1995 financial results. Current Report on Form 8-K dated February 12, 1996 included the consolidated financial statements of Ford and its subsidiaries for the year ended December 31, 1995. 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. FORD MOTOR COMPANY ------------------------------------- (Registrant) Date: May 13, 1996 By: /s/ D. R. Coulson ---------------------------------- D. R. Coulson Director of Accounting Ford Automotive Operations (principal accounting officer) -16- EXHIBIT INDEX -------------
Sequential Page Number Designation Description at Which Found - ----------- ----------------------------------------------------------- -------------- Exhibit 11 Ford Motor Company and Subsidiaries Computation of Primary 18 and Fully Diluted Earnings Per Share in Accordance with Opinion 15 of the Accounting Principles Board. Exhibit 12 Ford Motor Company and Subsidiaries Calculation of Ratio of 19 Earnings to Combined Fixed Charges and Preferred Stock Dividends. Exhibit 15 Letter of Coopers & Lybrand L.L.P., Independent Public 20 Accountants, dated May 10, 1996 relating to Financial Information.
-17- EX-11 2 Exhibit 11
Ford Motor Company and Subsidiaries COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE ----------------------------------------------------------- IN ACCORDANCE WITH OPINION 15 OF THE ACCOUNTING PRINCIPLES BOARD ---------------------------------------------------------------- First Quarter 1996 First Quarter 1995 -------------------------------- --------------------------------- Income Income Avg. Shares Attributable Avg. Shares Attributable of Common to Common of Common to Common and Class B and Class B Stock and Class B and Class B Stock Stock ----------------- Stock ----------------- Outstanding Total Share Outstanding Total Share ----------- ------ ----- ----------- ----- ----- (Mils.) (Mils.) (Mils.) (Mils.) Preliminary Earnings Per Share Calculation 1,168 $634 $0.54 1,025 $1,478 $1.44 I. Primary Earnings Per Share -------------------------- . Assuming exercise of options 44 34 . Assuming purchase of shares with proceeds of options (29) (20) . Assuming issuance of shares contingently issuable 2 2 . Uncommitted ESOP shares (4) (4) ----- ----- Net Common Stock Equivalents 13 12 ----- ----- Primary Earnings Per Share Calculation 1,181 $634 $0.54 a/ 1,037 $1,478 $1.43 a/ ===== ==== ===== ===== ====== ===== II. Fully Diluted Earnings Per Share -------------------------------- Primary Earnings Per Share Calculation 1,181 $634 $0.54 1,037 $1,478 $1.43 . Assuming conversion of convertible preferred stock 26 8 b/ 150 48 b/ . Reduction in shares assumed to be purchased with option proceeds c/ 4 1 ----- ---- ----- ------ Fully Diluted Earnings Per Share Calculation 1,211 $642 $0.53 1,188 $1,526 $1.28 ===== ==== ===== ===== ====== =====
- - - - - - a/ The effect of common stock equivalents and/or other dilutive securities was not material in this period; therefore, the amount presented on the income statement is the Preliminary Earnings Per Share Calculation. b/ Reflects the elimination of preferred dividends upon conversion. c/ Incremental effect of dividing assumed option proceeds by the ending price, rather than the average price, of Common Stock for each period when the ending price exceeds the average price. -18- EX-12 3 Exhibit 12 Ford Motor Company and Subsidiaries CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS ---------------------------------------------------------------------------------------- (in millions) First For the Years Ended December 31 Quarter --------------------------------------------------- 1996 1995 1994 1993 1992 1991 ------- ------- ------- ------- ------- ------- Earnings - -------- Income/(loss) before income taxes and cumulative effects of changes in accounting principles $1,087 $ 6,705 $ 8,789 $ 4,003 $ (127) $(2,587) Equity in net loss/(income) of affiliates plus dividends from affiliates 58 179 (182) (98) 26 69 Adjusted fixed charges a/ 2,718 10,556 8,122 7,648 8,113 9,360 ------ ------- ------- ------- ------ ------- Earnings $3,863 $17,440 $16,729 $11,553 $8,012 $ 6,842 ====== ======= ======= ======= ====== ======= Combined Fixed Charges and Preferred Stock Dividends - -------------------------- Interest expense b/ $2,607 $10,121 $ 7,787 $ 7,351 $7,987 $ 9,326 Interest portion of rental expense c/ 99 396 265 266 185 124 Preferred stock dividend requirements of majority owned subsidiaries and trusts d/ 14 199 160 115 77 56 ------ ------- ------- ------- ------ ------- Fixed charges 2,720 10,716 8,212 7,732 8,249 9,506 Ford preferred stock dividend requirements e/ 30 459 472 442 317 26 ------ ------- ------- ------- ------ ------- Total combined fixed charges and preferred stock dividends $2,750 $11,175 $ 8,684 $ 8,174 $8,566 $ 9,532 ====== ======= ======= ======= ====== ======= Ratios - ------ Ratio of earnings to fixed charges 1.4 1.6 2.0 1.5 f/ g/ Ratio of earnings to combined fixed charges and preferred stock dividends 1.4 1.6 1.9 1.4 h/ i/
- - - - - - a/ Fixed charges, as shown below, adjusted to exclude the amount of interest capitalized during the period and preferred stock dividend requirements of majority owned subsidiaries and trusts. b/ Includes interest, whether expensed or capitalized, and amortization of debt expense and discount or premium relating to any indebtedness. c/ One-third of all rental expense is deemed to be interest. d/ Preferred stock dividend requirements of Ford Holdings, Inc. (applicable for 1991 through 1995) increased to an amount representing the pre-tax earnings which would be required to cover such dividend requirements based on Ford's effective income tax rates for all periods except 1992. The U.S. statutory rate of 34% was used for 1992. e/ Preferred stock dividend requirements of Ford Motor Company increased to an amount representing the pre-tax earnings which would be required to cover such dividend requirements based on Ford's effective income tax rates for all periods except 1992. The U.S. statutory rate of 34% was used for 1992. f/ Earnings inadequate to cover fixed charges by $237 million. g/ Earnings inadequate to cover fixed charges by $2,664 million. h/ Earnings inadequate to cover combined fixed charges and preferred stock dividends by $554 million. i/ Earnings inadequate to cover combined fixed charges and preferred stock dividends by $2,690 million. -19- EX-15 4 EXHIBIT 15 Coopers & Lybrand L.L.P. letterhead Ford Motor Company The American Road Dearborn, Michigan Re: Ford Motor Company Registration Statement Nos. 2-95018, 2-95020, 33-9722, 33-14951, 33-19036, 33-36043, 33-36061, 33-39402, 33-50087, 33-50194, 33-50238, 33-54304, 33-54344, 33-54348, 33-54275, 33-54283, 33-54735, 33-54737, 33-55847, 33-56785, 33-58255, 33-58785, 33-58861, 33-61107, 33-62227, 33-64605, 33-64607, 333-02401 and 333-02735 on Form S-8; 2-42133, 33-32641, 33-40638, 33-43085, 33-55474, 33-55171 and 33-64247 on Form S-3 We are aware that our report dated April 15, 1996 accompanying the unaudited interim financial information of Ford Motor Company for the periods ended March 31, 1996 and 1995 and included in the Ford Motor Company Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 will be incorporated by reference in the Registration Statements. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the Registration Statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Detroit, Michigan May 10, 1996 -----END PRIVACY-ENHANCED MESSAGE-----