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| F > SEC Filings for F > Form 10-Q on 8-May-2009 | All Recent SEC Filings |
8-May-2009
Quarterly Report
FIRST QUARTER RESULTS OF OPERATIONS
Our worldwide net loss attributable to Ford Motor Company was $1.4 billion or $0.60 per share of Common and Class B Stock in the first quarter of 2009, a decline of $1.5 billion from net income attributable to Ford Motor Company of $70 million or $0.03 per share of Common and Class B Stock in the first quarter of 2008.
Results by sector for the first quarter of 2009 and 2008 are shown below (in millions):
First Quarter
2009
Over/
(Under)
2009 2008 (a) 2008
Income/(Loss) before income taxes
Automotive sector $ (1,468 ) $ 222 $ (1,690 )
Financial Services sector (152 ) 64 (216 )
Total Company (1,620 ) 286 (1,906 )
Provision for/(Benefit from) income taxes (204 ) 95 (299 )
Income/(Loss) from continuing operations (1,416 ) 191 (1,607 )
Income/(Loss) from discontinued operations - 1 (1 )
Net income/(loss) (1,416 ) 192 (1,608 )
Less: Income/(loss) attributable to noncontrolling
interests (b) 11 122 (111 )
Net income/(loss) attributable to Ford Motor
Company (c) $ (1,427 ) $ 70 $ (1,497 )
__________
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(b) Formerly labeled "Minority interests in net income/(loss)," reflects new presentation under SFAS No. 160. Primarily related to Ford Europe's consolidated 41% owned affiliate, Ford Otosan. The pre-tax results for Ford Otosan were $40 million and $214 million in the first quarter of 2009 and 2008, respectively.
(c) Formerly labeled "Net income/(loss)," reflects new presentation under SFAS No. 160.
Benefit from income taxes includes the favorable impact of approximately $294 million in refunds of prior period tax and related interest.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Income/(Loss) before income taxes includes certain items ("special items") that we have grouped into "Personnel and Dealer-Related Items" and "Other Items" to provide useful information to investors about the nature of the special items. The first category includes items related to our efforts to match production capacity and cost structure to market demand and changing model mix and therefore helps investors track amounts related to those activities. The second category includes items that we do not generally consider to be indicative of our ongoing operating activities, and therefore allows investors analyzing our pre-tax results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.
The following table details first quarter 2009 and 2008 special items in each category by segment or business unit (in millions):
First Quarter - Income/(Loss)
Personnel and Dealer-Related Items: 2009 2008
Automotive Sector
Ford North America
Personnel-reduction programs $ (171 ) $ (324 )
Retiree health care and related charges (178 ) 11
U.S. dealer actions (primarily dealership impairments) (81 ) (108 )
Job Security Benefits 292 93
Total Ford North America (138 ) (328 )
Ford Europe
Personnel-reduction programs (5 ) (11 )
Volvo
Personnel-reduction programs (2 ) -
Ford Asia Pacific Africa
Personnel-reduction programs (7 ) (5 )
Total Personnel and Dealer-Related Items - Automotive sector (152 ) (344 )
Other Items:
Automotive Sector
Ford North America
Ballard restructuring/Other - (72 )
Volvo
Held-for-sale impairment and related costs (664 ) -
Other Automotive
Gain on debt securities exchanged for equity - 16
Gain on debt restructuring and related costs 1,270 -
Total Other Automotive 1,270 16
Jaguar Land Rover
Jaguar Land Rover operating profits for 2008/Other (2 ) 439
Held-for-sale impairment and related costs - (439 )
Total Jaguar Land Rover (2 ) -
Total Other Items - Automotive sector 604 (56 )
Financial Services Sector
DFO Partnership impairment (141 ) -
Gain on purchase of Ford Holdings debt securities 51 -
Total Other Items - Financial Services sector (90 ) -
Total $ 362 $ (400 )
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Included in Provision for/(Benefit from) income taxes are tax benefits of $3 million and tax expenses of $8 million for the first quarter of 2009 and 2008, respectively, that we consider to be special items.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
The discussion below of Automotive and Financial Services sector results of operations is on a pre-tax basis.
AUTOMOTIVE SECTOR
Results of Operations
Details by segment or business unit of Income/(Loss) before income taxes are
shown below for the first quarter of 2009 and 2008 (in millions), with Mazda and
Jaguar Land Rover separated out from "ongoing" subtotals:
First Quarter
2009
Over/
(Under)
2009 2008 2008
Ford North America * $ (775 ) $ (445 ) $ (330 )
Ford South America 63 257 (194 )
Ford Europe (555 ) 728 (1,283 )
Volvo (921 ) (151 ) (770 )
Ford Asia Pacific Africa (103 ) (4 ) (99 )
Total ongoing Automotive operations (2,291 ) 385 (2,676 )
Other Automotive 825 (212 ) 1,037
Total ongoing Automotive (1,466 ) 173 (1,639 )
Mazda - 49 (49 )
Jaguar Land Rover (2 ) - (2 )
Total Automotive sector $ (1,468 ) $ 222 $ (1,690 )
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* Includes the sales of Mazda6 by our consolidated subsidiary, AAI.
Details by segment of Automotive revenues ("sales") and wholesale unit volumes for the first quarter of 2009 and 2008 are shown below:
First Quarter
Sales (a) Wholesales (b)
(in billions) (in thousands)
2009 2009
Over/(Under) Over/(Under)
2009 2008 2008 2009 2008 2008
Ford North
America (c) $ 10.2 $ 17.1 $ (6.9 ) (41 )% 354 704 (350 ) (50 )%
Ford South
America 1.4 1.8 (0.4 ) (24 ) 93 92 1 1
Ford Europe 6.0 10.2 (4.2 ) (41 ) 343 500 (157 ) (31 )
Volvo 2.6 4.2 (1.6 ) (37 ) 69 106 (37 ) (35 )
Ford Asia
Pacific Africa
(d) 1.2 1.7 (0.5 ) (30 ) 114 129 (15 ) (12 )
Total ongoing
Automotive
operations 21.4 35.0 (13.6 ) (39 ) 973 1,531 (558 ) (36 )
Jaguar Land
Rover - 4.1 (4.1 ) (100 ) - 74 (74 ) (100 )
Total Automotive
sector $ 21.4 $ 39.1 $ (17.7 ) (45 ) 973 1,605 (632 ) (39 )
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(a) 2009 over/(under) 2008 sales percentages are computed using unrounded sales numbers.
(b) Wholesale unit volumes generally are reported on a where-sold basis, and include all Ford-badged units and units manufactured by Ford that are sold to other manufacturers, as well as units distributed for other manufacturers. Vehicles sold to daily rental car companies that are subject to a guaranteed repurchase option, as well as other sales of finished vehicles for which the recognition of revenue is deferred (e.g., consignments), are included in wholesale unit volumes.
(c) Includes sales of Mazda6 by our consolidated subsidiary, AAI.
(d) Included in wholesale unit volumes of Ford Asia Pacific Africa are Ford-badged vehicles sold in China and Malaysia by certain unconsolidated affiliates totaling about 51,000 and 55,000 units in the first quarters of 2009 and 2008, respectively. "Sales" above does not include revenue from these units.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
Details of Automotive sector market share for selected markets for the first
quarter of 2009 and 2008, along with the level of dealer stocks as of
March 31, 2009 and 2008, are shown below:
Dealer-Owned Stocks (a)
Market Share (in thousands)
2009 2009
Over/(Under) Over/(Under)
Market 2009 2008 2008 2009 2008 2008
United States (b) 13.9 % 15.0 % (1.1 ) pts. 410 565 (155 )
South America (b)
(c) 10.9 9.5 1.4 37 28 9
Europe (b) (d) 9.4 8.9 0.5 282 329 (47 )
Volvo - United
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(b) Includes only Ford and, in certain markets (primarily United States), Lincoln and Mercury brands.
(c) South America market share is based, in part, on estimated vehicle registrations for our six major markets (Argentina, Brazil, Chile, Colombia, Ecuador and Venezuela).
(d) Europe market share is based, in part, on estimated vehicle registrations for the 19 European markets we track (described in "Item 1. Business" of our 2008 Form 10-K Report).
(e) Asia Pacific Africa market share is based, in part, on estimated vehicle sales for our 12 major markets (Australia, China, Japan, India, Indonesia, Malaysia, New Zealand, Philippines, South Africa, Taiwan, Thailand and Vietnam).
(f) Dealer-owned stocks for Asia Pacific Africa include primarily Ford-brand vehicles as well as a small number of units distributed for other manufacturers.
Overall Automotive Sector
The decline in results primarily reflects unfavorable volume and mix ($3.5 billion), a held-for-sale impairment of Volvo in the first quarter 2009 (about $700 million), and the non-recurrence of mark-to-market adjustments for changes in exchange rates on intercompany loans and related loan hedges (about $300 million), offset partially by a gain on debt restructuring ($1.1 billion), favorable cost changes ($1 billion), and favorable net pricing (about $700 million). The favorable cost changes are more than explained by lower structural costs, offset partially by higher net product costs.
The decrease in revenues is more than explained by unfavorable volume, the non-recurrence of Jaguar Land Rover revenues, and unfavorable currency exchange rates.
The table below details our Automotive sector first quarter 2009 structural cost changes at constant volume, mix and exchange, excluding special items and discontinued operations (in billions):
2009 Better/(Worse)
Explanation of Structural Cost Changes Than 2008
Primarily hourly and salaried personnel
Manufacturing and reductions and efficiencies in our plants and
engineering processes $ 0.8
Overhead Primarily salaried personnel reductions 0.3
Primarily the effect of the UAW Retiree Health
Pension and OPEB Care VEBA agreement 0.3
Advertising & sales
promotions Primarily reduced costs 0.3
Primarily lower depreciation and amortization
related to the North America asset impairment at
Spending-related the end of second quarter 2008 0.2
Total $ 1.9
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Ford North America Segment. The decline in earnings is more than explained by unfavorable volume and mix (including a decline in industry volume and dealer stocks), offset partially by favorable cost changes, favorable net pricing, and favorable adjustment to reserves for Job Security Benefits. The favorable cost changes primarily reflect lower structural costs (including lower manufacturing and engineering, pension and OPEB, overhead, spending-related, and advertising and sales promotion costs), offset partially by higher net product costs (including higher product content and the non-recurrence of favorable mark-to-market adjustments on commodity hedges).
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Ford South America Segment. The decrease in earnings is more than explained by unfavorable changes in currency exchange rates and unfavorable cost changes, offset partially by favorable net pricing. The unfavorable cost changes are more than explained by higher net product costs.
Ford Europe Segment. The decline in results primarily reflects unfavorable volume and mix (including a decline in industry volume and dealer stocks), lower earnings due to lower volumes at our consolidated joint ventures, unfavorable cost changes, and unfavorable changes in currency exchange rates, offset partially by favorable net pricing. The unfavorable cost changes are explained by higher net product (including increased distressed supplier costs, the non-recurrence of favorable mark-to-market adjustments on commodity hedges, and higher product content), warranty (primarily the non-recurrence of warranty reserve changes), and freight costs, offset partially by lower structural costs (including lower manufacturing and engineering and advertising and sales promotion costs).
Volvo Segment. The decline in earnings is more than explained by a held-for-sale impairment in the first quarter of 2009 and unfavorable volume and mix, offset partially by favorable cost changes. The favorable cost changes are more than explained by lower structural costs (including lower manufacturing and engineering, advertising and sales promotion, and overhead costs). Beginning with the second quarter of 2009, we will cease depreciation of Volvo's long-lived assets reflecting the held-for-sale status of Volvo.
Ford Asia Pacific Africa Segment. The decline in earnings primarily reflects unfavorable volume and mix and unfavorable changes in currency exchange rates, offset partially by favorable cost changes. The favorable cost changes are more than explained by lower structural costs (including lower manufacturing and engineering, advertising and sales promotion, and spending related costs).
Other Automotive. The improvement in results is primarily explained by the gain on the secured term loan restructuring (discussed in more detail in "Liquidity and Capital Resources" and Note 5 of the Notes to the Financial Statements) and the gain on debt securities purchased. These gains were offset partially by the non-recurrence of mark-to-market adjustments for changes in exchange rates on intercompany loans and related loan hedges.
Mazda Segment. In the fourth quarter of 2008, we sold a significant portion of our investment in Mazda. Our remaining ownership interest is treated as marketable securities, with mark-to-market adjustments reported in Other Automotive.
Jaguar Land Rover Segment. During the second quarter of 2008, we sold our Jaguar Land Rover operations.
FINANCIAL SERVICES SECTOR
Results of Operations
Details of the Financial Services sector Revenues and Income/(Loss) before
income taxes for the first quarter of 2009 and 2008 are shown below:
First Quarter
Revenues Income/(Loss) Before Income Taxes
(in billions) (in millions)
2009 2009
Over/(Under) Over/(Under)
2009 2008 2008 2009 2008 2008
Ford Credit $ 3.3 $ 4.1 $ (0.8 ) $ (36 ) $ 32 $ (68 )
Other Financial Services 0.1 0.1 - (116 ) 32 (148 )
Total $ 3.4 $ 4.2 $ (0.8 ) $ (152 ) $ 64 $ (216 )
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Ford Credit
The decline in results primarily reflects lower volume mainly due to lower receivables (primarily reflecting lower industry volumes, lower dealer stocks, changes in currency exchange rates, and the impact of divestitures and alternative business arrangements) (about $280 million). The decline in results also reflects a higher provision for credit losses that is more than explained by higher repossessions, higher severity, lower recoveries, and higher wholesale and dealer loan losses in the United States and higher credit losses in Europe (about $60 million). Lower volume and higher provision for credit losses were offset partially by lower depreciation expense for leased vehicles and lower residual losses on vehicles returned in the first quarter of 2009 (about $150 million), and lower net losses related to market valuation adjustments to derivatives ($138 million). In addition, lower operating costs were offset partially by other expenses including restructuring costs.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
Results of Ford Credit's operations and unallocated risk management for the
first quarter of 2009 and 2008 are shown below:
First Quarter
2009 Over/
2009 2008 (Under) 2008
Income/(Loss) before income taxes
North America operations $ (45 ) $ 38 $ (83 )
International operations 33 156 (123 )
Unallocated risk management* (24 ) (162 ) 138
Income/(Loss) before income taxes (36 ) 32 (68 )
Provision for/(Benefit from) income taxes and Gain
on disposal of discontinued operations (23 ) 8 (31 )
Net income/(loss) $ (13 ) $ 24 $ (37 )
________
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The decline in results for Ford Credit's North America operations primarily reflects lower volume and a higher provision for credit losses, offset partially by lower depreciation expense for leased vehicles. The decrease in earnings for Ford Credit's international operations primarily reflects a higher provision for credit losses, changes in currency exchange rates, and lower volume. The change in unallocated risk management reflects lower net losses related to market valuation adjustments to derivatives primarily related to movements in interest rates.
Ford Credit's net finance receivables and net investment in operating leases are shown below (in billions):
2009
March 31, December 31, Over/(Under)
2009 2008 2008
Receivables - On-Balance Sheet
Finance receivables
Retail installment $ 61.3 $ 65.5 $ (4.2 )
Wholesale 22.8 27.7 (4.9 )
Other 2.7 2.8 (0.1 )
Unearned interest supplements (1.3 ) (1.3 ) -
Allowance for credit losses (1.5 ) (1.4 ) (0.1 )
Finance receivables, net 84.0 93.3 (9.3 )
Net investment in operating leases 20.2 22.5 (2.3 )
Total receivables - on-balance sheet (a)(b) $ 104.2 $ 115.8 $ (11.6 )
Memo:
Total receivables - managed (c) $ 106.0 $ 117.7 $ (11.7 )
Total receivables - serviced (d) 106.1 118.0 (11.9 )
__________
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(b) Includes allowance for credit losses of $1.7 billion at March 31, 2009 and December 31, 2008.
(c) Includes on-balance sheet receivables, excluding unearned interest supplements related to finance receivables of $1.3 billion at March 31, 2009 and December 31, 2008; and includes off-balance sheet retail receivables of about $500 million and about $600 million at March 31, 2009 and December 31, 2008, respectively.
(d) Includes managed receivables and receivables sold in whole-loan sale transactions where Ford Credit retains no interest, but which it continues to service of about $100 million and about $300 million at March 31, 2009 and December 31, 2008, respectively.
Receivables decreased from year-end 2008, primarily in North America and Europe, mainly due to lower industry volumes, lower dealer stocks, and the transition of Jaguar, Land Rover, and Mazda financing to other finance providers.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
The following table shows worldwide charge-offs (credit losses, net of
recoveries), for Ford Credit during the periods indicated. The
loss-to-receivables ratios, which equal charge-offs on an annualized basis
divided by the average amount of receivables outstanding for the period,
excluding the allowance for credit losses and unearned interest supplements
related to finance receivables, are shown below.
First Quarter
2009 2008 2009 Over/(Under) 2008
. . .
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