Ford Beats 1st Quarter Estimates With Net Profit of $896 Million
-- First quarter net income of $896 million, or 45 cents a share, exceeds First Call consensus estimate of 22 cents a share. -- Automotive cash, marketable securities and VEBA assets of $26.6 billion - up $1.3 billion from Dec. 31. -- On track to earn 70 cents a share in 2003 and to meet Revitalization Plan targets. -- Corporate U.S. market share up 0.5 points year-over-year to 21.2 percent in the first quarter. -- Pre-tax worldwide automotive earnings of $659 million.
DEARBORN, Mich., April 16 -- Ford Motor Company today reported net income of $896 million, or 45 cents a share, for the first quarter of 2003.
This compares with a net loss of $1.1 billion, or 61 cents a share, in the first quarter of 2002. The loss from continuing operations in the first quarter of 2002 was $80 million, or 5 cents a share.
Ford Motor Company's income before taxes was $1.3 billion during the first quarter of 2003, compared with a $27 million loss in the first quarter of 2002.
Ford's first quarter revenue rose to $40.9 billion, from $39.5 billion during last year's first quarter. Worldwide vehicle unit sales in the 2003 first quarter were 1,726,000, up 3 percent from 1,675,000 a year ago.
"Our first quarter performance demonstrates that the acceleration of our cost-cutting actions and the management team's focus on improving our core business are making a difference," said Bill Ford, chairman and CEO. "Our overall financial results continue to improve, our first quarter U.S. market share is up from last year, and we are gaining momentum on most other fronts. In addition, we launched the new Jaguar XJ and are in the process of launching several other exciting new products, such as the all-new Ford Focus C-MAX in Europe and the highly anticipated Ford F-150 pickup truck in the U.S."
During the first quarter, Ford's corporate U.S. market share was 21.2 percent. Ford's corporate U.S. market share has improved since the first quarter of 2002, when it was 20.7 percent.
New Segment Reporting
As disclosed in the company's 2002 10-K report, beginning with the 2003 first quarter, Ford is expanding the number of operating segments by reporting two segments within its Automotive sector -- North America and International.
The North America Automotive segment includes the sale of Ford, Lincoln and Mercury cars and trucks in the U.S., Canada and Mexico, and the associated costs to design, develop, manufacture and service these vehicles. The International Automotive segment includes the sale of Ford brand vehicles outside of North America and the sale of Premier Automotive Group brand vehicles (i.e., Aston Martin, Jaguar, Land Rover and Volvo) throughout the world (including North America), together with the associated costs to design, develop, manufacture and service these vehicles. Ford is providing separate results for the business units within the International Automotive segment (i.e., Ford-brand Europe, Ford-brand South America, Ford-brand Asia Pacific and the Premier Automotive Group).
Previously, the company reported Automotive financial results on a geographic/legal entity basis. The new segment reporting will be on a business-unit basis consistent with the way these two segments are managed. Costs for each segment and business unit within each segment will reflect absolute corporate costs, eliminating the effect of transfer prices for vehicles, components and product development that were previously reflected in geographic results. Net interest expense and results of other non-core Automotive businesses will be reported centrally; these were previously included in geographic results.
These changes are being made to reflect organizational changes resulting from the appointment of executive vice presidents to lead North American and International Automotive Operations.
AUTOMOTIVE SECTOR
On a pre-tax basis, Ford's automotive sector earned $659 million during the first quarter of 2003, compared with a loss of $370 million a year ago.
Worldwide automotive revenue improved by $2 billion from $32.2 billion during the first quarter of 2002 to $34.2 billion in the first quarter of 2003.
Automotive cash, marketable securities and Voluntary Employee Beneficiary Association (VEBA) assets at March 31 rose to $26.6 billion, up from $25.3 billion at the end of 2002, more than accounted for by positive operating cash flow and the effect of tax refunds.
NORTH AMERICA AUTOMOTIVE
North America Automotive earned $1.2 billion on a pre-tax basis, compared with a pre-tax profit of $465 million in the first quarter of 2002. The improvement reflected strong cost performance, favorable mix and higher market share, offset partially by lower industry volume.
North America Automotive revenue in the first quarter of 2003 rose to $22.2 billion, compared with $21.5 billion in the first quarter of 2002.
INTERNATIONAL AUTOMOTIVE
The 2003 first-quarter pre-tax loss for International Automotive narrowed to $353 million, from a loss of $469 million during the first quarter of 2002.
First-quarter 2003 revenue for International Automotive increased to $12.0 billion, compared with $10.4 billion during the first quarter last year.
Ford-brand Europe: Ford-brand Europe incurred a pre-tax loss of $249 million in the first quarter of 2003, compared with a pre-tax loss of $268 million during the same period a year ago. The improvement is explained by better cost performance, offset largely by lower net pricing. Ford-brand Europe's revenue in the first quarter rose to $5.0 billion, compared with $4.1 billion during the first quarter of 2002.
Ford-brand South America: The pre-tax loss for Ford-brand South America narrowed to $31 million during the first quarter, from a loss of $85 million during the first quarter a year ago. The improvement reflected higher market share, continued cost reductions and higher net pricing, partially offset by lower industry volume. Revenue in South America was $330 million in the first quarter, compared with $396 million in the first quarter of 2002. The impact of a weaker Brazilian Real more than offset improved unit volume, resulting in the decline in revenue.
Ford-brand Asia-Pacific: During the first quarter of 2003, Ford-brand Asia-Pacific incurred a pre-tax loss of $26 million, compared with a loss of $39 million in the 2002 first quarter. The improvement reflected higher volume from the introduction of new products, primarily the all-new Falcon in Australia. Revenue improved to $1.3 billion, compared with $1.0 billion during the first quarter of 2002.
Premier Automotive Group (PAG): PAG reported a pre-tax loss of $88 million in the first quarter of 2003, compared with a pre-tax loss of $70 million during the first quarter of 2002. The decline primarily reflected lower net pricing, as well as lower volume associated with the production ramp-up of the all-new Jaguar XJ, largely offset by improved mix resulting from the all-new XC90 at Volvo and Range Rover at Land Rover. First-quarter revenue for PAG rose to $5.4 billion, from $4.9 billion a year ago.
FORD CREDIT
Ford Motor Credit Company reported net income of $442 million in the first quarter of 2003, up $186 million from earnings of $256 million in the same period a year ago. The increase primarily reflected a lower provision for credit losses and the net favorable impact of receivables sales, offset partially by the unfavorable impact of a lower level of managed receivables.
On a pre-tax basis, Ford Credit earned $727 million in the first quarter, compared with $396 million in the first quarter of 2002.
HERTZ
Hertz reported a pre-tax loss of $59 million in the first quarter, the same as the pre-tax loss a year ago.
OUTLOOK
"The U.S. economy is certainly continuing to feel the effects of the geopolitical uncertainty we have faced over the last several months," said Allan Gilmour, vice chairman and chief financial officer. "Despite consumer confidence being down so significantly, Ford Motor Company has earned a profit in the automotive sector, improved revenue, accelerated cost reductions and generated positive operating cash flow, showing that we are staying clearly focused on our goals. Our task is to continue to deliver on our objectives throughout the remainder of 2003 and beyond."
Ford expects to earn about 10 cents a share in the second quarter of 2003, which would result in first-half 2003 earnings of about 55 cents a share.
Investors and media can hear a review of first quarter results by Allan Gilmour, vice chairman and chief financial officer, via conference call at 703-871-3025 or on the Internet at http://www.shareholder.ford.com/ . Supporting presentation material will be available at the same Internet address. The presentation will begin at 8:30 a.m. EDT, April 16. The company will also conduct a conference call at 1:00 p.m. EDT, April 16, with Don Leclair, vice president and controller to address additional questions about the company's segment reporting changes. The call can be accessed by dialing 703-871-3025. A listen-only web cast will also be available on the Internet at www.shareholder.ford.com .
Ford Motor Company, headquartered in Dearborn, Michigan, is the world's second largest automaker, with approximately 335,000 employees in 200 markets on six continents. Its automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Credit, Quality Care and Hertz. Ford Motor Company will observe its 100th anniversary on June 16, 2003.
Statements included or incorporated by reference herein may constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
-- greater price competition in the U.S. and Europe resulting from currency fluctuations, industry overcapacity or other factors;
-- a significant decline in industry sales, particularly in the U.S. or Europe, resulting from slowing economic growth, geopolitical events or other factors;
-- lower-than-anticipated market acceptance of new or existing products;
-- work stoppages at key Ford or supplier facilities or other interruptions of supplies;
-- the discovery of defects in vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs;
-- increased safety, emissions, fuel economy or other regulation resulting in higher costs and/or sales restrictions;
-- unusual or significant litigation or governmental investigations arising out of alleged defects in our products or otherwise;
-- worse-than-assumed economic and demographic experience for our post- retirement benefit plans (e.g., investment returns, interest rates, health care cost trends, benefit improvements);
-- currency or commodity price fluctuations; -- a market shift from truck sales in the U.S.; -- economic difficulties in South America or Asia; -- reduced availability of or higher prices for fuel; -- labor or other constraints on our ability to restructure our business;
-- a change in our requirements under long-term supply arrangements under which we are obligated to purchase minimum quantities or pay minimum amounts;
-- a further credit rating downgrade;
-- inability to access debt or securitization markets around the world at competitive rates or in sufficient amounts;
-- higher-than-expected credit losses; -- lower-than-anticipated residual values for leased vehicles;
-- increased price competition in the rental car industry and/or a general decline in business or leisure travel due to terrorist attacks, act of war or measures taken by governments in response thereto that negatively affect the travel industry; and
-- our inability to implement the Revitalization Plan.
Ford Motor Company and Subsidiaries
SECTOR STATEMENT OF INCOME
For the Periods Ended March 31, 2003 and 2002
(in millions, except per share amounts)
First Quarter
2003 2002
(unaudited)
AUTOMOTIVE
Sales $34,200 $32,171
Costs and expenses
Cost of sales 31,084 29,923
Selling, administrative and other expenses 2,313 2,308
Total costs and expenses 33,397 32,231
Operating income/(loss) 803 (60)
Interest income 148 112
Interest expense 313 361
Net interest income/(expense) (165) (249)
Equity in net income/(loss)
of affiliated companies 21 (61)
Income/(loss) before income taxes - Automotive 659 (370)
FINANCIAL SERVICES
Revenues 6,688 7,290
Costs and expenses
Interest expense 1,644 1,988
Depreciation 2,567 2,561
Operating and other expenses 1,206 1,438
Provision for credit and insurance losses 593 960
Total costs and expenses 6,010 6,947
Income/(loss) before income taxes -
Financial Services 678 343
TOTAL COMPANY
Income/(loss) before income taxes 1,337 (27)
Provision for/(benefit from) income taxes 336 (20)
Income/(loss) before minority interests 1,001 (7)
Minority interests in net income
of subsidiaries 102 73
Income/(loss) from continuing operations 899 (80)
Income/(loss) from discontinued/
held-for-sale operations (3) (12)
Cumulative effect of change in
accounting principle - (1,002)
Net income/(loss) $896 $(1,094)
Income/(loss) attributable to Common
and Class B Stock after preferred
stock dividends $896 $(1,098)
Average number of shares of Common
and Class B Stock outstanding 1,832 1,807
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic income/(loss)
Income/(loss) from continuing operations $0.49 $(0.05)
Income/(loss) from discontinued/
held-for-sale operations - (0.01)
Cumulative effect of change in
accounting principle - (0.55)
Net income/(loss) $0.49 $(0.61)
Diluted income/(loss)
Income/(loss) from continuing operations $0.45 $(0.05)
Income/(loss) from discontinued/
held-for-sale operations - (0.01)
Cumulative effect of change in
accounting principle - (0.55)
Net income/(loss) $0.45 $(0.61)
Cash dividends $0.10 $0.10
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended March 31, 2003 and 2002
(in millions, except per share amounts)
First Quarter
2003 2002
(unaudited)
Sales and revenues
Sales $34,200 $32,171
Revenues and Automotive interest income 6,833 7,402
Total sales and revenues 41,033 39,573
Costs and expenses
Cost of sales 31,084 29,923
Selling, administrative and other expenses 6,086 6,309
Interest expense 1,957 2,349
Provision for credit and insurance losses 593 960
Total costs and expenses 39,720 39,541
Equity in net income/(loss)
of affiliated companies 24 (59)
Income/(loss) before income taxes 1,337 (27)
Provision for/(benefit from) income taxes 336 (20)
Income/(loss) before minority interests 1,001 (7)
Minority interests in net income/
(loss) of subsidiaries 102 73
Income/(loss) from continuing operations 899 (80)
Income/(loss) from discontinued/
held-for-sale operations (3) (12)
Cumulative effect of change in
accounting principle - (1,002)
Net income/(loss) $896 $(1,094)
Income/(loss) attributable to Common and
Class B Stock after Preferred Stock dividends $896 $(1,098)
Average number of shares of Common and Class B
Stock outstanding 1,832 1,807
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic income/(loss)
Income/(loss) from continuing operations $0.49 $(0.05)
Income/(loss) from discontinued/
held-for-sale operations - (0.01)
Cumulative effect of change in
accounting principle - (0.55)
Net income/(loss) $0.49 $(0.61)
Diluted income/(loss)
Income/(loss) from continuing operations $0.45 $(0.05)
Income/(loss) from discontinued/
held-for-sale operations - (0.01)
Cumulative effect of change in
accounting principle - (0.55)
Net income/(loss) $0.45 $(0.61)
Cash dividends $0.10 $0.10
Ford Motor Company and Subsidiaries
SECTOR BALANCE SHEET
(in millions)
March 31, December 31,
2003 2002
(unaudited)
ASSETS
Automotive
Cash and cash equivalents $7,138 $5,180
Marketable securities 17,315 17,464
Total cash and marketable securities 24,453 22,644
Receivables 2,296 2,065
Inventories 7,953 6,980
Deferred income taxes 3,389 3,462
Other current assets 5,112 4,551
Current receivable from Financial Services 1,366 1,062
Total current assets 44,569 40,764
Equity in net assets of affiliated companies 2,479 2,470
Net property 36,556 36,364
Deferred income taxes 11,791 11,694
Goodwill 4,921 4,805
Other intangible assets 803 812
Assets of discontinued/
held-for-sale operations 92 98
Other assets 11,536 10,783
Total Automotive assets 112,747 107,790
Financial Services
Cash and cash equivalents 12,099 7,070
Investments in securities 623 807
Finance receivables, net 92,765 97,030
Net investment in operating leases 37,540 40,055
Retained interest in sold receivables 18,092 17,618
Goodwill 756 752
Other intangible assets 246 248
Assets of discontinued/
held-for-sale operations - 2,406
Other assets 15,822 16,643
Receivable from Automotive 4,503 4,803
Total Financial Services assets 182,446 187,432
Total assets $295,193 $295,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $15,477 $14,606
Other payables 2,540 2,485
Accrued liabilities 29,734 27,644
Debt payable within one year 329 557
Total current liabilities 48,080 45,292
Long-term debt 13,643 13,607
Other liabilities 47,928 46,886
Deferred income taxes 231 303
Liabilities of discontinued/
held-for-sale operations 89 138
Payable to Financial Services 4,503 4,803
Total Automotive liabilities 114,474 111,029
Financial Services
Payables 2,463 1,890
Debt 145,038 148,058
Deferred income taxes 11,502 11,644
Other liabilities and deferred income 7,948 9,448
Liabilities of discontinued/
held-for-sale operations - 831
Payable to Automotive 1,366 1,062
Total Financial Services liabilities 168,317 172,933
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts
holding solely junior subordinated
debentures of the Company 5,670 5,670
Stockholders' equity
Capital stock
Common Stock, par value $0.01 per share
(1,837 million shares issued) 18 18
Class B Stock, par value $0.01 per share
(71 million shares issued) 1 1
Capital in excess of par value of stock 5,435 5,420
Accumulated other comprehensive income/(loss) (6,119) (6,531)
Treasury stock (1,974) (1,977)
Earnings retained for use in business 9,371 8,659
Total stockholders' equity 6,732 5,590
Total liabilities and
stockholders' equity $295,193 $295,222
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
March 31, December 31,
2003 2002
(unaudited)
ASSETS
Cash and cash equivalents $19,237 $12,250
Marketable securities 17,938 18,271
Receivables 2,296 2,065
Net investment in operating leases 37,540 40,055
Finance receivables, net 92,765 97,030
Retained interest in sold receivables 18,092 17,618
Inventories 7,953 6,980
Equity in net assets of affiliated companies 3,520 3,569
Net property 38,151 37,935
Deferred income taxes 15,204 15,213
Goodwill 5,677 5,557
Other intangible assets 1,049 1,060
Assets of discontinued/
held-for-sale operations 92 2,504
Other assets 29,810 29,250
Total assets $289,324 $289,357
LIABILITIES AND STOCKHOLDERS' EQUITY
Payables $20,480 $18,981
Accrued liabilities 27,276 25,088
Debt 159,010 162,222
Other liabilities and deferred income 55,697 56,276
Deferred income taxes 14,370 14,561
Liabilities of discontinued/
held-for-sale operations 89 969
Total liabilities 276,922 278,097
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts
holding solely junior subordinated
debentures of the Company 5,670 5,670
Stockholders' equity
Capital stock
Common Stock, par value $0.01 per share
(1,837 million shares issued) 18 18
Class B Stock, par value $0.01 per share
(71 million shares issued) 1 1
Capital in excess of par value of stock 5,435 5,420
Accumulated other comprehensive income/(loss) (6,119) (6,531)
Treasury stock (1,974) (1,977)
Earnings retained for use in business 9,371 8,659
Total stockholders' equity 6,732 5,590
Total liabilities and
stockholders' equity $289,324 $289,357
Ford Motor Company and Subsidiaries
CONDENSED SECTOR STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2003 and 2002
(in millions)
First Quarter 2003 First Quarter 2002
Financial Financial
Automotive Services Automotive Services
(unaudited) (unaudited)
Cash and cash
equivalents at
January 1 $5,180 $7,071 $4,064 $3,133
Cash flows from
operating activities
before securities
trading 2,953 4,661 2,333 3,746
Net sales/(purchases)
of trading securities 230 (40) (437) (25)
Net cash flows from
operating activities 3,183 4,621 1,896 3,721
Cash flows from
investing activities
Capital expenditures (1,416) (80) (1,536) (181)
Acquisitions of
receivables and
lease investments - (17,604) - (21,714)
Collections of
receivables and
lease investments - 10,749 - 14,855
Net acquisitions of
daily rental vehicles - (385) - (794)
Purchases of securities (566) (149) (537) (185)
Sales and maturities
of securities 474 207 452 139
Proceeds from sales of
receivables and
lease investments - 10,966 - 15,399
Proceeds from sale
of businesses - 157 - -
Net investing activity
with Financial Services 970 - (427) -
Cash paid for acquisitions (8) - (37) -
Other - 47 - 228
Net cash (used in)/
provided by investing
activities (546) 3,908 (2,085) 7,747
Cash flows from
financing activities
Cash dividends (183) - (184) -
Net purchases of
Common Stock (22) - (57) -
Proceeds from mandatorily
redeemable convertible
preferred securities - - 4,900 -
Changes in short-term debt (234) 2,424 (93) (6,729)
Proceeds from issuance
of other debt 90 3,862 107 9,456
Principal payments
on other debt (78) (10,640) (60) (10,233)
Repayment of debt from
discontinued operations - 1,421 - -
Net financing activity
with Automotive - (970) - 427
Other (3) 20 (5) 37
Net cash (used in)/
provided by
financing activities (430) (3,883) 4,608 (7,042)
Effect of exchange rate
changes on cash 55 78 (18) (31)
Net transactions with
Automotive/Financial
Services (304) 304 (411) 411
Net increase/(decrease)
in cash and cash
equivalents 1,958 5,028 3,990 4,806
Cash and cash equivalents
at March 31 $7,138 $12,099 $8,054 $7,939
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2003 and 2002
(in millions)
First Quarter
2003 2002
(unaudited)
Cash and cash equivalents at January 1 $12,251 $7,197
Cash flows from operating activities before
securities trading 7,614 6,079
Net sales/(purchases) of trading securities 190 (462)
Net cash flows from operating activities 7,804 5,617
Cash flows from investing activities
Capital expenditures (1,496) (1,717)
Acquisitions of receivables
and lease investments (17,604) (21,714)
Collections of receivables and
lease investments 10,749 14,855
Net acquisitions of daily rental vehicles (385) (794)
Purchases of securities (715) (722)
Sales and maturities of securities 681 591
Proceeds from sales of receivables
and lease investments 10,966 15,399
Proceeds from sale of businesses 157 -
Cash paid for acquisitions (8) (37)
Other 47 228
Net cash (used in)/provided by
investing activities 2,392 6,089
Cash flows from financing activities
Cash dividends (183) (184)
Net purchases of Common Stock (22) (57)
Proceeds from mandatorily redeemable
convertible preferred securities - 4,900
Changes in short-term debt 2,190 (6,822)
Proceeds from issuance of other debt 3,952 9,563
Principal payments on other debt (10,718) (10,293)
Repayment of debt from
discontinued operations 1,421 -
Other 17 32
Net cash (used in)/provided by
financing activities (3,343) (2,861)
Effect of exchange rate changes on cash 133 (49)
Net increase/(decrease) in cash
and cash equivalents 6,986 8,796
Cash and cash equivalents at March 31 $19,237 $15,993
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