UNITED STATES 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 - ----- AND EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 --------------- 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) One American Road, Dearborn, Michigan 48126 ------------------------------------------------------------------------- (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, 2001, the Registrant had outstanding 1,758,725,872 shares of Common Stock and 70,852,076 shares of Class B Stock. Exhibit index located on sequential page number 22 -- -1-
<TABLE> <CAPTION> Ford Motor Company and Subsidiaries HIGHLIGHTS ---------- First Quarter ------------------------------- 2001 2000 -------------- -------------- <S> <C> <C> Worldwide vehicle unit sales of cars and trucks (in thousands) - - North America 1,104 1,312 - - Outside North America 701 602 ----- ----- Total 1,805 1,914 ===== ===== Sales and revenues (in millions) - - Automotive $34,650 $36,175 - - Financial Services 7,711 6,719 ------- ------- Total $42,361 $42,894 ======= ======= Net income (in millions) - - Automotive $ 689 $ 1,552 - - Financial Services 370 380 ------- ------- Income from continuing operations 1,059 1,932 - - Discontinued operation - 147 ------- ------- Total $ 1,059 $ 2,079 ======= ======= Capital expenditures (in millions) - - Automotive $ 1,357 $ 1,500 - - Financial Services 131 306 ------- ------- Total $ 1,488 $ 1,806 ======= ======= Automotive capital expenditures as a percentage of sales 3.9% 4.1% Stockholders' equity at March 31 - - Total (in millions) $16,069 $28,419 - - Annualized after-tax return on Common and Class B stockholders' equity 25.7% 27.7% Automotive net cash at March 31 (in millions) - - Cash and marketable securities $15,767 $22,848 - - Debt 12,036 10,753 ------- ------- Automotive net cash $ 3,731 $12,095 ======= ======= After-tax return on sales - - North American Automotive 3.0% 6.2% - - Total Automotive 2.0% 4.3% Shares of Common and Class B Stock (in millions) - - Average number outstanding 1,840 1,206 - - Number outstanding at March 31 1,830 1,205 Common Stock price (per share) - - High $ 31.37 $ 30.33 - - Low 23.75 22.12 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK AFTER PREFERRED STOCK DIVIDENDS Income assuming dilution - - Automotive $ 0.36 $ 1.27 - - Financial Services 0.20 0.31 ------- ------- Total continuing operations 0.56 1.58 - - Discontinued operation - 0.12 ------- ------- Total $ 0.56 $ 1.70 ======= ======= Cash dividends $ 0.30 $ 0.50 </TABLE> -2-
<TABLE> <CAPTION> Ford Motor Company and Subsidiaries VEHICLE UNIT SALES ------------------ For the Periods Ended March 31, 2001 and 2000 (in thousands) First Quarter ----------------------------- 2001 2000 ------------- ------------- <S> <C> <C> North America United States Cars 363 481 Trucks 653 724 ----- ----- Total United States 1,016 1,205 Canada 52 79 Mexico 36 28 ----- ----- Total North America 1,104 1,312 Europe Britain 180 115 Germany 106 91 Italy 64 49 France 42 42 Spain 40 40 Sweden 28 28 Other countries 116 112 ----- ----- Total Europe 576 477 South America Brazil 35 28 Argentina 8 15 Other countries 7 6 ----- ----- Total South America 50 49 Other international Australia 26 24 Taiwan 17 22 Other countries 32 30 ----- ----- Total other international 75 76 ----- ----- Total worldwide vehicle unit sales 1,805 1,914 ===== ===== </TABLE> Vehicle unit sales generally are reported worldwide on a "where sold" basis and include sales of all Ford Motor Company units, as well as units manufactured by Ford and sold to other manufacturers. -3-
Part I. Financial Statements ---------------------------- Item 1. Financial Statements - ----------------------------- <TABLE> <CAPTION> Ford Motor Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME -------------------------------- For the Periods Ended March 31, 2001 and 2000 (in millions) First Quarter ----------------------------- 2001 2000 -------------- ------------- <S> <C> <C> AUTOMOTIVE Sales $34,650 $36,175 Costs and expenses (Note 2) Cost of sales (Note 3) 30,730 31,578 Selling, administrative and other expenses 2,506 2,265 ------- ------- Total costs and expenses 33,236 33,843 Operating income 1,414 2,332 Interest income 255 368 Interest expense 367 318 ------- ------- Net interest income/(expense) (112) 50 Equity in net income/(loss) of affiliated companies (178) (32) Net expense from transactions with Financial Services (85) (10) ------- ------- Income before income taxes - Automotive 1,039 2,340 FINANCIAL SERVICES Revenues 7,711 6,719 Costs and expenses Interest expense 2,560 2,213 Depreciation 2,519 2,208 Operating and other expenses (Note 3) 1,437 1,211 Provision for credit and insurance losses 686 454 ------- ------- Total costs and expenses 7,202 6,086 Net revenue from transactions with Automotive 85 10 ------- ------- Income before income taxes - Financial Services 594 643 ------- ------- TOTAL COMPANY Income before income taxes 1,633 2,983 Provision for income taxes 571 1,022 ------- ------- Income before minority interests 1,062 1,961 Minority interests in net income of subsidiaries 3 29 ------- ------- Income from continuing operations $ 1,059 $ 1,932 Income from discontinued operation (Note 4) - 147 ------- ------- Net income $ 1,059 $ 2,079 ======= ======= Income attributable to Common and Class B Stock after preferred stock dividends $ 1,055 $ 2,075 Average number of shares of Common and Class B Stock outstanding 1,840 1,206 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Notes 5 and 6) Basic income Income from continuing operations $ 0.58 $ 1.61 Net income $ 0.58 $ 1.73 Diluted income Income from continuing operations $ 0.56 $ 1.58 Net income $ 0.56 $ 1.70 Cash dividends $ 0.30 $ 0.50 The accompanying notes are part of the financial statements. </TABLE> -4-
<TABLE> <CAPTION> Ford Motor Company and Subsidiaries CONSOLIDATED BALANCE SHEET -------------------------- (in millions) March 31, December 31, 2001 2000 --------------- ---------------- <S> <C> <C> ASSETS Automotive Cash and cash equivalents $ 3,953 $ 3,374 Marketable securities 11,814 13,116 -------- -------- Total cash and marketable securities 15,767 16,490 Receivables 4,069 4,685 Inventories (Note 7) 7,664 7,514 Deferred income taxes 2,674 2,239 Other current assets 5,683 5,318 Current receivable from Financial Services 2,538 1,587 -------- -------- Total current assets 38,395 37,833 Equity in net assets of affiliated companies 3,003 2,949 Net property 36,133 37,508 Deferred income taxes 3,235 3,342 Other assets 13,045 13,711 -------- -------- Total Automotive assets 93,811 95,343 Financial Services Cash and cash equivalents 1,429 1,477 Investments in securities 662 817 Finance receivables, net 126,279 125,164 Net investment in operating leases 47,575 46,593 Other assets 12,194 12,390 Receivable from Automotive 2,637 2,637 -------- -------- Total Financial Services assets 190,776 189,078 -------- -------- Total assets $284,587 $284,421 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $ 15,794 $ 15,075 Other payables 4,443 4,011 Accrued liabilities 22,773 23,515 Income taxes payable 447 449 Debt payable within one year 249 277 -------- -------- Total current liabilities 43,706 43,327 Long-term debt 11,787 11,769 Other liabilities 30,895 30,495 Deferred income taxes 296 353 Payable to Financial Services 2,637 2,637 -------- -------- Total Automotive liabilities 89,321 88,581 Financial Services Payables 5,194 5,297 Debt 155,329 153,510 Deferred income taxes 8,626 8,677 Other liabilities and deferred income 6,837 7,486 Payable to Automotive 2,538 1,587 -------- -------- Total Financial Services liabilities 178,524 176,557 Company-obligated mandatorily redeemable preferred securities of a subsidiary trust holding solely junior subordinated debentures of the Company (Note 8) 673 673 Stockholders' equity Capital stock Preferred Stock, par value $1.00 per share (aggregate liquidation preference of $177 million) * * 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 6,035 6,174 Accumulated other comprehensive income (Notes 3 and 9) (5,768) (3,432) ESOP loan and treasury stock (2,603) (2,035) Earnings retained for use in business 18,386 17,884 -------- -------- Total stockholders' equity 16,069 18,610 -------- -------- Total liabilities and stockholders' equity $284,587 $284,421 ======== ======== - - - - - - *Less than $1 million The accompanying notes are part of the financial statements. </TABLE> -5-
<TABLE> <CAPTION> Ford Motor Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- For the Periods Ended March 31, 2001 and 2000 (in millions) First Quarter 2001 First Quarter 2000 --------------------------- --------------------------- Financial Financial Automotive Services Automotive Services ------------- ------------- ------------- ------------- <S> <C> <C> <C> <C> Cash and cash equivalents at January 1 $ 3,374 $ 1,477 $ 2,793 $ 1,588 Cash flows from operating activities before securities trading 3,385 1,903 3,443 5,342 Net sales of trading securities 1,362 (6) 22 73 ------- -------- ------- -------- Net cash flows from operating activities 4,747 1,897 3,465 5,415 Cash flows from investing activities Capital expenditures (1,357) (131) (1,500) (306) Acquisitions of receivables and lease investments - (23,772) - (24,585) Collections of receivables and lease investments - 13,249 - 15,389 Net acquisitions of daily rental vehicles - (1,118) - (1,035) Purchases of securities (6,713) (204) (1,133) (142) Sales and maturities of securities 6,654 199 1,100 123 Proceeds from sales of receivables and lease investments - 7,174 - 2,807 Net investing activity with Financial Services (674) - 35 - Cash paid for acquisitions (Note 10) (122) (743) (206) (49) Other 342 9 (56) 240 ------- -------- ------- -------- Net cash used in investing activities (1,870) (5,337) (1,760) (7,558) Cash flows from financing activities Cash dividends (557) - (607) - Net purchases of Common Stock (801) - (78) - Changes in short-term debt (28) (4,861) (736) (3,891) Proceeds from issuance of other debt 79 14,386 156 11,610 Principal payments on other debt (61) (7,691) (389) (3,672) Net financing activity with Automotive - 674 - (35) Net cash distribution to Ford from discontinued operation - - 17 - Other 84 44 21 (549) ------- ------- ------- ------- Net cash (used in)/provided by financing activities (1,284) 2,552 (1,616) 3,463 Effect of exchange rate changes on cash (63) (111) 48 (80) Net transactions with Automotive/Financial Services (951) 951 945 (945) ------- ------- ------- ------- Net increase/(decrease) in cash and cash equivalents 579 (48) 1,082 295 ------- ------- ------- ------- Cash and cash equivalents at March 31 $ 3,953 $ 1,429 $ 3,875 $ 1,883 ======= ======= ======= ======= </TABLE> The accompanying notes are part of the financial statements. -6-
Ford Motor Company and Subsidiaries NOTES TO FINANCIAL STATEMENTS ----------------------------- 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, 2000. For purposes of this report, "Ford", the "Company", "we", "our", "us" or similar references means Ford Motor Company and its majority owned subsidiaries unless the context requires otherwise. Certain amounts for prior periods were reclassified to conform with present period presentation. 2. Selected Automotive Costs and Expenses are summarized as follows (in millions): <TABLE> <CAPTION> First Quarter ---------------------------- 2001 2000 ------------ ------------ <S> <C> <C> Depreciation $675 $694 Amortization of special tools 726 574 Pension expense/(benefits) (85) 64 </TABLE> 3. SFAS 133 - Ford Motor Company adopted Statement of Financial Accounting Standard ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No. 138, on January 1, 2001. The Company operates in many countries worldwide and is exposed to market risks, including the effect of changes in foreign currency exchange rates, commodity prices, and interest rates. These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on results. The Company uses derivative financial instruments to manage the exposures to fluctuations in exchange rates, commodity prices, and interest rates. Exchange rate risk is managed by use of foreign currency agreements, including forward contracts, swaps, and options. Commodity price risk is managed by use of forward price contracts and options. Exchange rate and commodity risk derivatives are primarily accounted for as cash flow hedges and generally mature in 3 years or less, with a maximum maturity of 7 years. Interest rate risk is managed by entering into interest rate swap agreements to change the interest rate characteristics of Ford's debt (primarily used in the Financial Services sector) to match the interest rate characteristics of related assets. These interest rate derivatives are designated as either cash flow or fair-value hedges. In addition, Ford uses forward contracts to hedge certain net investments in foreign operations and holds other derivatives that presently do not qualify for hedge accounting treatment under SFAS No. 133. Derivatives accounted for as cash flow hedges comprise most of the balance of SFAS No. 133 activity reported as a part of stockholders' equity. Ford's strategy is to use derivatives to manage specific economic risks to changes in exchange rates, commodity prices, and interest rates. Ford does not use derivatives for speculative purposes. For more information on Ford's derivative strategy, see Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" and Note 1 of the Notes to Consolidated Financial Statements in the 10-K Report. Adverse adjustments to income (not material to total Company results) and to stockholders' equity in the first quarter, including transition adjustment, were (in millions): <TABLE> <CAPTION> Financial Total Automotive Services Company -------------- ------------ --------------- <S> <C> <C> <C> Income before income taxes $(90)* $(20)** $ (110) Net income (59) (13) (72) Stockholders' equity (1,225)*** * Recorded in Automotive cost of sales ** Recorded in Financial Services operating and other expenses *** Recorded inaccumulated other comprehensive income </TABLE> Of the $1,225 million reduction recorded in stockholders' equity (including $550 million transition adjustment on January 1), about $400 million ($170 million of which relates to transition adjustment) is expected to be reclassified to net income during the next twelve months as the related underlying transactions occur. The amount reclassified from equity to earnings in the first quarter of 2001 reduced earnings by about $80 million. Consistent with the Company's -7-
Ford Motor Company and Subsidiaries NOTES TO FINANCIAL STATEMENTS ----------------------------- comprehensive, non-speculative risk-management practices, neither these nor future reclassifications are anticipated to have a material effect on net Company earnings, as they should be substantially offset by the opposite effects on related underlying transactions. 4. Discontinued Operation - On June 28, 2000, Ford distributed 130 million shares of Visteon Corporation ("Visteon"), which represented its 100% ownership interest, by means of a tax-free spin-off in the form of a dividend on Ford Common and Class B Stock. Ford's financial statements reflect Visteon as a "discontinued operation" for all periods prior to July 1, 2000. 5. Value Enhancement Plan - On August 7, 2000, the Company announced the final results of its recapitalization, known as the Value Enhancement Plan ("VEP"). Under the VEP, Ford shareholders exchanged each of their old Ford Common or Class B shares for one new Ford Common or Class B share, as the case may be, plus, at their election, either $20 in cash, 0.748 additional new Ford Common shares, or a combination of $5.17 in cash and 0.555 additional new Ford Common shares. As a result of the elections made by shareholders under the VEP, the total cash elected was $5.7 billion and the total number of new Ford Common and Class B shares that became issued and outstanding was 1.893 billion. As a result of the VEP, approximately $1.2 billion was transferred from capital stock to capital in excess of par value of stock. In accordance with generally accepted accounting principles, prior period shares and earnings per share amounts were not adjusted. 6. Income Per Share of Common and Class B Stock - Basic income per share of Common and Class B Stock is calculated by dividing the income attributable to Common and Class B Stock by the average number of shares of Common and Class B Stock outstanding during the applicable period, adjusted for shares issuable under employee savings and compensation plans. The calculation of diluted income per share of Common and Class B Stock takes into account the effect of dilutive potential common stock, such as stock options. Income per share of Common and Class B Stock from continuing operations was as follows (in millions, except per share amounts): <TABLE> <CAPTION> First Quarter 2001 First Quarter 2000 ----------------------------- -------------------------- Income Shares Income Shares -------------- ------------- ----------- ------------- <S> <C> <C> <C> <C> Income from continuing operations and shares $1,059 1,840 $1,932 1,206 Preferred stock dividend requirements (4) - (4) - Issuable and uncommitted ESOP shares - (12) - (7) ------ ------ ------ ------ Basic continuing income and shares $1,055 1,828 $1,928 1,199 Basic income per share from continuing operations $ 0.58 $ 1.61 Basic income per share from discontinued operation - 0.12 ------ ------ Basic income per share $ 0.58 $ 1.73 Basic continuing income and shares $1,055 1,828 $1,928 1,199 Net dilutive effect of options - 40 - 23 ------ ----- ------ ----- Diluted continuing income and shares $1,055 1,868 $1,928 1,222 Diluted income per share from continuing operations $ 0.56 $ 1.58 Diluted income per share from discontinued operation - 0.12 ------ ------ Diluted income per share $ 0.56 $ 1.70 </TABLE> 7. Automotive Inventories are summarized as follows (in millions): <TABLE> <CAPTION> March 31, December 31, 2001 2000 ---------------- ----------------- <S> <C> <C> Raw materials, work in process and supplies $2,837 $2,798 Finished products 4,827 4,716 ------ ------ Total inventories $7,664 $7,514 ====== ====== </TABLE> 8. Company-Obligated Mandatorily Redeemable Preferred Securities of a Subsidiary Trust - The sole asset of Ford Motor Company Capital Trust I (the "Trust"), which is the obligor on the Preferred Securities of such Trust, is $632 million principal amount of 9% Junior Subordinated Debentures due 2025 of Ford Motor Company. -8-
Ford Motor Company and Subsidiaries NOTES TO FINANCIAL STATEMENTS ----------------------------- 9. Comprehensive Income - Other comprehensive income primarily reflects foreign currency translation adjustments and adjustments related to SFAS 133 (Note 3). Total comprehensive income is summarized as follows (in millions): <TABLE> <CAPTION> First Quarter ----------------------------------- 2001 2000 ----------------- ---------------- <S> <C> <C> Net income $ 1,059 $2,079 Other comprehensive income (2,336) (596) ------- ------ Total comprehensive income $(1,277) $1,483 ======= ====== </TABLE> 10. Acquisitions Hertz Purchase - In March 2001, through a tender offer and a merger transaction, Ford acquired (for a total price of $735 million) the common stock of Hertz that it did not own, which represented about 18% of the economic interest in Hertz. Purchase of Land Rover Business - On June 30, 2000, Ford purchased the Land Rover business from the BMW Group for approximately three billion euros. Approximately two-thirds of the purchase price (equivalent of $1.9 billion at June 30, 2000) was paid at time of closing; the remainder will be paid in 2005. The acquisition involves the entire Land Rover line of products, and related assembly and engineering facilities. It does not include Rover's passenger car business or financial services business. 11. Segment Information - Ford's business is divided into two business sectors - Automotive and Financial Services (including Ford Credit and Hertz); detail is summarized as follows (in millions): <TABLE> <CAPTION> Financial Services Sector ----------------------------------------- First Quarter Auto Ford Other Elims/ Sector Credit Hertz Fin Svcs Other Total ------------- ------------- ------------ ------------- ------------ ------------- <S> <C> <C> <C> <C> <C> 2001 ---- Revenues External customer $ 34,650 $ 6,348 $ 1,176 $ 179 $ 8 $ 42,361 Intersegment 1,228 122 8 27 (1,385) - -------- -------- ------- ------ ------- -------- Total Revenues $ 35,878 $ 6,470 $ 1,184 $ 206 $(1,377) $ 42,361 ======== ======== ======= ====== ======= ======== Net income $ 689 $ 393 $ (4) $ (15) $ (4) $ 1,059 Total assets $ 97,414 $175,156 $11,339 $7,476 $(6,798) $284,587 2000 ---- Revenues External customer $ 36,175 $ 5,491 $ 1,131 $ 98 $ (1) $ 42,894 Intersegment 1,158 39 8 42 (1,247) - -------- -------- ------- ------ ------- -------- Total Revenues $ 37,333 $ 5,530 $ 1,139 $ 140 $(1,248) $ 42,894 ======== ======== ======= ====== ======= ======== Income from continuing Operations $ 1,552 $ 353 $ 56 $ (11) $ (18) $ 1,932 Total assets a/ $102,146 $161,735 $10,360 $8,108 $(7,325) $275,024 - - - - - a/ Net assets from discontinued operations of $1,644 million as of March 31, 2000 are included in Auto Sector total assets. </TABLE> "Other Financial Services" data is an aggregation of miscellaneous smaller Financial Services Sector business components, including Ford Motor Land Development Corporation, Ford Leasing Development Company, Ford Leasing Corporation and Granite Management Corporation. "Eliminations/Other" data includes intersegment eliminations and minority interests. Interest income for the operating segments in the Financial Services Sector is reported as "Revenue". -9-
Report of Independent Accountants To the Board of Directors and Stockholders Ford Motor Company We have reviewed the accompanying consolidated balance sheet of Ford Motor Company and its subsidiaries as of March 31, 2001, and the related consolidated statement of income for each of the three-month periods ended March 31, 2001 and 2000 and the condensed consolidated statement of cash flows for the three-month periods ended March 31, 2001 and 2000. 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 accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2000, and the related consolidated statements of income, stockholders' equity and of cash flows for the year then ended (not presented herein), and in our report dated January 18, 2001, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2000, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Detroit, Michigan April 18, 2001 -10-
Item 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - ------------- In addition to specific explanations discussed below, comparisons between Ford's first quarter 2001 and 2000 results are influenced by three important events: o On August 7, 2000, we announced the final results of our recapitalization, known as our Value Enhancement Plan ("VEP"), which became effective on August 2, 2000. Under the VEP, Ford shareholders exchanged each of their old Ford Common or Class B shares for one new Ford Common or Class B share, as the case may be, plus, at their election, either $20 in cash, 0.748 additional new Ford Common shares, or a combination of $5.17 in cash and 0.555 additional new Ford Common shares. As a result of the elections made by shareholders under the VEP, the total cash elected was $5.7 billion and the total number of new Ford Common and Class B shares that became issued and outstanding was 1.893 billion. See Note 5 of our Notes to Financial Statements for a description of the effect of the VEP on earnings per share. o On June 30, 2000, we purchased the Land Rover business from the BMW Group. Land Rover's results and financial condition are included in our financial statements on a consolidated basis beginning in the third quarter of 2000. o On June 28, 2000, we distributed 130 million shares of Visteon Corporation (our former automotive systems and components division), which represented our 100% ownership interest, by means of a tax-free spin-off in the form of a dividend on Ford Common and Class B Stock. Visteon has been reflected as a discontinued operation through June 30, 2000. FIRST QUARTER RESULTS OF OPERATIONS Worldwide net income was $1,059 million in the first quarter of 2001, or $0.56 per diluted share of Common and Class B Stock. This compares with first quarter earnings from continuing operations in 2000 of $1,932 million, or $1.58 per diluted share. Worldwide sales revenue was $42.4 billion in the first quarter of 2001, down $0.5 billion from a year ago. Unit sales of cars and trucks were 1,805,000, down 109,000 units. Results by business sector for the first quarter of 2001 and 2000 are shown below (in millions). <TABLE> <CAPTION> First Quarter Net Income ------------------------------------------------ 2001 Over/(Under) 2001 2000 2000 ------------- -------------- ---------------- <S> <C> <C> <C> Automotive Sector $ 689 $1,552 $ (863) Financial Services Sector 370 380 (10) ------ ------ ------- Total continuing operations 1,059 1,932 (873) Discontinued operation - Visteon 0 147 (147) ------ ------ ------- Total Company $1,059 $2,079 $(1,020) ====== ====== ======= </TABLE> -11-
Item 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations(Continued) - ------------------------ Automotive Sector - ----------------- Worldwide earnings for our Automotive sector were $689 million in the first quarter of 2001, on sales of $34.7 billion. Earnings in the first quarter of 2000 were $1,552 million, on sales of $36.2 billion. Adjusted for constant volume and mix, total automotive costs were unchanged compared with the first quarter of 2000. Details of first quarter Automotive sector earnings from continuing operations are shown below (in millions). <TABLE> <CAPTION> First Quarter Net Income/(Loss) -------------------------------------------- 2001 Over/(Under) 2001 2000 2000 ------------ ----------- ----------------- <S> <C> <C> <C> North American Automotive $ 695 $1,667 $(972) Automotive outside North America - Europe 88 (3) 91 - South America (53) (82) 29 - Rest of World (41) (30) (11) ----- ------ ----- Total Automotive outside North America (6) (115) 109 ----- ------ ----- Total Automotive Sector $ 689 $1,552 $(863) ===== ====== ===== </TABLE> Automotive sector earnings in North America were $695 million in the first quarter of 2001, on sales of $23.7 billion. In the first quarter of 2000, earnings were $1,667 million, on sales of $27.2 billion. The decrease in earnings reflected primarily lower vehicle sales volume (unit sales down 208,000 units, or 16% from a year ago). The after-tax return on sales for our Automotive sector in North America was 3.0% in the first quarter of 2001. Excluding the effect of SFAS 133 as described below, the after-tax return on sales for our Automotive sector in North America would have been 3.2%, down 3 percentage points from a year ago. In the first quarter of 2001, approximately 4.2 million new cars and trucks were sold in the United States, down 300,000 units from a year ago. Our share of those unit sales was 22.6% in the first quarter of 2001, down 1.4 percentage points from a year ago. The decline in market share reflected in part low availability of new Ford Explorer and Mercury Mountaineer models. Our Automotive sector earnings in Europe were $88 million in the first quarter of 2001, compared with losses of $3 million a year ago. The improvement in earnings is explained by increased vehicle sales volume and lower costs at Ford brand operations. Other factors (including lower volume at Volvo, higher launch costs at Jaguar, and gains on sales of certain assets) were largely offsetting. In the first quarter of 2001, approximately 4.8 million new cars and trucks were sold in our nineteen primary European markets, down 279,000 units from a year ago. Our share of those unit sales was 11.1% in the first quarter of 2001, up 1.3 percentage points from a year ago. Our market share increase reflected strong sales performance of the new Ford Mondeo and Transit models and the addition of Land Rover. Our Automotive sector in South America had losses of $53 million in the first quarter of 2001, compared with losses of $82 million a year ago. The improved results reflected improved margins. -12-
Item 2. Management's Discussion and Analysis of Financial Condition and Results ------------------------------------------------------------------------------- of Operations (Continued) - ------------------------- In the first quarter of 2001, approximately 415,000 new cars and trucks were sold in Brazil, compared with 310,000 a year ago. Our share of those unit sales was 8.6% in the first quarter of 2001, down 9/10 of a percentage point from a year ago. Automotive sector losses outside North America, Europe and South America ("Rest of World") were $41 million in the first quarter of 2001, compared with losses of $30 million in the first quarter of 2000. The decline in results were more than explained by Ford's share of increased losses at Mazda. Financial Services Sector - ------------------------- Our Financial Services sector consists primarily of two segments, Ford Credit and Hertz. Details of first quarter Financial Services sector earnings are shown below (in millions). <TABLE> <CAPTION> First Quarter Net Income/(Loss) -------------------------------------------- 2001 Over/(Under) 2001 2000 2000 ------------ ---------- ---------------- <S> <C> <C> <C> Ford Credit $393 $353 $ 40 Hertz (4) 56 (60) Minority interests, eliminations, and other (19) (29) 10 ---- ---- ---- Total Financial Services Sector $370 $380 $(10) ==== ==== ==== Memo: Ford's share of earnings in Hertz $ 0 $ 46 $(46) </TABLE> Ford Credit's consolidated net income for the first quarter of 2001 was $393 million, up $40 million or 11% from the first quarter of 2000. Compared with 2000, the increase in first quarter earnings reflected primarily improvements in investment and other income (primarily the result of gains on the sale of receivables related to securitization transactions) and higher financing volumes, partially offset by higher credit losses and lower net financing margins. In the first quarter of 2001, Hertz had losses of $4 million, compared with earnings of $56 million (of which $46 million was Ford's share) a year ago. The decrease in earnings reflected primarily pricing pressure, a combination of a slowing U.S. economy and its impact on rental transaction volume and cost structure, higher 2001 model year vehicle holding costs, and lower vehicle and equipment residual values. LIQUIDITY AND CAPITAL RESOURCES Automotive Sector - ----------------- At March 31, 2001, our Automotive sector had $15.8 billion of cash and marketable securities, down $0.7 billion from December 31, 2000. The decline was more than explained by share repurchases ($800 million) and our acquisition of the minority interest in Hertz ($735 million), offset partially by positive operating cash flow. Automotive gross cash was $19.1 billion at March 31, 2001, including $3.3 billion of prefunding of certain employee health benefit obligations through a Voluntary Employee Beneficiary Association trust. (Early in the second quarter of 2001, we incurred a cash outlay of $1.6 billion for the final payment to AB Volvo for our acquisition of Volvo Car.) Automotive capital expenditures were $1.4 billion in the first quarter of 2001, down $100 million from a year ago. -13-
Item 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations (Continued) - ------------------------- Our stockholders' equity was $16.1 billion at March 31, 2001, down $2.5 billion from December 31, 2000. This decrease reflected primarily non-cash adjustments related to the adoption of SFAS 133 (as described below) and foreign currency translation (reflecting primarily the strengthening of the U.S. dollar relative to European currencies). At March 31, 2001, our Automotive sector had total debt of $12 billion, unchanged from December 31, 2000. Financial Services Sector - ------------------------- At March 31, 2001, our Financial Services sector had cash and cash equivalents of $1.4 billion, down $48 million from December 31, 2000. Finance receivables and net investments in operating leases were $174 billion at March 31, 2001, up from $172 billion at December 31, 2000. Total debt was $155 billion at March 31, 2001, up $2 billion from December 31, 2000. Outstanding commercial paper at March 31, 2001 totaled $34 billion at Ford Credit, and $2 billion at Hertz, with an average remaining maturity of 32 days and 20 days, respectively. HERTZ PURCHASE In March 2001, through a tender offer and a merger transaction, we acquired (for a total price of $735 million) the common stock of Hertz that we did not own, which represented about 18% of the economic interest in Hertz. As a result, Hertz has become an indirect, wholly-owned subsidiary. NEW ACCOUNTING STANDARD We adopted Statement of Financial Accounting Standards (SFAS) 133 "Accounting for Derivative Instruments and Hedging" on January 1, 2001. Adverse adjustments to income and to stockholders' equity included in first quarter results were (in millions): <TABLE> <CAPTION> Financial Total Automotive Services Company -------------- ------------- ------------- <S> <C> <C> <C> Income before income taxes $(90) $(20) $ (110) Net income (59) (13) (72) Stockholders' equity (1,225) </TABLE> For a further discussion of SFAS 133, see note 3 of our Notes to Financial Statements. OTHER FINANCIAL INFORMATION PricewaterhouseCoopers LLP, our independent accountants, performed a limited review of the financial data presented on pages 4 through 9 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, PricewaterhouseCoopers LLP did not express an opinion on the aforementioned data. The financial data include any material adjustments or disclosures proposed by PricewaterhouseCoopers LLP as a result of their review. -14-
Part II. Other Information Item 1. Legal Proceedings - -------------------------- Firestone Matters (Previously discussed beginning on page 20 of Ford's Annual Report on Form 10-K for the year ended December 31, 2000 (the "10-K Report").) As previously reported, on August 9, 2000, Bridgestone/Firestone, Inc. ("Firestone") announced a recall of all Firestone ATX and ATX II tires (P235/75R15) produced in North America since 1991 and Wilderness AT tires of that same size manufactured at Firestone's Decatur, Illinois plant. Firestone estimated that about 6.5 million of the affected tires were still in service on the date the recall was announced. The recall was announced following an analysis by Ford and Firestone that identified a statistically significant incidence of tread separation occurring in the affected tires. Most of the affected tires were installed as original equipment on Ford Explorer sport utility vehicles. The recall has been substantially completed. Ford incurred substantial costs in connection with the recall, including the costs of the recall itself and costs associated with production interruptions to permit production tires to be diverted to the recall. Also as previously reported, we are continuing to work with the Safety Administration in its investigation of the Firestone tire recall to attempt to assess the root cause of tread separation in the recalled tires and to determine whether the recall should be expanded to include other Firestone tires. The root cause assessment by the Safety Administration and our own analysis of root cause includes tires not subject to the original recall that have been installed as original equipment on several Ford models, including Ford Explorer and Mercury Mountaineer models. The conclusions reached by the Safety Administration or Ford in these studies, which at present are incomplete, could result in the recall and/or replacement of additional Firestone tires and additional substantial costs to the Company. We have accrued expenses in accordance with generally accepted accounting principles for the estimated losses from currently pending personal injury cases in which plaintiffs allege that their injuries were caused by defects in a vehicle tire that caused it to lose its tread and/or by defects in the vehicle (primarily Ford Explorer models) that caused it to roll over. These accruals are reflected in our financial statements. We periodically assess the anticipated costs of this litigation and additional accruals, which could be substantial, may be necessary in the future. The securities fraud class actions have been consolidated and an amended complaint has been filed. The amended complaint alleges that Ford's misrepresentations and omissions began in March 1998 (rather than early 1999, as alleged in the initial complaint). Class Actions - ------------- TFI Module Class Action. (Previously discussed on page 23 and 24 of the 10-K Report.) The class action in Missouri has been withdrawn. The trial court in the Howard case has ruled on the nature of the recall. Pursuant to this ruling, Ford will be ordered to replace all distributor-mounted TFI modules on vehicles in the class with new distributor-mounted TFI modules of the latest design. In addition, the Plaintiffs in Howard moved for immediate judgment on the remaining claims, including statutory damages, arguing that a retrial is not necessary because all of the dispositive factual issues have already been resolved by the trial judge. The trial court denied this motion and Plaintiffs are attempting to appeal that ruling. Unless the appellate court intervenes, the retrial in Howard will begin in September 2001. Throttle Body Assemblies Class Action. (Previously discussed on page 25 of the 10-K Report.) This action has been successfully removed to federal court. Ford Credit Debt Collection Class Action. (Previously discussed on page 26 of the 10-K Report.) The trial in the Molloy case is scheduled to begin on May 10, 2001 in the bankruptcy court on the named plaintiff's case only. -15-
Item 1. Legal Proceedings (Continued) - -------------------------------------- Performance Management Process Class Action. (Previously discussed on page 26 of the 10-K Report.) The plaintiffs allege both intentional discrimination and disparate impact relating to the Performance Management Process. Although the case is still in the early stages of litigation, Ford has filed a motion to dismiss the disparate impact claims. This motion is scheduled to be heard simultaneously with a similar motion filed in the Reverse Discrimination Class Action on May 30, 2001. Reverse Discrimination Class Action. (Previously discussed on page 26 of the 10-K Report.) Plaintiffs withdrew the initial case that was filed in the federal district court for the Eastern District of Michigan. On March 6, 2001, four plaintiffs filed a new purported class action in state court of Michigan against Ford and Mr. Nasser. This suit alleges reverse race, reverse gender and age discrimination. Specifically, the purported class claims that the Company's diversity initiatives discriminate against older white males. The suit alleges that the Company's Performance Management Process was intended to support the diversity initiatives by driving out the older white males. The suit alleges both intentional discrimination as well as disparate impact. Ford has filed a motion to dismiss all of the disparate impact claims. This motion is scheduled to be heard simultaneously with a similar motion filed in the Performance Management Process Class Action on May 30, 2001. F-150 Radiators Class Actions. In April 2001, two purported class actions were filed alleging that the Company defrauded purchasers of 1999-2001 model year Ford F-150 trucks by falsely representing that certain option packages included "upgraded" radiators. Plaintiffs allege that approximately 400,000 trucks that were intended to have larger radiators were actually built with standard radiators. One of the cases, filed in state court in New York, purports to represent a nationwide class, and seeks an order requiring installation of larger radiators and other damages. The second case, filed in state court in Texas, purports to represent purchasers in Texas, and seeks unspecified damages. Both cases allege breach of warranty and violation of state consumer protection laws. Other Matters Rouge Powerhouse Insurance Litigation. There are several pending lawsuits arising out of the February 1, 1999 Rouge Powerhouse explosion. In June 2000, Ford filed a coverage action against ten property insurance carriers seeking property damage and business interruption losses attributable to the Powerhouse explosion. Factory Mutual, one of these insurers, filed a counterclaim in the lawsuit for claims paid to Rouge Steel Company ("Rouge Steel"). Factory Mutual's counterclaim alleges that Rouge Steel's damages occurred as a result of Ford's negligence, gross negligence or willful and wanton misconduct in operating the Powerhouse and totals approximately $300 million. This counterclaim, and a similar claim for approximately $25 million by other insurers of Rouge Steel, has been ordered to arbitration. Additionally, claims related to business interruption losses incurred by five suppliers to Rouge Steel, totaling approximately $20 million, also have been added to the arbitration. In addition, six Ford employees and one Rouge Steel employee also have filed lawsuits seeking recovery in excess of $100 million in the aggregate for alleged psychological injuries caused as a result of the explosion. -16-
<TABLE> <CAPTION> Supplemental Schedule Ford Capital BV and Subsidiaries CONSOLIDATED STATEMENT OF INCOME -------------------------------- For the Periods Ended March 31, 2001 and 2000 (in millions) First Quarter ----------------------------- 2001 2000 -------------- ------------- <S> <C> <C> Sales $563 $511 Costs and expenses Cost of sales (Note 3) 528 475 Selling, administrative and other expenses 28 30 ------- ------- Total costs and expenses 556 505 ------- ------- Operating income 7 6 Interest income 44 71 Interest expense 37 59 ------- ------- Net interest income/(expense) 7 12 ------- ------- Income before income taxes 14 18 Provision for income taxes 5 8 ------- ------- Income before minority interests 9 10 Minority interests in net income of subsidiaries - 1 ------- ------- Net income $ 9 $ 11 ======= ======= </TABLE> The accompanying notes are part of the financial statements. -17-
<TABLE> <CAPTION> Ford Capital BV and Subsidiaries CONSOLIDATED BALANCE SHEET -------------------------- (in millions) March 31, December 31, 2001 2000 --------------- ---------------- <S> <C> <C> ASSETS Cash and cash equivalents $ 28 $ 18 Receivables 106 55 Notes receivable, affiliate 414 411 Inventories 59 41 Deferred income taxes 24 24 Other current assets 28 28 ------ ------ Total current assets 659 577 Notes receivable, affiliate 1,368 1,391 Net property 15 14 Other assets 74 104 ------ ------ Total assets $2,116 $2,086 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Trade payables $ 104 $ 63 Payables, affiliate and other 42 71 Accrued liabilities 212 156 Income taxes payable 29 31 Debt payable within one year 567 567 ------ ------ Total current liabilities 954 888 Long-term debt 900 900 Deferred tax liability 10 16 Other liabilities 24 10 ------ ------ Total liabilities 1,888 1,814 Minority interests 1 1 Stockholders' equity Capital stock, 255,140 shares issued with a par value of $593 and 623,392 shares issued with a par value of $133 each. 236 236 Capital in excess of par value of stock 72 72 Accumulated other comprehensive income (Notes 2 and 3) (69) (15) Accumulated deficit (12) (22) ------ ------ Total stockholders' equity 227 271 ------ ------ Total liabilities and stockholders' equity $2,116 $2,086 ====== ====== - - - - - - </TABLE> The accompanying notes are part of the financial statements. -18-
<TABLE> <CAPTION> Ford Capital BV and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- For the Periods Ended March 31, 2001 and 2000 (in millions) First Quarter -------------------------------- 2001 2000 --------------- --------------- <S> <C> <C> Cash and cash equivalents at January 1 $ 18 $ 49 Cash flows from operating activities (9) 22 Cash flows from investing activities Changes in notes receivable 20 75 Other (1) (1) ----- ----- Net cash (used in)/provided by investing activities 19 74 Cash flows from financing activities Principal payments on other debt - (118) ----- ----- Net cash (used in)/provided by financing activities - (118) Net increase/(decrease) in cash and cash equivalents 10 (22) ----- ----- Cash and cash equivalents at March 31 $ 28 $ 27 ===== ===== </TABLE> The accompanying notes are part of the financial statements. -19-
Ford Capital BV and Subsidiaries NOTES TO FINANCIAL STATEMENTS ----------------------------- 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 Ford Motor Company's Annual Report on Form 10-K for the year ended December 31, 2000. For purposes of this report, "the Company" or similar references mean Ford Capital BV and its majority owned subsidiaries unless the context requires otherwise. Certain amounts for prior periods were reclassified, if required, to conform to present period presentation. 2. SFAS 133 - Ford Capital BV adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No. 138, on January 1, 2001. The company uses cross currency swaps to hedge foreign currency exchange exposure on notes receivable. The swaps are accounted for as cash flow hedges. The maximum maturity of these swaps is nine years. The swaps account for all of the balance of SFAS No. 133 activity reported as part of stockholders' equity. Ford Capital BV's strategy is to use derivatives to manage specific economic risks to changes in exchange rates. The company does not use derivatives for speculative purposes. Adoption of SFAS No. 133 had no impact on income. During the first quarter, a $39 million net reduction was recorded in stockholders' equity as accumulated other comprehensive income. Of the amount recorded, a $63 million loss pertained to the January 1 transition adjustment. The remaining amount pertained to a gain from first quarter activity. Ford Capital BV does not expect to reclassify any gains or losses to earnings during the next twelve months. 3. Comprehensive Income - Other comprehensive income primarily reflects foreign currency translation adjustments and adjustments related to SFAS 133 (Note 2). Total comprehensive income is summarized as follows (in millions): <TABLE> <CAPTION> First Quarter ----------------------------------- 2001 2000 ----------------- ---------------- <S> <C> <C> Net income $ 9 $ 11 Other comprehensive income (45) (84) ----- --- Total comprehensive income $(36) $ 73 ==== ==== </TABLE> -20-
Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits -------- Please refer to the Exhibit Index on page 22. (b) Reports on Form 8-K ------------------- The Registrant filed the following Current Reports on Form 8-K during the quarter ended March 31, 2001: Current Report on Form 8-K dated January 3, 2001 included information relating to Ford's North American Production and Overseas Sales schedule Current Report on Form 8-K dated January 11, 2001 included information relating to our financial milestones for the upcoming 12 months Current Report on Form 8-K dated January 18, 2001 included information relating to Consolidated Financial Statements of Ford and Subsidiaries for the year ended and at December 31, 2000, together with the Report on Examination thereof by PricewaterhouseCoopers, L.L.P. Current Report on Form 8-K dated February 1, 2001 included information relating to U.S. retail sales of Ford vehicles in January 2001 and Ford's North American Production and Overseas Sales schedule Current Report on Form 8-K dated March 1, 2001 included information relating to U.S. retail sales of Ford vehicles in February 2001 and Ford's North American Production and Overseas Sales schedule Current Report on Form 8-K dated March 2, 2001 included information relating to Ford's announcement that Ford is comfortable with the consensus analysts' earnings estimate for Ford of 51 cents per diluted share for the first quarter 2001 Current Report on Form 8-K dated March 29, 2001 included information relating that Ford continues to be comfortable with the consensus analysts' earnings estimate for Ford of 54 cents per diluted share for the first quarter 2001 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 11, 2001 By: /s/ L. E. Hansen ------------ ------------------------------------------ L. E. Hansen Vice President & Controller (principal accounting officer) -21-
<TABLE> <CAPTION> EXHIBIT INDEX ------------- Designation Description ----------- --------------------------------------------------------------------------- <S> <C> Exhibit 12 Ford Motor Company and Subsidiaries Calculation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. Exhibit 15 Letter of PricewaterhouseCoopers LLP, Independent Accountants, dated May 11, 2001, relating to Financial Information. </TABLE> -22-