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Ford Posts Strong Financial Data, First Profit Since 2005 Page 2

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Alan Mulally

For the third quarter, the Financial Services sector reported a pre-tax operating profit of $661 million, compared with a profit of $159 million a year ago.

Ford Motor Credit Company: For the third quarter, Ford Credit reported a pre-tax operating profit of $677 million, compared with a pre-tax profit of $161 million a year ago. The increase primarily reflected lower residual losses due to higher auction values, and lower provisions for credit losses, offset partially by lower volume.

Other Financial Services: For the third quarter, Other Financial Services reported a pre-tax operating loss of $16 million in the third quarter, compared with a loss of $2 million a year ago.

OUTLOOK

Despite the severe global downturn, Ford said it continues to make progress on all four pillars of its plan:

  • Aggressively restructure to operate profitably at the current demand and changing model mix
  • Accelerate the development of new products that customers want and value
  • Finance the plan and improve the balance sheet
  • Work together effectively as one team, leveraging Ford's global assets

Ford said it remains on track to achieve or exceed all of its 2009 financial targets and almost all of its operational metrics. Ford will also continue to pursue actions to improve its balance sheet.

Ford expects full-year 2009 U.S. industry sales will be about 10.6 million units, consistent with the guidance previously communicated by the company. In Europe, Ford now expects that full-year industry sales will be about 15.7 million units, which is higher than its previous guidance.

Ford expects fourth quarter 2009 production to be up compared with year-ago levels and third quarter 2009 production. This increase is to return to planned dealer stock levels and match production with market demand for Ford products.

Ford now expects full-year Automotive structural cost reductions of about $5 billion, exceeding its full-year 2009 target. These costs were reduced by $4.6 billion through the first nine months. Going forward, Ford expects structural costs to be relatively stable as the company has largely completed its significant restructuring actions over the past four years.

The company said it expects full-year U.S. and Europe market share to remain at about the same levels achieved during the first nine months.

Ford expects Automotive operating-related cash flow to be positive in the fourth quarter, based on the company's present planning assumptions.

Ford now expects capital spending of about $5 billion, or slightly less. Capital expenditures through the first nine months were $3.4 billion; higher projected fourth quarter spending reflects the timing of Ford's product launches as the company maintains its product plans.

Ford Credit expects to be profitable in the fourth quarter and for the full-year 2009. Next year, Ford Credit expects reduced profits based on lower average receivables and the non-recurrence of favorable 2009 factors.

Based on its recent performance and present planning assumptions, Ford is changing its full-year 2011 guidance for total company and North American Automotive operations from being "breakeven or better" to "solidly profitable" on a pre-tax basis excluding special items, with positive Automotive operating-related cash flow.

While the company has confidence that the global economy will be improving by 2011, the near-term growth outlook remains rather uncertain. Looking at 2010, there is a high likelihood of a substantial decrease in European industry volume as scrappage programs expire. This decrease could more than offset U.S. sales volumes, which may improve somewhat from this past quarter's levels.

Ford expects to know more about the state of the global economic recovery and its impact on 2010 auto industry volumes in the coming months. Early next year, Ford will provide guidance on its 2010 planning assumptions and operational metrics when the company releases its full-year 2009 results.

"The third quarter is one the entire Ford extended team can be proud of because it proves that our product-led transformation is working," Mulally said. "Leading indicators are now showing signs of recovery in all of our major markets, however, consumer confidence and labor market conditions remain a concern.

"Despite the continued economic headwinds, we remain confident that we have the right plan and are taking the right actions to transfer Ford into a lean company that delivers profitability growth for all our stakeholders," Mulally added.

Ford's 2009 planning assumptions regarding the industry and operating metrics include the following:

    Planning Assumptions    Full Year Plan     Full Year        Memo: First
                                                Outlook         Nine Months
    --------------------    --------------    -------------     -----------

    Industry Volume
     (SAAR)**:
       -U.S. (million
        units)                 10.5 - 12.5       About 10.6            10.5
       -Europe (million
        units)***              12.5 - 13.5       About 15.7            15.7

    Operational Metrics
    Compared with 2008:
     Quality:
      -- U.S.                   Improve           On track        Improved
      -- International          Improve             Mixed           Mixed

       --Automotive
        Structural        Improve by about $4   Improve by about  Improved by
        Costs****               Billion            $5 Billion    $4.6 Billion

      -- U.S. Total Market
       Share (Ford and LM)      Stabilize           Improve          15.0%
       Share of Retail
       Market                   Stabilize           Improve          12.9%
      -- Europe Market
       Share ***               Equal / Improve      Improve           9.2%

      --Auto.                  Negative but        On track        $(3.4)
       Operating-Related        Significant                        Billion
       Cash Flow*****           Improvement

     Absolute Amount:
      --Capital Spending   $5 Billion to $5.5        About           $3.4
                                Billion           $5 Billion       Billion

                    FORD IS ON TRACK TO BE SOLIDLY PROFITABLE IN 2011
                        WITH POSITIVE OPERATING-RELATED CASH FLOW*

          *     Pre-tax profits excluding special items
          **    Includes medium and heavy trucks
          ***   European 19 markets Ford tracks
          ****  Cost changes are measured at constant exchange, and
                exclude special items and discontinued operations. In
                addition, costs that vary directly with volume, such as
                material, freight and warranty costs are measured at constant
                volume and mix
          ***** See tables at end for reconciliation to GAAP
     ---------------------------


Ford's production volumes are shown below:

    Production Volumes         Actual               Forecast
    ------------------         ------               --------
                         Third Quarter 2009    Fourth Quarter 2009
                         ------------------    -------------------
                                       O/(U)                 O/(U)
                          Units        2008     Units         2008
                          -----        ----     -----         ----
                          (000)        (000)    (000)         (000)

    Ford North America     490           72       570          141

    Ford Europe            385           (9)      456           91

    Volvo                   77            5        95           27
    -----                   --           --        --           --


CONFERENCE CALL DETAILS

Ford Motor Company [NYSE: F] releases its preliminary third quarter 2009 financial results at 7 a.m. EST today. The following briefings will be conducted after the announcement:

At 9 a.m. EST, Alan Mulally, Ford president and chief executive officer, and Lewis Booth, Ford executive vice president and chief financial officer, will host a call for the investment community and news media to discuss third quarter results.

At 11 a.m. EST, Bob Shanks, Ford vice president and controller, Neil Schloss, Ford vice president and treasurer, and K.R. Kent, Ford Motor Credit Company vice chairman and chief financial officer, will host a conference call for fixed income analysts and investors.

The presentations (listen-only) and supporting materials will be available on the Internet at www.shareholder.ford.com. Representatives of the news media and the investment community participating by teleconference will have the opportunity to ask questions following the presentations.

Access Information - November 2, 2009

Earnings Call: 9 a.m. EST

Toll Free: 866-356-4123

International: 617-597-5393

Earnings Passcode: "Ford Earnings"

Fixed Income: 11 a.m. EST

Toll Free: 866-730-5766

International: 857-350-1590

Fixed Income Passcode: 70059906 (Please note the new password)

Replays - Available after 2 p.m. the day of the event through Nov. 9

www.shareholder.ford.com

Toll Free: 888-286-8010

International: 617-801-6888

Passcodes:

Earnings: 29481628

Fixed Income: 55865600

Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford's products, please visit www.ford.com.

# # #

+ The financial results discussed herein are presented on a preliminary basis; final data will be included in Ford's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009. "Net income" and "Net loss" herein refer to "Net income/(loss) attributable to Ford" on our Statement of Operations, reflecting new presentation required by new accounting standards. 2008 results have been adjusted for the effect of new accounting standards, and for the reclassification of certain Financial Services sector revenue items. Discussion of overall Automotive cost changes, including structural cost changes (e.g., manufacturing and engineering, pension/OPEB, overhead, etc.), is at constant exchange and excludes special items and discontinued operations. In addition, costs that vary directly with production volume, such as material, freight, and warranty costs, are measured at constant volume and mix. See tables following the "Safe Harbor/Risk Factors" for the nature and amount of special items, and reconciliation of items designated as "excluding special items" to U.S. generally accepted accounting principles ("GAAP").

++ See the tables following "Safe Harbor/Risk Factors" for reconciliation of Automotive gross cash and operating-related cash flow to GAAP.

+++ Excluding special items and "Income/(Loss) attributable to non-controlling interests." See tables following "Safe Harbor/Risk Factors" for the nature and amount of these special items and reconciliation to GAAP.

Safe Harbor/Risk Factors

Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

  • Continued or worsening financial crisis;
  • Further declines in industry sales volume, particularly in the United States or Europe, due to financial crisis, deepening recessions, geo-political events, or other factors;
  • Decline in market share;
  • Continued or increased price competition resulting from industry overcapacity, currency fluctuations, or other factors;
  • A further increase in or acceleration of market shift away from sales of trucks, SUVs, or other more profitable vehicles, particularly in the United States;
  • A return to elevated gasoline prices, as well as the potential for volatile prices or reduced availability;
  • Lower-than-anticipated market acceptance of new or existing products;
  • Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
  • Adverse effects from the bankruptcy, insolvency, or government-funded restructuring of, change in ownership or control of, or alliances entered into by a major competitor;
  • Restriction on use of tax attributes from tax law "ownership change";
  • Economic distress of suppliers that may require us to provide financial support or take other measures to ensure supplies of components or materials and could increase our costs, affect our liquidity, or cause production disruptions;
  • Single-source supply of components or materials;
  • Labor or other constraints on our ability to restructure our business;
  • Work stoppages at Ford or supplier facilities or other interruptions of supplies;
  • Pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition;
  • Inability to implement the Retiree Health Care Settlement Agreement regarding UAW hourly retiree health care;
  • Worse-than-assumed economic and demographic experience for our postretirement benefit plans (e.g., discount rates or investment returns);
  • 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, cash expenditures, or sales restrictions;
  • Unusual or significant litigation or governmental investigations arising out of alleged defects in our products or otherwise;
  • A change in our requirements for parts or materials subject to long-term supply arrangements that commit us to purchase minimum or fixed quantities of parts or materials, or to pay a minimum amount to the seller ("take-or-pay" contracts);
  • Adverse effects on our results from a decrease in or cessation of government incentives;
  • Adverse effects on our operations resulting from certain geo-political or other events;
  • Substantial negative Automotive operating-related cash flows for the near- to medium-term affecting our ability to meet our obligations, invest in our business, or refinance our debt;
  • Substantial levels of Automotive indebtedness adversely affecting our financial condition or preventing us from fulfilling our debt obligations (which may grow because we are able to incur substantially more debt, including secured debt);
  • Failure of financial institutions to fulfill commitments under committed credit facilities;
  • Ford Credit's need for substantial liquidity to finance its business;
  • Inability of Ford Credit to obtain competitive funding;
  • Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts due to additional credit rating downgrades, market volatility, market disruption, or other factors;
  • A prolonged disruption of the debt and securitization markets;
  • Higher-than-expected credit losses;
  • Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles;
  • Collection and servicing problems related to finance receivables and net investment in operating leases;
  • Lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;
  • New or increased credit, consumer, data protection, or other regulation resulting in greater costs or financing restrictions;
  • Inability to implement our plans to further reduce structural costs and increase liquidity.

We cannot be certain that any expectation, forecast or assumption made by management in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. For additional discussion of these risks, see "Item 1A. Risk Factors" in our 2008 Form 10-K Report and subsequent Form 10-Q Reports.

    THIRD QUARTER & FIRST NINE MONTHS 2009 NET INCOME/(LOSS) COMPARED WITH
     2008

                                       Third Quarter      First Nine Months
                                       -------------      -----------------
                                      2008        2009     2008        2009
                                      ----        ----     ----        ----
    Revenue (Bils.)
    ---------------
    Revenue (Excluding Special
     Items)                          $31.7       $30.9   $109.1       $82.9
    Special Items*                       -           -      7.0           -
                                        --          --      ---          --
      Revenue                        $31.7       $30.9   $116.1       $82.9
                                     =====       =====   ======       =====

    Income (Mils.)
    --------------
    Pre-Tax Results from
     Continuing Operations
     (Excluding Special Items)     $(2,780)     $1,107  $(3,127)    $(1,299)
    Special Items*                   2,207         108   (6,219)      3,265
                                     -----         ---  -------       -----
    Pre-Tax Income/(Loss) from
     Continuing Operations           $(573)     $1,215  $(9,346)     $1,966

    (Provision for)/Benefit from
     Income Taxes                      463        (139)     811          40
                                       ---       -----      ---          --
    Income/(Loss) from Continuing
     Operations                      $(110)     $1,076  $(8,535)     $2,006
    Income/(Loss) from
     Discontinued Operations             -           -        9           5
                                        --          --       --          --
    Net Income/(Loss)                $(110)     $1,076  $(8,526)     $2,011
    Less: Income/(Loss)
     attributable to
     non-controlling interests          51          79      262         180
                                        --          --      ---         ---
       Net Income/(Loss)
        attributable to Ford         $(161)       $997  $(8,788)     $1,831
                                     =====        ====  =======      ======



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