This summary is based on the third quarter fiscal 2008 earnings call conducted by Ford Motor Co. (F) on November 7, 2008.
Management:
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President and Chief Executive Officer: Alan Mulally
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Chief Financial Officer: Lewis Booth
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Ford Motor Credit Vice Chairman and Chief Financial Officer: K. R. Kent
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Vice President and Treasurer: Neil Schloss
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Senior Vice President and Controller: Peter Daniel
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Director, Investor Relations: Lillian Etzkorn
Key Investors Issues
- Net loss was $129.0 million from $380 million in the prior year, a 66% improvement.
- Sales were $32.1 billion, 21.9% down from $41.1 billion a year ago.
- Firm to lay off a further 10% of jobs in North America.
Year to Date Highlights:
- Sales were $117 billion, down 9% from $128 billion in 2007.
- The firm realized a profit of $88 million, from a loss of $8.6 billion in the prior year.
Third Quarter Highlights
Ford’s sales were $32.1 billion, down $9.0 billion or 21.9% from $41.1 billion a year ago, reflecting lower volume, the sale of Jaguar Land Rover, unfavorable product mix, and lower net pricing, partly offset by favorable changes in the currency exchange rates.
- Vehicle wholesales were about 1.2 million units, down 313,000 from the same period in 2007.
- Operating loss from continued operations, excluding special items, was $2.7 billion, over $2.9 billion worse than a year ago.
- Overall, the firm reduced costs by $300.0 million despite commodity cost increases of more than $1.0 billion.
- Net loss was $129.0 million from $380 million in the prior year, including $462.0 million of tax benefits, more than explained by an adjustment for accounting standard FAS 109 which relates to deferred-tax asset evaluation allowances.
The company recorded a charge of $197.0 million, largely related to hourly and salaried personnel reduction programs in the U.S.
- Largely offsetting these changes was a $320.0 million gain due to reduction in the number of personnel in job security benefits reserve, primarily due to changes in the ACH plan.
- It also incurred $94.0 million of charges primarily related to personnel reduction programs in Europe, Australia, and Volvo.
- The $2.3 billion improvement near the bottom of the slide primarily represents the curtailment gain related to the VEBA agreement with the UAW.
Production levels were about 100,000 units below retail sales and nearly 500,000 units below the second quarter results and this had a substantial effect on profit and the decline in production resulted in about a $3.0 billion reduction in payables.
- Total liquidity, including available credit lines, was $29.6 billion and automotive debt was $26.1 billion and upon implementation of the independent VEBA, the firm will contribute debt securities with a face value of $6.3 billion to their trust.
- The firm has less than $3.0 billion of debt maturities in the next three years.
Operational Highlights:
- The firm launched two new vehicles during the period, the 2009 Ford F-150 full-size pickup was launched in North America, the number-one-selling truck in America for 31 years running with best-in-class capability and unsurpassed fuel economy.
- In Europe it launched the new Ford Fiesta, the first of Ford’s new global small cars with production beginning in Cologne, Germany, and the car is now going on sale in Europe.
- Fiesta also is beginning to now go on sale in Asia and will be introduced in North America in early 2010.
The all-new Ford Ka debuted at the Paris Air Show, a sub-compact car that goes on sale in Europe late this year and is featured in the new James Bond movie, Quantum of Solace, and launched the Ford Focus and Ford Escape in key Asia-Pacific and Africa markets.
- Ford Lincoln Mercury vehicles collectively reduced things gone wrong by 7.7% compared to last year, pulling into a statistical tie with Honda and Toyota, and topped the list of Seven Major Auto makers in the U.S. Global Quality Research Systems Study.
- It achieved a leading number of top safety picks from the U.S. Insurance Institute of Highway Safety with the 2009 Ford Flex and the Lincoln MKS earning top honors.
- The company reduced North America’s salary personnel cost by about 15% and reduced hourly personnel by about 3,000 since the end of the second quarter.
- On October 8, 2008, Volvo announced restructuring plans to reduce salaried personnel by an additional 3,300 and agency personnel by an additional 700, bringing the total planned Volvo personnel actions to about 6,000 world-wide since June, equal to about 25% reduction.
- Ford Credit continues to execute its funding plan and increased its liquidity available for use to about $25.0 billion despite a very challenging credit market.
ACH Divestiture Actions:
- ACH was formed in October 2005 with 17 plants, two of which were subsequently transferred to Ford.
- Its missions included ensuring continuity of supply and the support of new product programs while improving quality and cost, and to sell or close its facilities by year end 2008.
- The status of divestitures at the end of this year will include five plants sold, two plants closed, and two additional plants to close by year-end.
- The firm remains intent on transitioning these businesses to the supply base as soon as is practical in an orderly and economical manner.
Segment Highlights:
