Ford Mtr Co del · NYSE:F
Ford Mtr Co del — Ford Motor Company — Investor Presentation (June 2011)
52 slides from Ford Mtr Co del's investor presentation, Jun 20, 2011
Slide 1: Auto University
AUTO UNIVERSITY Bob Shanks Vice President and Controller June 20, 2011
Slide 2: Purpose of Auto University
AUTO UNIVERSITY Purpose of Auto University • Explain how we report our data • Address frequently asked questions SLIDE 2
Slide 3: Agenda
AUTO UNIVERSITY Agenda • Business Unit Reporting • Key Metrics • Profit Variance Analysis • Daily Rental Accounting • Cost Detail • EPS Calculations • Tax Matters • Cash and Balance Sheet • Calendarization Factors SLIDE 3
Slide 4: Business Unit Reporting -- Sectors
BUSINESS UNIT REPORTING -- SECTORS Two Operating Sectors, Automotive And Financial Services; Financial Services Includes Ford Credit And Other Businesses SLIDE 4
Slide 5: Business Unit Reporting -- Segments
BUSINESS UNIT REPORTING -- SEGMENTS Four Automotive Segments Reported On A Where Sold Basis. Other Automotive Primarily Is Related To Net Interest Expense SLIDE 5
Slide 6: Business Unit Reporting -- Other Automotive
BUSINESS UNIT REPORTING -- OTHER AUTOMOTIVE 2011 1Q (Mils.) Interest Income / Other $ 66 Interest Expense (251) Total Net Interest $(185) Fair Market Value Adjustments (64) * Total First Quarter Other Automotive $(249) * Primarily related to our investment in Mazda (Ford owns about 3.5%) Other Autom
Slide 7: Business Unit Reporting -- Where Sold Basis
BUSINESS UNIT REPORTING -- WHERE SOLD BASIS • Segment results are reported on a “where sold” basis - Segment results include total corporate profit on all vehicles sold in its markets no matter where the vehicle or its components are produced - For example, the revenue and profit of Edges produced i
Slide 8: Production vs. Wholesale vs. Retail
BUSINESS UNIT REPORTING -- PRODUCTION VS. WHOLESALE VS. RETAIL Production + / - Net Imports / Exports + / - Changes in Company Stocks = Wholesales + / - Changes in Dealer Stocks - Sales to other OEMS = Retails* * Market shares are based on major markets as defined on Appendix 1 and pages 7-10 and 52
Slide 9: Business Unit Reporting -- Joint Ventures
BUSINESS UNIT REPORTING -- JOINT VENTURES Joint venture results are reported within each segment as follows: • Unit Volumes 3 Included • Revenue - Not included • Profits 3 Ford’s share of after-tax profits included SLIDE 9
Slide 10: Key Metrics
KEY METRICS ** *** * Excludes special items; see Earnings Report Appendix for detail and reconciliation to GAAP and definition of wholesales ** Normal point of revenue and profit recognition *** Automotive operating margins defined as Automotive pre-tax results, excluding special items and Other Aut
Slide 11: Key Metrics -- Special Items
KEY METRICS -- SPECIAL ITEMS* FY 2010 Automotive Special Items Summary 2010 (Mils) Personnel and Dealer Related Mercury Disconinuation $ (339) Personnel-reduction actions (164) Other 55 Total Personnel and Dealer Related $ (448) Other Debt Reduction $ (853) Sale of Volvo 179 Other (29) Total Other $
Slide 12: Key Metrics -- Total Automotive and Business Unit Operating Margins
KEY METRICS -- TOTAL AUTOMOTIVE AND BUSINESS UNIT OPERATING MARGINS Automotive EBIT* Operating Margin Automotive Revenue * Excluding Special Items and Other Automotive SLIDE 12
Slide 13: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 13
Slide 14: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 14
Slide 15: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 15
Slide 16: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 16
Slide 17: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 17
Slide 18: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 18
Slide 19: Profit Variance Analysis
PROFIT VARIANCE ANALYSIS* * Variance methodology defined on Appendix 3 and page 56 of 1Q 2011 Form 10-Q Report SLIDE 19
Slide 20: Profit Variance Analysis -- SAAR and Absolute Industry Volumes
PROFIT VARIANCE ANALYSIS -- SAAR AND ABSOLUTE INDUSTRY VOLUMES 1Q 2Q 3Q 4Q FY SAAR's (Mils.) 2010 11.3 11.5 11.7 12.7 11.8 2009 9.8 9.8 11.8 11.0 10.6 Year-to-Year Change 15 % 17 % (1) % 15 % 11 % Quarter-to-Quarter Change 3 2 2 9 Industry Volumes (000) 2010 2,590 3,116 3,052 3,017 11,775 2009 2,246
Slide 21: Profit Variance Analysis -- Impact of Dealer Stock Changes
PROFIT VARIANCE ANALYSIS -- IMPACT OF DEALER STOCK CHANGES 1Q North American profit decline due to dealer stocks is 3 10,000 units times contribution margin SLIDE 21
Slide 22: Daily Rental Accounting -- Volume, Revenue and Profit Recognition
DAILY RENTAL ACCOUNTING -- VOLUME, REVENUE AND PROFIT RECOGNITION Daily Rental Repurchase Accounting Example Month Months Month 1 2-9 10 3 Wholesale and 3 Disposal via Auction Retail Volume Recognition 3 Auction Revenue Recognition 3 Operating Lease Revenue and estimated Profit Recognition 3 Profit
Slide 23: Automotive Cost Details -- Financial Statements
AUTOMOTIVE COST DETAILS -- FINANCIAL STATEMENTS Ford’s financial statements break costs into two categories: • Cost of Sales -- costs related to the development, manufacture and distribution of our vehicles, parts, and accessories. – Material (including commodities) – Freight – Warranty and related
Slide 24: Automotive Cost Details -- Variance Analysis
AUTOMOTIVE COST DETAILS -- VARIANCE ANALYSIS* Our variance analysis breaks costs into two major buckets: • Contribution costs (variances reflect changes in cost per unit) – Material » Commodities » Material excluding commodities (includes design changes and cost reductions) – Freight – Warranty and
Slide 25: Automotive Cost Details -- Major Types of Costs and How They Vary
AUTOMOTIVE COST DETAILS -- MAJOR TYPES OF COSTS AND HOW THEY VARY WITH PRODUCTION d h ea ort r p ove sup ) d o dity r an ift t t ion h m mo l o ab r a s r t iz a g co r ing e o a mo in tu tim s) nd l ud fac ver ase g * a (i nc y anu g o cre tisin ring tion M din r a r ial ight rant d e in d ve inee
Slide 26: Automotive Cost Details -- Warranty Reporting
AUTOMOTIVE COST DETAILS -- WARRANTY REPORTING • Estimated lifetime warranty costs are accrued for when the vehicle is wholesaled. – Includes costs for basic warranty coverage, product recalls, and other customer service actions • Reserve adjustments are recorded as appropriate – Based on a defined s
Slide 27: Automotive Cost Details -- Where to Find Them
AUTOMOTIVE COST DETAILS -- WHERE TO FIND THEM Income Statement Published Statement Contribution Costs Commodity and Other Material Cost of Sales 2010 10-K P.40 Commodity/Material are about 2/3 of Total Automotive Costs Freight Cost of Sales Ford does not disclose this separately Warranty (costs for
Slide 28: Earnings Per Share
EARNINGS PER SHARE BS Sorcl | TOTAL COMPANY CALCULATION OF EARNINGS PER SHARE First Quarter 2011 After-Tax Net Income Oper. Attributable — Excl. Special to Ford Items After-Tax Results (Mils.) After-tax results* $ 2,551 $ 2,612 Effect of dilutive 2016 Convertible Notes** 14 Effect of dilutive 2036 C
Slide 29: Earnings Per Share -- Trust Preferred Securities
EARNINGS PER SHARE -- TRUST PREFERRED SECURITIES 3 3 SLIDE 29
Slide 30: Earnings Per Share -- Warrants
EARNINGS PER SHARE -- WARRANTS 3 SLIDE 30
Slide 31: Earnings Per Share -- 2011 First Qtr. Dilution Effect of Warrants
EARNINGS PER SHARE -- 2011 FIRST QTR. DILUTION EFFECT OF WARRANTS Warrants outstanding at the end of reporting period 362 million * Average prices of common stock during First Quarter 2011 $16.05 Strike Price $9.20 Average price of common stock over strike price ($16.05 - $9.20) $6.85 Percentage of
Slide 32: Tax Matters
TAX MATTERS • Valuation Allowance • Cash Taxes • Effective Tax Rate SLIDE 32
Slide 33: Tax Matters -- Valuation Allowance
TAX MATTERS -- VALUATION ALLOWANCE • Valuation Allowance – $15.7 billion as of December 31, 2010 – Consumption can result in unusual and volatile tax rates – Release will be recorded as a tax benefit in income statement • Cash Taxes • Effective Tax Rate SLIDE 33
Slide 34: Tax Matters -- Valuation Allowance; Example of Revised Operating EPS
TAX MATTERS -- VALUATION ALLOWANCE; EXAMPLE OF REVISED OPERATING EPS Hypothetical: • Valuation allowance is reversed in 4Q • Tax rate is 10% for reporting periods 1Q – 3Q • Tax rate is 35% for reporting period 4Q • 100 Shares outstanding Q1 - Q3 Reported at 10% Tax Rate Q1 Q2 Q3 Q4 FY PBT $ 100 $ 10
Slide 35: Tax Matters -- Cash Taxes
TAX MATTERS -- CASH TAXES • Valuation Allowance • Cash Taxes – Release of valuation allowance has no impact on underlying tax attributes – Ford’s cash taxes are expected to remain low for a number of years • Effective Tax Rate SLIDE 35
Slide 36: Tax Matters -- Effective Tax Rate
TAX MATTERS -- EFFECTIVE TAX RATE • Valuation Allowance • Cash Taxes • Effective Tax Rate – Statutory tax rates vary by country – Ford expects its global ongoing effective tax rate to approach 35% SLIDE 36
Slide 37: Cash and Balance Sheet -- Gross Cash
CASH AND BALANCE SHEET -- GROSS CASH Mar. 31 2011 (Bils.) Cash and cash equivalents $12.6 * Marketable securities 8.8 Total cash and marketable securities $21.4 Securities in Transit (0.1) Gross cash $21.3 * Excludes restricted cash, which is reflected in Other Assets on the Balance Sheet (includes
Slide 38: Cash and Balance Sheet -- Cash Flow
CASH AND BALANCE SHEET -- CASH FLOW* See slides 39 and 44 for further detail Includes differences due to compensation, warranty and pension payments, and inter sector transactions Includes dividends and tax payments See slides 40 and 41 for further detail * Defined on Appendix 6 and page 65 of 1Q 20
Slide 39: Cash and Balance Sheet -- Working Capital
CASH AND BALANCE SHEET -- WORKING CAPITAL* Other Mfg. Companies* Ford $6.6 $13.0 $3.2 Inventories/ Payables Inventories/ Payables Receivables Receivables * Data are based on average 2010 balances; other manufacturing company data from Capital IQ; drawn to relative scale Working Capital Changes At Fo
Slide 40: Cash and Balance Sheet -- Pension and OPEB Accounting and Reporting
CASH AND BALANCE SHEET -- PENSION AND OPEB ACCOUNTING AND REPORTING* Year-End/Full Year 2010 Pension US Non-US Total OPEB (Bils) (Bils) (Bils) (Bils) Balance Sheet (Provided Annually) Asset/(Liability) Benefit Obligation $ (46.6) $ (23.4) $ (70.0) $ (6.4) Fair Value of Plan Assets 39.9 18.6 58.5 - F
Slide 41: Pension and OPEB Accounting and Reporting -- First Quarter 2011
CASH AND BALANCE SHEET RELATED -- PENSION AND OPEB ACCOUNTING AND REPORTING* First Quarter 2011 Pension OPEB Expense / (Income) (Mils.) (Provided Quarterly) Service cost $ 197 $ 15 Interest cost 897 82 Expected return on assets (1,105) - Amortization of: Prior service costs / (credits) 104 (152) (Ga
Slide 42: Calendarization Factors -- Production Seasonality
CALENDARIZATION FACTORS – PRODUCTION SEASONALITY* Higher Volume Lower Volume 1Q 2Q 3Q 4Q 1Q * Based on average data from the past seven years Generally, Profits And Cash Flow Are Aligned With Production Volumes SLIDE 42
Slide 43: Calendarization Factors -- Structural Cost Seasonality
CALENDARIZATION FACTORS -- STRUCTURAL COST SEASONALITY* Higher Cost Lower Cost 1Q 2Q 3Q 4Q 1Q * Based on average data from the past eight years Due To A Number Of Factors, Structural Costs Tend To Be Lowest In First Quarter And Highest In Fourth Quarter SLIDE 43
Slide 44: Calendarization Factors -- Cash Flow Seasonality
CALENDARIZATION FACTORS -- CASH FLOW SEASONALITY 2010 – 2011 Inventory Movements 2010 – 2011 Trade Payable Movements $16.8 $14.3 $13.5 $6.9 $7.4 $5.9 3Q 4Q 1Q 3Q 4Q 1Q Working Capital Also Is Subject To Seasonal Timing Differences Primarily Associated With Our End Of Year Production Shutdown SLIDE 4
Slide 45: Calendarization Factors -- Additional Factors That Can Vary
CALENDARIZATION FACTORS -- ADDITIONAL FACTORS THAT CAN VARY QUARTER BY QUARTER • Product launches • Reserve Adjustments – Warranty – Marketing • “One-time” gains or losses – Distress supplier Payments / Recoveries – Insurance Settlements • Fair Market Value / Balance Sheet revaluations SLIDE 45
Slide 46: Appendix
APPENDIX
Slide 47: Major Markets Defined
MAJOR MARKETS DEFINED • North America -- U.S. • FSAO -- Argentina, Brazil, Chile, Colombia, Ecuador and Venezuela (6) • FoE -- Britain, Germany, France, Italy, Spain, Austria, Belgium, Ireland, Netherlands, Portugal, Switzerland, Finland, Sweden, Denmark, Norway, Czech Republic, Greece, Hungary, and
Slide 48: Special Items Explained
SPECIAL ITEMS EXPLAINED • Special items are reported as a separate reconciling item as opposed to being allocated back to the operating segments. This approach is consistent with how management reviews the operating segments internally. • There are two groupings for Special Items – Personnel and Dea
Slide 49: Profit Variance Methodology
PROFIT VARIANCE METHODOLOGY • In general, we measure year-over-year and sequential quarter-over-quarter changes in Automotive pre-tax operating profit for our total Automotive sector (excluding special items) and segments using the causal factors listed below, with revenue and cost variances calcula
Slide 50: Calculating Volume and Mix Effect on Profits
CALCULATING VOLUME AND MIX EFFECT ON PROFITS • Industry volume variance is calculated first and isolates the impact of the change in industry volumes, holding all other variables constant • Market share variance isolates the impact of the change in market share, at present year industry volume, hold
Slide 51: Pricing and Marketing Incentive Reporting
PRICING AND MARKETING INCENTIVE REPORTING • “Net Pricing” includes the impact of changes in both wholesale pricing and marketing incentives • Wholesale price changes include both pricing for new design features added to a vehicle (e.g. a more powerful engine) and “pure” pricing (actions taken to bet
Slide 52: Cash and Cash Flow
CASH AND CASH FLOW • We classify changes in Automotive gross cash into three categories – Automotive Operating-related cash flows; other cash flows; and cash flows of a financing nature: – Operating-related cash flows best represent the ability of the Automotive business to generate cash. This is co
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