Attached files
| file | filename |
|---|---|
| EX-99 - EXHIBIT 99 - FORD MOTOR CO | q22017earningsrelease.pdf |
| 8-K - 8-K - FORD MOTOR CO | earnings8-kdated07x26x2017.htm |
Ford Motor Company 2Q July 26, 2017
* See endnote on page 4.
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│ NEWS
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2Q 2017
B/(W) 2Q 2016
PRODUCT AND SERVICES HIGHLIGHTS
HIGHLIGHTS 2Q 2017*
2017 F-150 King Ranch
2017 Lincoln Continental
2017 Expedition
Ford SYNC 3
Ford Delivers Second Quarter Net Income of $2.0B;
$2.5B Adjusted Pre-Tax Profit;
Total Company Revenue of $39.9B
? Second quarter net income was $2.0B, total company revenue
was $39.9B; EPS was $0.51, all up year over year
? Total Company adjusted pre-tax profit of $2.5B and lower
tax rate drove adjusted EPS of $0.56, up $0.04 year over year
? Lower adjusted pre-tax profit due to higher commodity cost,
mainly steel, unfavorable exchange and non-repeat of last
year’s gain on the sale of majority stake in OEConnection LLC
? In the U.S.: Year-over-year average transaction prices rose
nearly five times the industry average in the quarter and
incentives declined as a percent of vehicle price, while the
industry increased
? Automotive profits driven by North America, with Europe and
Asia Pacific also profitable; outside North America, other
regions were about breakeven in total; Ford Credit pre-tax profit
was $619M, up 55 percent year over year
? Automotive operating cash flow was positive; continue to expect
full-year shareholder distributions of about $2.7B
? 2017: Expect full year adjusted EPS of $1.65 to $1.85 with
adjusted effective tax rate now expected to be about 15 percent
2 0 17 S E C O N D Q U A R T E R F I N A N C I A L R E S U LT S
“This quarter shows the underlying health
of our company with strong products like
F-Series and commercial vehicles around
the world, but we have opportunity to
deliver even more. The entire team is
focused on improving the fitness of the
business and smartly deploying our
capital to improve both the top and
bottom lines in the quarters ahead.”
Jim Hackett, President & CEO
Revenue Net Income Adjusted Pre-Tax Profit EPS Adjusted EPS Auto Segment Auto Segment Operating
(GAAP) (GAAP) (Non-GAAP) (GAAP) (Non-GAAP) Operating Margin (GAAP) Cash Flow (GAAP)
$39.9B $2.0B $2.5B $0.51 $0.56 5.9% $1.3B
$0.4B $0.1B $(0.5)B $0.02 $0.04 (1.8) ppts $(2.9)B
“We continue to maintain a strong
balance sheet with substantial cash
and liquidity. This provides the capital
needed to invest in and grow our
business, while also protecting against
a downturn.”
Bob Shanks
Executive Vice President & CFO
F-Series
In the U.S. F-Series had its
best second quarter sales
performance since 2001,
with a 7 percent gain
compared to last year.
Average transaction prices
of $45,400 per truck were
up $3,100 from a year ago
and led the segment.
Lincoln
Lincoln had strong 2Q sales
in both the U.S. and China,
selling more than 29,000
vehicles in the U.S. for the
brand’s best performance
in a decade. In China, the
brand capped its best ever
quarter with record June
sales, up 84 percent.
Quality
Ford earned the No. 2
ranking of all non-premium
brands in this year’s U.S.
J.D. Power Initial Quality
Study – the brand’s best
ranking in the report’s 31-
year history. Seven Ford and
Lincoln models were in the
top three of their segments.
Over-the-Air Updates
Ford offered its first
software update via Wi-Fi
with a SYNC 3 update that
brings support for Android
Auto and Apple CarPlay to
more than 800,000
model-year 2016 vehicles.
Ford Motor Company 2Q July 26, 2017
A U T O M O T I V E S E G M E N T R E S U LT S
North America
South America
Europe
Middle East & Africa
Asia Pacific
F O R D C R E D I T R E S U LT S
Ford Credit
Wholesales Revenue MarketShare
Operating
Margin
Pre-Tax
Results
2
? Wholesale volume was down 1 percent, revenue up
3 percent year over year, driven by continued strength of
series and vehicle mix and higher net pricing
? Market share improvement in truck and utilities was more
than offset by lower fleet sales
? For 2017: Continue to expect North America
operating margin and profit to be lower than 2016, mainly
due to higher commodity costs and increased engineering
expense, mainly for utilities and autonomous vehicles
2Q 2017 807K $24.5B 14.4% 9.0% $2.2B
B/(W)
2Q 2016 (8)K $0.7B (0.1) ppts (2.3) ppts $(0.5)B
? All key metrics improved for the third consecutive quarter
? Wholesales were up 12 percent; revenue up 18 percent,
reflecting higher volume and favorable pricing
? Market share improved due to performance of the Ka
? For 2017: Continue to expect loss to improve from
last year, as a result of favorable market factors as the
economy continues to recover
2Q 2017 93K $1.5B 9.2% (12.6)% $(185)M
B/(W)
2Q 2016 10K $0.2B 0.5 ppts 8.7 ppts $80M
? Ninth consecutive quarterly profit, but key metrics were
lower due to Brexit effects and launch of the all-new Fiesta
? Kuga, Ka and commercial vehicle share improved, while
overall share was down due to Fiesta launch
? For 2017: Continue to expect Europe to remain profitable,
although below 2016 levels, mainly due to Brexit effects
and higher commodity cost. Favorable market factors and
continued improvement in Russia will be a partial offset
2Q 2017 375K $7.1B 7.3% 1.2% $88M
B/(W)
2Q 2016 (55)K $(1.0)B (0.2) ppts (4.6) ppts $(379)M
? Pre-tax results improved due to favorable cost
performance, reflecting mainly lower material and freight
costs, and favorable exchange
? Other key metrics lower due to lower wholesale volume,
largely reflecting lower share and lower industry
? For 2017: Continue to expect results in the region to
improve compared to 2016 due to lower cost and favorable
exchange with lower volume a partial offset
2Q 2017 24K $0.6B 3.4% (9.7)% $(53)M
B/(W)
2Q 2016 (14)K $(0.4)B (1.2) ppts (2.5) ppts $12M
? Wholesale volume up 7 percent; revenue up 21 percent,
reflecting strength of full line up of SUVs and continued
growth of Lincoln in China
? Market share was up, due to higher share in China because
of strong JMC commercial vehicle gains and Lincoln
performance
? For 2017: Continue to expect pre-tax profits to improve
from 2016 due to favorable volume and mix, and lower cost
2Q 2017 352K $3.4B 3.7% 4.1% $143M
B/(W)
2Q 2016 24K $0.6B 0.1 ppts 4.4 ppts $151M
Wholesales Revenue(GAAP) Market Share
Operating Margin
(GAAP)
Pre-Tax Profit
(GAAP)
2Q 2017 1,651K $37.1B 7.4% 5.9% $2.2B
B/(W) 2Q 2016 (43)K $0.1B (0.1) ppts (1.8) ppts $(0.6)B
? Best quarterly pre-tax profit since 2011
? Continued receivables growth globally
? For 2017: Now expect full-year pre-tax profit higher
than $1.5B, reflecting an improved lease residual outlook,
along with higher volume, margin and a strong cost focus
Pre-Tax Results
2Q 2017 $619M
B/(W)
2Q 2016 $219M
Ford Motor Company 2Q July 26, 20173
Statements included or incorporated by reference 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:
? Decline in industry sales volume, particularly in the United States, Europe, or China, due to financial crisis, recession, geopolitical events, or
other factors;
? Lower-than-anticipated market acceptance of Ford’s new or existing products or services, or failure to achieve expected growth;
? Market shift away from sales of larger, more profitable vehicles beyond Ford’s current planning assumption, particularly in the United States;
? Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
? Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
? Adverse effects resulting from economic, geopolitical, protectionist trade policies, or other events;
? Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made
disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors);
? Single-source supply of components or materials;
? Labor or other constraints on Ford’s ability to maintain competitive cost structure;
? Substantial pension and other postretirement liabilities impairing liquidity or financial condition;
? Worse-than-assumed economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or
investment returns);
? Restriction on use of tax attributes from tax law “ownership change;”
? The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;
? Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and/or sales restrictions;
? Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived
environmental impacts, or otherwise;
? Adverse effects on results from a decrease in or cessation or claw back of government incentives related to investments;
? Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third party vendor or supplier;
? Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
? Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts,
due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;
? Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
? Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and
? New or increased credit regulations, consumer or data protection regulations, or other regulations resulting in higher costs and/or additional
financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made 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, see "Item 1A. Risk Factors" in
our Annual Report on Form 10-K for the year ended December 31, 2016, as updated by subsequent Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.
R I S K F A C T O R S
Ford Motor Company 2Q July 26, 20174
C O N F E R E N C E C A L L D E TA I L S
Ford Motor Company [NYSE:F] releases its 2017 second quarter financial results at 7:00 a.m. EDT today.
Following the release, Jim Hackett, Ford president and chief executive officer, and Bob Shanks, Ford executive vice president and chief
financial officer, will host a conference call at 9 a.m. EDT to discuss the results.
The presentation (listen-only) and supporting materials will be available at www.shareholder.ford.com. Representatives of the investment
community and the news media will have the opportunity to ask questions on the call.
Access Information - Wednesday, July 26, 2017
Ford Earnings Call: 9 a.m. EDT
Toll-Free: 1.877.870.8664
International: 1.970.297.2423
Passcode: Ford Earnings
REPLAY
(Available after 1:00 p.m. EDT the day of the event through Thursday, August 3, 2017)
www.shareholder.ford.com
Toll-Free: 1.855.859.2056
International: 1.404.537.3406
Passcode: 95413408
About Ford Motor Company
Ford Motor Company is a global company based in Dearborn, Michigan. The company designs, manufactures, markets and services a?full
line of Ford cars, trucks, SUVs, electrified vehicles and Lincoln luxury vehicles, provides financial services through Ford Motor Credit
Company and is pursuing leadership positions in electrification, autonomous vehicles and mobility solutions. Ford employs approximately
203,000 people worldwide. For more information regarding Ford, its products and Ford Motor Credit Company, please visit
??????????????????????.
* The following applies to the information throughout this release:
? See tables at the end of this release for the nature and amount of special items, and reconciliations of the non-GAAP financial
measures designated as “adjusted” to the most comparable financial measures calculated in accordance with U.S. generally
accepted accounting principles (“GAAP”).
? Wholesale unit sales and production volumes include Ford brand and Jiangling Motors Corporation (“JMC”) brand vehicles produced
and sold in China by our unconsolidated affiliates; revenue does not includes these sales. See materials supporting the July 26, 2017
conference call at www.shareholder.ford.com for further discussion of wholesale unit volumes.
? Automotive segment operating margin is defined as Automotive segment pre-tax profit divided by Automotive segment revenue.
? References to records related to Automotive segment pre-tax profit, Automotive segment operating cash flow, Automotive segment
operating margin and Automotive business unit results are since at least 2000.
Ford Motor Company 2Q July 26, 20175
C O N S O L I D AT E D I N C O M E S T AT E M E N T
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
(in millions, except per share amounts)
For the periods ended June 30,
2016 2017 2016 2017
Second Quarter First Half
(unaudited)
Revenues
Automotive $ 36,932 $ 37,113 $ 72,189 $ 73,588
Financial Services 2,553 2,738 5,014 5,407
Other — 2 — 4
Total revenues 39,485 39,853 77,203 78,999
Costs and expenses
Cost of sales 32,522 33,349 63,039 66,057
Selling, administrative, and other expenses 2,784 2,756 5,474 5,520
Financial Services interest, operating, and other expenses 2,258 2,217 4,318 4,449
Total costs and expenses 37,564 38,322 72,831 76,026
Interest expense on Automotive debt 212 277 412 556
Non-Financial Services other income/(loss), net 686 658 1,454 1,370
Financial Services other income/(loss), net 82 74 173 96
Equity in net income of affiliated companies 398 273 939 619
Income before income taxes 2,875 2,259 6,526 4,502
Provision for/(Benefit from) income taxes 903 209 2,099 858
Net income 1,972 2,050 4,427 3,644
Less: Income/(Loss) attributable to noncontrolling interests 2 8 5 15
Net income attributable to Ford Motor Company $ 1,970 $ 2,042 $ 4,422 $ 3,629
EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK
Basic income $ 0.50 $ 0.51 $ 1.11 $ 0.91
Diluted income 0.49 0.51 1.11 0.91
Cash dividends declared 0.15 0.15 0.55 0.35
Ford Motor Company 2Q July 26, 20176
C O N S O L I D AT E D B A L A N C E S H E E T
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
December 31, 2016
June 30,
2017
(unaudited)
ASSETS
Cash and cash equivalents $ 15,905 $ 16,223
Marketable securities 22,922 22,886
Financial Services finance receivables, net 46,266 49,888
Trade and other receivables, less allowances of $392 and $416 11,102 10,159
Inventories 8,898 11,092
Other assets 3,368 3,291
Total current assets 108,461 113,539
Financial Services finance receivables, net 49,924 51,551
Net investment in operating leases 28,829 28,597
Net property 32,072 33,794
Equity in net assets of affiliated companies 3,304 3,241
Deferred income taxes 9,705 10,145
Other assets 5,656 6,602
Total assets $ 237,951 $ 247,469
LIABILITIES
Payables $ 21,296 $ 23,568
Other liabilities and deferred revenue 19,316 19,958
Automotive debt payable within one year 2,685 2,911
Financial Services debt payable within one year 46,984 47,862
Total current liabilities 90,281 94,299
Other liabilities and deferred revenue 24,395 24,840
Automotive long-term debt 13,222 13,277
Financial Services long-term debt 80,079 81,959
Deferred income taxes 691 735
Total liabilities 208,668 215,110
Redeemable noncontrolling interest 96 97
EQUITY
Common Stock, par value $.01 per share (3,986 million shares issued of 6 billion authorized) 40 40
Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized) 1 1
Capital in excess of par value of stock 21,630 21,735
Retained earnings 15,634 18,437
Accumulated other comprehensive income/(loss) (7,013 ) (6,716 )
Treasury stock (1,122 ) (1,253 )
Total equity attributable to Ford Motor Company 29,170 32,244
Equity attributable to noncontrolling interests 17 18
Total equity 29,187 32,262
Total liabilities and equity $ 237,951 $ 247,469
Ford Motor Company 2Q July 26, 20177
C O N S O L I D AT E D S T AT E M E N T O F C A S H F L O W S
FORD MOTOR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the periods ended June 30,
2016 2017
First Half
(unaudited)
Cash flows from operating activities
Net cash provided by/(used in) operating activities $ 11,891 $ 9,951
Cash flows from investing activities
Capital spending (3,206) (3,264)
Acquisitions of finance receivables and operating leases (27,501) (27,379)
Collections of finance receivables and operating leases 19,732 21,636
Purchases of equity and debt securities (16,757) (16,931)
Sales and maturities of equity and debt securities 15,491 16,906
Settlements of derivatives 111 154
Other 21 16
Net cash provided by/(used in) investing activities (12,109) (8,862)
Cash flows from financing activities
Cash dividends (2,184) (1,392)
Purchases of common stock (145) (131)
Net changes in short-term debt 934 72
Proceeds from issuance of other debt 25,574 20,467
Principal payments on other debt (21,104) (19,952)
Other (87) (102)
Net cash provided by/(used in) financing activities 2,988 (1,038)
Effect of exchange rate changes on cash and cash equivalents 21 267
Net increase/(decrease) in cash and cash equivalents $ 2,791 $ 318
Cash and cash equivalents at January 1 $ 14,272 $ 15,905
Net increase/(decrease) in cash and cash equivalents 2,791 318
Cash and cash equivalents at June 30 $ 17,063 $ 16,223
Ford Motor Company 2Q July 26, 20178
S U P P L E M E N TA L F I N A N C I A L I N F O R M AT I O N
The tables below provide supplemental consolidating financial information. The data is presented by our reportable
segments, Automotive and Financial Services. All Other, Special Items, and Adjustments include our operating segments
that did not meet the quantitative threshold to qualify as a reportable segment, special items, eliminations of intersegment
transactions, and deferred tax netting.
Selected Income Statement Information. The following table provides supplemental income statement information, by
segment (in millions):
For the period ended June 30, 2017
Second Quarter
Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Revenues $ 37,113 $ 2,738 $ 2 $ 39,853
Total costs and expenses 35,815 2,217 290 38,322
Interest expense on Automotive debt — — 277 277
Other income/(loss), net 627 74 31 732
Equity in net income of affiliated companies 266 8 (1 ) 273
Income/(loss) before income taxes 2,191 603 (535 ) 2,259
Provision for/(Benefit from) income taxes 181 174 (146 ) 209
Net income/(loss) 2,010 429 (389 ) 2,050
Less: Income/(Loss) attributable to noncontrolling interests 8 — — 8
Net income attributable to Ford Motor Company $ 2,002 $ 429 $ (389 ) $ 2,042
For the period ended June 30, 2017
First Half
Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Revenues $ 73,588 $ 5,407 $ 4 $ 78,999
Total costs and expenses 71,295 4,449 282 76,026
Interest expense on Automotive debt — — 556 556
Other income/(loss), net 1,258 96 112 1,466
Equity in net income of affiliated companies 605 15 (1 ) 619
Income/(loss) before income taxes 4,156 1,069 (723 ) 4,502
Provision for/(Benefit from) income taxes 741 322 (205 ) 858
Net income/(loss) 3,415 747 (518 ) 3,644
Less: Income/(Loss) attributable to noncontrolling interests 15 — — 15
Net income attributable to Ford Motor Company $ 3,400 $ 747 $ (518 ) $ 3,629
Ford Motor Company 2Q July 26, 20179
S U P P L E M E N TA L F I N A N C I A L I N F O R M AT I O N
Selected Balance Sheet Information. The following tables provide supplemental balance sheet information, by
segment (in millions):
June 30, 2017
Assets Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Cash and cash equivalents $ 8,853 $ 7,366 $ 4 $ 16,223
Marketable securities 19,575 3,311 — 22,886
Financial Services finance receivables, net — 49,888 — 49,888
Trade and other receivables, less allowances 4,274 5,884 1 10,159
Inventories 11,092 — — 11,092
Other assets 2,317 974 — 3,291
Receivable from other segments 20 1,730 (1,750 ) —
Total current assets 46,131 69,153 (1,745 ) 113,539
Financial Services finance receivables, net — 51,551 — 51,551
Net investment in operating leases 1,904 26,693 — 28,597
Net property 33,620 166 8 33,794
Equity in net assets of affiliated companies 3,048 180 13 3,241
Deferred income taxes 14,008 218 (4,081 ) 10,145
Other assets 4,872 1,676 54 6,602
Receivable from other segments — 1,156 (1,156 ) —
Total assets $ 103,583 $ 150,793 $ (6,907 ) $ 247,469
Liabilities Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Payables $ 22,441 $ 1,122 $ 5 $ 23,568
Other liabilities and deferred revenue 18,707 1,239 12 19,958
Automotive debt payable within one year 2,911 — — 2,911
Financial Services debt payable within one year — 47,862 — 47,862
Payable to other segments 1,730 — (1,730 ) —
Total current liabilities 45,789 50,223 (1,713 ) 94,299
Other liabilities and deferred revenue 23,858 980 2 24,840
Automotive long-term debt 13,277 — — 13,277
Financial Services long-term debt — 81,959 — 81,959
Deferred income taxes 158 4,658 (4,081 ) 735
Payable to other segments 1,147 — (1,147 ) —
Total liabilities $ 84,229 $ 137,820 $ (6,939 ) $ 215,110
Ford Motor Company 2Q July 26, 201710
S U P P L E M E N TA L F I N A N C I A L I N F O R M AT I O N
Selected Cash Flow Information. The following tables provide supplemental cash flow information, by segment
(in millions):
For the period ended June 30, 2017
First Half
Cash flows from operating activities Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Net cash provided by/(used in) operating activities $ 5,748 $ 4,236 $ (33 ) $ 9,951
Reconciling Adjustments to Automotive Segment Operating Cash Flows*
Automotive capital spending (3,242 )
Net cash flows from non-designated derivatives 200
Funded pension contributions 456
Separation payments 59
Other 65
Automotive Segment Operating Cash Flows $ 3,286
_________
For the period ended June 30, 2017
First Half
Cash flows from investing activities Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Capital spending $ (3,242 ) $ (22 ) $ — $ (3,264 )
Acquisitions of finance receivables and operating leases — (27,379 ) — (27,379 )
Collections of finance receivables and operating leases — 21,636 — 21,636
Purchases of equity and debt securities (13,578 ) (3,351 ) (2 ) (16,931 )
Sales and maturities of equity and debt securities 13,570 3,336 — 16,906
Settlements of derivatives 200 (46 ) — 154
Other 10 12 (6 ) 16
Investing activity (to)/from other segments (38 ) (11 ) 49 —
Net cash provided by/(used in) investing activities $ (3,078 ) $ (5,825 ) $ 41 $ (8,862 )
Cash flows from financing activities Automotive
Financial
Services
All Other,
Special Items,
& Adjustments Consolidated
Cash dividends $ (1,392 ) $ — $ — $ (1,392 )
Purchases of common stock (131 ) — — (131 )
Net changes in short-term debt 216 (144 ) — 72
Proceeds from issuance of other debt 507 19,960 — 20,467
Principal payments on other debt (881 ) (19,071 ) — (19,952 )
Other (50 ) (52 ) — (102 )
Financing activity to/(from) other segments — 12 (12 ) —
Net cash provided by/(used in) financing activities $ (1,731 ) $ 705 $ (12 ) $ (1,038 )
Effect of exchange rate changes on cash and cash equivalents $ 94 $ 173 $ — $ 267
* We measure and evaluate our Automotive segment operating cash flow on a different basis than Net cash provided by/(used in) operating activities in our
consolidated statement of cash flows. Automotive segment operating cash flow includes additional elements management considers to be related to our
Automotive operating activities, primarily capital spending and non-designated derivatives, and excludes outflows for funded pension contributions,
separation payments, and other items that are considered operating cash flows under U.S. GAAP. The table above quantifies the reconciling adjustments to
Net cash provided by/(used in) operating activities for the period ended June 30, 2017.
Ford Motor Company 2Q July 26, 201711
N O N - G A A P F I N A N C I A L M E A S U R E S T H AT S U P P L E M E N T G A A P M E A S U R E S
We use both GAAP and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment
business performance. The non-GAAP measures listed below are intended to be considered by users as supplemental information to their
equivalent GAAP measures, to aid investors in better understanding our financial results. We believe that these non-GAAP measures provide
useful perspective on underlying business results and trends, and a means to assess our period-over-period results. These non-GAAP measures
should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These
non-GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in
items or events being adjusted.
Total Company Adjusted Pre-tax Profit (Most Comparable GAAP Measure: Net income attributable to Ford) – The non-GAAP measure is useful to
management and investors because it allows users to evaluate our pre-tax results excluding pre-tax special items. Pre-tax special items
consist of (i) pension and OPEB remeasurement gains and losses that are not reflective of our underlying business results, (ii) significant
restructuring actions related to our efforts to match production capacity and cost structure to market demand and changing model mix, and (iii)
other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities. When we provide guidance for
adjusted pre-tax profit, we do not provide guidance on a net income basis because the GAAP measure will include potentially significant special
items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and OPEB
remeasurement gains and losses.
Adjusted Earnings Per Share (Most Comparable GAAP Measure: Earnings Per Share) – Measure of Company’s diluted net earnings per share
adjusted for impact of pre-tax special items (described above), and tax special items. The measure provides investors with useful information to
evaluate performance of our business excluding items not indicative of underlying run rate of our business. When we provide guidance for
adjusted earnings per share, we do not provide guidance on an earnings per share basis because the GAAP measure will include potentially
significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and
OPEB remeasurement gains and losses.
Adjusted Effective Tax Rate (Most Comparable GAAP Measure: Effective Tax Rate) – Measure of Company’s tax rate excluding pre-tax special
items (described above) and tax special items. The measure provides an ongoing effective rate which investors find useful for historical
comparisons and for forecasting. When we provide guidance for adjusted effective tax rate, we do not provide guidance on an effective tax rate
basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with
reasonable certainty prior to year-end, including pension and OPEB remeasurement gains and losses.
Ford Motor Company 2Q July 26, 201712
N E T I N C O M E R E C O N C I L I AT I O N T O A D J U S T E D P R E - TA X P R O F I T
E A R N I N G S P E R S H A R E R E C O N C I L I AT I O N T O A D J U S T E D E A R N I N G S P E R S H A R E
2017
2Q YTD
Diluted After-Tax Results (Mils)
Diluted after-tax results (GAAP) 2,042$ 3,629$
Less: Impact of pre-tax and tax special items (202) (193)
Adjusted net income – diluted (Non-GAAP) 2,244$ 3,822$
Basic and Diluted Shares (Mils)
Basic shares (average shares outstanding) 3,977 3,977
Net dilutive options and unvested restricted stock units 19 21
Diluted shares 3,996 3,998
Earnings per share – diluted (GAAP) 0.51$ 0.91$
Less: Net impact of adjustments (0.05) (0.05)
Adjusted earnings per share – diluted (Non-GAAP) 0.56$ 0.96$
(Mils) Memo:
2016 2017 2016 2017 FY 2016
Net income / (Loss) attributable to Ford (GAAP) 1,970$ 2,042$ 4,422$ 3,629$ 4,596$
Income / (Loss) attributable to non-controlling interests 2 8 5 15 11
Net income / (Loss) 1,972$ 2,050$ 4,427$ 3,644$ 4,607$
Less: (Provision for) / Benefit from income taxes (903) (209) (2,099) (858) (2,189)
Income / (Loss) before income taxes 2,875$ 2,259$ 6,526$ 4,502$ 6,796$
Less: Special items pre-tax (118) (248) (304) (224) (3,579)
Adjusted pre-tax profit (Non-GAAP) 2,993$ 2,507$ 6,830$ 4,726$ 10,375$
2Q YTD
Ford Motor Company 2Q July 26, 201713
E F F E C T I V E T A X R AT E R E C O N C I L I AT I O N T O A D J U S T E D E F F E C T I V E T A X R AT E
S P E C I A L I T E M S
2017 Memo:
2Q YTD FY 2016
Pre-Tax Results (Mils)
Income / (Loss) before income taxes (GAAP) 2,259$ 4,502$ 6,796$
Less: Impact of special items (248) (224) (3,579)
Adjusted pre-tax profit (Non-GAAP) 2,507$ 4,726$ 10,375$
Taxes (Mils)
(Provision for) / Benefit from income taxes (GAAP) (209)$ (858)$ (2,189)$
Less: Impact of special items 46 31 1,121
Adjusted (provision for) / benefit from income taxes (Non-GAAP) (255)$ (889)$ (3,310)$
Tax Rate (Pct)
Effective tax rate (GAAP) 9.3% 19.1% 32.2%
Adjusted effective tax rate (Non-GAAP) 10.2% 18.8% 31.9%
(Mils) Memo:
2016 2017 2016 2017 FY 2016
Pension and OPEB remeasurement gain / (loss) (11)$ -$ (11)$ -$ (2,996)$
Separation-related actions (102)$ (7)$ (276)$ (29)$ (304)$
Other Items
San Luis Potosi plant cancellation -$ 7$ -$ 53$ (199)$
Japan, Indonesia market closure (5) - (17) - (80)
Next-generation Focus footprint change - (248) - (248) -
Total other items (5)$ (241)$ (17)$ (195)$ (279)$
Total pre-tax special items (118)$ (248)$ (304)$ (224)$ (3,579)$
Tax special items (1)$ 46$ (67)$ 31$ 1,121$
Memo:
Special items impact on earnings per share* (0.03)$ (0.05)$ (0.09)$ (0.05)$ (0.61)$
2Q YTD
Ford Motor Company 2Q July 26, 201714
C O N S O L I D AT E D I N C O M E S T AT E M E N T – F O R D C R E D I T
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
(in millions)
For the periods ended June 30,
2016 2017 2016 2017
Second Quarter First Half
(unaudited)
Financing revenue
Operating leases $ 1,388 $ 1,381 $ 2,706 $ 2,747
Retail financing 757 825 1,493 1,627
Dealer financing 443 476 883 927
Other 7 17 19 34
Total financing revenue 2,595 2,699 5,101 5,335
Depreciation on vehicles subject to operating leases (1,075 ) (1,037 ) (2,089) (2,101 )
Interest expense (687 ) (769 ) (1,333) (1,498 )
Net financing margin 833 893 1,679 1,736
Other revenue
Insurance premiums earned 41 42 80 82
Fee based revenue and other — 61 — 116
Total financing margin and other revenue 874 996 1,759 1,934
Expenses
Operating expenses 310 302 604 606
Provision for credit losses 137 99 265 251
Insurance expenses 79 62 91 93
Total expenses 526 463 960 950
Other income, net 52 86 115 116
Income before income taxes 400 619 914 1,100
Provision for income taxes 104 173 260 321
Net income $ 296 $ 446 $ 654 $ 779
Ford Motor Company 2Q July 26, 201715
C O N S O L I D AT E D B A L A N C E S H E E T – F O R D C R E D I T
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
2016
June 30,
2017
(unaudited)
ASSETS
Cash and cash equivalents $ 8,077 $ 7,366
Marketable securities 3,280 3,311
Finance receivables, net 102,981 108,300
Net investment in operating leases 27,209 26,693
Notes and accounts receivable from affiliated companies 811 986
Derivative financial instruments 909 979
Other assets 2,822 2,859
Total assets $ 146,089 $ 150,494
LIABILITIES
Accounts payable
Customer deposits, dealer reserves, and other $ 1,065 $ 1,138
Affiliated companies 336 513
Total accounts payable 1,401 1,651
Debt 126,492 129,268
Deferred income taxes 3,230 3,449
Derivative financial instruments 166 216
Other liabilities and deferred income 1,997 2,066
Total liabilities 133,286 136,650
SHAREHOLDER’S INTEREST
Shareholder’s interest 5,227 5,227
Accumulated other comprehensive income/(loss) (890 ) (609 )
Retained earnings 8,466 9,226
Total shareholder’s interest attributable to Ford Motor Credit Company 12,803 13,844
Shareholder’s interest attributable to noncontrolling interests — —
Total shareholder’s interest 12,803 13,844
Total liabilities and shareholder’s interest $ 146,089 $ 150,494
Ford Motor Company 2Q July 26, 201716
C O N S O L I D AT E D S T AT E M E N T O F C A S H F L O W S – F O R D C R E D I T
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the periods ended June 30,
2016 2017
First Half
(unaudited)
Cash flows from operating activities
Net cash provided by/(used in) operating activities $ 3,309 $ 2,866
Cash flows from investing activities
Purchases of finance receivables (17,939 ) (19,025 )
Collections of finance receivables 15,692 17,809
Purchases of operating lease vehicles (7,590 ) (6,720 )
Liquidations of operating lease vehicles 4,050 4,440
Net change in wholesale receivables and other short-duration receivables (2,453 ) (857 )
Purchases of marketable securities (3,965 ) (3,351 )
Proceeds from sales and maturities of marketable securities 2,197 3,336
Settlements of derivatives 35 (46 )
All other investing activities (85 ) (12 )
Net cash provided by/(used in) investing activities (10,058 ) (4,426 )
Cash flows from financing activities
Proceeds from issuances of long-term debt 25,624 19,960
Principal payments on long-term debt (20,800 ) (19,071 )
Change in short-term debt, net 717 (132 )
Cash distributions to parent — (28 )
All other financing activities (78 ) (53 )
Net cash provided by/(used in) financing activities 5,463 676
Effect of exchange rate changes on cash and cash equivalents (30 ) 173
Net increase/(decrease) in cash and cash equivalents $ (1,316) $ (711)
Cash and cash equivalents at January 1 $ 8,886 $ 8,077
Net increase/(decrease) in cash and cash equivalents (1,316 ) (711 )
Cash and cash equivalents at June 30 $ 7,570 $ 7,366