Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor — FY2003 Earnings Presentation
44 slides from Ford Mtr Co Del's earnings presentation, Jan 22, 2004
Slide 1: Fourth Quarter and Full Year 2003 Earnings Review
FOURTH QUARTER AND FULL YEAR 2003 EARNINGS REVIEW JANUARY 22, 2004
Slide 2: 2003 Year in Review
2003 YEAR IN REVIEW Achieved pre-tax automotive breakeven* Exceeded expectations for cost savings Improved quality Successful vehicle launches, including F-150 and Focus C-Max Continued progress on unit revenues in North America P.A.G. profitable Substantial improvement in South America and Asia Pac
Slide 3: Fourth Quarter 2003 Summary
FOURTH QUARTER 2003 SUMMARY Earnings per share of $0.31 from continuing operations, excluding special items, and net income of $(0.43) The Americas North America per unit revenue up over $700 per unit compared with a year ago Market share loss in North America reflected primarily discontinued vehicl
Slide 4: Fourth Quarter and Full Year Results
Earnings Per Share Net Income $(0.43 ) $(0.36 ) $0.27 $0.82 Continuing Ops. - Excl. Special Items 0.31 0.20 1.14 0.58 Net Income (Mils.) $(793 ) $(663 ) $495 $1,475 Pre-Tax Profit (Mils.) Incl. Special Items $(1,106 ) $(1,129 ) $1,370 $419 Excl. Special Items 899 546 3,431 1,580 Revenue (Bils.) Tota
Slide 5: Income from Continuing Operations Excluding Special Items Compared with Net Income
INCOME FROM CONTINUING OPERATIONS EXCLUDING SPECIAL ITEMS COMPARED WITH NET INCOME Memo: Pre-Tax Profit (Mils.) Earnings Per Share* Memo: Pre-Tax Profit (Mils.) Fourth Quarter Full Year Earnings Per Share* * Earnings per share from continuing operations is calculated on a basis that includes pre-tax
Slide 6: 2003 Full Year Milestones
2003 FULL YEAR MILESTONES Planning Assumptions Industry Volume -- U.S. 16.5 million units 17.0 -- Europe 17.0 million units 17.0 Net Pricing* -- U.S. (Ford / LM) Zero (0.6)% -- Europe (Ford) 1% (1.7)% Physicals Market Share Improve in all regions Mixed Quality Improve in all regions Improved Automot
Slide 7: Total Company 2003 Pre-Tax Profit / (Loss) by Sector
TOTAL COMPANY 2003 PRE-TAX PROFIT / (LOSS) BY SECTOR Full Year (Mils.)* Financial Services Total Automotive Total Automotive Fin Svcs 2Q 800 104 850 $3,431 $104 $3,327 * Excluding special items; see Appendix (pages 2, 3, and 4 of 17) for reconciliation to GAAP Total Auto Fin Svcs 2Q 899 -20 903 Fina
Slide 8: 2003 Automotive Pre-Tax Profit Compared with 2002
2003 AUTOMOTIVE PRE-TAX PROFIT COMPARED WITH 2002 Fourth Quarter (Bils.)* * Excluding special items; see Appendix (pages 2, 3 and 4 of 17) for reconciliation to GAAP Full Year (Bils.)* 2002 2003 Volume Revenue Cost Other -300 100 -1500 -1000 3200 -300 $(1.0) $(1.5) 2002 Net Pricing Cost Perf. $3.2 V
Slide 9: Full Year Automotive Cost Performance
FULL YEAR AUTOMOTIVE COST PERFORMANCE Quality Mfg. Eng Overhead Net Product D&A Pension 1.6 1.2 1.4 0.4 -0.2 -1.2 $0.4 $1.6 $(1.2) $(0.2) $1.2 $1.4 2003 Costs B / (W) 2002 (Bils.)* Net Product Costs Quality Related Pension / Healthcare Deprec. / Amort. Mfg. / Engrg. Overhead * At constant volume, mi
Slide 10: Automotive Sector 2003 Profit / (Loss)
AUTOMOTIVE SECTOR 2003 PROFIT / (LOSS) WW Americas Int'l Other 2Q -4 193 172 -369 World- wide Other Automotive Fourth Quarter (Mils.)* Americas $(4) $(369) $193 Pre-Tax Profits by Segment Full Year (Mils.)* Memo: B / (W) 2002 $236 $(224) $624 $(164) $357 $(236) $575 $18 * Excluding special items; se
Slide 11: Automotive Sector - Americas Segment 2003 Profit / (Loss)
AUTOMOTIVE SECTOR - AMERICAS SEGMENT 2003 PROFIT / (LOSS) Americas N.A. S. A. 2Q 193 197 -4 Americas South America Fourth Quarter (Mils.)* North America $193 $(4) $197 Pre-Tax Profits Total Auto Fin Svcs 2Q 1632 1762 -130 Americas South America Full Year (Mils.)* North America $1,632 $1,762 $(130) M
Slide 12: Automotive Sector - North America Fourth Quarter Key Metrics
AUTOMOTIVE SECTOR -- NORTH AMERICA FOURTH QUARTER KEY METRICS -- 2003 vs. 2002 2002 2003 Revenue 21.2 22.8 2003 2002 $22.8 $21.2 Revenue (Bils.) 2002 2003 Vehicle Unit Sales 999 1022 2003 2002 1,022 999 Vehicle Unit Sales (000) 2002 2003 PBT 513 197 $513 2003 2002 Pre-Tax Profit (Mils.)* * Excluding
Slide 13: North America Unit Revenue Continues to Improve
NORTH AMERICA UNIT REVENUE CONTINUES TO IMPROVE 4Q 01 4Q 02 4Q 03 Net Rev 20717 21001 21725 2001 Full Year Per Unit Revenue* 2002 2003 * Excluding FIN46 $21,001 $20,717 2001 4Q 01 4Q 02 4Q 03 Net Rev 20349 21273 21976 2002 2003 Fourth Qtr. Per Unit Revenue* $21,273 $20,349 Revenue Drivers • Discipli
Slide 14: Automotive Sector - South America Fourth Quarter Key Metrics
AUTOMOTIVE SECTOR -- SOUTH AMERICA FOURTH QUARTER KEY METRICS -- 2003 vs. 2002 2002 2003 Revenue 0.3 0.6 2003 2002 $0.6 $0.3 Revenue (Bils.) 2002 2003 Vehicle Unit Sales 56 61 2003 2002 61 56 Vehicle Unit Sales (000) 2002 2003 PBT -96 -8 $(96) 2003 2002 Pre-Tax Profit (Mils.)* * Excluding special it
Slide 15: Automotive Sector - International Segment 2003 Profit / (Loss)
AUTOMOTIVE SECTOR - INTERNATIONAL SEGMENT 2003 PROFIT / (LOSS) Intl Europe AP PAG Other 2Q 172 60 26 108 -22 Fourth Quarter (Mils.)* $172 $(22) $26 Pre-Tax Profits Full Year (Mils.)* Memo: B / (W) 2002 $624 $77 $61 $496 $(10) $575 $(564) $151 $904 $84 $108 Itnl Europe AP PAG Other 2Q -905 -1113 -25
Slide 16: Automotive Sector - Europe Fourth Quarter Key Metrics
AUTOMOTIVE SECTOR -- EUROPE FOURTH QUARTER KEY METRICS -- 2003 vs. 2002 1st Qtr 2nd Qtr East 5.6 7.4 2003 2002 $7.4 $5.6 Revenue (Bils.) 2002 2003 461 484 2003 2002 484 460 Vehicle Unit Sales (000) 1st Qtr 2nd Qtr East -17 64 $(17) 2003 2002 Pre-Tax Profit (Mils.)* $60 * Excluding special items; see
Slide 17: Ford Europe 2004 Improvement Plan
FORD EUROPE 2004 IMPROVEMENT PLAN 1st Qtr. (Mils.) Actual Results $(247 ) $(525 ) $(401 ) $60 $(772) $(341) 2003 Second Half Annualized $ (680 ) - - 2004 Benefit of Restructuring Actions 450 - - Cost Reductions and Other Improvements 30 - 130 2004 Milestone $(100) - $(200 ) * Excluding special items
Slide 18: Automotive Sector - Asia Pacific Fourth Quarter Key Metrics
AUTOMOTIVE SECTOR - ASIA PACIFIC FOURTH QUARTER KEY METRICS -- 2003 vs. 2002 2002 2003 Revenue 1.3 1.5 2003 2002 $1.5 $1.3 Revenue (Bils.) 2002 2003 Vehicle Unit Sales 73 93 2003 2002 93 73 Vehicle Unit Sales (000) 2002 2003 PBT -35 26 $26 2003 2002 Pre-Tax Profit (Mils.)* $(35) * Excluding special
Slide 19: Automotive Sector - P.A.G. Fourth Quarter Key Metrics
AUTOMOTIVE SECTOR -- P.A.G. FOURTH QUARTER KEY METRICS -- 2003 vs. 2002 1st Qtr 2nd Qtr East 6 7.5 2003 2002 $7.5 $6.0 Revenue (Bils.) 2002 2003 200 220 2003 2002 220 201 Vehicle Unit Sales (000) 1st Qtr 2nd Qtr East -388 108 $(388) 2003 2002 Pre-Tax Profit (Mils.)* $108 * Excluding special items; s
Slide 20: Pension Update
PENSION UPDATE PENSION FUNDING NOT AN ISSUE U.S. pension fund returns Actual 26.1 % Long-term assumption 8.75 % U.S. discount rate 6.75 % 6.25 % Worldwide pre-tax expense (Bils.) $0.9 $0.9 European restructuring costs included above 0.1 Worldwide pension contributions (Bils.) $2.8 $0.7 Funded status
Slide 21: Post-Retirement Health Care and Life Insurance
POST-RETIREMENT HEALTH CARE AND LIFE INSURANCE Worldwide OPEB expense (Bils.) $4.2 $2.7 - - Visteon Agreement included above 1.6 Worldwide Retiree Benefit payments (Bils.) 1.4 1.5 U.S. Assumptions Cost trend assumptions at 12/31 Initial trend rate 11 % 9 % Steady state trend rate - 5% reached by 200
Slide 22: 2003 Fourth Quarter and Full Year Automotive Cash
2003 FOURTH QUARTER AND FULL YEAR AUTOMOTIVE CASH* 4th Qtr. (Bils.) Full Yr. (Bils.) Cash, Marketable & Loaned Securities, Short-Term VEBA Assets December 31, 2003 $ 25.9 $25.9 September 30, 2003 / December 31, 2002 26.9 25.3 Change in Gross Cash $ (1.0 ) $ 0.6 Operating-Related Cash Flow Automotive
Slide 23: Financial Services Sector 2003 Profit / (Loss)
FINANCIAL SERVICES SECTOR 2003 PROFIT / (LOSS) Pre-Tax Profits by Operation Total Credit Hertz Other 903 839 44 20 Fourth Quarter (Mils.) $903 Total Credit Hert Other 3327 3035 228 64 Full Year (Mils.) $228 Total Hertz Ford Credit $3,327 Other Financial Services Memo: B / (W) 2002 $310 $245 $17 $48
Slide 24: 2004 Planning Assumptions and Operational Metrics
2004 PLANNING ASSUMPTIONS AND OPERATIONAL METRICS Planning Assumptions Industry Volume -- U.S. 17.0 million units -- Europe 16.9 million units Industry Net Pricing -- U.S. Down slightly -- Europe Down slightly Operational Metrics Quality Improve in all regions Market Share Flat or improve in all reg
Slide 25: 2004 Financial Milestones
2004 FINANCIAL MILESTONES Pre-Tax Income Automotive Americas North America $ 1.5 - 1.7 South America (0.1) - 0 International Europe (0.2) - (0.1 ) Asia-Pacific 0 - 0.1 P.A.G. 0.5 - 0.6 Total Automotive $ 0.9 - $1.1 Financial Services 2.6 - 2.7 Total Company $ 3.5 - $3.8 * Excluding special items Mil
Slide 26: Outlook for the First Quarter 2004
OUTLOOK FOR THE FIRST QUARTER 2004 First Quarter production compared with year ago 1,030,000 units in North America, largely unchanged 420,000 units in Europe, up 12,000 units 200,000 units at P.A.G., up 23,000 units Remaining restructuring action in Europe will be concluded in First Half Pricing pr
Slide 27: Safe Harbor
SAFE HARBOR Greater price competition in the U.S. and Europe resulting from currency fluctuations, industry overcapacity or other factors; A significant decline in industry sales, particularly in the U.S. or Europe, resulting from slowing economic growth, geo-political events or other factors; Lower
Slide 28: Fourth Quarter Restructuring Actions - Visteon Agreement
FOURTH QUARTER RESTRUCTURING ACTIONS -- VISTEON AGREEMENT Pre-Tax Profit / (Loss) (Mils.) 2003 Pre-Tax Profit Transfer of Pre-Spin OPEB Liability $(1,646 ) IT Separation / Other (101 ) One-Time Payment from Visteon 150 Total $(1,597 ) Appendix 1 of 17
Slide 29: Reconciliation of Automotive Pre-Tax Profit to Exclude Special Items
RECONCILIATION OF AUTOMOTIVE PRE-TAX PROFIT TO EXCLUDE SPECIAL ITEMS Fourth Quarter (Mils.) Full Year (Mils.) Pre-Tax Profit from Continuing Opns. $(570 ) $(1,153 ) $(2,009 ) $(1,957 ) Less: Special Items - European Restructuring $(173 ) $ (173 ) $ (457 ) $ (513 ) - P.A.G. Restructuring (157 ) (157
Slide 30: 2002 - 2003 Fourth Quarter Pre-Tax Results
2002 - 2003 FOURTH QUARTER PRE-TAX RESULTS North America $ 513 $(1,400 ) $ -- $(1,597 ) $ 513 $ 197 South America (96 ) (4 ) -- -- (96 ) (4 ) Total Americas $ 417 $(1,404 ) $ -- $(1,597 ) $417 $ 193 International Europe $(190 ) $ (397 ) $(173 ) $ (457 ) $ (17 ) $ 60 Asia Pacific (35 ) 26 -- -- (35 )
Slide 31: 2002 - 2003 Full Year Pre-Tax Results
2002 - 2003 FULL YEAR PRE-TAX RESULTS North America $ 2,490 $ 165 $ -- $(1,597 ) $ 2,490 $ 1,762 South America (622 ) (130 ) -- -- (622 ) (130 ) Total Americas $ 1,868 $ 35 $ -- $(1,597 ) $ 1,868 $ 1,632 International Europe $ (722 ) $(1,626 ) $(173 ) $ (513 ) $ (549 ) $(1,113 ) Asia Pacific (176 )
Slide 32: Fourth Quarter Automotive Summary
FOURTH QUARTER AUTOMOTIVE SUMMARY Americas North America 999 1,022 $21,252 $22,808 $ 513 $ 197 South America 56 61 335 623 (96 ) (4 ) Total Americas 1,055 1,083 $21,587 $23,431 $ 417 $ 193 International Europe 460 484 $ 5,573 $ 7,412 $ (17 ) $ 60 Asia Pacific 73 93 1,262 1,548 (35 ) 26 P.A.G. 201 22
Slide 33: Full Year Automotive Summary
FULL YEAR AUTOMOTIVE SUMMARY Americas North America 4,146 3,811 $87,070 $83,597 $ 2,490 $ 1,762 South America 195 209 1,549 1,877 (622 ) (130 ) Total Americas 4,341 4,020 $88,619 $85,474 $ 1,868 $ 1,632 International Europe 1,561 1,595 $18,876 $22,186 $ (549 ) $(1,113 ) Asia Pacific 300 353 4,379 5,
Slide 34: 2003 Full Year Market Results
2003 FULL YEAR MARKET RESULTS U.S. Industry SAAR (Mils.) 16.2 16.6 18.0 17.1 17.0 (0.1 ) Market Share (Pct.) - Ford and Lincoln Mercury 20.0 % 19.3 % 18.6 % 19.0 % 19.2 (0.7 ) Pts. - Premier Automotive Group 1.2 1.3 1.3 1.4 1.3 0.1 Total U.S. Market Share 21.2 % 20.6 % 19.9 % 20.4 % 20.5 (0.6 ) Pts.
Slide 35: Production Volumes
PRODUCTION VOLUMES North America 900 (51 ) 1,030 (2 ) Europe 438 (4 ) 420 12 P.A.G. 200 30 200 23 Units (000) 2003 Actual Fourth Quarter B / (W) 2002 (000) Units (000) First Quarter 2004 Forecast B / (W) 2003 (000) Appendix 8 of 17
Slide 36: Reconciliation of Net Pricing to Change in Automotive Sales
RECONCILIATION OF NET PRICING TO CHANGE IN AUTOMOTIVE SALES Automotive Sales 2003 $22,808 $22,317 $7,412 $15,314 $83,597 $21,936 $22,186 $13,910 2002 21,252 21,273 5,573 12,115 87,070 21,001 18,876 12,092 2003 B / (W) $ 1,556 $ 1,044 $1,839 $ 3,199 $ (3,473 ) $ 935 $ 3,310 $ 1,818 Than 2002 Memo: Ch
Slide 37: 2003 Ford and Lincoln Mercury U.S. Market Data
2003 FORD AND LINCOLN MERCURY U.S. MARKET DATA* Sales Mix Fleet Sales (Pct. of Total) 28 % 27 % 16 % 24 % 24 % 0 Pts. Red Carpet Lease (Pct. of Total) 7 5 4 4 5 (6 ) Red Carpet Lease (Pct. of Retail) 10 7 5 5 7 (7 ) Inventory Days' Supply Car 66 67 70 77 77 (2 ) Truck 95 86 66 75 75 9 Average 84 80
Slide 38: Costs and Expenses Automotive Sector
COSTS AND EXPENSES AUTOMOTIVE SECTOR Total Cost and Expenses $35,033 $41,572 $(6,539 ) $134,801 $139,973 $(5,172 ) Select Cost Items Included Above: Depreciation $ 572 $ 755 $ (183 ) $2,435 $2,814 $ (379 ) Amortization 658 726 (68 ) 2,461 2,658 (197 ) Post-Retirement Expense* 554 2,616 (2,062 ) 2,11
Slide 39: Ford Credit Results and Metrics - Full Year
2002 2003 East 1371 2196 4Q 594 839 Receivables (Bils.) On-Balance Sheet $126 $132 * Securitized Off-Balance Sheet 71 50 Managed $197 $182 Credit Losses (Mils.) On-Balance Sheet $2,362 $2,044 Managed 2,816 2,813 Loss-to-Receivables Ratio On-Balance Sheet 1.72 % 1.67% Managed - U.S. Retail and Lease
Slide 40: Ford Credit Key Metric Definitions
FORD CREDIT KEY METRIC DEFINITIONS Appendix 13 of 17 In addition to evaluating Ford Credit's financial performance on a GAAP financial statement basis, Ford Credit management also uses other criteria, some of which were previously disclosed in this presentation and are defined below. Information abo
Slide 41: Ford Credit Ratio Definitions
FORD CREDIT RATIO DEFINITIONS In addition to evaluating Ford Credit's financial performance on a GAAP financial statement basis, Ford Credit management also uses other criteria, some of which were previously disclosed in this presentation and are defined below: Leverage: Total Debt - - Financial Sta
Slide 42: Ford Credit Reconciliations of Managed Leverage to Financial Statement Leverage
FORD CREDIT RECONCILIATIONS OF MANAGED LEVERAGE TO FINANCIAL STATEMENT LEVERAGE Dec. 31, 2002 (Bils.) Dec. 31, 2003 (Bils.) Leverage Calculation * Total Debt $140.3 $149.7 Total Securitized Receivables Outstanding** 71.4 49.4 Retained Interest in Securitized Receivables** (17.6 ) (13.0 ) Adjustments
Slide 43: Automotive Gross Cash Reconciliation to GAAP
AUTOMOTIVE GROSS CASH RECONCILIATION TO GAAP Appendix 16 of 17 Cash and Cash Equivalents $ 5.2 $ 5.4 $ 0.2 Marketable Securities 17.4 10.8 (6.6 ) Loaned Securities 0 5.7 5.7 Total Cash / Market. Sec. $22.6 $21.9 $(0.7 ) Short-Term VEBA 2.7 4.0 1.3 Gross Cash $25.3 $25.9 $ 0.6 Dec. 31, 2003 B / (W) D
Slide 44: Automotive Operating Related Cash Flow Reconciliation to GAAP
Appendix 17 of 17 AUTOMOTIVE OPERATING RELATED CASH FLOW RECONCILIATION TO GAAP Cash Flow from Operating Activities before Securities $(3.5 ) $ 1.3 Trading* Items Included in Operating-Related Cash Flow Capital Expenditures $(1.8 ) $(7.4 ) Net Transactions Between Automotive and 0.8 1.2 Financial Se