01—Abstract
Summary
Summary of the 10-K filed March 21, 1994. Cited figures are marked; the original filing is the authoritative source.
Ford Motor Company's 1993 Form 10-K shows a sharp turnaround from 1992.
Worldwide net income rose to $2,529 milliona, or $4.55 per share, compared with a loss of $7,385 million (-$15.61 per share) in 1992, which was driven by a one-time $6,883 million accounting charge for postretirement health care and income taxes. Excluding that charge, the 1992 loss was $502 million. Sales and revenues reached $108.5 billion, up 8%, and factory unit sales of cars and trucks rose 3% to 5.96 million.
The Financial Services segment was the standout performer, with record net income of $1,589 millionb, up 54%, while Automotive returned to profit at $940 million after a 1992 loss of $1,534 million (excluding accounting changes). U.S. Automotive earned $1,482 million, aided by a 22.3% U.S. car share and 30.5% U.S. truck share, both improvements over 1992. The balance sheet remained solid.
Automotive cash and marketable securities totaled $9.8 billion, and Automotive debt fell to $8.0 billionc, or 34% of total capitalization. Stockholders' equity rose to $15.6 billion. Management guided to continued improvement in 1994, citing cost reductions, new products such as the Windstar, Aspire, and Contour, and expected U.S. industry sales of about 15 million units.
Key risks include a weak European market (industry car sales down 16% in 1993), tougher emissions and fuel economy rules, large product-liability and litigation exposures, and an investigation into strategic options for the troubled savings-and-loan subsidiary First Nationwide, which lost $55 milliond in 1993. For investors, the filing shows a company that has recovered strongly in North America and in Financial Services, while Europe remains a drag. The cash dividend was held at $1.60 per share, and the Hertz stake was raised from 49% to 54%, which will bring Hertz into consolidation.
02—Key points
Key Highlights
- Net income of $2,529 million ($4.55/share) in 1993, versus a 1992 net loss of $7,385 million that included a one-time $6,883 million accounting charge.
- Sales and revenues rose 8% to $108.5 billion, and worldwide factory unit sales increased 3% to 5.96 million vehicles.
- Financial Services set a record with net income of $1,589 million, up 54% from 1992, led by Ford Credit's record $1,194 million.
- Automotive operations returned to profitability at $940 million, with U.S. Automotive earning $1,482 million on $61.6 billion of sales, compared with a loss in 1992.
- Market share improved: Ford's U.S. combined car and truck share reached 25.5% in 1993, the highest since 1978, while Europe remained weak with industry car sales down 16%.
- Balance sheet strengthened: Automotive cash and marketable securities were $9.8 billion, Automotive debt fell to $8.0 billion, and stockholders' equity rose to $15.6 billion.
- Major risks include European restructuring, emissions and CAFE regulation, product-liability suits (e.g., Bronco II rollover and restraint-system claims), and a strategic review of First Nationwide, which lost $55 million in 1993.
03—Questions
Frequently Asked Questions
Why did Ford's net income swing from a loss in 1992 to a profit in 1993?
The 1992 loss of $7,385 million was driven mainly by a one-time $6,883 million charge from adopting new accounting rules for postretirement health care and income taxes. Excluding that charge, the 1992 loss was $502 million. In 1993, net income of $2,529 million reflected higher U.S. industry volume, a higher Ford market share, improved margins, lower marketing costs, and a record year at Financial Services.
How is Ford's Financial Services segment performing relative to Automotive?
Financial Services earned a record $1,589 million in 1993, up $557 million from 1992, supported by Ford Credit's record $1,194 million and strong results at The Associates and USL Capital. Automotive earned $940 million, a substantial improvement from the 1992 loss. Financial Services contributed a significant share of total profit, while Europe remained the main weakness in Automotive, with losses of $407 million in European operations excluding Jaguar.
What is the outlook for Ford in 1994?
Management expects continued improvement in operating results from cost reductions, new products such as the Windstar, Aspire, Contour, and Mercury Mystique, and moderate U.S. economic growth. It projects U.S. industry sales of about 15 million units in 1994 and a modest rise in European industry sales, with European Automotive results expected to improve. The company also expects per-unit U.S. marketing costs to fall further. These are forward-looking statements and depend on economic conditions.
What are the biggest risks or uncertainties disclosed in the filing?
Key risks include potentially costly compliance with tougher emissions standards (such as California's LEV and ZEV mandates) and CAFE fuel economy rules, which could force production cuts. Ford also faces extensive litigation, including restraint-system and Bronco II rollover suits totaling several hundred million dollars in claimed damages, plus environmental remediation liabilities that may be substantial. Ford's European operations remain under pressure, and the strategic review of First Nationwide could affect results.
Did Ford change its dividend or make any significant capital moves?
The quarterly dividend stayed at $0.40 per share, or $1.60 annually, the same as in 1992. Ford spent $6.8 billion on capital expenditures in 1993, up about $1 billion. On March 8, 1994, it bought an additional 5% of Hertz from Commerzbank, raising its stake from 49% to 54%, so Hertz will now be consolidated into Financial Services. Ford also contributed $1 billion to its pension funds in 1993.
04—Continue