01—Abstract
Summary
Summary of the 10-K filed February 18, 2014. Cited figures are marked; the original filing is the authoritative source.
Ford Motor Company's 2013 Form 10-K (filed February 18, 2014) shows a year of solid recovery and strong profitability for the automaker, with total revenues of $146.9 billiona (up 10% from $133.6 billion in 2012) and net income attributable to Ford of $7.2 billion, or $1.76 per diluted share, compared with $5.7 billion or $1.42 in 2012.
Total Company pre-tax profit excluding special items was $8.6 billionb, which management described as among the best in the company's history. The Automotive sector drove the improvement, with wholesale volumes up 12%, an operating margin of 5.4%, and North America delivering record-level results with pre-tax profit of $8.8 billion. Europe continued to lose money, though its pre-tax loss narrowed to $1.6 billion, and South America was roughly breakeven.
The balance sheet strengthened meaningfully. Total equity attributable to Ford rose to $26.4 billionc from $15.9 billion, helped by a $4.6 billion favorable swing in accumulated other comprehensive income tied to pension and OPEB remeasurement. Worldwide pension underfunding fell to $9 billion from $18.7 billion, and Automotive gross cash ended at $24.8 billion with total Automotive liquidity of $36.2 billion.
Automotive debt rose to $15.7 billiond, but management reiterated its target of reducing it to about $10 billion by mid-decade. The dividend was doubled to $0.10 per quarter during 2013 and was raised a further 25% to $0.125 for the first quarter of 2014. Looking forward, management guided to 2014 total Company pre-tax profit of $7 to $8 billion, below 2013, as it launches 23 all-new or significantly refreshed vehicles, including 16 in North America.
Automotive operating margin is expected to be lower and operating-related cash flow substantially lower, reflecting higher capital spending of about $7.5 billion annually. Key risks flagged in the filing include excess global capacity (about 23 million units), tighter fuel economy and emissions rules, Brazilian tax disputes, a pending U.S. Customs ruling on Transit Connect duties, and a large product-liability-adjacent apartheid lawsuit, as well as currency volatility in emerging markets such as Venezuela and Argentina.
02—Key points
Key Highlights
- Total revenues rose about 10% to $146.9 billion, and net income attributable to Ford reached $7.2 billion, or $1.76 per diluted share, versus $1.42 in 2012.
- Total Company pre-tax profit excluding special items was $8.6 billion, and Automotive pre-tax profit was the highest in more than a decade, with record results in North America and Asia Pacific Africa.
- Automotive operating margin was 5.4% on wholesale volume growth of 12%, while Europe's pre-tax loss narrowed to $1.6 billion from a larger loss a year earlier.
- Total equity attributable to Ford nearly doubled to $26.4 billion, mainly from higher retained earnings and a $4.6 billion improvement in pension-related other comprehensive income.
- Global pension underfunding fell from $18.7 billion to $9 billion, and Automotive gross cash was $24.8 billion with total Automotive liquidity of $36.2 billion.
- The quarterly dividend was doubled to $0.10 in 2013 and increased to $0.125 for the first quarter of 2014, and 2014 pre-tax profit guidance is $7 to $8 billion, below 2013.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 18, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $146.92B$133.56B | +10.0% |
| Cost of Revenue | $120.19B$113.04B | +6.3% |
| Gross Profit | $26.73B$20.52B | +30.2% |
| R&D Expenses | $6.20B$5.50B | +12.7% |
| SG&A Expenses | $10.85B$11.53B | −5.9% |
| Operating Expenses | $134.11B$127.76B | +5.0% |
| Interest Expense | $3.69B$3.83B | −3.6% |
| Net Income | $11.95B$5.61B | +113.0% |
| EPS (Basic) | $3.04$1.47 | +106.8% |
| EPS (Diluted) | $2.94$1.41 | +108.5% |
| Shares Outstanding (Basic) | 3.94B3.81B | +3.1% |
| Shares Outstanding (Diluted) | 4.09B4.01B | +1.8% |
05—Questions
Frequently Asked Questions
What is Ford's outlook for 2014 profitability?
Management expects total Company pre-tax profit, excluding special items, of $7 billion to $8 billion in 2014, below the $8.6 billion achieved in 2013. Automotive operating margin is expected to be lower, mainly because of launch costs for 16 North American products, and operating-related cash flow is expected to be substantially lower due to planned capital spending of about $7.5 billion. Ford Credit's pre-tax profit is expected to be about flat with 2013.
How strong is Ford's balance sheet and liquidity position?
Automotive gross cash was $24.8 billion at year-end 2013, and total Automotive liquidity, including an unutilized $10.7 billion revolving credit facility, was $36.2 billion. Automotive debt was $15.7 billion, up from $14.3 billion, and the company still targets about $10 billion by mid-decade. Pension underfunding dropped to $9 billion from $18.7 billion, aided by $5 billion of contributions in 2013.
What are the main risks investors should watch?
Key risks include industry overcapacity (about 23 million units globally), currency and commodity volatility, Brazilian tax assessments tied to incentives in Bahia, and a pending U.S. Customs ruling that could raise duties on Transit Connect imports. Tighter U.S. and EU fuel economy and emissions rules, particularly the 2022-2025 standards, could also pressure sales mix and profitability, and the Venezuelan operating environment remains challenging.
How is Ford's dividend policy evolving?
Ford doubled its quarterly dividend to $0.10 per share during 2013 and raised it by a further 25% to $0.125 per share for the first quarter of 2014. Management describes the goal as a regular, growing dividend that is sustainable over an economic or business cycle. Total dividends declared in 2013 were $0.40 per share.
How did Ford's North America business perform in 2013?
North America was the strongest contributor, with pre-tax profit of $8.8 billion and an operating margin of 9.9%. U.S. market share rose 0.5 percentage points to 15.7%, supported by F-Series, Escape, and Fusion sales. Management expects North America to remain strongly profitable in 2014 but at a lower level, with an operating margin of 8% to 9%, as it launches 16 new or refreshed products.
06—Continue