10-QPeriod: Q3 FY2001

FORD MOTOR CO Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 14, 2001For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company reported a significant loss for the third quarter of 2001, with a net loss of $692 million compared to a profit of $888 million in the same quarter of the prior year. This downturn was primarily driven by a substantial loss in the Automotive sector, which posted a $1,054 million loss on reduced sales of $28.6 billion. The North American Automotive segment was particularly impacted, reporting losses of $1,026 million due to lower sales volume, higher marketing costs, and warranty expenses. Despite the challenges in the automotive segment, the Financial Services sector demonstrated resilience, with net income of $362 million. However, this was a decrease from $497 million in the prior year, largely due to a $117 million decline in earnings from Hertz, attributed to a slowing economy and the impact of the September 11th terrorist attacks. Ford Credit's performance remained relatively stable, with a slight decrease in net income. For the first nine months of 2001, Ford reported a total company loss of $385 million, a stark contrast to the $2,390 million profit in the same period of 2000. The automotive sector incurred significant losses for the nine-month period, while financial services saw reduced earnings. The company has also taken steps to manage liquidity, including a reduction in its quarterly dividend, and is facing ongoing legal and environmental matters.

Key Highlights

  • 1Ford reported a net loss of $692 million in Q3 2001, a significant decline from a $888 million profit in Q3 2000.
  • 2Automotive sector losses widened to $1,054 million in Q3 2001, driven by a $1,026 million loss in North America.
  • 3Total sales and revenues decreased by $3.6 billion to $36.5 billion in Q3 2001 compared to the prior year.
  • 4The Financial Services sector reported $362 million in net income for Q3 2001, down from $497 million in Q3 2000, primarily due to lower earnings at Hertz.
  • 5Ford announced a 50% reduction in its quarterly dividend to 15 cents per share, effective for the fourth quarter of 2001.
  • 6Credit rating agencies downgraded Ford and Ford Credit's long-term debt ratings during the quarter.
  • 7Ford incurred costs related to the Firestone tire replacement program and ongoing litigation, including personal injury lawsuits and class actions.

Frequently Asked Questions

The primary driver of the $692 million net loss in Q3 2001 was a substantial deterioration in the Automotive sector, which posted a loss of $1,054 million. This was due to lower vehicle sales volume, significantly higher marketing costs (including 0.0% financing offers), and increased warranty and customer satisfaction costs, particularly in North America.

The Financial Services sector reported a net income of $362 million, a decrease from $497 million in the prior year. Ford Credit's net income was relatively stable, down slightly to $376 million, but Hertz's earnings declined sharply by $117 million to $26 million. This decline at Hertz was attributed to lower rental volume resulting from the slowing U.S. economy and the impact of the September 11th terrorist attacks on travel.

Ford anticipates continued volatility and uncertainty in business conditions for Q4 2001. While planned vehicle production in North America is set to increase from Q3 levels, it is expected to be down from the previous year. The company stated it would be difficult to earn a profit in the fourth quarter, even excluding restructuring charges.

Yes, Ford continues to address matters related to the Firestone tire recall and replacement program, including ongoing litigation and NHTSA investigations. The company is also involved in various class-action lawsuits concerning paint issues, TFI modules, and late charges. While investigations into waste disposal and MFA matters have been closed without criminal charges, discussions with the EPA on a related civil matter are ongoing.