Summary
Ford Motor Company reported a net income of $570 million for the second quarter of 2002, a significant turnaround from the $752 million loss recorded in the same period of 2001. This improvement was driven primarily by the Automotive sector, which moved from a substantial loss to a profit, largely due to the non-recurrence of significant costs like the Firestone tire replacement program and improved pricing. However, the Financial Services sector saw a decline in income. Despite the quarterly improvement, the first half of 2002 resulted in a net loss of $524 million, heavily impacted by a $1,002 million after-tax charge related to the adoption of SFAS No. 142, which eliminated goodwill amortization but required impairment testing. The company's liquidity remains strong, with a substantial increase in gross cash for the Automotive sector, bolstered by significant cash and marketable securities. Management anticipates a small loss in the third quarter of 2002 but expects a modest profit for the full year, emphasizing continued progress on its Revitalization Plan.
Key Highlights
- 1Ford Motor Company reported a net income of $570 million for Q2 2002, a significant improvement from a $752 million loss in Q2 2001.
- 2Automotive sector operating income improved dramatically, moving from a $1.194 billion loss in Q2 2001 to a $178 million profit in Q2 2002.
- 3The first half of 2002 resulted in a net loss of $524 million, largely due to a $1,002 million after-tax charge from the adoption of SFAS No. 142 (Goodwill Impairment).
- 4Automotive sector sales were $35.2 billion in Q2 2002, slightly up from $34.6 billion in Q2 2001, while worldwide net income for the company was $570 million, compared to a loss of $752 million in the prior year.
- 5Financial Services sector earnings decreased to $392 million in Q2 2002 from $442 million in Q2 2001, primarily due to higher credit losses at Ford Credit.
- 6The company's Automotive sector ended Q2 2002 with $10.9 billion in net cash (gross cash less total debt), a significant increase from $3.9 billion at the end of 2001.
- 7Ford announced its intent to sell Kwik-Fit Holdings Ltd. for approximately $500 million, anticipating a related after-tax loss of about $500 million in the third quarter of 2002.