8-KOther Events

FORD MOTOR CO 8-K Report (Oct 2, 2001)

Filed October 2, 2001For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company filed an 8-K on October 2, 2001, reporting on U.S. retail sales for September 2001 and providing updated financial outlooks. The company highlighted significant challenges in the current economic climate, characterized by volatility and uncertainty, which are impacting planning and sales. In response to these conditions, Ford implemented a 0.0% financing program in the U.S. to stimulate sales, which, while successful in the latter half of September, proved to be a costly initiative. This, coupled with lower earnings at its subsidiary Hertz due to reduced travel volume, has led Ford to revise its financial projections. The company now anticipates a third-quarter loss greater than previously estimated by analysts and expects full-year earnings to fall short of its prior 70 cents per share forecast.

Key Highlights

  • 1Ford announced a 0.0% financing program in the U.S. to boost September 2001 sales.
  • 2The 0.0% financing program, while helping sales in the latter half of September, is noted as being very expensive.
  • 3U.S. marketing costs for Q3 2001 are now expected to be 10% higher than the previously estimated 14.5% of revenue.
  • 4Hertz is experiencing significantly lower volume due to sharp curtailments in business and personal travel.
  • 5Ford now expects its third-quarter 2001 loss to be greater than current analyst consensus estimates.
  • 6Full-year 2001 earnings are now projected to fall short of the previous forecast of 70 cents per share before one-time items.
  • 7Additional fourth-quarter production cuts may be necessary if U.S. vehicle sales decline further.

Frequently Asked Questions

The revised earnings forecast is primarily due to higher U.S. marketing costs resulting from an expensive 0.0% financing program, and lower earnings at Hertz due to significantly reduced travel volumes. These factors are impacting both third-quarter results and the full-year outlook.

The U.S. economy is described as volatile and uncertain, making planning difficult. This environment led to a 120,000-unit reduction in third-quarter production due to transportation disruptions and the uncertain outlook, and has impacted Hertz's volume.

Ford stated that the third-quarter production cuts will not be made up in the fourth quarter of 2001 due to current and expected market conditions for U.S. vehicle sales. Further production cuts in Q4 are possible if sales decline further.

Ford plans to provide additional details, including an update to its fourth-quarter production plans, when it announces its third-quarter financial results on October 17, 2001.