Summary
This 8-K filing from Ford Motor Company addresses a discrepancy between Ford's reported cash position and the conclusions presented in a Goldman, Sachs & Co. report dated September 6, 2002. The Goldman Sachs report suggested that Ford's automotive cash might be overstated by as much as $10 billion due to how Ford's automotive sector subsidizes Ford Motor Credit Company for low-interest rate retail and lease financing programs. Ford asserts that the actual impact on its automotive operating cash balances is less than half of what the report indicated, and the effect on cash flow is even smaller.
Key Highlights
- 1Ford Motor Company disputes findings in a Goldman Sachs report regarding its cash position.
- 2The Goldman Sachs report suggested automotive cash was overstated by up to $10 billion due to financing subsidies.
- 3Ford states the impact of financing subsidies on its automotive operating cash is less than half of what was reported.
- 4Ford's accounting for these subsidies has been consistent for many years and is detailed in its 2001 10-K.
- 5Automotive revenue is reduced upfront for the subsidy amount upon vehicle sale or program change.
- 6Ford Credit recognizes interest subvention as revenue over the life of the financing contract.
- 7Ford Credit does not currently require a capital contribution and is expected to pay a dividend to Ford this year.