Why is Ford seeking new credit facilities?

Ford is seeking new senior secured credit facilities totaling approximately $15 billion to enhance its liquidity and financial flexibility. This is a proactive measure to ensure ample financial resources are available to support its operations and strategic initiatives, especially given the anticipated cash outflows.

What are the expected cash outflows for the Automotive segment?

Ford expects significant cash outflows for its Automotive segment. This includes approximately $3 billion in operating-related cash outflows for the fourth quarter of 2006 and cumulative outflows of about $10 billion for operations and $7 billion for restructuring between 2007 and 2009, with a substantial portion expected in 2007.

What impact will these financing and cash flow changes have on Ford's earnings?

The company anticipates a deterioration in overall total company earnings for 2007. This is primarily attributed to decreased earnings at Ford Credit (due to lower financing margins, higher credit loss provisions, and reduced receivables) and increased interest expenses from higher debt levels. However, Ford Credit's profitability is expected to improve in 2008 and 2009.

What is the outlook for Ford's product development investments?

Despite the anticipated cash outflows and financial pressures, Ford expects to continue investing in new products at approximately the same level as in recent years, around $7 billion annually, throughout the 2007-2009 period.

FORD MOTOR CO 8-K: Regulation FD

Summary

Ford Motor Company's Form 8-K filing on November 29, 2006, details significant financing activities and provides updated cash flow and earnings expectations. The company is pursuing new senior secured credit facilities totaling approximately $15 billion, comprising a $8 billion revolving credit facility and a $7 billion term loan. This move is intended to bolster liquidity and financial flexibility. The report also outlines substantial expected cash outflows for the automotive sector, including operating-related cash needs and restructuring expenditures, particularly in 2007. While acknowledging a projected deterioration in overall company earnings for 2007 due to a planned suspension of dividends from Ford Credit and increased interest expenses, Ford anticipates improved profitability at Ford Credit in 2008 and 2009. The company expects to maintain its product investment levels.

Key Highlights

1Ford is pursuing new secured credit facilities totaling approximately $15 billion ($8 billion revolving credit facility and $7 billion term loan) to enhance liquidity.
2Significant Automotive operating-related cash outflows of approximately $3 billion are expected in Q4 2006.
3Restructuring cash expenditures are estimated to be between $500 million and $1 billion in Q4 2006.
4Cumulative Automotive operating and restructuring cash outflows are projected to be around $17 billion from 2007-2009, with over half expected in 2007.
5Ford plans to continue investing approximately $7 billion annually in new products through 2009.
6Ford Motor Credit Company (Ford Credit) is expected to suspend regular dividend payments beginning in 2007.
7Overall company earnings are anticipated to decline in 2007 due to lower Ford Credit earnings and higher interest costs.

FORD MOTOR CO 8-K Report, Regulation FD Disclosure (Nov 29, 2006)

Summary

Key Highlights

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