23rd Oct 2006 16:24
Ford Motor Co23 October 2006 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 20, 2006 (Date of earliest event reported) FORD MOTOR COMPANY (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-3950 38-0549190 (Commission File Number) (IRS Employer Identification No.) One American Road, Dearborn, Michigan 48126(Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 313-322-3000 Check the appropriate box below if the Form 8-K filing is intended tosimultaneously satisfy the filing obligation of the registrant under any of thefollowing provisions: ( ) Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)( ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 140.14a-12)( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - 2 - Item 2.02. Results of Operations and Financial Condition. Ford Motor Company ("Ford") hereby incorporates by reference its news releasesdated October 23, 2006, which are herewith furnished as Exhibit 99.1 and Exhibit99.2. Ford's President and Chief Executive Officer, Alan Mulally, and Executive VicePresident and Chief Financial Officer, Don Leclair, will host a presentation forthe investment community and news media beginning at 9:00 a.m. to reviewpreliminary third quarter 2006 financial results. Investors may access thispresentation by dialing 800-706-7741 (or 1-617-614-3471 from outside the UnitedStates). The passcode for either telephone number is a verbal response of "FordEarnings." At the same time, a listen-only webcast and supporting presentation materialsfor the call will be available on the Internet at www.shareholder.ford.com.Investors may also access replays for one week following the presentation byvisiting www.shareholder.ford.com, or by dialing 888-286-8010 (or 1-617-801-6888from outside the United States). The passcode for replays is 29481628. All timesreferenced above are in Eastern Time. Please note that Exhibit 99.2 to this Form 8-K discusses pre-tax profitsexcluding special items for Ford's Automotive sector and the primary operatingsegments and business units within the Automotive sector. The most directlycomparable financial measure calculated and presented in accordance with U.S.Generally Accepted Accounting Principles is pre-tax profits including specialitems. We believe that pre-tax profits excluding special items is a usefulmeasure to provide investors, because it excludes those items that we do notconsider to be indicative of earnings from ongoing operating activities. As aresult, pre-tax profits excluding special items provides investors with a morerelevant measure of the results generated by our operations. Item 2.05. Costs Associated with Exit or Disposal Activities. On January 19, 2006, we committed to a major business improvement plan for ourNorth American Automotive operations, which we refer to as the Way Forward plan,key aspects of which were set forth in our Annual Report on Form 10-K for theyear ended December 31, 2005. Responding to changing facts and circumstances, onSeptember 14, 2006, we committed to an acceleration of this plan, includingactions designed to further reduce operating costs and to increase the flow ofnew products, and we provided a revised financial outlook. As part of this accelerated plan, we have announced our intention to idle andcease operations at 16 manufacturing facilities, nine of which have beenidentified and slated for idling by the end of 2008; the remaining facilitiesare to be idled after 2008. Additionally, we have announced our intention tosell or close all of our Automotive Components Holdings, LLC ("ACH") facilities,and to redeploy or separate all ACH employees by the end of 2008.1 Our best estimate of costs associated with these exit or disposal activitiesprimarily reflects personnel-related costs. We have estimated costs (accrued inthe first nine months of 2006) and cash expenditures over time of $2.5 billionfor Jobs Bank Benefits and employee separation packages.2 We have estimated ------------1 The identification of the nine facilities slated for idling by 2008 andadditional detail about non-exit or disposal activities related to ouraccelerated Way Forward plan (such as the reduction of salaried-related costs)can be found in our Current Report on Form 8-K dated September 13, 2006. 2 "Jobs Bank Benefits" are defined in Note 4 of the Notes to the FinancialStatements in our Quarterly Report on Form 10-Q for the period ended March 31,2006. - 3 - costs (accrued in the first nine months of 2006) of $1.3 billion for relatednon-cash pension curtailment charges. During the first quarter of 2006, we alsoaccrued $300 million for fixed-asset write-off costs associated with theimmediate idling of St. Louis Assembly Plant; we expect the cost of fixed-assetwrite-offs for future facility idlings to be included in operating costs. We have not yet accrued any costs for benefits that may be provided to employeesworking at the facilities to be idled after 2008. The cost of executing plansfor these facilities is dependent on the resolution of many contingencies,including the negotiation of future labor agreements, the successfulimplementation of our product cycle plan, the resolution of alternative capacityactions, and changes in our market share between now and the planned idling ofthese facilities. At this time, we are estimating a charge of up to $750 million(on a discounted basis) for benefits that we anticipate may be paid to employeesexpected to be permanently idled as a result of the future idling of thesefacilities. Although it is probable that we will take the necessary actions toreduce our manufacturing employment, the amount of our estimated benefitobligation is highly dependent on the resolution of the previously-mentionedcontingencies. No estimated value is more likely than another, and therefore thebenefit obligation is not reasonably estimable. Item 4.02 (a). Non-Reliance on Previously Issued Financial Statements or aRelated Audit Report or Completed Interim Review. During the preparation of its response to a comment letter from the Division ofCorporation Finance of the Securities and Exchange Commission related to aroutine review of its Annual Report on Form 10-K for the year ended December 31,2005, our indirect wholly-owned subsidiary, Ford Motor Credit Company ("FordCredit"), became aware of a matter related to accounting for interest rate swapsunder Statement of Financial Accounting Standards No. 133, Accounting forDerivative Instruments and Hedging Activities, as amended ("SFAS 133").Specifically, Ford Credit discovered that certain interest rate swaps it hadentered into to hedge the interest rate risk inherent in certain long-term fixedrate debt were accounted for incorrectly because they did not satisfy thetechnical accounting rules under SFAS 133 to qualify for exemption from the morestrict effectiveness testing requirements. PricewaterhouseCoopers LLP, ourindependent registered public accounting firm, audited our 2001 through 2005financial statements, which included a review of these swaps. These interest rate swaps were entered into as part of Ford Credit'sasset-liability management strategy. As noted above, the swaps economicallyhedge the interest rate risk associated with long-term debt issuances, and wecontinue to believe that these swaps have been and will continue to be highlyeffective economic hedges. The correction to the accounting does not impact theeconomics of the hedges, nor does it affect cash. Although the final restatement amounts have not yet been determined, based onthe information to date, we estimate that Ford and Ford Credit's results in 2002will improve materially. On October 20, 2006, we recommended to the Audit Committee of our Board ofDirectors that we restate our financial statements for each of the years endedDecember 31, 2003, 2004 and 2005, and our selected financial data for each ofthe years 2001 - 2005 appearing in Item 15 and Item 6 of our Annual Report onForm 10-K for the year ended December 31, 2005, as well as our interim financialstatements for the quarters ended March 31, 2005 and 2006, June 30, 2005 and2006, and September 30, 2005. The Audit Committee agreed with management'srecommendation and it was concluded that these financial statementsshould no longer be relied upon by investors. The Audit Committee has discussedthis matter with PricewaterhouseCoopers LLP. - 4 - The revised financial statements and selected financial data for the periodsreferenced above will be included, as applicable, in an amended Annual Report onForm 10-K for the year ended December 31, 2005, and in an amended QuarterlyReport on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006. Therevised interim financial statements for the quarter ended September 30, 2005will be included in the Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2006. We expect to file the amended documents by the time we fileour Quarterly Report on Form 10-Q for the quarter ended September 30, 2006. Management is currently assessing the impact this matter has on itspreviously-issued report on internal controls over financial reporting as ofDecember 31, 2005 and management's conclusions regarding the Company'sdisclosure controls and procedures. If management concludes that this matterresulted from a material weakness in its controls over interest rate swapaccounting at Ford Credit, management may conclude that its internal controlsover financial reporting and disclosure controls and procedures were ineffectiveas of December 31, 2005. If management reaches such a conclusion, we also expectthat the control deficiency will have been remediated by the time of the filingof the revised financial statements and selected financial data. Item 8.01. Other Events. As previously disclosed, we expect that we will have Automotive gross cash andcommitted credit lines totaling approximately $26 billion at year-end 2006.1In addition, we expect that we will have approximately $3 billion of long-termVEBA that will be accessible over time. Further, as previously announced, we areseeking to raise additional liquidity through the sale of Aston Martin andAutomobile Protection Corporation. During the fourth quarter of 2006 and for the near to medium term, we expect ouroperating-related cash flow to be negative by a substantial amount. Thisprimarily reflects significant operating losses in our Automotive sector through2008, cash expenditures incurred in connection with our restructuring efforts,primarily for personnel separations, and pension contributions. This alsoreflects throughout this period our expectation to continue to invest in newproducts at about the same level as we have during the past few years, orapproximately $7 billion annually. To fund the substantial negative cash flow we expect to experience over thisperiod and to provide added liquidity to protect against a recession or otherunexpected events, we are exploring various financing strategies, includingsecured financing involving a substantial portion of our Automotive assets. ------------3Automotive gross cash includes cash and cash equivalents, marketablesecurities, loaned securities and short-term Voluntary Employee BenefitAssociation ("VEBA") trust funds. - 5 - Item 9.01. Financial Statements and Exhibits. EXHIBITS Designation Description Method of Filing Exhibit 99.1 News Release dated Furnished with this Report October 23, 2006 Exhibit 99.2 News Release dated Furnished with this Report October 23, 2006 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned hereunto duly authorized. FORD MOTOR COMPANY (Registrant) Date: October 23, 2006 By: /s/Peter J. Sherry, Jr. Peter J. Sherry, Jr. Secretary - 6 - EXHIBIT INDEX Designation Description Exhibit 99.1 News Release dated October 23, 2006 Exhibit 99.2 News Release dated October 23, 2006 Exhibit 99.1 NEWS Contact: Media: Equity Investment Fixed Income Shareholder Inquiries: Becky Sanch Community: Investment Community: 1.800.555.5259 or 1.313.594.4410 Raj Modi Rob Moeller 1.313.845.8540 [email protected] 1.313.323.8221 1.313.621.0881 [email protected] [email protected] [email protected] Editor's note: The following is one of two related press releases Ford MotorCompany is issuing today. Please also refer to the release entitled: "FORDREPORTS PRELIMINARY THIRD QUARTER 2006 FINANCIAL RESULTS." FOR IMMEDIATE RELEASE FORD TO RESTATE RESULTS SINCE 2001 FOR ACCOUNTING UNDER SFAS 133 DEARBORN, Mich., Oct. 23, 2006 - Ford Motor Company (NYSE: F) today announced itplans to restate previous financial results from 2001 through the second quarterof 2006 to correct the accounting for certain derivative transactions under theStatement of Financial Accounting Standards (SFAS) 133, Accounting forDerivative Instruments and Hedging Activities. The correction to the accounting does not affect the economics of the derivativetransactions, nor have any impact on the company's cash. However, therestatements are expected to affect the preliminary financial results Fordannounced today for its 2006 third quarter. The company expects to finalizerestatement amounts for the current period and all previous periods by the timeof the filing of its Quarterly Report on Form 10-Q for the quarter ended Sept.30, 2006. (For full details regarding Ford's preliminary results for the 2006third quarter, please see press release entitled, "FORD REPORTS PRELIMINARYTHIRD QUARTER 2006 FINANCIAL RESULTS.") Ford discovered that since 2001, certain interest rate swaps Ford Motor CreditCompany had entered into to hedge the interest rate risk inherent in certainlong-term fixed rate debt were accounted for incorrectly under SFAS 133 becausethey did not satisfy the standard's technical accounting rules to qualify forexemption from the more strict effectiveness testing requirements. Ford MotorCredit Company uses transactions involving derivatives, including swaps,forwards and options, to reduce economic risk and volatility in a disciplinedand defensive manner. PricewaterhouseCoopers LLP, the company's independentregistered public accounting firm, audited Ford's 2001 through 2005 financialstatements, which included a review of these swaps. "This is a very complicated accounting standard, and interpretation of itsproper application has continued to evolve," said Executive Vice President andChief Financial Officer Don Leclair. "Our overall hedging strategy is sound. Wewill correct our accounting for these types of derivative instruments. We remaincommitted to strong internal controls and reporting transparency." Ford Motor Credit Company's interest rate swaps were entered into as part of theunit's asset-liability management strategy. The swaps economically hedge theinterest rate risk associated with long-term debt issuances. Although the finalrestatement amounts have not yet been determined, we estimate based on theinformation to date that Ford and Ford Motor Credit Company's results in 2002will improve materially. Other periods are still under study. About Ford Motor Company:Ford Motor Company, a global automotive industry leader based in Dearborn,Mich., manufactures and distributes automobiles in 200 markets across sixcontinents. With about 300,000 employees and 108 plants worldwide, the company[?c=8217]s core and affiliated automotive brands include Aston Martin, Ford,Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-relatedservices include Ford Motor Credit Company. - # # # - 2 Exhibit 99.2 NEWS Contact: Media: Equity Investment Fixed Income Shareholder Inquiries: Becky Sanch Community: Investment Community: 1.800.555.5259 or 1.313.594.4410 Raj Modi Rob Moeller 1.313.845.8540 [email protected] 1.313.323.8221 1.313.621.0881 [email protected] [email protected] [email protected] Editor's note: The following is one of two related press releases Ford MotorCompany is issuing today. Please also refer to the release entitled: "FORD TORESTATE RESULTS SINCE 2001 FOR ACCOUNTING UNDER SFAS 133." FOR IMMEDIATE RELEASE FORD REPORTS PRELIMINARY 3Q 2006 FINANCIAL RESULTS* • Ford also announces plans to restate certain financial results to correct accounting under SFAS 133. The preliminary third-quarter results announced today do not reflect these corrections.• Third-quarter net loss of $5.8 billion, or $3.08 per share.• Loss from continuing operations, excluding special items, of $1.2 billion, or 62 cents per share.**• Strong liquidity with total cash, including automotive cash, marketable securities, loaned securities and short-term VEBA assets, of $23.6 billion. DEARBORN, Mich., Oct. 23, 2006 - Ford Motor Company (NYSE: F) today reportedpreliminary third-quarter 2006 financial results. In a separate announcement, Ford said it would restate financial results from2001 through the second quarter of 2006 to correct the accounting for certainderivative transactions under Statement of Financial Accounting Standards (SFAS)133, Accounting for Derivative Instruments and Hedging Activities. --------------------------------------------------------------------------------\* The financial results discussed herein are presented on a preliminary basis;final data will be included in our Quarterly Report on Form 10-Q for the quarterended Sept. 30, 2006 ("Form 10-Q Report"). ** Earnings per share from continuing operations, excluding special items, iscalculated on a basis that includes pre-tax profit and provision for taxes andminority interest. See table following "Safe Harbor/Risk Factors"for the nature and amount of these special items and a reconciliationto GAAP. These corrections are not reflected in the preliminary results announced todayfor Ford's 2006 third quarter. The company expects to finalize restatementamounts for this and previous periods by the time it files its Quarterly Reporton Form 10-Q for the quarter ended Sept. 30, 2006. Financial statementspertaining to the 2006 third quarter will be provided at that time. SUMMARY OF PRELIMINARY RESULTSFor the third quarter, Ford Motor Company reported a net loss of $5.8 billion,or $3.08 per share. This compares with a net loss of $284 million, or 15 centsper share, in the 2005 third quarter. Excluding special items, the third quarter loss from continuing operations was$1.2 billion, or 62 cents per share, compared with a loss of $191 million, or 10cents per share, a year earlier. The performance from continuing operations primarily reflected operatingchallenges in the company's North America, Asia Pacific and Africa, and PremierAutomotive Group operations. Performance also included continued profitabilityin South America and at Ford Credit. Though it lost money during the quarter,Ford Europe showed a year-over-year improvement in operating results andremained poised to deliver full-year profitability. Special items included in the quarter's net loss primarily reflected the costsassociated with restructuring efforts, primarily in North America, as well asthe revaluation of long-lived assets related to automotive operations in NorthAmerica and Jaguar/Land Rover. On an after-tax basis, special items reducedthird-quarter earnings by a total of $4.6 billion or $2.46 per share. The totalpre-tax effect of these special items was $5.3 billion. (See appendix at the endof this press release for a detailed explanation of special items and otherchanges during the period.) In addition, effective this quarter, the company established a valuationallowance of $2.2 billion against deferred tax assets primarily at its NorthAmerica and Jaguar/Land Rover operations. The valuation allowance wasestablished because of the cumulative losses the company has incurred and thefinancial outlook for these operations. 2 Alan Mulally, Ford's president and chief executive officer, said he and hissenior management team are committed to creating a viable Ford Motor Companybusiness going forward. "These business results are clearly unacceptable," Mulally said. "We arecommitted to dealing decisively with the fundamental business reality thatcustomer demand is shifting to smaller, more efficient vehicles. Our focusedpriorities are to restructure aggressively to operate profitably at lowervolumes, and to accelerate the development of new, more efficient vehicles thatcustomers really want. "We have great global assets and resources that we will leverage tosignificantly improve our product strategy, our production efficiency andquality. This will enable us to meet customer expectations for distinctivevehicles much more cost effectively. These actions will lead to profitablegrowth of our business over the long term." The following discussion of the preliminary results of our Automotive sector andAutomotive business units is on a basis that excludes special items. See tablefollowing "Safe Harbor/Risk Factors" for the nature and amountof these special items and a reconciliation to GAAP. AUTOMOTIVE SECTOROn a pre-tax basis, worldwide Automotive sector losses in the third quarter were$1.8 billion. This compares with a pre-tax loss of $1.3 billion during the sameperiod a year ago. Worldwide automotive sales for the third quarter declined to $32.6 billion from$34.7 billion in the same period last year. Worldwide vehicle unit sales in thequarter were 1,511,000, down from 1,531,000 a year ago. North America: In the third quarter, Ford[?c=8217]s North America automotiveoperations reported a pre-tax loss of $2.0 billion, compared with a pre-tax lossof $1.2 billion a year ago. The decline was largely attributed to lower volumesand unfavorable mix, primarily associated with lower industry volume and lowermarket share, and higher incentives. Cost reductions were a partial offset.Sales were $15.4 billion, down from $18.2 billion for the same period a yearago. South America: Ford[?c=8217]s South America automotive operations reported athird-quarter pre-tax profit of $222 million, an improvement from a pre-taxprofit of $96 million a year ago. The improvement was primarily explained byhigher volume and favorable pricing. Sales for the third quarter improved to$1.5 billion from $1.2 billion in 2005. 3 Ford Europe: Ford Europe's third-quarter pre-tax loss was $13 millioncompared with a pre-tax loss of $55 million during the 2005 period. Theimprovement came from higher vehicle sales, partially offset by higherpension-related costs, lower profits from operations in Turkey and negative netpricing. During the third quarter, Ford Europe's sales were $7.3billion, compared with $6.4 billion during third quarter 2005. Premier Automotive Group (PAG): PAG reported a pre-tax loss of $593 million forthe third quarter, compared with a pre-tax loss of $108 million for the sameperiod in 2005. The decline was explained by adverse cost performance,primarily reflecting adjustments to Jaguar and Land Rover warranty accruals andlower volume at all operations, excluding Aston Martin. Improvements in overheadcosts were offset by increases in advertising. Third-quarter sales for PAG were$6.5 billion, compared with $6.8 billion a year ago. Asia Pacific and Africa: For the third quarter, Asia Pacific and Africa reporteda pre-tax loss of $56 million, compared with a pre-tax profit of $21 million ayear ago. The decline primarily reflected lower production and dealerinventories, adverse mix, and higher incentives, partially offset by costreductions. Sales were $1.6 billion, compared with $1.9 billion in 2005. Mazda: During the third quarter of 2006, Ford's share of Mazda pre-taxprofits and associated operations was $40 million, compared with $112 millionduring the same period a year ago. The decline primarily reflected thenon-recurrence of mark-to-market gains on Mazda convertible bonds during 2005,which have now been entirely converted to equity. Other Automotive: Third-quarter results included a pre-tax profit of $553million in Other Automotive, compared with a loss of $241 million a year ago.The year-over-year improvement relates to tax-related interest and higherportfolio returns. FINANCIAL SERVICES SECTORFor the third quarter, the Financial Services sector earned a pre-tax profit of$448 million, compared with a pre-tax profit of $1.1 billion a year ago. Ford Motor Credit Company: Ford Motor Credit Company reported net income of $262 million in the third quarter of 2006, down $315 million from net income of $577million a year earlier. On a pre-tax basis from continuing operations, FordMotor Credit earned $428 million in the third quarter, compared with $901million in the previous year. The decrease in earnings was attributed to lowerfinancing margins, higher depreciation expense and the impact of lower averagereceivable levels. 4 CASH AND LIQUIDITYThe company ended the quarter with total cash, including automotive cash,marketable securities, loaned securities and short-term Voluntary EmployeeBeneficiary Association (VEBA) assets at Sept. 30, 2006 of $23.6 billion,unchanged from the end of the second quarter. The company's operating-relatedcash flow was $3.1 billion negative for the quarter. During the quarter, $3.0billion was transferred out of long-term VEBA and is now included in total cash. Don Leclair, executive vice president and chief financial officer said, "As werestructure our business we will continue to make investments in productsnecessary to ensure Ford's future success. Throughout this period, maintainingstrong liquidity will continue to be a high priority." THIRD-QUARTER CONFERENCE CALL DETAILSAt 9 a.m. EDT, Alan Mulally and Don Leclair will host a conference call for newsmedia and analysts to discuss the preliminary third quarter financial resultsand issues related to SFAS 133. As a result, the previously scheduled fixed-income conference call has beencanceled. The presentations (listen-only) and supporting materials will be available onthe Internet at www.shareholder.ford.com. Representatives of the news media andthe investment community participating by teleconference will have theopportunity to ask questions following the presentations. Access Information - Monday, Oct. 23Earnings: 9:00 a.m. EDTToll Free: 800-706-7741International: 617-614-3471Earnings Passcode: "Ford Earnings" Replays - Available through Monday, Oct. 30www.shareholder.ford.comToll Free: 888-286-8010International: 617-801-6888 Passcodes:Earnings: 29481628 About Ford Motor Company: 5 Ford Motor Company, a global automotive industry leader based in Dearborn,Mich., manufactures and distributes automobiles in 200 markets across sixcontinents. With about 300,000 employees and 108 plants worldwide, the company'score and affiliated automotive brands include Aston Martin, Ford,Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-relatedservices include Ford Motor Credit Company. - # # # - 6 Safe Harbor/Risk Factors Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private SecuritiesLitigation Reform Act of 1995. Forward-looking statements are based onexpectations, forecasts and assumptions by our management and involve a numberof risks, uncertainties, and other factors that could cause actual results todiffer materially from those stated, including, without limitation: • Continued decline in market share;• Continued or increased price competition resulting from industry overcapacity, currency fluctuations or other factors;• A market shift (or an increase in or acceleration of market shift) away from sales of trucks or sport utility vehicles, or from sales of other more profitable vehicles, in the United States;• A significant decline in industry sales, particularly in the United States or Europe, resulting from slowing economic growth, geo-political events (e.g., an escalation or expansion of armed conflict in or beyond the Middle East) or other factors;• Lower-than-anticipated market acceptance of new or existing products;• Continued or increased high prices for or reduced availability of fuel;• Currency or commodity price fluctuations;• Adverse effects from the bankruptcy or insolvency of, change in ownership or control of, or alliances entered into by a major competitor;• Economic distress of suppliers that has in the past and may in the future require us to provide financial support or take other measures to ensure supplies of components or materials;• Work stoppages at Ford or supplier facilities or other interruptions of supplies;• Single-source supply of components or materials;• Labor or other constraints on our ability to restructure our business;• Worse-than-assumed economic and demographic experience for our postretirement benefit plans (e.g., discount rates, investment returns, and health care cost trends);• The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs;• Increased safety, emissions, fuel economy or other (e.g., pension funding) regulation resulting in higher costs, cash expenditures, and/or sales restrictions;• Unusual or significant litigation or governmental investigations arising out of alleged defects in our products or otherwise;• A change in our requirements for parts or materials where we have entered into long-term supply arrangements that commit us to purchase minimum or fixed quantities of certain parts or materials, or to pay a minimum amount to the seller ("take-or-pay contracts");• Inability to access debt or securitization markets around the world at competitive rates or in sufficient amounts due to additional credit rating downgrades or otherwise;• Higher-than-expected credit losses;• Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles;• Changes in interest rates;• Collection and servicing problems related to finance receivables and net investment in operating leases;• Lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;• New or increased credit, consumer or data protection or other regulations resulting in higher costs and/or additional financing restrictions; and• Inability to implement the Way Forward plan. We cannot be certain that any expectation, forecast or assumption made bymanagement in preparing these forward-looking statements will prove accurate, orthat any projection will be realized. It is to be expected that there may bedifferences between projected and actual results. Our forward-looking statementsspeak only as of the date of their initial issuance, and we do not undertake anyobligation to update or revise publicly any forward-looking statement, whetheras a result of new information, future events or otherwise. For additionaldiscussion, see "Item 1A. Risk Factors" in our 2005 10-K Report. *** 7 TOTAL COMPANY 2006 THIRD QUARTER INCOME FROM CONTINUING OPERATIONS COMPARED WITHNET INCOME - PRELIMINARY** Third Quarter Pre-Tax Profit After-Tax Earnings Per Profit Share* (Mils.) (Mils.) Income/(Loss) from Continuing Operations Excluding Special $ (1,379 ) $ (1,170 ) $ (0.62 )Items Special Items• Jobs Bank/Employee Separation $ (861 )• Additional Personnel Reduction Programs (259 )• Pension Curtailment Charges (437 )• Fixed Asset Impairment- North America (2,200 )- Jaguar/Land Rover (1,600 )• Other Gains 99Total Special Items $ (5,258 ) $ (4,630 ) $ (2.46 ) $ (6,637 ) $ (5,800 ) $ (3.08 )Income/(Loss) from Continuing Operations Memo:Deferred Tax Asset Valuation Allowance Included Above $(2,221) * Earnings per share from continuing operations is calculated on a basis thatincludes pre-tax profit, provision for taxes, and minority interest; additionalinformation regarding the method of calculating earnings per share is availablein the materials supporting the Oct. 23, 2006, conference calls atwww.shareholder.ford.com. ** Results exclude accounting corrections related to SFAS 133. 8 Appendix: Detailed Explanation of Third-Quarter Special Items and Other Changes On an after-tax basis, total special items reduced third-quarter earnings by$4.6 billion or $2.46 per share.The total pre-tax effect of these special items was $5.3 billion and included: • A net charge of $861 million for jobs bank benefits and employee separations directly related to plans to idle facilities in North America. The charge reflects plans to sell or close all Automotive Components Holdings, LLC (ACH) plants by the end of 2008, as well as the planned idling of the Maumee (Ohio) Stamping Plant and the Essex Ontario, Canada) Engine Plant. • A charge of $259 million associated with continued global personnel reduction programs at facilities other than those identified for idling, as well as a related charge of $437 million for pension curtailment related to third-quarter jobs bank and hourly separation actions. The pension curtailment charge represents the impact of retirements earlier than planned, enhanced benefits, and the accelerated recognition of prior service costs and actuarial losses associated with our U.S. and Canadian hourly pension plan. • An impairment charge of $2.2 billion for North America assets and $1.6 billion for Jaguar/Land Rover assets. The charges were taken after determining the fair value of long-lived assets for North America and Jaguar/Land Rover were below book value. These impairments are a result of the structural changes in North America, revisions to market share and currency exchange assumptions, and recent operating results. • A non-recurring gain of $99 million that reflects the release of a reserve for excise taxes in South America based on a recent legal ruling. In addition, effective this quarter, the company established a valuationallowance of $2.2 billion against deferred tax assets of primarily North Americaand Jaguar/Land Rover operations. The valuation allowance was establishedbecause of the cumulative losses the company has incurred and the reassessmentof their financial outlook. In the third quarter the company recorded partialtax offsets. Beginning in the fourth quarter, the company will not record taxoffsets for further losses or profits for these operations until a return tosustained profitability. 9 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FDM Group