Ford Motor Company (F) Q4 2006 earnings summary

Executive summary

• FY06 net loss was $12.6B, or $6.72/share, versus net income of $1.4B, or $0.77/share, in FY05; the result included $11.9B of special items, chiefly restructuring and impairment charges.

• Revenue was $160.1B versus $176.9B in FY05; Automotive wholesale volumes fell 3% to 6.60M units and Automotive reported a $17.0B pre-tax loss.

• Priorities centered on restructuring North America, accelerating product launches, and preserving liquidity; year-end Automotive gross cash was $33.9B after major debt and credit-facility financings.

Financial highlights

• Automotive sales were $143.3B in FY06 versus $153.5B in FY05; operating loss widened to $17.9B from $4.2B.

• Financial Services revenue was $16.8B versus $23.4B, while pre-tax income fell to $2.0B from $5.0B, primarily reflecting the 2005 Hertz sale and lower finance results.

• Special items totaled $11.9B in FY06, including $4.8B of Jobs Bank and personnel-reduction costs, $2.2B of North America asset impairments, and $1.6B of Jaguar/Land Rover impairments.

• Operating cash flow from continuing operations was $9.6B consolidated; Automotive operating-related cash flow was negative $5.6B, compared with negative $1.3B in FY05.

Outlook and guidance

• FY07 total Automotive results, including special items, were expected to remain a loss but improve substantially from FY06; overall results were also expected to be a substantially improved net loss.

• FY07 special items were projected at $1B-$2B, excluding gains or losses from asset sales; capital spending was expected to be about $7B.

• North America annual operating-cost reductions targeted about $5B by end-2008 versus 2005; Automotive was projected to return to profitability in 2009, conditional on volume/mix stabilization and cost execution.

• FY07 Financial Services pre-tax profit was expected to be substantially below FY06; year-end managed receivables were projected at $140B-$145B.

• From 2007-09, cumulative Automotive operating-related cash outflows were projected at about $10B, restructuring cash expenditures at about $7B, and other non-operating net cash inflows at about $2B.