filings.toolsFord Motor 10-Q 2021-09-30
Filed 2021-10-28. 6 sections, 313K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021
or
☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-3950
Ford Motor Company
(Exact name of Registrant as specified in its charter)
| Delaware | 38-0549190 | ||||||||||
| (State of incorporation) | (I.R.S. Employer Identification No.) | ||||||||||
| One American Road | |||||||||||
| Dearborn, | Michigan | 48126 | |||||||||
| (Address of principal executive offices) | (Zip code) |
313-322-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbols | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $.01 per share | F | New York Stock Exchange | ||||||||||||
| 6.200% Notes due June 1, 2059 | FPRB | New York Stock Exchange | ||||||||||||
| 6.000% Notes due December 1, 2059 | FPRC | New York Stock Exchange |
Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of October 22, 2021, Ford had outstanding 3,925,389,427 shares of Common Stock and 70,852,076 shares of Class B Stock.
Exhibit Index begins on page 71
FORD MOTOR COMPANY
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2021
| Table of Contents | Page | ||||||||||
| Part I - Financial Information | |||||||||||
| Item 1 | Financial Statements | 1 | |||||||||
| Consolidated Statements of Cash Flows | 1 | ||||||||||
| Consolidated Income Statements | 2 | ||||||||||
| Consolidated Statements of Comprehensive Income | 2 | ||||||||||
| Consolidated Balance Sheets | 3 | ||||||||||
| Consolidated Statements of Equity | 4 | ||||||||||
| Notes to the Financial Statements | 5 | ||||||||||
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 33 | |||||||||
| Recent Developments | 33 | ||||||||||
| Results of Operations | 34 | ||||||||||
| Automotive Segment | 36 | ||||||||||
| Mobility Segment | 42 | ||||||||||
| Ford Credit Segment | 43 | ||||||||||
| Corporate Other | 46 | ||||||||||
| Interest on Debt | 46 | ||||||||||
| Taxes | 46 | ||||||||||
| Liquidity and Capital Resources | 47 | ||||||||||
| Credit Ratings | 56 | ||||||||||
| Outlook | 57 | ||||||||||
| Cautionary Note on Forward-Looking Statements | 58 | ||||||||||
| Non-GAAP Financial Measures That Supplement GAAP Measures | 59 | ||||||||||
| Non-GAAP Financial Measure Reconciliations | 61 | ||||||||||
| Supplemental Information | 64 | ||||||||||
| Accounting Standards Issued But Not Yet Adopted | 67 | ||||||||||
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 68 | |||||||||
| Item 4 | Controls and Procedures | 68 | |||||||||
| Part II - Other Information | |||||||||||
| Item 1 | Legal Proceedings | 69 | |||||||||
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 70 | |||||||||
| Item 6 | Exhibits | 71 | |||||||||
| Signature | 72 |
i
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
| For the periods ended September 30, | |||||||||||
| 2020 | 2021 | ||||||||||
| First Nine Months | |||||||||||
| (unaudited) | |||||||||||
| Cash flows from operating activities | |||||||||||
| Net income/(loss) | $ | 1,515 | $ | 5,637 | |||||||
| Depreciation and tooling amortization | 6,670 | 5,478 | |||||||||
| Other amortization | (938) | (1,034) | |||||||||
| Increase/(Decrease) in provision for credit and insurance losses | 866 | (250) | |||||||||
| Pension and other postretirement employee benefits (“OPEB”) expense/(income) (Note 13) | (454) | (1,115) | |||||||||
| Equity investment dividends received in excess of (earnings)/losses | 132 | 95 | |||||||||
| Foreign currency adjustments | (216) | 348 | |||||||||
| Net unrealized (gain)/loss on Other Investments (Note 10) | 7 | (926) | |||||||||
| Net (gain)/loss on changes in investments in affiliates (Note 4) | (3,483) | (354) | |||||||||
| Stock compensation | 170 | 262 | |||||||||
| Provision for deferred income taxes | 978 | 652 | |||||||||
| Decrease/(Increase) in finance receivables (wholesale and other) | 11,006 | 8,508 | |||||||||
| Decrease/(Increase) in accounts receivable and other assets | 74 | (1,329) | |||||||||
| Decrease/(Increase) in inventory | (202) | (3,129) | |||||||||
| Increase/(Decrease) in accounts payable and accrued and other liabilities | 3,858 | (511) | |||||||||
| Other | (253) | (76) | |||||||||
| Net cash provided by/(used in) operating activities | 19,730 | 12,256 | |||||||||
| Cash flows from investing activities | |||||||||||
| Capital spending | (4,211) | (4,455) | |||||||||
| Acquisitions of finance receivables and operating leases | (43,473) | (34,693) | |||||||||
| Collections of finance receivables and operating leases | 36,536 | 39,440 | |||||||||
| Proceeds from sale of business (Note 17) | 1,340 | 145 | |||||||||
| Purchases of marketable securities and other investments | (27,401) | (23,243) | |||||||||
| Sales and maturities of marketable securities and other investments | 24,402 | 28,439 | |||||||||
| Settlements of derivatives | (407) | (244) | |||||||||
| Other | 344 | (381) | |||||||||
| Net cash provided by/(used in) investing activities | (12,870) | 5,008 | |||||||||
| Cash flows from financing activities | |||||||||||
| Cash payments for dividends and dividend equivalents | (596) | (3) | |||||||||
| Purchases of common stock | — | — | |||||||||
| Net changes in short-term debt | (2,815) | 1,568 | |||||||||
| Proceeds from issuance of long-term debt | 54,325 | 19,300 | |||||||||
| Principal payments on long-term debt | (50,641) | (36,122) | |||||||||
| Other | (242) | (163) | |||||||||
| Net cash provided by/(used in) financing activities | 31 | (15,420) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (160) | (155) | |||||||||
| Net increase/(decrease) in cash, cash equivalents, and restricted cash | $ | 6,731 | $ | 1,689 | |||||||
| Cash, cash equivalents, and restricted cash at beginning of period (Note 7) | $ | 17,741 | $ | 25,935 | |||||||
| Net increase/(decrease) in cash, cash equivalents, and restricted cash | 6,731 | 1,689 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period (Note 7) | $ | 24,472 | $ | 27,624 |
The accompanying notes are part of the consolidated financial statements.
Item 1. Financial Statements (continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share amounts)
| For the periods ended September 30, | |||||||||||||||||||||||
| 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||
| Third Quarter | First Nine Months | ||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Automotive | $ | 34,710 | $ | 33,211 | $ | 82,677 | $ | 90,893 | |||||||||||||||
| Ford Credit | 2,774 | 2,434 | 8,480 | 7,700 | |||||||||||||||||||
| Mobility | 17 | 38 | 35 | 70 | |||||||||||||||||||
| Total revenues (Note 3) | 37,501 | 35,683 | 91,192 | 98,663 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Cost of sales | 31,223 | 30,057 | 79,677 | 82,258 | |||||||||||||||||||
| Selling, administrative, and other expenses | 2,266 | 2,947 | 6,663 | 8,667 | |||||||||||||||||||
| Ford Credit interest, operating, and other expenses | 1,661 | 1,337 | 6,818 | 3,954 | |||||||||||||||||||
| Total costs and expenses | 35,150 | 34,341 | 93,158 | 94,879 | |||||||||||||||||||
| Operating income/(loss) | 2,351 | 1,342 | (1,966) | 3,784 | |||||||||||||||||||
| Interest expense on Company debt excluding Ford Credit | 498 | 439 | 1,175 | 1,365 | |||||||||||||||||||
| Other income/(loss), net (Note 4, Note 10, and Note 17) | 845 | 852 | 5,843 | 3,883 | |||||||||||||||||||
| Equity in net income/(loss) of affiliated companies | 58 | 130 | (8) | 260 | |||||||||||||||||||
| Income/(Loss) before income taxes | 2,756 | 1,885 | 2,694 | 6,562 | |||||||||||||||||||
| Provision for/(Benefit from) income taxes | 366 | 63 | 1,179 | 925 | |||||||||||||||||||
| Net income/(loss) | 2,390 | 1,822 | 1,515 | 5,637 | |||||||||||||||||||
| Less: Income/(Loss) attributable to noncontrolling interests | 5 | (10) | 6 | (18) | |||||||||||||||||||
| Net income/(loss) attributable to Ford Motor Company | $ | 2,385 | $ | 1,832 | $ | 1,509 | $ | 5,655 | |||||||||||||||
| EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 6) | |||||||||||||||||||||||
| Basic income/(loss) | $ | 0.60 | $ | 0.46 | $ | 0.38 | $ | 1.42 | |||||||||||||||
| Diluted income/(loss) | 0.60 | 0.45 | 0.38 | 1.40 | |||||||||||||||||||
| Weighted-average shares used in computation of earnings/(loss) per share | |||||||||||||||||||||||
| Basic shares | 3,976 | 3,995 | 3,971 | 3,989 | |||||||||||||||||||
| Diluted shares | 4,005 | 4,036 | 3,997 | 4,027 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
| For the periods ended September 30, | |||||||||||||||||||||||
| 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||
| Third Quarter | First Nine Months | ||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Net income/(loss) | $ | 2,390 | $ | 1,822 | $ | 1,515 | $ | 5,637 | |||||||||||||||
| Other comprehensive income/(loss), net of tax (Note 18) | |||||||||||||||||||||||
| Foreign currency translation | (70) | (302) | (1,625) | (23) | |||||||||||||||||||
| Marketable securities | (17) | (23) | 96 | (98) | |||||||||||||||||||
| Derivative instruments | (71) | 343 | 597 | 154 | |||||||||||||||||||
| Pension and other postretirement benefits | 15 | 5 | 46 | 18 | |||||||||||||||||||
| Total other comprehensive income/(loss), net of tax | (143) | 23 | (886) | 51 | |||||||||||||||||||
| Comprehensive income/(loss) | 2,247 | 1,845 | 629 | 5,688 | |||||||||||||||||||
| Less: Comprehensive income/(loss) attributable to noncontrolling interests | 4 | (10) | 5 | (16) | |||||||||||||||||||
| Comprehensive income/(loss) attributable to Ford Motor Company | $ | 2,243 | $ | 1,855 | $ | 624 | $ | 5,704 |
The accompanying notes are part of the consolidated financial statements.
Item 1. Financial Statements (continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)
| December 31, 2020 | September 30, 2021 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents (Note 7) | $ | 25,243 | $ | 27,429 | |||||||
| Marketable securities (Note 7) | 24,718 | 18,997 | |||||||||
| Ford Credit finance receivables, net of allowance for credit losses of $394 and $303 (Note 8) | 42,401 | 32,600 | |||||||||
| Trade and other receivables, less allowances of $84 and $46 | 9,993 | 10,851 | |||||||||
| Inventories (Note 9) | 10,808 | 13,508 | |||||||||
| Other assets | 3,581 | 3,583 | |||||||||
| Total current assets | 116,744 | 106,968 | |||||||||
| Ford Credit finance receivables, net of allowance for credit losses of $911 and $681 (Note 8) | 55,277 | 50,839 | |||||||||
| Net investment in operating leases | 27,951 | 26,740 | |||||||||
| Net property | 37,083 | 36,597 | |||||||||
| Equity in net assets of affiliated companies | 4,901 | 4,628 | |||||||||
| Deferred income taxes | 12,423 | 11,891 | |||||||||
| Other assets | 12,882 | 15,014 | |||||||||
| Total assets | $ | 267,261 | $ | 252,677 | |||||||
| LIABILITIES | |||||||||||
| Payables | $ | 22,204 | $ | 22,923 | |||||||
| Other liabilities and deferred revenue (Note 12 and Note 20) | 23,645 | 18,787 | |||||||||
| Debt payable within one year (Note 14) | |||||||||||
| Company excluding Ford Credit | 1,374 | 1,849 | |||||||||
| Ford Credit | 49,969 | 45,474 | |||||||||
| Total current liabilities | 97,192 | 89,033 | |||||||||
| Other liabilities and deferred revenue (Note 12 and Note 20) | 28,379 | 28,808 | |||||||||
| Long-term debt (Note 14) | |||||||||||
| Company excluding Ford Credit | 22,633 | 23,767 | |||||||||
| Ford Credit | 87,708 | 73,482 | |||||||||
| Deferred income taxes | 538 | 883 | |||||||||
| Total liabilities | 236,450 | 215,973 | |||||||||
| EQUITY | |||||||||||
| Common Stock, par value $0.01 per share (4,042 million shares issued of 6 billion authorized) | 40 | 40 | |||||||||
| Class B Stock, par value $0.01 per share (71 million shares issued of 530 million authorized) | 1 | 1 | |||||||||
| Capital in excess of par value of stock | 22,290 | 22,477 | |||||||||
| Retained earnings | 18,243 | 23,894 | |||||||||
| Accumulated other comprehensive income/(loss) (Note 18) | (8,294) | (8,245) | |||||||||
| Treasury stock | (1,590) | (1,574) | |||||||||
| Total equity attributable to Ford Motor Company | 30,690 | 36,593 | |||||||||
| Equity attributable to noncontrolling interests | 121 | 111 | |||||||||
| Total equity | 30,811 | 36,704 | |||||||||
| Total liabilities and equity | $ | 267,261 | $ | 252,677 |
| The following table includes assets to be used to settle liabilities of the consolidated variable interest entities (“VIEs”). These assets and liabilities are included in the consolidated balance sheets above. | |||||||||||
| December 31, 2020 | September 30, 2021 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,822 | $ | 5,657 | |||||||
| Ford Credit finance receivables, net | 51,472 | 43,248 | |||||||||
| Net investment in operating leases | 12,794 | 8,759 | |||||||||
| Other assets | — | 11 | |||||||||
| LIABILITIES | |||||||||||
| Other liabilities and deferred revenue | $ | 56 | $ | 10 | |||||||
| Debt | 46,770 | 39,576 |
The accompanying notes are part of the consolidated financial statements.
Item 1. Financial Statements (Continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, unaudited)
| Equity Attributable to Ford Motor Company | |||||||||||||||||||||||||||||||||||||||||||||||
| Capital Stock | Cap. In Excess of Par Value of Stock | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) (Note 18) | Treasury Stock | Total | Equity Attributable to Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 41 | $ | 22,165 | $ | 20,320 | $ | (7,728) | $ | (1,613) | $ | 33,185 | $ | 45 | $ | 33,230 | |||||||||||||||||||||||||||||||
| Adoption of accounting standards | — | — | (202) | — | — | (202) | — | (202) | |||||||||||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | (1,993) | — | — | (1,993) | — | (1,993) | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss), net | — | — | — | (733) | — | (733) | — | (733) | |||||||||||||||||||||||||||||||||||||||
| Common Stock issued (a) | — | (15) | — | — | — | (15) | — | (15) | |||||||||||||||||||||||||||||||||||||||
| Treasury stock/other | — | — | — | — | 6 | 6 | 3 | 9 | |||||||||||||||||||||||||||||||||||||||
| Dividends and dividend equivalents declared ($0.15 per share) (b) | — | — | (598) | — | — | (598) | — | (598) | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | 41 | $ | 22,150 | $ | 17,527 | $ | (8,461) | $ | (1,607) | $ | 29,650 | $ | 48 | $ | 29,698 | |||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | 1,117 | — | — | 1,117 | 1 | 1,118 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss), net | — | — | — | (10) | — | (10) | — | (10) | |||||||||||||||||||||||||||||||||||||||
| Common Stock issued (a) | — | 60 | — | — | — | 60 | — | 60 | |||||||||||||||||||||||||||||||||||||||
| Treasury stock/other | — | — | — | — | 6 | 6 | (18) | (12) | |||||||||||||||||||||||||||||||||||||||
| Dividends and dividend equivalents declared (b) | — | — | 1 | — | — | 1 | — | 1 | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 41 | $ | 22,210 | $ | 18,645 | $ | (8,471) | $ | (1,601) | $ | 30,824 | $ | 31 | $ | 30,855 | |||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | 2,385 | — | — | 2,385 | 5 | 2,390 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss), net | — | — | — | (142) | — | (142) | (1) | (143) | |||||||||||||||||||||||||||||||||||||||
| Common stock issued (a) | — | 52 | — | — | — | 52 | — | 52 | |||||||||||||||||||||||||||||||||||||||
| Treasury stock/other | — | — | — | — | 5 | 5 | 1 | 6 | |||||||||||||||||||||||||||||||||||||||
| Dividends and dividend equivalents declared (b) | — | — | 1 | — | — | 1 | — | 1 | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 41 | $ | 22,262 | $ | 21,031 | $ | (8,613) | $ | (1,596) | $ | 33,125 | $ | 36 | $ | 33,161 | |||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | 41 | $ | 22,290 | $ | 18,243 | $ | (8,294) | $ | (1,590) | $ | 30,690 | $ | 121 | $ | 30,811 | |||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | 3,262 | — | — | 3,262 | — | 3,262 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss), net | — | — | — | (76) | — | (76) | — | (76) | |||||||||||||||||||||||||||||||||||||||
| Common Stock issued (a) | — | (50) | — | — | — | (50) | — | (50) | |||||||||||||||||||||||||||||||||||||||
| Treasury stock/other | — | — | — | — | 5 | 5 | 25 | 30 | |||||||||||||||||||||||||||||||||||||||
| Dividends and dividend equivalents declared (b) | — | — | (3) | — | — | (3) | — | (3) | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | 41 | $ | 22,240 | $ | 21,502 | $ | (8,370) | $ | (1,585) | $ | 33,828 | $ | 146 | $ | 33,974 | |||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | 561 | — | — | 561 | (8) | 553 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss), net | — | — | — | 102 | — | 102 | 2 | 104 | |||||||||||||||||||||||||||||||||||||||
| Common Stock issued (a) | — | 168 | — | — | — | 168 | — | 168 | |||||||||||||||||||||||||||||||||||||||
| Treasury stock/other | — | — | — | — | 6 | 6 | (20) | (14) | |||||||||||||||||||||||||||||||||||||||
| Dividends and dividend equivalents declared (b) | — | — | (1) | — | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | 41 | $ | 22,408 | $ | 22,062 | $ | (8,268) | $ | (1,579) | $ | 34,664 | $ | 120 | $ | 34,784 | |||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | 1,832 | — |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
SUPPLEMENTAL INFORMATION
The tables below provide supplemental consolidating financial information, other financial information, and U.S. sales by type. Company excluding Ford Credit includes our Automotive and Mobility reportable segments, Corporate Other, Interest on Debt, and Special Items. Eliminations, where presented, primarily represent eliminations of intersegment transactions and deferred tax netting.
Selected Cash Flow Information. The following tables provide supplemental cash flow information (in millions):
| For the period ended September 30, 2021 | ||||||||||||||||||||||||||
| First Nine Months | ||||||||||||||||||||||||||
| Cash flows from operating activities | Company excluding Ford Credit | Ford Credit | Eliminations | Consolidated | ||||||||||||||||||||||
| Net income | $ | 2,161 | $ | 3,476 | $ | — | $ | 5,637 | ||||||||||||||||||
| Depreciation and tooling amortization | 4,247 | 1,231 | — | 5,478 | ||||||||||||||||||||||
| Other amortization | 103 | (1,137) | — | (1,034) | ||||||||||||||||||||||
| Increase/(Decrease) in provision for credit and insurance losses | 1 | (251) | — | (250) | ||||||||||||||||||||||
| Pension and OPEB expense/(income) | (1,115) | — | — | (1,115) | ||||||||||||||||||||||
| Equity investment dividends received in excess of (earnings)/losses | 106 | (11) | — | 95 | ||||||||||||||||||||||
| Foreign currency adjustments | 261 | 87 | — | 348 | ||||||||||||||||||||||
| Net unrealized (gain)/loss on Other Investments | (926) | — | — | (926) | ||||||||||||||||||||||
| Net (gain)/loss on changes in investments in affiliates | (353) | (1) | — | (354) | ||||||||||||||||||||||
| Stock compensation | 255 | 7 | — | 262 | ||||||||||||||||||||||
| Provision for deferred income taxes | 667 | (15) | — | 652 | ||||||||||||||||||||||
| Decrease/(Increase) in finance receivables (wholesale and other) | — | 8,508 | — | 8,508 | ||||||||||||||||||||||
| Decrease/(Increase) in intersegment receivables/payables | (830) | 830 | — | — | ||||||||||||||||||||||
| Decrease/(Increase) in accounts receivable and other assets | (1,545) | 216 | — | (1,329) | ||||||||||||||||||||||
| Decrease/(Increase) in inventory | (3,129) | — | — | (3,129) | ||||||||||||||||||||||
| Increase/(Decrease) in accounts payable and accrued and other liabilities | (264) | (247) | — | (511) | ||||||||||||||||||||||
| Other | (28) | (48) | — | (76) | ||||||||||||||||||||||
| Interest supplements and residual value support to Ford Credit | (1,650) | 1,650 | — | — | ||||||||||||||||||||||
| Net cash provided by/(used in) operating activities | $ | (2,039) | $ | 14,295 | $ | — | $ | 12,256 |
| Cash flows from investing activities | Company excluding Ford Credit | Ford Credit | Eliminations | Consolidated | ||||||||||||||||||||||
| Capital spending | $ | (4,424) | $ | (31) | $ | — | $ | (4,455) | ||||||||||||||||||
| Acquisitions of finance receivables and operating leases | — | (34,693) | — | (34,693) | ||||||||||||||||||||||
| Collections of finance receivables and operating leases | — | 39,440 | — | 39,440 | ||||||||||||||||||||||
| Proceeds from sale of business | 145 | — | — | 145 | ||||||||||||||||||||||
| Purchases of marketable and other investments | (16,100) | (7,143) | — | (23,243) | ||||||||||||||||||||||
| Sales and maturities of marketable securities and other investments | 18,499 | 9,940 | — | 28,439 | ||||||||||||||||||||||
| Settlements of derivatives | (200) | (44) | — | (244) | ||||||||||||||||||||||
| Other | (381) | — | — | (381) | ||||||||||||||||||||||
| Investing activity (to)/from other segments | 6,500 | (21) | (6,479) | — | ||||||||||||||||||||||
| Net cash provided by/(used in) investing activities | $ | 4,039 | $ | 7,448 | $ | (6,479) | $ | 5,008 |
| Cash flows from financing activities | Company excluding Ford Credit | Ford Credit | Eliminations | Consolidated | ||||||||||||||||||||||
| Cash payments for dividends and dividend equivalents | $ | (3) | $ | — | $ | — | $ | (3) | ||||||||||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||||||||||||
| Net changes in short-term debt | (144) | 1,712 | — | 1,568 | ||||||||||||||||||||||
| Proceeds from issuance of long-term debt | 2,300 | 17,000 | — | 19,300 | ||||||||||||||||||||||
| Principal payments on long-term debt | (393) | (35,729) | — | (36,122) | ||||||||||||||||||||||
| Other | (110) | (53) | — | (163) | ||||||||||||||||||||||
| Financing activity to/(from) other segments | 21 | (6,500) | 6,479 | — | ||||||||||||||||||||||
| Net cash provided by/(used in) financing activities | $ | 1,671 | $ | (23,570) | $ | 6,479 | $ | (15,420) | ||||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | $ | (78) | $ | (77) | $ | — | $ | (155) |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Selected Income Statement Information. The following table provides supplemental income statement information (in millions):
| For the period ended September 30, 2021 | |||||||||||||||||
| Third Quarter | |||||||||||||||||
| Company excluding Ford Credit | Ford Credit | Consolidated | |||||||||||||||
| Revenues | $ | 33,249 | $ | 2,434 | $ | 35,683 | |||||||||||
| Total costs and expenses | 33,004 | 1,337 | 34,341 | ||||||||||||||
| Operating income/(loss) | 245 | 1,097 | 1,342 | ||||||||||||||
| Interest expense on Company debt excluding Ford Credit | 439 | — | 439 | ||||||||||||||
| Other income/(loss), net | 881 | (29) | 852 | ||||||||||||||
| Equity in net income/(loss) of affiliated companies | 121 | 9 | 130 | ||||||||||||||
| Income/(Loss) before income taxes | 808 | 1,077 | 1,885 | ||||||||||||||
| Provision for/(Benefit from) income taxes | (34) | 97 | 63 | ||||||||||||||
| Net income/(loss) | 842 | 980 | 1,822 | ||||||||||||||
| Less: Income/(Loss) attributable to noncontrolling interests | (10) | — | (10) | ||||||||||||||
| Net income/(loss) attributable to Ford Motor Company | $ | 852 | $ | 980 | $ | 1,832 | |||||||||||
| For the period ended September 30, 2021 | |||||||||||||||||
| First Nine Months | |||||||||||||||||
| Company excluding Ford Credit | Ford Credit | Consolidated | |||||||||||||||
| Revenues | $ | 90,963 | $ | 7,700 | $ | 98,663 | |||||||||||
| Total costs and expenses | 90,925 | 3,954 | 94,879 | ||||||||||||||
| Operating income/(loss) | 38 | 3,746 | 3,784 | ||||||||||||||
| Interest expense on Company debt excluding Ford Credit | 1,365 | — | 1,365 | ||||||||||||||
| Other income/(loss), net | 3,990 | (107) | 3,883 | ||||||||||||||
| Equity in net income/(loss) of affiliated companies | 237 | 23 | 260 | ||||||||||||||
| Income/(Loss) before income taxes | 2,900 | 3,662 | 6,562 | ||||||||||||||
| Provision for/(Benefit from) income taxes | 739 | 186 | 925 | ||||||||||||||
| Net income/(loss) | 2,161 | 3,476 | 5,637 | ||||||||||||||
| Less: Income/(Loss) attributable to noncontrolling interests | (18) | — | (18) | ||||||||||||||
| Net income/(loss) attributable to Ford Motor Company | $ | 2,179 | $ | 3,476 | $ | 5,655 | |||||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Selected Balance Sheet Information. The following tables provide supplemental balance sheet information (in millions):
| September 30, 2021 | ||||||||||||||||||||||||||
| Assets | Company excluding Ford Credit | Ford Credit | Eliminations | Consolidated | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 14,466 | $ | 12,963 | $ | — | $ | 27,429 | ||||||||||||||||||
| Marketable securities | 16,951 | 2,046 | — | 18,997 | ||||||||||||||||||||||
| Ford Credit finance receivables, net | — | 32,600 | — | 32,600 | ||||||||||||||||||||||
| Trade and other receivables, net | 4,040 | 6,811 | — | 10,851 | ||||||||||||||||||||||
| Inventories | 13,508 | — | — | 13,508 | ||||||||||||||||||||||
| Other assets | 2,470 | 1,113 | — | 3,583 | ||||||||||||||||||||||
| Receivable from other segments | 107 | 1,038 | (1,145) | — | ||||||||||||||||||||||
| Total current assets | 51,542 | 56,571 | (1,145) | 106,968 | ||||||||||||||||||||||
| Ford Credit finance receivables, net | — | 50,839 | — | 50,839 | ||||||||||||||||||||||
| Net investment in operating leases | 1,281 | 25,459 | — | 26,740 | ||||||||||||||||||||||
| Net property | 36,377 | 220 | — | 36,597 | ||||||||||||||||||||||
| Equity in net assets of affiliated companies | 4,490 | 138 | — | 4,628 | ||||||||||||||||||||||
| Deferred income taxes | 11,707 | 177 | 7 | 11,891 | ||||||||||||||||||||||
| Other assets | 13,060 | 1,954 | — | 15,014 | ||||||||||||||||||||||
| Receivable from other segments | — | 27 | (27) | — | ||||||||||||||||||||||
| Total assets | $ | 118,457 | $ | 135,385 | $ | (1,165) | $ | 252,677 |
| Liabilities | Company excluding Ford Credit | Ford Credit | Eliminations | Consolidated | ||||||||||||||||||||||
| Payables | $ | 21,851 | $ | 1,072 | $ | — | $ | 22,923 | ||||||||||||||||||
| Other liabilities and deferred revenue | 17,543 | 1,244 | — | 18,787 | ||||||||||||||||||||||
| Debt payable within one year | 1,849 | 45,474 | — | 47,323 | ||||||||||||||||||||||
| Payable to other segments | 1,145 | — | (1,145) | — | ||||||||||||||||||||||
| Total current liabilities | 42,388 | 47,790 | (1,145) | 89,033 | ||||||||||||||||||||||
| Other liabilities and deferred revenue | 27,566 | 1,242 | — | 28,808 | ||||||||||||||||||||||
| Long-term debt | 23,767 | 73,482 | — | 97,249 | ||||||||||||||||||||||
| Deferred income taxes | 374 | 502 | 7 | 883 | ||||||||||||||||||||||
| Payable to other segments | 27 | — | (27) | — | ||||||||||||||||||||||
| Total liabilities | $ | 94,122 | $ | 123,016 | $ | (1,165) | $ | 215,973 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Selected Other Information.
Equity. At September 30, 2021, total equity attributable to Ford was $36.6 billion, an increase of $5.9 billion compared with December 31, 2020. The detail for this change is shown below (in billions):
| Increase/ (Decrease) | |||||
| Net income/(loss) | $ | 5.7 | |||
| Common stock issued | 0.2 | ||||
| Total | $ | 5.9 |
U.S. Sales by Type. The following table shows third quarter 2021 U.S. sales volume and U.S. wholesales segregated by truck, SUV, and car sales. U.S. sales volume reflects transactions with (i) retail and fleet customers (as reported by dealers), (ii) governments, and (iii) Ford management. U.S. wholesales reflect sales to dealers.
| U.S. Sales | U.S. Wholesales | ||||||||||
| Trucks | 229,738 | 264,383 | |||||||||
| SUVs | 161,571 | 197,020 | |||||||||
| Cars | 9,534 | 9,959 | |||||||||
| Total Vehicles | 400,843 | 471,362 |
ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
The Financial Accounting Standards Board (“FASB”) has issued the following Accounting Standards Updates (“ASU”), which are not expected to have a material impact to our financial statements or financial statement disclosures. For additional information, see Note 2 of the Notes to the Financial Statements.
| ASU | Effective Date (a) | ||||||||||
| 2021-04 | Issuer’s Accounting for Certain Modifications or Exchanges of Warrants | January 1, 2022 | |||||||||
| 2021-05 | Lessors – Certain Leases with Variable Lease Payments | January 1, 2022 | |||||||||
| 2018-12 | Targeted Improvements to the Accounting for Long Duration Contracts | January 1, 2023 |
(a)Early adoption for each of the standards is permitted.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Automotive Segment
Foreign Currency Risk. The net fair value of foreign exchange forward contracts (including adjustments for credit risk) as of September 30, 2021, was a liability of $351 million, compared with a liability of $487 million as of December 31, 2020. The potential change in the fair value from a 10% change in the underlying exchange rates, in U.S. dollar terms, would have been $2.2 billion at September 30, 2021, compared with $2.5 billion at December 31, 2020.
Commodity Price Risk. The net fair value of commodity forward contracts (including adjustments for credit risk) as of September 30, 2021, was an asset of $312 million, compared with an asset of $105 million at December 31, 2020. The potential change in the fair value from a 10% change in the underlying commodity prices would have been $216 million at September 30, 2021, compared with $141 million at December 31, 2020.
Ford Credit Segment
Interest Rate Risk. To provide a quantitative measure of the sensitivity of its pre-tax cash flow to changes in interest rates, Ford Credit uses interest rate scenarios that assume a hypothetical, instantaneous increase or decrease of one percentage point in all interest rates across all maturities (a “parallel shift”), as well as a base case that assumes that all interest rates remain constant at existing levels. The differences in pre-tax cash flow between these scenarios and the base case over a 12-month period represent an estimate of the sensitivity of Ford Credit’s pre-tax cash flow. Under this model, Ford Credit estimates that at September 30, 2021, all else constant, such an increase in interest rates would decrease its pre-tax cash flow by $51 million over the next 12 months, compared with a decrease of $3 million at December 31, 2020. In reality, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in Ford Credit’s analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.
Transition from LIBOR to Alternative Reference Rates
We and our affiliates, including Ford Credit, have been working to transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates. We have developed a total company inventory of affected financial instruments and contracts, have been working to transition legacy contracts linked to LIBOR to alternative reference rates, and intend to rely primarily on alternative reference rates for new contracts after 2021.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. James D. Farley, Jr., our Chief Executive Officer (“CEO”), and John T. Lawler, our Chief Financial Officer (“CFO”), have performed an evaluation of the Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of September 30, 2021, and each has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by SEC rules and forms, and that such information is accumulated and communicated to the CEO and CFO to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting. There were no changes in internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
ENVIRONMENTAL MATTERS
We have no legal proceedings arising under any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, in which (i) a governmental authority is a party, and (ii) we believe there is the possibility of monetary sanctions (exclusive of interest and costs) in excess of $1 million.
OTHER MATTERS
Brazilian Tax Matters (as previously reported on page 28 of our 2020 Form 10-K Report, page 68 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and page 68 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021). One Brazilian state (São Paulo) and the Brazilian federal tax authority currently have outstanding substantial tax assessments against Ford Motor Company Brasil Ltda. (“Ford Brazil”) related to state and federal tax incentives Ford Brazil received for its operations in the Brazilian state of Bahia. The São Paulo assessment is part of a broader conflict among various states in Brazil. The federal legislature enacted laws designed to encourage the states to end that conflict, and in 2017 the states reached an agreement on a framework for resolution. Ford Brazil continues to pursue a resolution under the framework and expects the amount of any remaining assessments by the states to be resolved under that framework. The federal assessments are outside the scope of the legislation.
All of the outstanding assessments have been appealed to the relevant administrative court of each jurisdiction. To proceed with an appeal within the judicial court system, an appellant may be required to post collateral. To date, we have not been required to post any collateral. If we are required to post collateral, which could be in excess of $1 billion, we expect it to be in the form of fixed assets, surety bonds, and/or letters of credit, but we may be required to post cash collateral. Although the ultimate resolution of these matters may take many years, we consider our overall risk of loss to be remote.
Emissions Certification (as previously reported on page 28 of our 2020 Form 10-K Report). Beginning in 2018 and continuing into 2020, the Company investigated a potential concern involving its U.S. emissions certification process. The matter focused on issues related to road load estimations, including analytical modeling and coastdown testing. The potential concern did not involve the use of defeat devices (see Item 1, Governmental Standards of our 2020 Form 10-K Report for a definition of defeat devices). We voluntarily disclosed this matter to the U.S. Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”) on February 18, 2019 and February 21, 2019, respectively. Subsequently, the U.S. Department of Justice (“DOJ”) opened a criminal investigation into the matter. In addition, we notified a number of other state and federal agencies. We cooperated fully with these government agencies. We received notifications from EPA, CARB, and DOJ that these agencies have closed their inquiries into the matter and do not intend to take any further action. The review opened by Environment and Climate Change Canada remains open.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
In the third quarter of 2021, we repurchased shares of Ford Common Stock from our employees related to certain exercises of stock options in accordance with our various compensation plans.
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly-Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| July 1, 2021 through July 31, 2021 | 1,500 | $ | 14.75 | — | — | |||||||||||||||||||||
| August 1, 2021 through August 31, 2021 | — | — | — | — | ||||||||||||||||||||||
| September 1, 2021 through September 30, 2021 | 39,594 | 14.19 | — | — | ||||||||||||||||||||||
| Total / Average | 41,094 | $ | 14.21 | — | — |
Item 6. Exhibits.
| Designation | Description | Method of Filing | ||||||||||||
| Exhibit 31.1 | Rule 15d-14(a) Certification of CEO. | Filed with this Report. | ||||||||||||
| Exhibit 31.2 | Rule 15d-14(a) Certification of CFO. | Filed with this Report. | ||||||||||||
| Exhibit 32.1 | Section 1350 Certification of CEO. | Furnished with this Report. | ||||||||||||
| Exhibit 32.2 | Section 1350 Certification of CFO. | Furnished with this Report. | ||||||||||||
| Exhibit 101.INS | Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”). | (a) | ||||||||||||
| Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document. | (a) | ||||||||||||
| Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | (a) | ||||||||||||
| Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | (a) | ||||||||||||
| Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | (a) | ||||||||||||
| Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | (a) | ||||||||||||
| Exhibit 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | (a) |
(a)Submitted electronically with this Report in accordance with the provisions of Regulation S-T.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FORD MOTOR COMPANY
| By: | /s/ Cathy O’Callaghan | ||||
| Cathy O’Callaghan, Controller | |||||
| (principal accounting officer) | |||||
| Date: | October 27, 2021 |