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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 June 30, 2024

☐ 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
6.500% Notes due August 15, 2062	FPRD	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 July 19, 2024, Ford had outstanding 3,904,397,609 shares of Common Stock and 70,852,076 shares of Class B Stock.

Exhibit Index begins on page 69

FORD MOTOR COMPANY

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2024


	Table of Contents	Page
	Part I - Financial Information
Item 1	Financial Statements	3
	Consolidated Income Statements	3
	Consolidated Statements of Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Cash Flows	5
	Consolidated Statements of Equity	6
	Notes to the Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
	Recent Developments	35
	Results of Operations	36
	Ford Blue Segment	38
	Ford Model e Segment	39
	Ford Pro Segment	39
	Ford Next Segment	41
	Ford Credit Segment	41
	Corporate Other	44
	Interest on Debt	44
	Taxes	44
	Liquidity and Capital Resources	45
	Credit Ratings	54
	Outlook	55
	Cautionary Note on Forward-Looking Statements	56
	Non-GAAP Financial Measures That Supplement GAAP Measures	58
	Non-GAAP Financial Measure Reconciliations	60
	Supplemental Information	62
	Accounting Standards Issued But Not Yet Adopted	65
Item 3	Quantitative and Qualitative Disclosures About Market Risk	66
Item 4	Controls and Procedures	66

	Part II - Other Information
Item 1	Legal Proceedings	67
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 5	Other Information	68
Item 6	Exhibits	69
	Signature	70

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(in millions, except per share amounts)


	For the periods ended June 30,
	2023		2024		2023		2024
	Second Quarter				First Half
	(unaudited)
Revenues
Company excluding Ford Credit	$	42,427	$	44,811	$	81,512	$	84,701
Ford Credit	2,527		2,997		4,916		5,884
Total revenues (Note 3)	44,954		47,808		86,428		90,585

Costs and expenses
Cost of sales	37,471		40,489		72,140		76,965
Selling, administrative, and other expenses	2,750		2,678		5,256		5,054
Ford Credit interest, operating, and other expenses	2,272		2,758		4,458		5,458
Total costs and expenses	42,493		45,925		81,854		87,477
Operating income/(loss)	2,461		1,883		4,574		3,108
Interest expense on Company debt excluding Ford Credit	304		270		612		548
Other income/(loss), net (Note 4)	255		628		479		1,126
Equity in net income/(loss) of affiliated companies	(124)		197		6		364
Income/(Loss) before income taxes	2,288		2,438		4,447		4,050
Provision for/(Benefit from) income taxes	272		605		768		883
Net income/(loss)	2,016		1,833		3,679		3,167
Less: Income/(Loss) attributable to noncontrolling interests	99		2		5		4
Net income/(loss) attributable to Ford Motor Company	$	1,917	$	1,831	$	3,674	$	3,163

EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 6)
Basic income/(loss)	$	0.48	$	0.46	$	0.92	$	0.79
Diluted income/(loss)	0.47		0.46		0.91		0.79

Weighted-average shares used in computation of earnings/(loss) per share
Basic shares	4,003		3,985		3,996		3,982
Diluted shares	4,041		4,022		4,035		4,022

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	For the periods ended June 30,
	2023		2024		2023		2024
	Second Quarter				First Half
	(unaudited)
Net income/(loss)	$	2,016	$	1,833	$	3,679	$	3,167
Other comprehensive income/(loss), net of tax (Note 16)
Foreign currency translation	278		(521)		771		(635)
Marketable securities	(44)		28		66		20
Derivative instruments	(369)		43		(424)		248
Pension and other postretirement benefits	3		24		6		51
Total other comprehensive income/(loss), net of tax	(132)		(426)		419		(316)
Comprehensive income/(loss)	1,884		1,407		4,098		2,851
Less: Comprehensive income/(loss) attributable to noncontrolling interests	103		1		9		3
Comprehensive income/(loss) attributable to Ford Motor Company	$	1,781	$	1,406	$	4,089	$	2,848

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, 2023		June 30, 2024
	(unaudited)
ASSETS
Cash and cash equivalents (Note 7)	$	24,862	$	19,953
Marketable securities (Note 7)	15,309		14,613
Ford Credit finance receivables, net of allowance for credit losses of $256 and $252 (Note 8)	46,425		47,434
Trade and other receivables, less allowances of $64 and $62	15,601		16,802
Inventories (Note 9)	15,651		17,183
Other assets	3,633		4,533
Total current assets	121,481		120,518
Ford Credit finance receivables, net of allowance for credit losses of $626 and $628 (Note 8)	55,650		58,159
Net investment in operating leases	21,384		21,545
Net property	40,821		40,709
Equity in net assets of affiliated companies	5,548		7,215
Deferred income taxes	16,985		16,468
Other assets	11,441		11,972
Total assets	$	273,310	$	276,586

LIABILITIES
Payables	$	25,992	$	25,458
Other liabilities and deferred revenue (Note 10 and Note 18)	25,870		27,380
Debt payable within one year (Note 12)
Company excluding Ford Credit	477		1,712
Ford Credit	49,192		48,853

Total current liabilities	101,531		103,403
Other liabilities and deferred revenue (Note 10 and Note 18)	28,414		28,289
Long-term debt (Note 12)
Company excluding Ford Credit	19,467		18,694
Ford Credit	80,095		81,642
Deferred income taxes	1,005		963
Total liabilities	230,512		232,991

EQUITY
Common Stock, par value $0.01 per share (4,108 million shares issued of 6 billion authorized)	41		41
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	23,128		23,270
Retained earnings	31,029		32,240
Accumulated other comprehensive income/(loss) (Note 16)	(9,042)		(9,357)
Treasury stock	(2,384)		(2,628)
Total equity attributable to Ford Motor Company	42,773		43,567
Equity attributable to noncontrolling interests	25		28
Total equity	42,798		43,595
Total liabilities and equity	$	273,310	$	276,586


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, 2023		June 30, 2024
	(unaudited)
ASSETS
Cash and cash equivalents	$	2,298	$	2,311
Ford Credit finance receivables, net	56,131		57,226
Net investment in operating leases	11,179		12,431
Other assets	90		78
LIABILITIES
Other liabilities and deferred revenue	$	45	$	24
Debt	48,177		45,152

The accompanying notes are part of the consolidated financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	For the periods ended June 30,
	2023		2024
	First Half
	(unaudited)
Cash flows from operating activities
Net income/(loss)	$	3,679	$	3,167
Depreciation and tooling amortization	3,775		3,795
Other amortization	(554)		(772)
Provision for credit and insurance losses	212		317
Pension and other postretirement employee benefits (“OPEB”) expense/(income) (Note 11)	612		201
Equity method investment dividends received in excess of (earnings)/losses and impairments	142		(124)
Foreign currency adjustments	(97)		173
Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments (Note 4)	163		8
Stock compensation	238		275
Provision for/(Benefit from) deferred income taxes	3		206
Decrease/(Increase) in finance receivables (wholesale and other)	(1,473)		(1,865)
Decrease/(Increase) in accounts receivable and other assets	(1,793)		(1,603)
Decrease/(Increase) in inventory	(3,354)		(1,845)
Increase/(Decrease) in accounts payable and accrued and other liabilities	6,134		5,269
Other	148		(309)
Net cash provided by/(used in) operating activities	7,835		6,893

Cash flows from investing activities
Capital spending	(3,729)		(4,194)
Acquisitions of finance receivables and operating leases	(26,231)		(29,542)
Collections of finance receivables and operating leases	22,517		22,530
Purchases of marketable securities and other investments	(4,860)		(6,069)
Sales and maturities of marketable securities and other investments	7,584		6,812
Settlements of derivatives	(32)		(237)
Capital contributions to equity method investments	(1,047)		(1,299)
Other	(359)		78
Net cash provided by/(used in) investing activities	(6,157)		(11,921)

Cash flows from financing activities
Cash payments for dividends and dividend equivalents	(3,794)		(1,925)
Purchases of common stock	—		(244)
Net changes in short-term debt	(658)		(1,008)
Proceeds from issuance of long-term debt	26,401		28,960
Payments of long-term debt	(22,213)		(25,145)
Other	(197)		(254)
Net cash provided by/(used in) financing activities	(461)		384

Effect of exchange rate changes on cash, cash equivalents, and restricted cash	66		(240)

Net increase/(decrease) in cash, cash equivalents, and restricted cash	$	1,283	$	(4,884)

Cash, cash equivalents, and restricted cash at beginning of period (Note 7)	$	25,340	$	25,110
Net increase/(decrease) in cash, cash equivalents, and restricted cash	1,283		(4,884)
Cash, cash equivalents, and restricted cash at end of period (Note 7)	$	26,623	$	20,226

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 16)		Treasury Stock		Total		Equity Attributable to Non-controlling Interests		Total Equity
Balance at December 31, 2022	$	42	$	22,832	$	31,754	$	(9,339)	$	(2,047)	$	43,242	$	(75)	$	43,167
Net income/(loss)	—		—		1,757		—		—		1,757		(94)		1,663
Other comprehensive income/(loss), net	—		—		—		551		—		551		—		551
Common Stock issued (a)	—		57		—		—		—		57		—		57
Treasury stock/other	—		—		—		—		—		—		—		—
Dividends and dividend equivalents declared ($0.80 per share) (b)	—		—		(3,241)		—		—		(3,241)		—		(3,241)
Balance at March 31, 2023	$	42	$	22,889	$	30,270	$	(8,788)	$	(2,047)	$	42,366	$	(169)	$	42,197
Net income/(loss)	—		—		1,917		—		—		1,917		99		2,016
Other comprehensive income/(loss), net	—		—		—		(136)		—		(136)		4		(132)
Common Stock issued (a)	—		140		—		—		—		140		—		140
Treasury stock/other	—		—		—		—		—		—		(5)		(5)
Dividends and dividend equivalents declared ($0.15 per share) (b)	—		—		(610)		—		—		(610)		—		(610)
Balance at June 30, 2023	$	42	$	23,029	$	31,577	$	(8,924)	$	(2,047)	$	43,677	$	(71)	$	43,606







Balance at December 31, 2023	$	42	$	23,128	$	31,029	$	(9,042)	$	(2,384)	$	42,773	$	25	$	42,798
Net income/(loss)	—		—		1,332		—		—		1,332		2		1,334
Other comprehensive income/(loss), net	—		—		—		110		—		110		—		110
Common Stock issued (a)	—		(3)		—		—		—		(3)		—		(3)
Treasury stock/other	—		—		—		—		—		—		—		—
Dividends and dividend equivalents declared ($0.33 per share) (b)	—		—		(1,342)		—		—		(1,342)		—		(1,342)
Balance at March 31, 2024	$	42	$	23,125	$	31,019	$	(8,932)	$	(2,384)	$	42,870	$	27	$	42,897
Net income/(loss)	—		—		1,831		—		—		1,831		2		1,833
Other comprehensive income/(loss), net	—		—		—		(425)		—		(425)		(1)		(426)
Common Stock issued (a)	—		145		—		—		—		145		—		145
Treasury stock/other	—		—		—		—		(244)		(244)		—		(244)
Dividends and dividend equivalents declared ($0.15 per share) (b)	—		—		(610)		—		—		(610)		—		(610)
Balance at June 30, 2024	$	42	$	23,270	$	32,240	$	(9,357)	$	(2,628)	$	43,567	$	28	$	43,595

(a)Includes impact of share-based compensation.

(b)Dividends and dividend equivalents declared for Common and Class B Stock. In the first quarter of 2023 and 2024, in addition to a regular dividend of $0.15 per share, we declared a supplemental dividend of $0.65 per share and $0.18 per share, respectively.

The accompanying notes are part of the consolidated financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

Table of Contents


Footnote		Page
Note 1	Presentation	8
Note 2	New Accounting Standards	8
Note 3	Revenue	9
Note 4	Other Income/(Loss)	11
Note 5	Income Taxes	11
Note 6	Capital Stock and Earnings/(Loss) Per Share	11
Note 7	Cash, Cash Equivalents, and Marketable Securities	12
Note 8	Ford Credit Finance Receivables and Allowance for Credit Losses	15
Note 9	Inventories	19
Note 10	Other Liabilities and Deferred Revenue	19
Note 11	Retirement Benefits	20
Note 12	Debt	21
Note 13	Derivative Financial Instruments and Hedging Activities	22
Note 14	Employee Separation Actions and Exit and Disposal Activities	24
Note 15	Acquisitions and Divestitures	25
Note 16	Accumulated Other Comprehensive Income/(Loss)	26
Note 17	Variable Interest Entities	27
Note 18	Commitments and Contingencies	28
Note 19	Segment Information	31

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. PRESENTATION

For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us,” or similar references mean Ford Motor Company, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise. We also make reference to Ford Motor Credit Company LLC, herein referenced to as Ford Credit. Our consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X.

In the opinion of management, these unaudited financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of our results of operations and financial condition for the periods, and at the dates, presented. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K Report”).

NOTE 2. NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

We adopted the following Accounting Standards Updates (“ASUs”) during 2024, none of which had a material impact to our consolidated financial statements or financial statement disclosures:


ASU		Effective Date
2023-01	Leases: Common Control Arrangements	January 1, 2024
2023-02	Investments – Equity Method and Joint Ventures - Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method	January 1, 2024

Accounting Standards Issued But Not Yet Adopted

ASU 2023-07, Segment Reporting, Improvements to Reportable Segment Disclosures. In November 2023, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (”CODM”) for each reportable segment. In addition to significant segment expenses that are separately disclosed, the standard requires disclosure of an amount for “other segment items” by reportable segment and a description of its composition. The standard also requires all annual disclosures about a reporting segment’s profit or loss and assets to be provided on an interim basis. This new standard is effective for our 2024 annual financial statements and interim periods beginning in 2025. We continue to assess the effect on our consolidated financial statement disclosures; however, adoption will not impact our consolidated balance sheets or income statements.

ASU 2023-09, Improvements to Income Tax Disclosures. In December 2023, the FASB issued a new accounting standard to enhance the transparency and decision usefulness of income tax disclosures. The new standard is effective for annual periods beginning after December 15, 2024, with retrospective application permitted. There will be no impact to our consolidated balance sheets or income statements; however, there will be changes to our consolidated financial statement disclosures, primarily related to the effective tax rate reconciliation and cash paid for income taxes.

All other ASUs issued but not yet adopted were assessed and determined to be not applicable or are not expected to have a material impact on our consolidated financial statements or financial statement disclosures.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 3. REVENUE

The following tables disaggregate our revenue by major source for the periods ended June 30 (in millions):


	Second Quarter 2023
	Company excluding Ford Credit		Ford Credit		Consolidated
Vehicles, parts, and accessories	$	41,241	$	—	$	41,241
Used vehicles	457		—		457
Services and other revenue (a)	683		49		732
Revenues from sales and services	42,381		49		42,430

Leasing income	46		1,029		1,075
Financing income	—		1,426		1,426
Insurance income	—		23		23
Total revenues	$	42,427	$	2,527	$	44,954

	Second Quarter 2024
	Company excluding Ford Credit		Ford Credit		Consolidated
Vehicles, parts, and accessories	$	43,542	$	—	$	43,542
Used vehicles	489		—		489
Services and other revenue (a)	726		42		768
Revenues from sales and services	44,757		42		44,799

Leasing income	54		1,030		1,084
Financing income	—		1,889		1,889
Insurance income	—		36		36
Total revenues	$	44,811	$	2,997	$	47,808

	First Half 2023
	Company excluding Ford Credit		Ford Credit		Consolidated
Vehicles, parts, and accessories	$	79,168	$	—	$	79,168
Used vehicles	926		—		926
Services and other revenue (a)	1,328		66		1,394
Revenues from sales and services	81,422		66		81,488

Leasing income	90		2,078		2,168
Financing income	—		2,727		2,727
Insurance income	—		45		45
Total revenues	$	81,512	$	4,916	$	86,428

	First Half 2024
	Company excluding Ford Credit		Ford Credit		Consolidated
Vehicles, parts, and accessories	$	82,187	$	—	$	82,187
Used vehicles	999		—		999
Services and other revenue (a)	1,414		62		1,476
Revenues from sales and services	84,600		62		84,662

Leasing income	101		2,047		2,148
Financing income	—		3,708		3,708
Insurance income	—		67		67
Total revenues	$	84,701	$	5,884	$	90,585

(a)Includes extended service contract revenue.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 3. REVENUE (Continued)

The amount of consideration we receive and revenue we recognize on our vehicles, parts, and accessories varies with changes in return rights, marketing incentives we offer to our customers and their customers, and other pricing adjustments. Estimates of marketing incentives and other pricing adjustments are based on our expectations of retail and fleet sales volumes, mix of products to be sold, competitor actions, and incentive programs to be offered. Customer acceptance of products and programs, as well as other market conditions, will impact these estimates. As a result of changes in our estimate of variable consideration (e.g., marketing incentives), we recorded a decrease related to revenue recognized in prior periods of $3 million and $256 million in the second quarter of 2023 and 2024, respectively.

We had a balance of $4.8 billion and $5.0 billion of unearned revenue associated primarily with outstanding extended service contracts reported in Other liabilities and deferred revenue at December 31, 2023 and June 30, 2024, respectively*.* We expect to recognize approximately $900 million of the unearned amount in the remainder of 2024, $1.4 billion in 2025, and $2.7 billion thereafter. We recognized $374 million and $427 million of unearned amounts from prior years as revenue during the second quarter of 2023 and 2024, respectively, and $754 million and $858 million in the first half of 2023 and 2024, respectively.

Amounts paid to dealers to obtain extended service contracts are deferred and recorded as Other assets. We had a balance of $317 million and $319 million in deferred costs as of December 31, 2023 and June 30, 2024, respectively. We recognized $25 million and $27 million of amortization during the second quarter of 2023 and 2024, respectively, and $51 million and $53 million in the first half of 2023 and 2024, respectively.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. OTHER INCOME/(LOSS)

The amounts included in Other income/(loss), net for the periods ended June 30 were as follows (in millions):


	Second Quarter				First Half
	2023		2024		2023		2024
Net periodic pension and OPEB income/(cost), excluding service cost (Note 11)	$	(167)	$	105	$	(332)	$	81
Investment-related interest income	372		367		720		777
Interest income/(expense) on income taxes	(2)		(9)		(6)		(23)
Realized and unrealized gains/(losses) on cash equivalents, marketable securities, and other investments	(112)		21		(163)		(8)
Gains/(Losses) on changes in investments in affiliates	13		17		17		24
Royalty income	127		113		230		237
Other	24		14		13		38
Total	$	255	$	628	$	479	$	1,126

NOTE 5. INCOME TAXES

For interim tax reporting, we estimate one single effective tax rate for tax jurisdictions not subject to a valuation allowance, which is applied to the year-to-date ordinary income/(loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

NOTE 6. CAPITAL STOCK AND EARNINGS/(LOSS) PER SHARE

Earnings/(Loss) Per Share Attributable to Ford Motor Company Common and Class B Stock

Basic and diluted earnings/(loss) per share were calculated using the following (in millions):


	Second Quarter				First Half
	2023		2024		2023		2024
Net income/(loss) attributable to Ford Motor Company	$	1,917	$	1,831	$	3,674	$	3,163

Basic and Diluted Shares
Basic shares (average shares outstanding)	4,003		3,985		3,996		3,982
Net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt	38		37		39		40
Diluted shares	4,041		4,022		4,035		4,022

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

The fair values of cash, cash equivalents, and marketable securities measured at fair value on a recurring basis were as follows (in millions):


		December 31, 2023
	Fair Value Level	Company excluding Ford Credit		Ford Credit		Consolidated
Cash and cash equivalents
U.S. government	1	$	2,320	$	912	$	3,232
U.S. government agencies	2	2,075		625		2,700
Non-U.S. government and agencies	2	699		276		975
Corporate debt	2	1,617		101		1,718
Total marketable securities classified as cash equivalents		6,711		1,914		8,625
Cash, time deposits, and money market funds		7,493		8,744		16,237
Total cash and cash equivalents		$	14,204	$	10,658	$	24,862

Marketable securities
U.S. government	1	$	4,467	$	207	$	4,674
U.S. government agencies	2	1,774		49		1,823
Non-U.S. government and agencies	2	2,096		109		2,205
Corporate debt	2	5,807		268		6,075
Equities	1	23		—		23
Other marketable securities	2	353		156		509
Total marketable securities		$	14,520	$	789	$	15,309

Restricted cash		$	111	$	137	$	248

Cash, cash equivalents, and restricted cash - held for sale		$	—	$	—	$	—
		June 30, 2024
	Fair Value Level	Company excluding Ford Credit		Ford Credit		Consolidated
Cash and cash equivalents
U.S. government	1	$	250	$	60	$	310
U.S. government agencies	2	3,095		—		3,095
Non-U.S. government and agencies	2	400		283		683
Corporate debt	2	439		279		718
Total marketable securities classified as cash equivalents		4,184		622		4,806
Cash, time deposits, and money market funds		8,321		6,826		15,147
Total cash and cash equivalents		$	12,505	$	7,448	$	19,953

Marketable securities
U.S. government	1	$	4,021	$	227	$	4,248
U.S. government agencies	2	1,876		—		1,876
Non-U.S. government and agencies	2	2,358		55		2,413
Corporate debt	2	5,197		255		5,452
Equities	1	19		—		19
Other marketable securities	2	460		145		605
Total marketable securities		$	13,931	$	682	$	14,613

Restricted cash		$	123	$	105	$	228

Cash, cash equivalents, and restricted cash - held for sale (Note 15)		$	45	$	—	$	45

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

The cash equivalents and marketable securities accounted for as available-for-sale (“AFS”) securities were as follows (in millions):


	December 31, 2023
									Fair Value of Securities with Contractual Maturities
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Within 1 Year		After 1 Year through 5 Years		After 5 Years
Company excluding Ford Credit
U.S. government	$	4,458	$	6	$	(66)	$	4,398	$	2,172	$	2,216	$	10
U.S. government agencies	2,053		4		(62)		1,995		490		1,487		18
Non-U.S. government and agencies	1,948		1		(75)		1,874		587		1,275		12
Corporate debt	7,433		27		(67)		7,393		2,830		4,558		5
Other marketable securities	322		2		(4)		320		—		247		73
Total	$	16,214	$	40	$	(274)	$	15,980	$	6,079	$	9,783	$	118

	June 30, 2024
									Fair Value of Securities with Contractual Maturities
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Within 1 Year		After 1 Year through 5 Years		After 5 Years
Company excluding Ford Credit
U.S. government	$	4,004	$	2	$	(53)	$	3,953	$	1,560	$	2,383	$	10
U.S. government agencies	1,999		—		(58)		1,941		553		1,370		18
Non-U.S. government and agencies	1,996		1		(62)		1,935		679		1,217		39
Corporate debt	5,650		13		(49)		5,614		1,046		4,543		25
Other marketable securities	430		1		(3)		428		—		321		107
Total	$	14,079	$	17	$	(225)	$	13,871	$	3,838	$	9,834	$	199

Sales proceeds and gross realized gains/losses from the sale of AFS securities for the periods ended June 30 were as follows (in millions):


	Second Quarter				First Half
	2023		2024		2023		2024
Company excluding Ford Credit
Sales proceeds	$	715	$	2,715	$	1,878	$	6,434
Gross realized gains	—		3		1		5
Gross realized losses	9		8		21		16

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

The present fair values and gross unrealized losses for cash equivalents and marketable securities accounted for as AFS securities that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position, were as follows (in millions):


	December 31, 2023
	Less than 1 Year				1 Year or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Company excluding Ford Credit
U.S. government	$	619	$	(2)	$	2,735	$	(64)	$	3,354	$	(66)
U.S. government agencies	283		(1)		1,068		(61)		1,351		(62)
Non-U.S. government and agencies	67		—		1,654		(75)		1,721		(75)
Corporate debt	2,608		(2)		2,192		(65)		4,800		(67)
Other marketable securities	26		—		122		(4)		148		(4)
Total	$	3,603	$	(5)	$	7,771	$	(269)	$	11,374	$	(274)

	June 30, 2024
	Less than 1 Year				1 Year or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Company excluding Ford Credit
U.S. government	$	1,285	$	(12)	$	2,289	$	(41)	$	3,574	$	(53)
U.S. government agencies	751		(5)		1,161		(53)		1,912		(58)
Non-U.S. government and agencies	313		(3)		1,558		(59)		1,871		(62)
Corporate debt	2,275		(8)		1,585		(41)		3,860		(49)
Other marketable securities	117		(1)		117		(2)		234		(3)
Total	$	4,741	$	(29)	$	6,710	$	(196)	$	11,451	$	(225)

We determine credit losses on AFS debt securities using the specific identification method. During the first half of 2024, we did not recognize any credit loss. The unrealized losses on securities are due to changes in interest rates and market liquidity.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash, as reported in the consolidated statements of cash flows, were as follows (in millions):


	December 31, 2023		June 30, 2024
Cash and cash equivalents	$	24,862	$	19,953
Restricted cash (a)	248		228
Cash, cash equivalents, and restricted cash - held for sale (Note 15)	—		45
Total cash, cash equivalents, and restricted cash	$	25,110	$	20,226

(a)Included in Other assets in the non-current assets section of our consolidated balance sheets.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

Ford Credit manages finance receivables as “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, Ford Credit defines “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.

Ford Credit finance receivables, net were as follows (in millions):


	December 31, 2023		June 30, 2024
Consumer
Retail installment contracts, gross	$	73,825	$	77,264
Finance leases, gross	7,793		8,138
Retail financing, gross	81,618		85,402
Unearned interest supplements	(3,344)		(4,211)
Consumer finance receivables	78,274		81,191
Non-Consumer
Dealer financing	24,683		25,282
Non-Consumer finance receivables	24,683		25,282
Total recorded investment	$	102,957	$	106,473

Recorded investment in finance receivables	$	102,957	$	106,473
Allowance for credit losses	(882)		(880)
Total finance receivables, net	$	102,075	$	105,593

Current portion	$	46,425	$	47,434
Non-current portion	55,650		58,159
Total finance receivables, net	$	102,075	$	105,593

Net finance receivables subject to fair value (a)	$	94,728	$	97,936
Fair value (b)	93,189		96,509

(a)Net finance receivables subject to fair value exclude finance leases.

(b)The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Ford Credit’s finance leases are comprised of sales-type and direct financing leases. Financing revenue from finance leases for the second quarter of 2023 and 2024 was $91 million and $122 million, respectively, and for the first half of 2023 and 2024 was $174 million and $239 million, respectively, and is included in Ford Credit revenues on our consolidated income statements.

At December 31, 2023 and June 30, 2024, accrued interest was $294 million and $306 million, respectively, which we report in Other assets in the current assets section of our consolidated balance sheets.

Included in the recorded investment in finance receivables at December 31, 2023 and June 30, 2024, were consumer receivables of $46.0 billion and $45.1 billion, respectively, and non-consumer receivables of $21.3 billion and $22.7 billion, respectively, (including Ford Blue, Ford Model e, and Ford Pro receivables sold to Ford Credit, which we report in Trade and other receivables) that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. The receivables are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of Ford Credit’s other creditors. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on Ford Credit’s aging analysis. Consumer receivables credit quality ratings are as follows:

*•*Pass – current to 60 days past due;

*•*Special Mention – 61 to 120 days past due and in intensified collection status; and

*•*Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral less costs to sell.

The credit quality analysis of consumer receivables at December 31, 2023 was as follows (in millions):


	Amortized Cost Basis by Origination Year
	Prior to 2019		2019		2020		2021		2022		2023		Total		Percent
Consumer
31 - 60 days past due	$	40	$	49	$	130	$	125	$	187	$	159	$	690	0.9	%
61 - 120 days past due	9		11		30		37		58		50		195		0.2
Greater than 120 days past due	7		4		7		10		10		5		43		0.1
Total past due	56		64		167		172		255		214		928		1.2
Current	891		2,359		7,385		11,301		20,247		35,163		77,346		98.8
Total	$	947	$	2,423	$	7,552	$	11,473	$	20,502	$	35,377	$	78,274	100.0	%

Gross charge-offs	$	47	$	40	$	75	$	85	$	117	$	37	$	401

The credit quality analysis of consumer receivables at June 30, 2024 was as follows (in millions):


	Amortized Cost Basis by Origination Year
	Prior to 2020		2020		2021		2022		2023		2024		Total		Percent
Consumer
31 - 60 days past due	$	58	$	100	$	112	$	178	$	205	$	55	$	708	0.9	%
61 - 120 days past due	11		20		27		44		60		16		178		0.2
Greater than 120 days past due	8		6		11		14		9		1		49		0.1
Total past due	77		126		150		236		274		72		935		1.2
Current	1,710		5,036		8,116		16,155		29,648		19,591		80,256		98.8
Total	$	1,787	$	5,162	$	8,266	$	16,391	$	29,922	$	19,663	$	81,191	100.0	%

Gross charge-offs	$	26	$	31	$	39	$	74	$	81	$	2	$	253

Non-Consumer Portfolio. The credit quality of dealer financing receivables is evaluated based on Ford Credit’s internal dealer risk rating analysis. Ford Credit uses a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that are considered most significant in predicting a dealer’s ability to meet its financial obligations. Ford Credit also considers numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with Ford Credit and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

Group I – strong to superior financial metrics;
Group II – fair to favorable financial metrics;
Group III – marginal to weak financial metrics; and
Group IV – poor financial metrics, including dealers classified as uncollectible.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The credit quality analysis of dealer financing receivables at December 31, 2023 was as follows (in millions):


	Amortized Cost Basis by Origination Year														Wholesale Loans
	Dealer Loans
	Prior to 2019		2019		2020		2021		2022		2023		Total				Total			Percent
Group I	$	383	$	30	$	58	$	156	$	61	$	331	$	1,019	$	20,419		$	21,438		86.9	%
Group II	16		—		1		3		2		44		66		2,834			2,900			11.7
Group III	—		—		—		—		1		8		9		292			301			1.2
Group IV	—		1		—		—		—		2		3		41			44			0.2
Total (a)	$	399	$	31	$	59	$	159	$	64	$	385	$	1,097	$	23,586		$	24,683		100.0	%

Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	1	$	1	$	3		$	4

(a)Total past due dealer financing receivables at December 31, 2023 were $33 million.

The credit quality analysis of dealer financing receivables at June 30, 2024 was as follows (in millions):


	Amortized Cost Basis by Origination Year														Wholesale Loans
	Dealer Loans
	Prior to 2020		2020		2021		2022		2023		2024		Total				Total			Percent
Group I	$	291	$	64	$	107	$	59	$	274	$	130	$	925	$	21,459		$	22,384		88.5	%
Group II	9		—		3		2		3		25		42		2,550			2,592			10.3
Group III	—		—		—		—		1		6		7		288			295			1.2
Group IV	—		—		—		—		—		—		—		11			11			—
Total (a)	$	300	$	64	$	110	$	61	$	278	$	161	$	974	$	24,308		$	25,282		100.0	%

Gross charge-offs	$	1	$	—	$	—	$	—	$	—	$	—	$	1	$	6		$	7

(a)Total past due dealer financing receivables at June 30, 2024 were $4 million.

Non-Accrual of Revenue. The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Loan Modifications. Consumer and non-consumer receivables that have a modified interest rate and/or a term extension (including receivables that were modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code) are typically considered to be loan modifications. Ford Credit does not grant modifications to the principal balance of the receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.

The use of interest rate modifications and term extensions helps Ford Credit mitigate financial loss. Term extensions may assist in cases where Ford Credit believes the customer will recover from short-term financial difficulty and resume regularly scheduled payments. The effect of most loan modifications made to borrowers experiencing financial difficulty is included in the historical trends used to measure the allowance for credit losses. A loan modification that improves the delinquency status of a borrower reduces the probability of default, which results in a lower allowance for credit losses. At June 30, 2024, an insignificant portion of Ford Credit's total finance receivables portfolio had been granted a loan modification, and these modifications are generally treated as a continuation of the existing loan.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Allowance for Credit Losses

The allowance for credit losses represents an estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly.

Adjustments to the allowance for credit losses are made by recording charges to Ford Credit interest, operating, and other expenses on our consolidated income statements. The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors*.*

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses. In the event Ford Credit repossesses the collateral, the receivable is charged off and the collateral is recorded at its estimated fair value less costs to sell and reported in Other assets on our consolidated balance sheets.

An analysis of the allowance for credit losses related to finance receivables for the periods ended June 30 was as follows (in millions):


	Second Quarter 2023						First Half 2023
	Consumer		Non-Consumer		Total		Consumer		Non-Consumer		Total
Allowance for credit losses
Beginning balance	$	863	$	7	$	870	$	838	$	7	$	845
Charge-offs	(78)		—		(78)		(174)		—		(174)
Recoveries	38		—		38		76		1		77
Provision for credit losses	40		—		40		118		(1)		117
Other (a)	3		—		3		8		—		8
Ending balance	$	866	$	7	$	873	$	866	$	7	$	873


	Second Quarter 2024						First Half 2024
	Consumer		Non-Consumer		Total		Consumer		Non-Consumer		Total
Allowance for credit losses
Beginning balance	$	877	$	3	$	880	$	879	$	3	$	882
Charge-offs	(124)		(7)		(131)		(253)		(7)		(260)
Recoveries	42		—		42		81		3		84
Provision for credit losses	87		8		95		178		5		183
Other (a)	(6)		—		(6)		(9)		—		(9)
Ending balance	$	876	$	4	$	880	$	876	$	4	$	880

(a) Primarily represents amounts related to translation adjustments.

The allowance for credit losses remained unchanged during the second quarter of 2024 and decreased $2 million during the first half of 2024, driven by the impact of improvement in Ford Credit’s macroeconomic outlook assumptions, offset partially by an increase in Ford Credit finance receivables. Net charge-offs increased from a year ago, reflecting normalization from lower levels following the COVID-19 pandemic. While credit performance has remained strong, high inflationary pressure and high interest rates have caused economic uncertainty, which is expected to have an unfavorable impact on future consumer credit losses. Ford Credit will continue to monitor economic trends and conditions and portfolio performance and will adjust the reserve accordingly.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 9. INVENTORIES

Inventories were as follows (in millions):


	December 31, 2023		June 30, 2024
Raw materials, work-in-process, and supplies	$	6,196	$	5,589
Finished products	9,455		11,594
Total inventories	$	15,651	$	17,183

Our finished product inventory at June 30, 2024 was higher than at December 31, 2023, primarily reflecting new vehicle launches and units awaiting final quality review.

NOTE 10. OTHER LIABILITIES AND DEFERRED REVENUE

Other liabilities and deferred revenue were as follows (in millions):


	December 31, 2023		June 30, 2024
Current
Dealer and dealers’ customer allowances and claims	$	12,910	$	13,213
Deferred revenue	2,515		3,159
Employee benefit plans	2,282		2,448
Accrued interest	1,224		1,310
Operating lease liabilities	481		505
OPEB (a)	331		329
Pension (a)	205		204
Other (b)	5,922		6,212
Total current other liabilities and deferred revenue	$	25,870	$	27,380
Non-current
Dealer and dealers’ customer allowances and claims	$	7,506	$	8,289
Pension (a)	6,383		5,459
OPEB (a)	4,365		4,273
Deferred revenue	5,051		4,899
Operating lease liabilities	1,395		1,489
Employee benefit plans	837		933
Other (b)	2,877		2,947
Total non-current other liabilities and deferred revenue	$	28,414	$	28,289

(a)Balances at June 30, 2024 reflect pension and OPEB liabilities at December 31, 2023, updated for: service and interest cost; expected return on assets; curtailments, settlements, and associated interim remeasurement (where applicable); separation expense; actual benefit payments; and cash contributions. The discount rate and rate of expected return assumptions are unchanged from year-end 2023. Included in Other assets are pension assets of $4.3 billion at both December 31, 2023 and June 30, 2024.

(b)Includes current derivative liabilities of $1.0 billion and $1.2 billion at December 31, 2023 and June 30, 2024, respectively. Includes non-current derivative liabilities of $1.3 billion and $0.9 billion at December 31, 2023 and June 30, 2024, respectively (see Note 13).

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 11. RETIREMENT BENEFITS

Defined Benefit Plans - Expense

The pre-tax net periodic benefit cost/(income) for our defined benefit pension and OPEB plans for the periods ended June 30 were as follows (in millions):


	Second Quarter
	2023						2024
	Pension Benefits				OPEB		Pension Benefits				OPEB
	U.S. Plans		Non-U.S. Plans		Worldwide		U.S. Plans		Non-U.S. Plans		Worldwide
Service cost	$	75	$	61	$	6	$	73	$	61	$	6
Interest cost	405		242		57		401		233		56
Expected return on assets	(480)		(223)		—		(455)		(252)		—
Amortization of prior service costs/(credits)	—		5		1		24		6		3
Net remeasurement (gain)/loss	81		8		—		—		(172)		—
Separation programs/other	10		57		—		1		53		—
Settlements and curtailments	3		1		—		—		(3)		—
Net periodic benefit cost/(income)	$	94	$	151	$	64	$	44	$	(74)	$	65


	First Half
	2023						2024
	Pension Benefits				OPEB		Pension Benefits				OPEB
	U.S. Plans		Non-U.S. Plans		Worldwide		U.S. Plans		Non-U.S. Plans		Worldwide
Service cost	$	147	$	122	$	11	$	146	$	124	$	12
Interest cost	813		479		115		801		468		113
Expected return on assets	(966)		(442)		—		(910)		(507)		—
Amortization of prior service costs/(credits)	—		10		2		47		12		5
Net remeasurement (gain)/loss	194		8		—		—		(183)		—
Separation programs/other	12		61		—		9		67		—
Settlements and curtailments	45		1		—		—		(3)		—
Net periodic benefit cost/(income)	$	245	$	239	$	128	$	93	$	(22)	$	130

The service cost component is included in Cost of sales and Selling, administrative, and other expenses. Other components of net periodic benefit cost/(income) are included in Other income/(loss), net on our consolidated income statements.

Pension Plan Contributions

During 2024, we continue to expect to contribute about $1 billion of cash to our global funded pension plans. We also expect to make about $420 million of benefit payments to participants in unfunded plans. In the first half of 2024, we contributed $633 million to our global funded pension plans and made $210 million of benefit payments to participants in unfunded plans.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 12. DEBT

The carrying value of Company debt excluding Ford Credit and Ford Credit debt was as follows (in millions):


	December 31, 2023		June 30, 2024
Company excluding Ford Credit
Debt payable within one year
Short-term	$	362	$	799
Long-term payable within one year
U.K. Export Finance Program	—		790
Other debt (including finance leases)	117		147
Unamortized (discount)/premium	(2)		(21)
Unamortized issuance costs	—		(3)
Total debt payable within one year	477		1,712
Long-term debt payable after one year
Public unsecured debt securities	14,935		14,935
Convertible notes (a)	2,300		2,300
U.K. Export Finance Program	1,749		948
Other debt (including finance leases)	811		790
Unamortized (discount)/premium	(155)		(119)
Unamortized issuance costs	(173)		(160)
Total long-term debt payable after one year	19,467		18,694
Total Company excluding Ford Credit	$	19,944	$	20,406
Fair value of Company debt excluding Ford Credit (b)	$	19,775	$	20,239
Ford Credit
Debt payable within one year
Short-term	$	18,658	$	17,030
Long-term payable within one year
Unsecured debt	11,755		11,805
Asset-backed debt	18,851		20,164
Unamortized (discount)/premium	(1)		(1)
Unamortized issuance costs	(13)		(16)
Fair value adjustments (c)	(58)		(129)
Total debt payable within one year	49,192		48,853
Long-term debt payable after one year
Unsecured debt	45,435		51,232
Asset-backed debt	36,074		31,897
Unamortized (discount)/premium	10		(17)
Unamortized issuance costs	(224)		(235)
Fair value adjustments (c)	(1,200)		(1,235)
Total long-term debt payable after one year	80,095		81,642
Total Ford Credit	$	129,287	$	130,495
Fair value of Ford Credit debt (b)	$	130,533	$	132,119

(a)As of June 30, 2024, each $1,000 principal amount of the notes will be convertible into 68.17 shares of our Common Stock, which is equivalent to a conversion price of approximately $14.67 per share. We recognized issuance cost amortization of $2 million and $3 million during the second quarter and first half of 2023 and 2024, respectively.

(b)At December 31, 2023 and June 30, 2024, the fair value of debt includes $362 million and $799 million of Company excluding Ford Credit short-term debt, respectively, and $15.5 billion and $15.2 billion of Ford Credit short-term debt, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.

(c)These adjustments are related to hedging activity and include discontinued hedging relationship adjustments of $(681) million and $(527) million at December 31, 2023 and June 30, 2024, respectively. The carrying value of hedged debt was $38.7 billion and $42.0 billion at December 31, 2023 and June 30, 2024, respectively.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 13. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended June 30 were as follows (in millions):


	Second Quarter				First Half
Cash flow hedges	2023		2024		2023		2024
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)	$	64	$	50	$	90	$	64
Commodity contracts (b)	(15)		(3)		(24)		(29)
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments	(130)		(106)		(270)		(202)
Fair value changes on hedging instruments	(316)		(26)		(66)		(269)
Fair value changes on hedged debt	292		17		13		237
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments	(19)		(35)		(33)		(64)
Fair value changes on hedging instruments	(24)		(47)		(2)		(111)
Fair value changes on hedged debt	22		40		3		102
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)	25		126		22		195
Cross-currency interest rate swap contracts	(60)		(30)		25		(196)
Interest rate contracts	109		3		97		51
Commodity contracts	(45)		9		(56)		(11)
Total	$	(97)	$	(2)	$	(201)	$	(233)

(a)For the second quarter and first half of 2023, a $328 million loss and a $391 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the second quarter and first half of 2024, a $49 million gain and a $337 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.

(b)For the second quarter and first half of 2023, a $108 million loss and a $100 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the second quarter and first half of 2024, a $54 million gain and a $22 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.

(c)For the second quarter and first half of 2023, a $32 million gain and a $51 million gain, respectively, were reported in Cost of sales, and a $7 million loss and a $29 million loss, respectively, were reported in Other income/(loss), net. For the second quarter and first half of 2024, an $81 million gain and a $58 million gain, respectively, were reported in Cost of sales, and a $45 million gain and a $137 million gain, respectively, were reported in Other income/(loss), net.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 13. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):


	December 31, 2023						June 30, 2024
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges
Foreign currency exchange contracts	$	19,530	$	69	$	385	$	19,610	$	117	$	160
Commodity contracts	983		23		36		988		44		12
Fair value hedges
Interest rate contracts	12,119		106		633		17,311		81		807
Cross-currency interest rate swap contracts	2,078		69		104		3,802		16		139
Derivatives not designated as hedging instruments
Foreign currency exchange contracts	22,802		201		261		22,295		266		96
Cross-currency interest rate swap contracts	7,100		119		252		5,301		82		234
Interest rate contracts	73,134		465		1,036		72,746		397		860
Commodity contracts	1,051		35		31		955		51		29
Total derivative financial instruments, gross (a) (b)	$	138,797	$	1,087	$	2,738	$	143,008	$	1,054	$	2,337

Current portion			$	493	$	1,464			$	718	$	1,392
Non-current portion			594		1,274				336		945
Total derivative financial instruments, gross			$	1,087	$	2,738			$	1,054	$	2,337

(a)At December 31, 2023 and June 30, 2024, we held collateral of $40 million and $22 million, respectively, and we posted collateral of $185 million and $119 million, respectively.

(b)At December 31, 2023 and June 30, 2024, the fair value of assets and liabilities available for counterparty netting was $815 million and $603 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 14. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES

We generally record costs associated with voluntary separations at the time of employee acceptance. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

Company Excluding Ford Credit

Employee separation actions and exit and disposal activities include employee separation costs, facility and other asset-related charges (e.g., impairment, accelerated depreciation), dealer and supplier payments, other statutory and contractual obligations, and other expenses, which are recorded in Cost of sales and Selling, administrative, and other expenses. Below are actions that have been initiated:

Brazil. Exited manufacturing operations in 2021 resulting in the closure of facilities in Camaçari, Taubaté, and Troller. Sales of the Taubaté and Camaçari plants were completed in 2023
India. Ceased vehicle manufacturing in Sanand in the fourth quarter of 2021 and ceased manufacturing in Chennai in the third quarter of 2022. A sale of the Sanand vehicle assembly and powertrain plants was completed in the first quarter of 2023 (see Note 15)
Spain. Ceased production of the Mondeo at the Valencia plant in the first quarter of 2022
China. Ceased development of certain product programs in 2023
Germany. Production of the Focus will cease at our Saarlouis Body and Assembly Plant in 2025. Our plan is to repurpose the facility into a technology center, retaining 1,000 positions

In addition, we are continuing to reduce our global workforce and take other restructuring actions, including the separation of salaried workers announced in 2023 and separation packages for certain members of our hourly workforce.

The following table summarizes the activities for the periods ended June 30, which are recorded in Other liabilities and deferred revenue (in millions):


	Second Quarter				First Half
	2023		2024		2023		2024
Beginning balance	$	1,126	$	1,466	$	588	$	1,086
Changes in accruals (a)	290		195		919		789
Payments	(112)		(315)		(195)		(503)
Foreign currency translation and other	(27)		(13)		(35)		(39)
Ending balance	$	1,277	$	1,333	$	1,277	$	1,333

(a)Excludes pension costs of $55 million and $50 million in the second quarter of 2023 and 2024, respectively, and $59 million and $64 million in the first half of 2023 and 2024, respectively.

We recorded $2 million in the second quarter of 2023 and $50 million in the first half of 2023 for accelerated depreciation and other non-cash items.

We recorded costs of $1 billion and $853 million in the first half of 2023 and 2024, respectively, related to the actions above. We estimate that we will incur about $1 billion in total charges in 2024 related to such actions, primarily attributable to employee separations and supplier settlements; some charges are related to plans that are subject to negotiations with a works council, union, or other social partner. In addition, we continue to review our global businesses and may take additional restructuring actions where a path to sustained profitability is not feasible when considering the capital allocation required for those businesses.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 15. ACQUISITIONS AND DIVESTITURES

Company Excluding Ford Credit

Ford Sales and Service Korea Company (“FSSK”). In the first quarter of 2024, we entered into an agreement to sell 100% of our equity interest in FSSK. Accordingly, as of June 30, 2024, we reported $55 million of held-for-sale assets, including $45 million of cash, and $37 million of held-for-sale liabilities in Other assets and Other liabilities, respectively. We determined the assets held for sale were not impaired.

Auto Motive Power (“AMP”). In the fourth quarter of 2023, we acquired AMP, a California-based energy management

startup focused on electric vehicle charging solutions. Assets acquired primarily include goodwill and technology, which are reported in Other assets. The acquisition did not have a material impact on our financial statements.

Sanand, India (“Sanand”) Plants. In the first quarter of 2023, we completed the sale of our Sanand vehicle assembly and powertrain plants to Tata Passenger Electric Mobility Limited, a subsidiary of Tata Motors Limited. Ford continues to operate the powertrain facility by leasing back the associated land and building. As a result of the sale transaction, we derecognized the fixed assets and recognized the powertrain facility operating lease right-of-use asset and related lease liability in the first quarter of 2023. The fair value of the cash consideration received approximated the carrying value of the fixed assets at the time of sale.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 16. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in the balances for each component of accumulated other comprehensive income/(loss) attributable to Ford Motor Company for the periods ended June 30 were as follows (in millions):


	Second Quarter				First Half
	2023		2024		2023		2024
Foreign currency translation
Beginning balance	$	(5,923)	$	(5,557)	$	(6,416)	$	(5,443)
Gains/(Losses) on foreign currency translation	276		(496)		761		(614)
Less: Tax/(Tax benefit) (a)	—		23		(10)		19
Net gains/(losses) on foreign currency translation	276		(519)		771		(633)
(Gains)/Losses reclassified from AOCI to net income (b)	(2)		(1)		(4)		(1)
Other comprehensive income/(loss), net of tax (c)	274		(520)		767		(634)
Ending balance	$	(5,649)	$	(6,077)	$	(5,649)	$	(6,077)

Marketable securities
Beginning balance	$	(332)	$	(178)	$	(442)	$	(170)
Gains/(Losses) on available for sale securities	(67)		30		68		15
Less: Tax/(Tax benefit)	(16)		5		17		3
Net gains/(losses) on available for sale securities	(51)		25		51		12
(Gains)/Losses reclassified from AOCI to net income	9		5		20		11
Less: Tax/(Tax benefit)	2		2		5		3
Net (gains)/losses reclassified from AOCI to net income (b)	7		3		15		8
Other comprehensive income/(loss), net of tax	(44)		28		66		20
Ending balance	$	(376)	$	(150)	$	(376)	$	(150)

Derivative instruments
Beginning balance	$	74	$	(126)	$	129	$	(331)
Gains/(Losses) on derivative instruments	(436)		103		(491)		359
Less: Tax/(Tax benefit)	(113)		24		(127)		84
Net gains/(losses) on derivative instruments	(323)		79		(364)		275
(Gains)/Losses reclassified from AOCI to net income	(49)		(47)		(66)		(35)
Less: Tax/(Tax benefit)	(3)		(11)		(6)		(8)
Net (gains)/losses reclassified from AOCI to net income (d)	(46)		(36)		(60)		(27)
Other comprehensive income/(loss), net of tax	(369)		43		(424)		248
Ending balance	$	(295)	$	(83)	$	(295)	$	(83)

Pension and other postretirement benefits
Beginning balance	$	(2,607)	$	(3,071)	$	(2,610)	$	(3,098)
Amortization and recognition of prior service costs/(credits)	6		33		12		64
Less: Tax/(Tax benefit)	2		7		3		15
Net prior service costs/(credits) reclassified from AOCI to net income	4		26		9		49
Translation impact on non-U.S. plans	(1)		(2)		(3)		2
Other comprehensive income/(loss), net of tax	3		24		6		51
Ending balance	$	(2,604)	$	(3,047)	$	(2,604)	$	(3,047)

Total AOCI ending balance at June 30	$	(8,924)	$	(9,357)	$	(8,924)	$	(9,357)

(a)We do not recognize deferred taxes for a majority of the foreign currency translation gains and losses because we do not anticipate reversal in the foreseeable future. However, we have made elections to tax certain non-U.S. operations simultaneously in U.S. tax returns, and have recorded deferred taxes for temporary differences that will reverse, independent of repatriation plans, in U.S. tax returns. Taxes or tax benefits resulting from foreign currency translation of the temporary differences are recorded in Other comprehensive income/(loss), net of tax.

(b)Reclassified to Other income/(loss), net.

(c)Excludes a $4 million gain and a $1 million loss related to noncontrolling interests in 2023 and 2024, respectively.

(d)Reclassified to Cost of sales. During the next twelve months, we expect to reclassify existing net gains on cash flow hedges of $13 million (see Note 13).

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 17. VARIABLE INTEREST ENTITIES

Certain of our affiliates are variable interest entities in which we are not the primary beneficiary. Our maximum exposure to any potential losses associated with these unconsolidated affiliates is limited to our equity investments, accounts receivable, loans, and guarantees and was $3.7 billion and $5.2 billion at December 31, 2023 and June 30, 2024, respectively. Of these amounts, guarantees of $125 million at both December 31, 2023 and June 30, 2024 related to certain obligations of our VIEs also are included in Note 18.

On July 13, 2022, Ford, SK On Co., Ltd., and SK Battery America, Inc. (a wholly owned subsidiary of SK On) completed the creation of BlueOval SK, LLC (“BOSK”), a 50/50 joint venture that will build and operate electric vehicle battery plants in Tennessee and Kentucky to supply batteries to Ford and Ford affiliates. BOSK is a variable interest entity of which we are not the primary beneficiary, and we use the equity method of accounting for our investment. As of June 30, 2024, Ford has recognized contributions to BOSK of $4.8 billion of its agreed capital contribution of up to $6.6 billion through 2026. The total amount of capital contributions is subject to adjustments agreed to by the parties.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 18. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies primarily consist of guarantees and indemnifications, litigation and claims, and warranty and field service actions.

Guarantees and Indemnifications

Financial Guarantees. Financial guarantees and indemnifications are recorded at fair value at their inception. Subsequent to initial recognition, the guarantee liability is adjusted at each reporting period to reflect the current estimate of expected payments resulting from possible default events over the remaining life of the guarantee. The maximum potential payments for financial guarantees were $535 million and $537 million at December 31, 2023 and June 30, 2024, respectively. The carrying value of recorded liabilities related to financial guarantees was $59 million and $39 million at December 31, 2023 and June 30, 2024, respectively.

Our financial guarantees consist of debt and lease obligations of certain joint ventures, as well as certain financial obligations of outside third parties, including suppliers, to support our business and economic growth. Expiration dates vary through 2037, and guarantees will terminate on payment and/or cancellation of the underlying obligation. A payment by us would be triggered by failure of the joint venture or other third party to fulfill its obligation covered by the guarantee. In some circumstances, we are entitled to recover from a third party amounts paid by us under the guarantee.

Non-Financial Guarantees. Non-financial guarantees and indemnifications are recorded at fair value at their inception. We regularly review our performance risk under these arrangements, and in the event it becomes probable we will be required to perform under a guarantee or indemnity, the amount of probable payment is recorded. The maximum potential payments and carrying values of recorded liabilities related to non-financial guarantees were de minimis at both December 31, 2023 and June 30, 2024.

In the ordinary course of business, we execute contracts involving indemnifications standard in the industry and indemnifications specific to a transaction, such as the sale of a business. These indemnifications might include and are not limited to claims relating to any of the following: environmental, tax, and shareholder matters; intellectual property rights; power generation contracts; governmental regulations and employment-related matters; dealer, supplier, and other commercial contractual relationships; and financial matters, such as securitizations. Performance under these indemnities generally would be triggered by a breach of contract claim brought by a counterparty, including a joint venture or alliance partner, or a third-party claim. While some of these indemnifications are limited in nature, many of them do not limit potential payment. Therefore, we are unable to estimate a maximum amount of future payments that could result from claims made under these unlimited indemnities.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 18. COMMITMENTS AND CONTINGENCIES (Continued)

Litigation and Claims

Various legal actions, proceedings, and claims (generally, “matters”) are pending or may be instituted or asserted against us. These include, but are not limited to, matters arising out of alleged defects in our products; product warranties; governmental regulations relating to safety, emissions, and fuel economy or other matters; government incentives; tax matters, including trade and customs; alleged illegal acts resulting in fines or penalties; financial services; employment-related matters; dealer, supplier, and other contractual relationships; intellectual property rights; environmental matters; shareholder or investor matters; and financial reporting matters. Certain of the pending legal actions are, or purport to be, class actions. Some of the matters involve or may involve claims for compensatory, punitive, or antitrust or other treble damages in very large amounts, or demands for field service actions, environmental remediation programs, sanctions, loss of government incentives, assessments, or other relief, which, if granted, would require very large expenditures.

The extent of our financial exposure to these matters is difficult to estimate. Many matters do not specify a dollar amount for damages, and many others specify only a jurisdictional minimum. To the extent an amount is asserted, our historical experience suggests that in most instances the amount asserted is not a reliable indicator of the ultimate outcome.

We accrue for matters when losses are deemed probable and reasonably estimable. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood that we will prevail, and the severity of any potential loss. We reevaluate and update our accruals as matters progress over time.

For the majority of matters, which generally arise out of alleged defects in our products, we establish an accrual based on our extensive historical experience with similar matters. We do not believe there is a reasonably possible outcome materially in excess of our accrual for these matters.

For the remaining matters, where our historical experience with similar matters is of more limited value (i.e., “non-pattern matters”), we evaluate the matters primarily based on the individual facts and circumstances. For non-pattern matters, we evaluate whether there is a reasonable possibility of a material loss in excess of any accrual that can be estimated. Our estimate of reasonably possible loss in excess of our accruals for all material matters currently reflects indirect tax and regulatory matters, for which we estimate the aggregate risk to be a range of up to about $0.6 billion.

As noted, the litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Our assessments are based on our knowledge and experience, but the ultimate outcome of any matter could require payment substantially in excess of the amount that we have accrued and/or disclosed.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 18. COMMITMENTS AND CONTINGENCIES (Continued)

Warranty and Field Service Actions

We accrue the estimated cost of both base warranty coverages and field service actions at the time of sale. We establish our estimate of base warranty obligations using a patterned estimation model, using historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year. We establish our estimates of field service action obligations using a patterned estimation model, using historical information regarding the nature, frequency, severity, and average cost of claims for each model year. In addition, from time to time, we issue extended warranties at our expense, the estimated cost of which is accrued at the time of issuance. Warranty and field service action obligations are reported in Other liabilities and deferred revenue. We reevaluate the adequacy of our accruals on a regular basis.

We recognize the benefit from a recovery of the costs associated with our warranty and field service actions when specifics of the recovery have been agreed with our supplier and the amount of recovery is virtually certain. Recoveries are reported in Trade and other receivables, net and Other assets.

The estimate of our future warranty and field service action costs, net of estimated supplier recoveries, for the periods ended June 30 was as follows (in millions):


	First Half
	2023		2024
Beginning balance	$	9,193	$	11,504
Payments made during the period	(2,011)		(2,862)
Changes in accrual related to warranties issued during the period	2,146		2,671
Changes in accrual related to pre-existing warranties	882		1,438
Foreign currency translation and other	(314)		(198)
Ending balance	$	9,896	$	12,553

Changes to our estimated costs are reported as changes in accrual related to pre-existing warranties in the table above. Our estimate of reasonably possible costs in excess of our accruals for material field service actions and customer satisfaction actions is a range of up to about $1.3 billion in the aggregate.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 19. SEGMENT INFORMATION

We report segment information consistent with the way our chief operating decision maker (“CODM”) evaluates the operating results and performance of the Company. Accordingly, we analyze the results of our business through the following segments: Ford Blue, Ford Model e, Ford Pro, Ford Next, and Ford Credit.

Below is a description of our reportable segments and other activities.

Ford Blue Segment

Ford Blue primarily includes the sale of Ford and Lincoln internal combustion engine (“ICE”) and hybrid vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services. This segment focuses on developing Ford and Lincoln ICE and hybrid vehicles. Additionally, this segment provides hardware engineering and manufacturing capabilities to Ford Model e and manufactures vehicles on behalf of Ford Pro and, in certain cases, Ford Model e. Ford Blue also includes:

All sales for markets not presently in scope for Ford Model e or Ford Pro (as further described below)
In markets outside of the United States and Canada, sales to commercial, government, and rental customers of ICE and hybrid vehicles not considered core to Ford Pro
Sales of electric vehicles (“EVs”) by our unconsolidated affiliates in China
All sales of vehicles manufactured and sold to other OEMs

Ford Model e Segment

Ford Model e primarily includes the sale of our electric vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services. This segment focuses on developing EV and digital vehicle technologies, as well as software development. Additionally, Ford Model e provides software and connected vehicle technologies on behalf of the enterprise, and manufactures certain EVs, including for Ford Pro. Ford Model e operates in North America, Europe, and China. Ford Model e also includes EV and related sales not considered core to Ford Pro to commercial, government, and rental customers in Europe, China, and Mexico.

Ford Pro Segment

Ford Pro primarily includes the sale of Ford and Lincoln vehicles, service parts, accessories, and services for commercial, government, and rental customers. Included in this segment are sales of all core Ford Pro vehicles, such as Super Duty and the Transit range of vans in North America and Europe and all sales of Ranger in Europe. In the United States and Canada, Ford Pro also includes all vehicle sales to commercial, government, and rental customers. This segment focuses on selling ICE, hybrid, and electric vehicles, and providing digital and physical services to optimize and maintain fleets, including telematics and EV charging solutions. This segment reflects external sales of vehicles produced by Ford Blue and Ford Model e, and the costs (including intersegment markup) associated with acquiring vehicles for sale and providing services are reflected in this segment. Ford Pro operates in North America and Europe.

Ford Next Segment

The Ford Next segment primarily includes expenses and investments for emerging business initiatives aimed at creating value for Ford in vehicle-adjacent market segments.

Ford Credit Segment

The Ford Credit segment is comprised of the Ford Credit business on a consolidated basis, which is primarily vehicle-related financing and leasing activities.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 19. SEGMENT INFORMATION (Continued)

Corporate Other

Corporate Other primarily includes corporate governance expenses, past service pension and OPEB income and expense, interest income (excluding Ford Credit interest income and interest earned on our extended service contract portfolio) and gains and losses from our cash, cash equivalents, and marketable securities (excluding gains and losses on investments in equity securities), and foreign exchange derivatives gains and losses associated with intercompany lending. Corporate governance expenses are primarily administrative, delivering benefit on behalf of the global enterprise, that are not allocated to operating segments. These include expenses related to setting and directing global policy, providing oversight and stewardship, and promoting the Company’s interests. Corporate Other assets include: cash, cash equivalents and marketable securities, tax related assets, defined benefit pension plan net assets, and other assets managed centrally.

Interest on Debt

Interest on Debt is presented as a separate reconciling item and consists of interest expense on Company debt excluding Ford Credit.

Special Items

Special Items are presented as a separate reconciling item. They consist of (i) pension and OPEB remeasurement gains and losses, (ii) gains and losses on investments in equity securities, (iii) significant personnel expenses, supplier- and dealer-related costs, and facility-related charges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix, and (iv) other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities. Our management ordinarily excludes these items from its review of the results of the operating segments for purposes of measuring segment profitability and allocating resources. We also report these special items separately to help investors track amounts related to these activities and to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 19. SEGMENT INFORMATION (Continued)

Segment Revenue, Cost, and Asset Principles for Ford Blue, Ford Model e, and Ford Pro

External vehicle and digital services revenue is generally vehicle-specific and included in the segment responsible for the external vehicle sale. A majority of parts and accessories revenue and cost is attributed to customer sales channels or vehicle lines based on recent end customer sales and is included in the respective segment.

In the normal course of business, Ford Blue, Ford Model e, and Ford Pro transact between segments and cooperate to leverage synergies, including developing and manufacturing vehicles on behalf of another segment. When one segment produces a vehicle that is sold externally by another segment, an intersegment transaction occurs. The producing segment will report intersegment revenue to recoup the costs associated with the unit produced. This includes material cost, labor and overhead (including depreciation and amortization), inbound freight, and an intersegment markup. The intersegment markup amount is set to deliver a competitive return to the producing segment for its manufacturing and distribution service. Costs are reflected in the associated segment externally reporting the vehicle sale, as detailed in the table below:


Income Statement Elements	Examples	Segment Reporting
Costs specific to a particular vehicle	Bill of material cost and initial warranty accrual	Reported in the segment externally selling the vehicle
Costs identifiable by product line	Manufacturing and logistics costs, depreciation & amortization expense, direct research & development costs	Typically identifiable to the product line or production location. Reported in the segment externally selling the vehicle, based on relative volume
Shared costs	Selling, general & administrative expense, and indirect/cross product line research & development costs	Typically shared across all segments, generally based on relative volume. Certain costs clearly linked to a segment are reported in the specific segment
Intersegment markup costs for intersegment vehicle transactions	Contract manufacturing and distribution fees	Reported in the segment externally selling the vehicle, for each applicable vehicle transaction

Assets are reported in each segment, aligned to the appropriate operational responsibility. Manufacturing assets, e.g., our plants and the machinery and equipment therein, are included in our Ford Blue and Ford Model e segments. Manufacturing assets producing only, or primarily, EVs and related components are reflected in Ford Model e. Manufacturing assets that support the production of ICE and hybrid vehicles, including those producing ICE and electric in the same facility, are included in Ford Blue. Vendor tooling dedicated to producing EV parts is reported in Ford Model e. There are no Ford manufacturing or vendor tooling assets reported in Ford Pro. Regardless of the segment reporting the asset, depreciation and amortization expense is reflected on the basis of production volume and reported in the segment that reports the external vehicle sale.

Equity in net income/(loss) of affiliated companies is included in Income/(Loss) before income taxes, based primarily on which segment the entity supports or has the majority of the entity’s purchases or sales. The table below shows the segment reporting for our most significant unconsolidated entities:


Ford Blue	Ford Model e	Ford Pro
∘ Changan Ford Automobile Corporation, Ltd. (“CAF”)	∘ BlueOval SK, LLC	∘ Ford Otomotiv Sanayi Anonim Sirketi (“Ford Otosan”)
∘ Jiangling Motors Corporation, Ltd. (“JMC”)
∘ AutoAlliance (Thailand) Co., Ltd. (“AAT”)

Next: Item 1. Financial Statements (Continued)