filings.toolsItem 1. Financial Statements (Continued)
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Item 1. Financial Statements (Continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 19. SEGMENT INFORMATION (Continued)
Key financial information for the periods ended or at June 30 was as follows (in millions):
| Ford Blue | Ford Model e | Ford Pro | Ford Next | Ford Credit | Corporate Other | Interest on Debt | Special Items | Eliminations/Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| External revenues | $ | 25,002 | $ | 1,834 | $ | 15,589 | $ | — | $ | 2,527 | $ | 2 | $ | — | $ | — | $ | — | $ | 44,954 | |||||||||||||||||||||||||||||||||||||||
| Intersegment revenues (a) | 10,206 | 172 | — | — | — | — | — | — | (10,378) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 35,208 | $ | 2,006 | $ | 15,589 | $ | — | $ | 2,527 | $ | 2 | $ | — | $ | — | $ | (10,378) | $ | 44,954 | |||||||||||||||||||||||||||||||||||||||
| Income/(Loss) before income taxes | $ | 2,308 | $ | (1,080) | $ | 2,391 | $ | (26) | $ | 390 | $ | (197) | $ | (304) | $ | (1,194) | (b) | $ | — | $ | 2,288 | ||||||||||||||||||||||||||||||||||||||
| Equity in net income/(loss) of affiliated companies | 104 | (3) | 160 | (6) | 7 | 1 | — | (387) | (c) | — | (124) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 58,475 | 9,420 | 2,754 | 253 | 143,155 | 54,063 | — | — | (2,129) | (d) | 265,991 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| External revenues | $ | 26,670 | $ | 1,149 | $ | 16,988 | $ | 2 | $ | 2,997 | $ | 2 | $ | — | $ | — | $ | — | $ | 47,808 | |||||||||||||||||||||||||||||||||||||||
| Intersegment revenues (a) | 11,306 | 112 | — | — | — | — | — | — | (11,418) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 37,976 | $ | 1,261 | $ | 16,988 | $ | 2 | $ | 2,997 | $ | 2 | $ | — | $ | — | $ | (11,418) | $ | 47,808 | |||||||||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | $ | 1,171 | $ | (1,143) | $ | 2,564 | $ | (13) | $ | 343 | $ | (165) | $ | (270) | $ | (49) | (e) | $ | — | $ | 2,438 | ||||||||||||||||||||||||||||||||||||||
| Equity in net income/(loss) of affiliated companies | 96 | (20) | 111 | (1) | 10 | — | — | 1 | — | 197 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 59,863 | 16,810 | 3,287 | 174 | 150,159 | 49,936 | — | — | (3,643) | (d) | 276,586 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ford Blue | Ford Model e | Ford Pro | Ford Next | Ford Credit | Corporate Other | Interest on Debt | Special Items | Eliminations/Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| First Half 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| External revenues | $ | 50,126 | $ | 2,541 | $ | 28,838 | $ | 1 | $ | 4,916 | $ | 6 | $ | — | $ | — | $ | — | $ | 86,428 | |||||||||||||||||||||||||||||||||||||||
| Intersegment revenues (a) | 19,383 | 181 | — | — | — | — | — | — | (19,564) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 69,509 | $ | 2,722 | $ | 28,838 | $ | 1 | $ | 4,916 | $ | 6 | $ | — | $ | — | $ | (19,564) | $ | 86,428 | |||||||||||||||||||||||||||||||||||||||
| Income/(Loss) before income taxes | $ | 4,931 | $ | (1,802) | $ | 3,757 | $ | (70) | $ | 693 | $ | (344) | $ | (612) | $ | (2,106) | (b) | $ | — | $ | 4,447 | ||||||||||||||||||||||||||||||||||||||
| Equity in net income/(loss) of affiliated companies | 159 | (6) | 277 | (18) | 14 | 1 | — | (421) | (c) | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| First Half 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| External revenues | $ | 48,424 | $ | 1,264 | $ | 35,007 | $ | 3 | $ | 5,884 | $ | 3 | $ | — | $ | — | $ | — | $ | 90,585 | |||||||||||||||||||||||||||||||||||||||
| Intersegment revenues (a) | 23,047 | 133 | — | — | — | — | — | — | (23,180) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 71,471 | $ | 1,397 | $ | 35,007 | $ | 3 | $ | 5,884 | $ | 3 | $ | — | $ | — | $ | (23,180) | $ | 90,585 | |||||||||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | $ | 2,076 | $ | (2,463) | $ | 5,572 | $ | (22) | $ | 669 | $ | (312) | $ | (548) | $ | (922) | (f) | $ | — | $ | 4,050 | ||||||||||||||||||||||||||||||||||||||
| Equity in net income/(loss) of affiliated companies | 158 | (39) | 228 | (2) | 18 | — | — | 1 | — | 364 |
(a)Intersegment revenues only reflect finished vehicle transactions between Ford Blue, Ford Model e, and Ford Pro where there is an intersegment markup and are recognized at the time of the intersegment transaction.
(b)Primarily reflects restructuring actions, mark-to-market adjustments for our global pension and OPEB plans, and an accrual for the Transit Connect customs matter (relating to certain Transit Connect vehicles produced between 2009 and 2013).
(c)Primarily reflects our share of charges from an equity method investment resulting from Ford’s ongoing restructuring actions in China.
(d)Primarily includes eliminations of intersegment transactions occurring in the ordinary course of business.
(e)Primarily reflects restructuring actions in Europe (which triggered remeasurement of certain European pension plans) and updated assumptions for the duration of the Oakville Assembly Plant changeover, which is now shorter than originally planned.
(f)Primarily reflects restructuring actions in Europe, buyouts for hourly employees in North America, and the extended duration of the Oakville Assembly Plant changeover.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
RECENT DEVELOPMENTS
Electric Vehicle Market
Although we continue to invest in our electric vehicle strategy, we have observed lower-than-anticipated industrywide electric vehicle adoption rates and near-term pricing pressures, which has led us, and may in the future lead us, to adjust our spending, production, and/or product launches to better match the pace of electric vehicle adoption. As a result, we have incurred, and may continue to incur, expenses related to payments to our electric vehicle-related suppliers (battery, raw material, or otherwise), inventory adjustments, or other matters. Further, significant unexpected changes in the EV demand environment have led, and may in the future lead, to incremental competitive pricing actions. These market dynamics may continue to occur, which could have a substantial impact on our business.
In addition, slower-than-anticipated development of the electric vehicle market may impact our strategy to comply with regulatory standards, and, in some cases, we plan to utilize credits purchased from third parties to demonstrate regulatory compliance or we may need to modify our product offerings. In the second quarter of 2024, for example, we entered into agreements to purchase about $3.8 billion of regulatory compliance credits for use in North America and Europe for current and future model years. Our obligations under those agreements as well as the ultimate number of credits we may purchase are dependent on the sellers’ delivery of the credits and on the continued existence of the underlying regulatory compliance obligation in the applicable jurisdiction. During the second quarter of 2024, we recorded about $100 million of expense for our anticipated utilization of regulatory compliance credits, which is included in Ford Blue and Ford Pro results. See Item 1A. Risk Factors in our 2023 Form 10‑K Report and as updated by our subsequent filings with the SEC for a discussion of the risks related to lower-than-anticipated electric vehicle volumes and our planned transition to a greater mix of electric vehicles.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
RESULTS OF OPERATIONS
In the second quarter of 2024, the net income attributable to Ford Motor Company was $1,831 million, and Company adjusted EBIT was $2,757 million.
Net income/(loss) includes certain items (“special items”) that are excluded from Company adjusted EBIT. These items are discussed in more detail in Note 19 of the Notes to the Financial Statements. We report special items separately 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. Our pre-tax and tax special items were as follows (in millions):
| Second Quarter | First Half | ||||||||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | ||||||||||||||||||||
| Restructuring (by Geography) | |||||||||||||||||||||||
| Europe | $ | (51) | $ | (226) | $ | (421) | $ | (547) | |||||||||||||||
| North America Hourly Buyouts | — | — | — | (260) | |||||||||||||||||||
| China | (446) | — | (755) | — | |||||||||||||||||||
| Other | (159) | — | (147) | — | |||||||||||||||||||
| Subtotal Restructuring | $ | (656) | $ | (226) | $ | (1,323) | $ | (807) | |||||||||||||||
| Other Items | |||||||||||||||||||||||
| Transit Connect customs matter | $ | (300) | $ | — | $ | (300) | $ | — | |||||||||||||||
| Extended Oakville Assembly Plant Changeover | — | 45 | — | (246) | |||||||||||||||||||
| Other (including gains/(losses) on investments) | (90) | 7 | (176) | 9 | |||||||||||||||||||
| Subtotal Other Items | $ | (390) | $ | 52 | $ | (476) | $ | (237) | |||||||||||||||
| Pension and OPEB Gain/(Loss) | |||||||||||||||||||||||
| Pension and OPEB remeasurement | $ | (89) | $ | 172 | $ | (202) | $ | 183 | |||||||||||||||
| Pension settlements and curtailments | (59) | (47) | (105) | (61) | |||||||||||||||||||
| Subtotal Pension and OPEB Gain/(Loss) | $ | (148) | $ | 125 | $ | (307) | $ | 122 | |||||||||||||||
| Total EBIT Special Items | $ | (1,194) | $ | (49) | $ | (2,106) | $ | (922) | |||||||||||||||
| Provision for/(Benefit from) tax special items (a) | $ | (177) | $ | 30 | $ | (321) | $ | (190) |
(a)Includes related tax effect on special items and tax special items.
We recorded $49 million of pre-tax special item charges in the second quarter of 2024, primarily reflecting restructuring actions in Europe (which triggered remeasurement of certain European pension plans) and updated assumptions for the duration of the Oakville Assembly Plant changeover, which is now shorter than originally planned.
In Note 19 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources.
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