Ford Report $5.9 Billion 4th Quarter Loss

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Ford Motor Company [NYSE: F] today reported a fourth quarter net loss of $5.9 billion, or $2.46 per share. This compares with a net loss of $2.8 billion, or $1.33 per share, in the fourth quarter of 2007.

Ford’s fourth quarter pre-tax operating loss from continuing operations, excluding special items, was $3.7 billion, a decline from a loss of $620 million a year ago. On an after-tax basis, Ford lost $3.3 billion in the fourth quarter or $1.37 per share, compared with a loss of $487 million, or 23 cents per share, a year ago.

“Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results,” said Ford President and CEO Alan Mulally. “We continued to take the decisive actions necessary to lower production to match the lower worldwide demand and reduce costs, which we expect will allow us to significantly reduce negative operating cash flow in 2009 and position Ford for growth when the economy rebounds.

“The progress we continued to make in the fourth quarter gives us great confidence that we have the right plan, the right people and the right products to create a viable, profitably growing Ford for all of our stakeholders,” Mulally added. “Our market share growth in the fourth quarter in the U.S. and Europe is a positive sign that customers recognize the value of our new products and understand that a new and different Ford is emerging.”

Based on current planning assumptions, Ford reiterated it has sufficient liquidity to fund its business plan and product investments. Ford said it finished 2008 with $24 billion in available Automotive liquidity, including $13.4 billion in Automotive gross cash. In January 2009, as permitted by its underlying agreement with the UAW, Ford converted the Temporary Asset Account funds into a new Ford note, payable at year-end. This will provide the flexibility to utilize more than $2 billion of funds to support operations, if needed. As a result, this amount will improve liquidity and be included as part of Ford’s Automotive gross cash beginning with the first quarter of 2009.

Ford also reconfirmed that, based on current planning assumptions, it does not need a bridge loan from the U.S. government, barring a significantly deeper economic downturn or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company’s supply base, dealers or creditors.

Ford also said it remains on track for both its overall and North American Automotive pre-tax results to be breakeven or profitable in 2011 – excluding special items – based on current planning assumptions.

Due to concerns about the instability of the capital markets with the uncertain state of the global economy, Ford announced it is drawing its available credit lines. The company said it expects to receive the funds on Feb. 3 and will add the $10.1 billion to its cash and reflect it on its first quarter 2009 balance sheet.

“Ford went to the credit markets two years ago when they were functioning normally and obtained the funding necessary – including our credit lines – to support our product transformation and restructuring,” Mulally said. “Given the instability of the capital markets with the uncertain state of the global economy, we believe it is prudent to draw these credit facilities at this time.”

Also today, Ford said the United Auto Workers union has agreed to end the “jobs bank” at Ford, known as the Job Security program. The company and the union presently are working out the details of implementation.

Summary

• Net loss of $5.9 billion, or $2.46 per share, for the fourth quarter of 2008 amid a sharp global decline in vehicle demand; pre-tax loss of $3.7 billion from continuing operations, excluding special items. ++

• Reduced Automotive costs by $1.4 billion in fourth quarter and $4.4 billion in 2008 versus year-ago levels.  Achieved $5.1 billion in North America cost reductions at year-end 2008 compared with 2005, excluding favorable impact of depreciation and amortization from asset impairment at the end of the second quarter.  

• Decisively reduced global dealer stocks by more than 50,000 vehicles compared with the third quarter.  Ford now has among the lowest days’ supply in the industry.    

• Product transformation continues to gain strength, helping the company to gain market share in Europe for fourth quarter and full year, and in the U.S. in the fourth quarter.

• Total liquidity of $24 billion, including Automotive gross cash of $13.4 billion, at Dec. 31, 2008. +++

• Ford is drawing its available credit lines due to concerns about the instability of the capital markets with the uncertain state of the economy.  The $10.1 billion will be added to company cash for the first quarter 2009.

• The United Auto Workers union has agreed to end the “jobs bank” at Ford.  The company and the union are presently working out the details of implementation.

• Based on current planning assumptions, Ford has sufficient Automotive liquidity to fund its business plan and product investments and does not need a bridge loan from the U.S. government.

• Ford remains on track for both its overall and its North American Automotive pre-tax results to be at or above breakeven in 2011, excluding special items.