Go Further
PENSION
AND OPEB
UPDATE
JANUARY 7, 2016
PENSION DE-RISKING PROGRESS
Limited the growth in pension obligations
– Closed plans to new entrants, e.g., U.S. plans closed since 2011
– Settled $4.2 billion of U.S. obligation in 2012 and 2013 through lump sum
program
Contributed $11 billion since 2012 to global funded plans; expect these plans to
be fully funded in aggregate in 2016
Progressively rebalanced asset mix to higher fixed income to reduce funded
status volatility
Substantially reduced underfunded status, with further improvement expected
at year-end 2015
Adopted immediate recognition for pension and OPEB expense, also referred
to as mark-to-market, at year-end 2015
Significant Progress Achieved In Funding And De-Risking Our Pension Plans
SLIDE 2
MARK-TO-MARKET ADOPTION AND REPORTING EFFECTS
Provides greater transparency of our operating performance and
segment results – eliminates costs associated with prior periods
Improves alignment of operating results with cash flows; reflects current
performance of our pension and OPEB plans in net income
Enhances comparability with key automotive competitors
Has no impact on cash, funding requirements, or employees’ pension and
OPEB benefits
Expected to improve 2015 Company pre-tax profit by about $1.5 billion;
full year profit guidance, excluding special items, revised from
$8.5 billion - $9.5 billion to $10.0 billion - $11.0 billion
Mark-To-Market Provides Greater Transparency To Operating Results
SLIDE 3
PENSION AND OPEB EXPENSE
Estimated Impact to 2015 Pre-Tax Operating Results (Bils.)
Methods
Prior
New
New
Method
B / (W)
Than Prior
Pension / OPEB
Service cost
$
Interest Cost
Amortization - Prior Period Gains / (Losses)
(1.2)
(3.0)
(1.4)
-
-
Expected Return on Assets
4.1
$
(1.2)
(3.0)
Amortization - Prior Service Cost
Total Pension & OPEB (Expense) / Income
$
(1.5)
$
-
0.2
$
Non-Pension / OPEB
Inventory Impact/ Other
Total Estimated FY Impact - Excluding Special Items
A
Amortization of gains/losses eliminated
B
Expected returns on assets calculated based on fair value
C
Includes impact of capitalization of fringe costs on inventory
1.4
A
0.3
B
-
4.4
$
-
1.7
(0.2)
$
C
1.5
SLIDE 4
GREATER TRANSPARENCY OF OPERATING RESULTS
Company Pre-tax Results *(Mils)
$9,334
Automotive Operating Margin*
$10,095
$8,865
$7,293
$8,190
5.9%
6.0%
7.1%
6.5%
4.6%
First Nine Months
2011
2012
2013
2014
2015
B / (W) Than Reported
Mils:
$606
$981
$1,487
$1,011
$1,224
*
First Nine Months
Pts:
2011
2012
2013
2014
2015
0.5
0.7
1.1
0.7
1.2
Excludes Special Items; see Appendix for reconciliation to GAAP
Historical Results Revised;
First Nine Months 2015 Pre-Tax Results Increased By $1.2 Billion
SLIDE 5
IMPROVED COMPARABILITY
Amortization Expense 2010 - 2014 (Mils)*
Ford (Prior Method)
GM (Post Bankruptcy)
Chrysler / FCA U.S. LLC (Post Bankruptcy)
$1,499
$966
$891
$589
$330
$318
$21
$13
$6
$6
2010
2011
$127
$305
$95
2012
$101
$71
2013
2014
* Gain / (Loss) Amortization from Annual Form 10-K reports
Elimination Of Ford’s Amortization Expense Improves Comparability To Competitors
SLIDE 6
2015 PLANNING ASSUMPTIONS AND KEY METRICS
2014 FY
Results*
Planning Assumptions (Mils)
Industry Volume
- U.S.
- Europe 20
- China
Key Metrics
Automotive:
- Revenue (Bils)
16.8
14.6
24.0
$ 135.8
- Operating Margin
2015 FY Outlook
Prior
About 17.7
About 16.0
About 24.0
Higher**
4.6 %
Higher**
- Operating-Related Cash Flow (Bils)***
$
3.6
Higher**
Ford Credit (Compared with 2014):
- Pre-Tax Profit (Bils)
$
1.9
Equal To Or Higher**
Total Company:
- Pre-Tax Profit (Bils)***
$
7.3
$8.5 - $9.5
*
**
***
Updated
$10.0 - $11.0
After revision; see Appendix A and B
Compared with 2014
Excludes special items
2015 Full Year Guidance Updated To $10.0 Billion - $11.0 Billion
SLIDE 7
Q&A
RISK FACTORS
Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on
expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
Decline in industry sales volume, particularly in the United States, Europe, or China due to financial crisis, recession, geopolitical events, or other factors;
Decline in Ford's market share or failure to achieve growth;
Lower-than-anticipated market acceptance of Ford's new or existing products;
Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States;
An increase in or continued volatility of fuel prices, or reduced availability of fuel;
Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
Adverse effects resulting from economic, geopolitical, or other events;
Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production
constraints or disruptions;
• Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or
difficulties, or other factors);
• Single-source supply of components or materials;
• Labor or other constraints on Ford's ability to maintain competitive cost structure;
• Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition;
• Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns);
• Restriction on use of tax attributes from tax law "ownership change”;
• The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;
• Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and / or sales restrictions;
• Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;
• A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-or-pay" contracts);
• Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments;
• Inherent limitations of internal controls impacting financial statements and safeguarding of assets;
• Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier;
• Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
• Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory
requirements, or other factors;
• Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
• Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and
• New or increased credit, consumer, or data protection or other regulations resulting in higher costs and / or additional financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences
between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as
a result of new information, future events, or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, as updated by subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
•
•
•
•
•
•
•
•
•
SLIDE 9
APPENDIX
PENSION AND OPEB UPDATE
APPENDIX INDEX
Item
Appendix
2011 - 2015 Revised Results
A
2014 - 2015 Revised Results By Quarter
B
2011 - 2015 Pre-Tax Special Items
C
TOTAL COMPANY
2011 – 2015 REVISED RESULTS (MILS)
Year End
2011
2012
Pre-Tax Results
Revised
B/(W)
Than
Reported
North America
$ 6,665
$
Europe
Rest of World*
Other Automotive
Total Automotive
Financial Services
Pre-Tax Results (Excl. Special Items)
Special Items
Total Company
509
84
755
(5,647)
$ 3,687
$
(1,525)
$
606
-
$
606
(5,565)
$ (4,959)
(14)
(470)
$
7,155
$
1,710
$ 8,865
(6,860)
$ 2,005
800
195
225
-
2,431
$ 9,334
$ 8,925
(14)
(601)
$ 6,903
Revised
B/(W)
Than
Reported
111
981
-
$
Revised
B/(W)
Than
Reported
First Nine Months
2015
B/(W)
Than
Revised
Reported
$
$
$
2013
981
2014
Revised
B/(W)
Than
Reported
$
$ 1,068
9,877
(1,025)
417
227
$ 8,423
$
(6,614)
4,276
$ (5,633)
$ 14,371
1,487
1,487
$ 5,499
7,331
$
1,794
$
5,844
$
2
(755)
$
545
464
(591)
-
1,672
$ 10,095
(598)
2
(656)
7,443
7,293
(6,059)
$
1,234
1,011
-
$
1,011
7,316
$
128
709
509
(198)
6
(542)
$ 6,704
$
1,224
$
1,224
$
1,224
1,486
$ 8,190
(4,119)
166
$ (3,108)
$ 8,356
-
-
Operating Margin
*
North America
8.9%
0.6 Pts.
11.2%
0.8 Pts.
11.4%
1.2 Pts.
9.0%
0.6 Pts.
10.9%
1.0 Pts.
Total Automotive
5.9%
0.5 Pts.
6.0%
0.7 Pts.
6.5%
1.1 Pts.
4.6%
0.7 Pts.
7.1%
1.2 Pts.
Includes South America, Middle East & Africa, and Asia Pacific Automotive segments
APPENDIX A
TOTAL COMPANY
2014 – 2015 REVISED RESULTS BY QUARTER (MILS)
2014
Q1
Pre-Tax Results
Revised
North America
$
Revised
Revised
$
$ 1,537
225
$ 2,567
99
124
Rest of World*
(164)
1
Other Automotive
(222)
-
Total Automotive
Financial Services
Pre-Tax Results (Excl. Special Items)
Special Items
Total Company
$ 1,244
$
161
(112)
1
(141)
-
(174)
-
(5)
2
(37)
2
(156)
(171)
-
(144)
-
(218)
-
(212)
-
(167)
-
(163)
-
429
$
325
$ 2,837
$
325
(122)
$ 1,584
$ 2,838
143
-
$
238
$
238
(481)
$ 2,356
$
1,417
-
-
$
236
-
408
$
236
$ 1,333
-
(5,296)
(4,119)
$
236
$ (3,963)
$ (3,907)
495
(160)
$ 1,257
$
925
66
$
229
922
$
$ 1,569
(42)
$
1,614
$
212
$
212
$
1,310
$
1,779
$
1,779
-
$
374
-
491
$
374
$ 3,286
-
-
$
374
$ 3,286
469
-
$ 2,795
$
Revised
146
238
$
Revised
Q3
B/(W)
Than
Reported
(297)
$
127
Revised
B/(W)
Than
Reported
109
$ 2,408
$
Revised
2015
Q2
Q1
B/(W)
Than
Reported
(330)
325
127
Q4
B/(W)
Than
Reported
110
$
462
$ 1,706
Q3
B/(W)
Than
Reported
(95)
Europe
1,725
Q2
B/(W)
Than
Reported
241
$ 2,909
175
9
$
418
$ 2,599
$
418
$ 3,125
-
166
$
418
$ 3,291
B/(W)
Than
Reported
$
239
191
2
-
$
432
$
432
$
432
526
-
-
Operating Margin
*
North America
8.4%
1.1 Pts.
12.2%
0.6 Pts.
7.7%
0.6 Pts.
7.7%
0.3 Pts.
7.8%
1.1 Pts.
12.2%
1.1 Pts.
12.3%
1.0 Pts.
Total Automotive
4.3%
0.9 Pts.
7.3%
0.7 Pts.
3.3%
0.8 Pts.
3.4%
0.6 Pts.
4.8%
1.2 Pts.
8.4%
1.2 Pts.
7.7%
1.2 Pts.
Includes South America, Middle East & Africa, and Asia Pacific Automotive segments
APPENDIX B
TOTAL COMPANY
2011 – 2015 PRE-TAX SPECIAL ITEMS (MILS)
Full Year
2011
Revised
Pension and OPEB Remeasurements
Personnel and Dealer-Related Items
Separation-related actions
Job Security Benefits / Other
Total Personnel and Dealer-Related Items
Other Items
Venezuela accounting change
U.S. pension lump sum program
Ford Sollers equity impairment
Belgium pension settlement
CFMA restructuring
Ford Sollers Gain
Other
Total Other Items
Total Special Items
2012
B/(W)
Than
Reported
Revised
B/(W)
Than
Reported
First Nine Months
2015
B/(W)
Than
Revised
Reported
2013
Revised
B/(W)
Than
Reported
2014
Revised
B/(W)
Than
Reported
$ (5,674)
$ (5,674)
$ (6,864)
$ (6,864)
$ 5,250
$ 5,250
$ (4,119)
$ (4,119)
$
-
$
-
$
(269)
(58)
(327)
$
-
$
(498)
(54)
(552)
$
-
$
(856)
(856)
$
-
$
(685)
(685)
$
-
$
-
$
-
401
(47)
354
$
109
109
$
625
(69)
556
$
250
250
$
(118)
(118)
$
594
594
$ (800)
(329)
(126)
$ (1,255)
$
$
$
166
166
$
$
-
$
-
$ 5,844
$ (6,059)
$ (4,119)
$
166
$
-
$
$
$
$ (5,647)
$
$
$ (5,565)
$
$
$ (6,860)
$
$
$ (6,614)
$
$
$ 4,276
$
$
$
$
$
$
APPENDIX C