February 14, 2014
Consumer Goods
Ford Motor Company
Ticker: F
Recommendation: Outperform
Current Price: $14.80
Implied Price: $17.04
Investment Thesis
Key Statistics
52 Week Price Range

With the introduction of the new, military-grade aluminum alloy Ford F150, the truck will continue to lead the pickup industry in sales and is
poised to extend the run as the best-selling pickup truck 37 years in a row,
with sales benefitting from the rebound in housing and construction

The average age of vehicles on the road is 11 years and near a historical
high which, combined with the recent consumer confidence increase and
pent-up demand for new vehicles, stands to drive vehicle sales in the near
future

The release of 16 all-new or significantly refreshed vehicles in North
America in 2014, Ford’s largest geographic segment in terms of revenue,
combined with 25 new vehicles being released over the next five years in
Europe will draw new customers to Ford, increasing market share and in
turn, growing both revenues and net income

Heavy investment in new factories and upgraded manufacturing facilities
along with the plan to hire over 10,000 new employees proves that Ford is
making the investment to meet current and future surging demand for
popular vehicles such as the F-150 and Fusion

The aluminum Ford F-150 may be adopted by consumers slower than
expected due to higher insurance and repair costs, hurting sales and profits
due to high margins typically earned on larger vehicles
$12.10 - $18.02
50-Day M oving Average
$15.59
Estimated Beta
1.29
Dividend Yield
3.30%
M arket Capitalization
3-Year Revenue CAGR
$58.54B
4.63%
Trading Statistics
Diluted Shares Outstanding
3,874M
Average Volume (3-M onth)
44.76M
Institutional Ownership
53.60%
Insider Ownership
0.46%
8.8x
EV/EBITDA (LTM )
One-Year Stock Chart
Margins and Ratios
Gross M argin (LTM )
250000000
$20.00
18.36%
$18.00
200000000
$16.00
EBITDA M argin (LTM )
7.49%
Net M argin (LTM )
4.87%
$14.00
150000000
$12.00
$10.00
Debt to Enterprise Value
0.86
100000000
$8.00
$6.00
50000000
$4.00
$2.00
Covering Analyst: Tyler Markgraff
$0.00
Aug-12
tmarkgra@uoregon.edu
0
Oct-12
Dec-12
Volume
1
Feb-13
Apr-13
Adj Close
Jun-13
Aug-13
50-Day Avg
Oct-13
Dec-13
200-Day Avg
University of Oregon Investment Group
University of Oregon Investment Group
February 14, 2014
Business Overview
Figure 1: Ford Model T
Ford Motor Company was founded by Henry Ford on June 16, 1903 in Detroit,
Michigan. The Model T, one of the most iconic cars in America, was the
beginning of an era for automobile production when Henry Ford implemented
the basic techniques of an assembly line and mass production. Ford continued to
pave the way by doubling wages and offering a variety of paint colors for the
cars. Since that point in history, Ford has continued to innovate, survived the
Great Recession better than any of the big three automotive manufacturers and
grown exponentially, now with worldwide operations and over $120 billion in
revenue annually.
Ford Motor Company is broken down into two separate segments: Automotive
and Financial Services.
Automotive
Source: Google
Figure 2: Government Bailout Funds to
Automotive Manufacturers ($M)
60,000
50,744
50,000
Dollars ($M)
40,000
30,000
20,000
10,748
10,000
0
(1,315)
(11,410)
(10,000)
General Motors
(20,000)
Chrysler
Bailout
The automotive sector operates in four different segments: Ford North America,
Ford South America, Ford Europe and Ford Asia Pacific Africa. Each of these
four automotive segments report their respective sales from Ford and Lincoln
brand vehicles, service parts and accessories, along with associated costs. While
Ford had owned a number of other automobile brands including Jaguar, Volvo,
Mercury and Aston Martin, the company has since either discontinued or sold
those brands to refocus on the core brands of Ford and Lincoln and grow market
share. While Ford had held a significant stake in Mazda, that has since been
reduced and the interest in the company is now reported as a marketable
security. During 2013 Ford sold approximately 6,330,000 vehicles at wholesale
throughout the four operating segments.
In addition to selling automobiles to dealers, Ford also sells vehicles to
dealerships for sale to fleet customers. Fleet customers are considered
commercial fleet customers, daily rental car companies and governments. Ford
also sells authorized parts and extended service contracts to retail customers.
Financial Services
Under the financial services sector there are two separate reportable segments.
The first is Ford Motor Credit Company which includes vehicle-related
financing, leasing and insurance while the second segment is classified as
“Other Financial Services” which includes a number of business, holding
companies and real estate.
Return
Source: ProPublica
Industry
Figure 3: GDP Growth Forecast
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
United States
Europe
Actual Growth 2010-2012
China
India
Brazil
Forecast Growth 2013
Mexico
Middle East Russa, Central
& North
Asia and
Africa
Southeast
Europe
Forecast Growth 2014
Projected Growth 2014-2019 Trend Growth 2020-2025
Source: Conference Board
Back in 2008 when the financial crisis began, the Big 3 (Chrysler, GM, Ford)
asked the government for a bailout of over $50 billion to avoid bankruptcy. With
bankruptcy would come an ever deeper recession and millions of layoffs.
Although Ford requested government bailout funds, it did not necessarily need it
but felt compelled to ask for the funds as Ford did not want to compete against
government-subsidized companies. Ford had requested $14 million from the
government and in return would accelerate the development of more fuel
efficient (hybrid and electric) vehicles, focus on smaller cars and sell Volvo, all
of which Ford has done. More importantly, Ford did not receive “bailout”
money like General Motors and Chrysler. Since that point in time, Ford has
excelled under the leadership of Alan Mulally and his One Ford Plan, something
that will be touched on later.
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University of Oregon Investment Group
February 14, 2014
Macroeconomic Environment
Due to the fact that the automobile industry is highly correlated with
macroeconomic conditions, the industry tanked during the recession. Across the
globe countries are beginning to recover from the financial crisis, grow GDP
and invest in infrastructure. With respect to the United States, consumer
confidence at a five-month high, GDP is growing steadily in the United States
and disposable income is projected to grow at 2.5% for the next five years,
signifying the North American automotive market is poised to continue the
rebound from the recession. Other areas such as Europe are trying to recover
from the debt crisis while China, which has been growing at an extremely rapid
pace the past few years, is beginning experience slower growth of the economy.
Along with the modest GDP growth, fiscal policy also plays a key role in the
automotive industry. With Fed Chair Janet Yellen stating that unemployment is
still too high, the federal stimulus will continue to instill confidence in investors,
even if currently being pared back. Outside of the United States, volatility in
South American countries such as Argentina and Venezuela will prove
challenging for automakers in the coming years. Due to the fact many of these
macroeconomic factors are region specific, they will be discussed further in the
revenue breakdown section.
Figure 4: Consumer Confidence Index
120.0
110.0
100.0
90.0
80.0
70.0
60.0
50.0
40.0
Source: BEA
Competition
Figure 5: Ford Vehicles Mileage
The automotive industry has been a historically competitive industry due to the
high capital intensity, competitive pricing and increasing proliferation by foreign
automotive manufacturers. Aspects that automakers typically compete on are
price, fuel economy, reliability, styling and the utility of the vehicle. Many
domestic automakers are have been undergoing a heavy restructuring of their
vehicle portfolio as consumers are concerned about gas mileage. Heavy capital
and supply-chain requirements prevent new competitors from entering the mass
market and in addition, strict regulatory standards and heavy investments in
research and development further prove that the market is capital intensive.
2012
2011
2010
2009
2008
2007
0
5
10
15
Combined Car and Truck Fleet
20
MPG
25
30
35
Trucks
Cars (Domestic and Import)
Source: Ford Investor Relations
Fuel Efficiency Requirements
Figure 6: Ford Vehicle Type Shift
100%
10%
Percent of Total Sales
90%
80%
27%
39%
22%
70%
18%
60%
50%
40%
32%
30%
40%
55%
2010
2020
20%
10%
29%
0%
2000
Small
Medium
Large
Source: Ford Investor Relations
40
With freshly redesigned vehicles, it is imperative for automakers to continue to
roll out new and redesigned models to retain customer interest and market share.
With federal fuel efficiency requirements impending, automakers are innovating
new ways to increase fuel efficiency such as turbocharged engines or more
efficient transmissions.
Throughout the last decade, research into and production of hybrid and electric
cars has grown significantly. Driven by a number of factors including rising fuel
prices, increasingly cost-conscious drivers and a “green” generation of drivers
coming of age, the demand for more fuel efficient vehicles has taken off. Further
driving this trend are the federal fuel efficiency requirements. As part of the
bailout during the recession, automakers had to accelerate the research and
development of more fuel efficient vehicles. While Toyota’s Prius may be
widely considered the first mainstream hybrid vehicle, a number of automobile
manufacturers including Ford, General Motors, Volkswagen, Honda, BMW
have all gone to great lengths to increase the fuel efficiency of their existing
fleet, as well as developing newer and more fuel efficient vehicles. In addition,
manufacturers are beginning to develop plug-in hybrid vehicles (PHEV), such as
the Chevrolet Volt, with batteries that can be charged through wall outlets but
with a gasoline generator on board. While these smaller and more fuel efficient
cars are better for the environment, smaller vehicles typically have lower
margins than larger vehicles such as the F-150. Small vehicles are projected to
constitute a large portion of Ford revenue in the future (Figure 6) which will put
pressure on manufacturers to cut costs in other areas to make up for the smaller
UOIG 3
University of Oregon Investment Group
Figure 7: Ford CO2 Tailpipe Emissions per Vehicle
February 14, 2014
margins. Although there are relatively few pure electric cars in the market, this
segment is poised for growth, driven by the increasing demand for fuel
efficiency.
Under the “One National Program” administrative agencies and the Supreme
Court have established miles per gallon (mpg) requirements for future model
year vehicles. The federal standards require light duty vehicles to reach an
industry average fuel economy of approximately 35.5 mpg by the 2016 model
year. In 2012 the “One National Program” was amended and extended through
2025, requiring light duty industry fuel average of approximately 45 mpg by the
2021 model year, and 54.5 mpg by the 2025 model year. A number of new
requirements are also expected to come out for other vehicle segments, as well
as other European countries.
2012
2011
2010
2009
2008
2007
260
280
300
320
Grams per Mile
340
360
Source: Ford Investor Relations
With more countries and consumers becoming conscious of the carbon footprint,
there is a large shift toward more fuel efficient vehicles, something which Ford
will benefit from with existing and new lineup of fuel efficient cars, SUVs and
pickups.
Automobile Demand
As consumer sentiment and disposable income begin to recover, the option of
buying a new car is becoming an option for many consumers. The average age
of cars on the road is currently over 11 years; the oldest ever recorded. There is
a large amount of pent up demand in the industry that must be relieved at some
point in time in the near future. Consumers tended to hold onto their current cars
longer and postpone purchasing a new vehicle during the recession but with
economic indicators becoming more positive, a large number of consumers will
fuel new vehicle purchases in the coming years.
Figure 8: Car Sharing Programs Member Growth
1,100,000
900,000
Number of Members
700,000
500,000
300,000
100,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(100,000)
Mexico
Canada
United States
North America
Source: Ford Investor Relations
Figure 9: One Ford Plan
2012
2013
On the other hand, the Millennials (Generation Y) are posing a problem for the
automotive industry. A number of factors are causing manufacturers to worry
about demand from Millennials. An increasing number of car sharing programs,
the desire to live in a city and diminished job prospects by the economic
downturn are all driving factors in lower vehicle volume sales. Unable to find
employment, many young adults had to move back home at the peak of the
recession. After accumulating savings to move out and secure employment and
housing, vehicles can be low on the priority list.
Borrowing Costs
As a result of the financial crisis, the Fed had initiated a stimulus effort to help
jump-start the economy and jumpstart spending and investment. For the past
five to six years, rates have been near historic lows to encourage banks to lend
more money, and therefore increasing consumer spending. As a result, rates for
consumer mortgages and loans have been near all-time lows as well, an
opportunistic time for borrowing to make a large purchase such as a vehicle.
With the Fed trimming back the stimulus, rates will begin to rise, making
borrowing less appealing. Although this is a rising interest rate environment,
rates are still near historical lows and prove very attractive for prospective
automobile buyers.
Strategic Positioning
One Ford Plan
Source: Ford Investor Relations
In 2006 Alan Mulally put the “One Ford” plan in place to help turn the
struggling automaker around. There are four key parts to the One Ford plan:
UOIG 4
University of Oregon Investment Group
Figure 10: Percent of Nameplates Achieving IIHS
Top Safety Pick
100%
93%
90%
75%
Percent of Nameplates
80%
77% 78%
74%
65%
70%
60%
52% 52% 54%
50%
40%
30%
20%
10%
0%
2011
2012
Ford
Toyota
2013
Figure 11: “Things Gone Wrong” per 1000
Vehicles
1600
1447
1405
Total "Things Gone Wrong" per 1000
Vehicles
Aggressively Restructure to Operate Profitably at the Current Demand
and Changing Model Mix
Throughout the past years Ford has eliminated a number of brands from their
automotive portfolio including Aston Martin, Jaguar, Land Rover and Volvo in
order to focus on the core two brands, Ford and Lincoln. Doing this allows Ford
to focus more resources toward providing customers with quality cars under
these two brands. More notably are the significant achievements in product
development. Through the “hub and satellite” approach, there is one lead
product development engineering center, or the hub, which is designated to each
global vehicle line, ensuring global scale and efficiency through common parts
and processes. The “satellite” then delivers vehicles to the appropriate market in
a timely manner. Lastly, Ford’s commitment to platform consolidation is
notable. Back in 2007 Ford utilized 27 different vehicle platforms. By the end of
this year there will be only 14 platforms with an ultimate goal of 9 different
platforms for the whole globe.
General Motors
Source: Ford Investor Relations
1400
February 14, 2014
1373
1287
1206
1200
Accelerate Development of New Products Customers Want and Value
Ford strives to produce vehicles with bold exterior designs that are great to drive
and provide exceptional value and quality. By focusing on those characteristics
along with developing cars that are increasingly greener, safer and smarter, Ford
has been and will continue to deliver a quality product to the customer. Crash
avoidance features such as Blind Spot Information System and adaptive cruise
control, technologies typically found on higher-end cars, are now being put into
Ford vehicles for the mass market. Ford will continue to invest in new
technologies to develop a safer, more enjoyable and fuel-efficient driving
experience.
1140
Finance Our Plan and Strengthen Our Balance Sheet
Through the implementation of the One Ford plan, the automotive sector has
been and is predicted to continue to generate significant operating-related cash
flow. With the cash, Ford has strengthened the balance sheet, invested in new
products, reduced debt when economically sensible and is paying a quality
dividend.
1000
800
600
400
200
0
2007
2008
2009
2010
2011
2012
Source: Ford Investor Relations
Work Together Effectively as One Team
Ford has implemented a business plan to review the business environment, risks,
opportunities and other key areas to identify areas that must be given further
attention, either to capitalize on growth or mitigate risk. The company
encourages an open workplace and partnerships with stakeholders to create a
more viable business.
Business Growth Strategies
Figure 12: Utility Patents Issued to Ford &
Subsidiaries
Number of Patents Issued to Ford
700
661
Along with adhering to the proven One Ford plan, the company plans to pursue
a number of additional strategies to grow the automotive and financial segments
of the company.
600
500
400
357
343
325
2007
2008
2009
430
444
2010
2011
Innovation & Vehicle Introduction
300
200
100
0
2012
During early January 2014 Ford introduced an innovative refresh of the F-150,
the best-selling pickup truck for 37 years straight and best-selling vehicle for 31
years straight. Faced with imposing fuel efficiency requirements, automobile
manufacturers are continuously looking for areas to shave weight and improve
fuel-efficiency. Ford introduced the first pickup truck designed with a militarygrade aluminum alloy body and steel frame instead of the typical all-steel truck.
In all, the change in materials shaves over 700 pounds from the truck and
combined with the new EcoBoost engine offered in the truck, gives Ford trucks
Source: Ford Investor Relations
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University of Oregon Investment Group
Figure 13: Ford EcoBoost Twin Turbo
Engine
February 14, 2014
the advantage over other competitors. With bigger vehicles providing higher
margins, the introduction and adoption of this truck is vital to future revenues
from trucks and market share. In addition, the housing and construction
industries are beginning to gain momentum, benefitting pickup sales even
further.
Besides the introduction of the new F-150, Ford is introducing 23 new vehicles
around the globe, including 16 here in the United States. Refreshing models is
vital to holding onto market share in the competitive automotive industry and
although margins may be lower in 2014 due to the retooling of factories and
down time, the investment made now by Ford will continue to pay off in the
long term.
Investment in EcoBoost Engines
Due to the pressure provided by the federal government to improve gas mileage,
Ford has a significant advantage in the automotive market with the EcoBoost
engine. These engines are designed to deliver the power and torque consistent
with larger engines while lowering fuel consumption. With the combination of
turbocharging and direct fuel injection, Ford has accomplished the sought after
goal of improving fuel economy without sacrificing power. With the
introduction of the new 2015 F-150, Ford also introduced a new EcoBoost
engine that will pair with the truck. With this proprietary technology Ford will
continue to maintain an upper hand in the fuel efficiency fight among other
manufacturers.
Source: Google
Figure 14: Ford Fusion Autonomous
Driving Technology
Technology
Ford’s Sync technology allows drivers to operate the radio, navigation and
cellular phones with just their voice. While Sync had interface difficulties the
past few years, the technology is being further refined every year to provide
drivers with the best possible technology experience. In addition, Ford’s
Developer Program allows the company to tap into outside parties’ knowledge
to share innovative ideas with Ford to create valuable features for customers.
As of recently Ford has paired with Stanford and MIT to further develop
autonomous driving technology and make a safer driving experience. The goal
of this program is to create real-time 3D maps of vehicle surroundings through
the use of algorithms that will also predict where moving vehicles and
pedestrians will be. While many cars can already park themselves, there is a
long road to autonomous driving, including many regulations and debate about
the effectiveness and reliability of the technology.
Source: Google
Figure 15: Employment by Business Type
300000
It is imperative for automotive manufacturers to maintain a technological edge
with technology becoming so intertwined with our lives on a day-to-day basis.
Ford is continually investing in partnerships and ventures to maintain this
technological advantage and develop new products for customers.
250000
Number of Jobs
200000
150000
Investment in Production
100000
50000
0
2007
2008
Automotive
2009
2010
2011
Financial Services
Source: Ford Investor Relations
2012
Anticipating a rebound in not only the United States but global economy, Ford
has made a number of investments to ramp production and meet forecasted
demand while following the One Ford plan of offering customers products they
want and value. Over the last two years Ford has added 14,000 jobs in the
United States, with many of the positions focused on battery-based technology
and improving fuel efficiency. Back in December of 2013 Ford announced that
they would be adding 5,000 jobs in the United States and another 6,000 abroad
all while opening three assembly plants, two of which will be in China and the
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University of Oregon Investment Group
February 14, 2014
other in Brazil. With surging demand for primarily the Fusion and F-150, Ford
needed to increase production capacity.
Figure 16: Ford Sales Changing
Geographic Mixture
100%
4%
15%
90%
24%
80%
32%
70%
In addition to the added jobs mentioned above, Ford announced recently that
they will be investing over $80 million and adding 350 jobs at the Kentucky
Truck Plant in Louisville due to the fact production cannot keep up with
demand. Adding the extra capacity will allow Ford to increase production by
15%, or 55,000 F-Series Super Duty trucks.
30%
60%
25%
Revenue
50%
40%
Automotive Sector
72%
30%
55%
43%
20%
10%
0%
2000
2010
Americas
Europe
2020
Asia Pacific and Africa
Source: Ford Investor Relations
Figure 17: North America Industry Share
17.0%
16.5%
16.0%
15.9%
15.7%
15.4%
15.5%
14.9%
15.0%
14.5%
14.0%
1Q 2013
2Q 2013
3Q 2013
4Q 2013
Full Year 2013
Source: Ford Investor Relations
Ford manufactures the vehicles then sells them to individual dealers, a
transaction typically financed by Ford Credit. Dealerships use Ford Credit to
finance their inventory purchases and Ford Credit ultimately pays cash to a legal
entity in the automotive sector for the receivables of the dealer’s obligation for
the purchase price of the vehicle. When the vehicle is sold to the end user,
dealers pay the wholesale finance receivable to Ford Credit.
The automotive sector revenue is broken down into four different regions: North
America, South America, Europe and Asia Pacific Africa.
North America
In 2013 the North America segment recorded $88.9 billion in revenue with
3,088,000 in wholesales. Among the top selling models for 2013 are the Focus,
Fusion, Escape and F-Series pickup trucks. The Ford North America segment
accounted for 63% of revenue and 48% of wholesales in 2013, compared to 63%
of revenue and 45% of wholesales in 2012.
South America
In 2013 the South America segment recorded $10.8 billion in revenue with
538,000 in wholesales. Recent model releases in the region include the Mondeo
sedan, EcoSport SUV and the new Ford Fiesta. The Ford South America
segment accounted for 8% of revenue and 9% of wholesales in 2013, compared
to 8% of revenue and 9% of wholesales in 2012.
Figure 18: Europe Industry Share
8.2%
8.1%
8.1%
8.0%
8.0%
Total Share of Total Industry
Total Share of Total Industry
16.5%
Revenue in the automotive sector is primarily generated by the sales of vehicles,
parts and accessories with sales and marketing incentives as reductions to
revenue. For vehicles that are sold to rental car companies or other agreements
in which there is a guaranteed repurchase option, the revenue is recognized over
the term of the lease. When the vehicles are returned at the end of the operating
term, a gain or loss is recognized after the vehicle is sold at auction and
depreciation is taken into account.
7.9%
7.8%
7.8%
7.7%
7.7%
7.6%
7.5%
7.5%
Europe
In 2013 the Europe segment recorded $27.9 billion in revenue with 1,360,000 in
wholesales. Popular models in the region include the Fiesta, C-MAX, Focus,
Mondeo and Galaxy and Ford one of the broadest product offerings with the
low-CO2 offerings. The Ford Europe segment accounted for 21% of revenue
and 22% of wholesales in 2013, compared to 21% of revenue and 26% of
wholesales in 2012.
7.4%
7.3%
7.2%
1Q 2013
2Q 2013
3Q 2013
4Q 2013
Source: Ford Investor Relations
Full Year 2013
Asia Pacific Africa
In 2013 the Asia Pacific Africa segment recorded $11.8 billion in revenue with
1,344,000 in wholesales. Included in the automobile sales number are vehicles
produced by Ford’s Chinese joint venture, Jiangling Motors Corporation (JMC).
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University of Oregon Investment Group
February 14, 2014
Popular models in the region include the Mondeo, Edge, Fiesta and Kuga. The
Ford Asia Pacific Africa segment accounted for 8% of revenue and 21% of
wholesales in 2013, compared to 8% of revenue and 20% of wholesales in 2012.
Figure 19: Ford Financial Services Assets
Financial Services
Revenue for the financial services sector are generated from interest on finance
receivables, net of certain deferred origination costs and operating leases, net of
certain deferred origination costs. The financing receivables are broken down
into two different segments, consumer and non-consumer.
100,000
90,000
80,000
Dollars ($B)
70,000
60,000
50,000
40,000
30,000
20,000
10,000
2009
2010
2011
2012
Finance Receivables
2013
2014
2015
2016
2017
2018
Net Investment in Operating Leases
Source: UOIG Spreads
Finance Receivables: Consumer
Ford Credit purchases retail installment sale and lease contracts for new and
used vehicles from Ford and Lincoln dealers based on the credit-worthiness of
the sale and lease customers. The amount paid for retail installment sale
contracts is based on the negotiated purchase price, less trade-in allowance,
down payment or special incentives. In most markets Ford Credit holds a
security interest in vehicles purchased through the retail installment sales
contracts which provide repossession rights on the vehicles and insurance
requirements for customers.
Finance Receivables: Non-Consumer
Ford Credit extends commercial credit to Ford and Lincoln dealers through
approved lines of credit to purchase new and used vehicles. These loans are also
used for purchasing inventory, dealership improvements, working capital or real
estate acquisition.
Figure 20: Alan Mulally Compensation Breakdown
Net Investment in Operating Leases
In this segment Ford Credit has the option to purchase leases that are originated
by the dealer. Once the lease is purchased, the dealer typically has no further
obligation connected with the lease. At the termination of the lease the customer
has the option to purchase the vehicle for the price in the contract or return the
vehicle to the dealer. If returned, the vehicles are typically sold at auctions and
recognized as a gain or loss.
35,000
Management and Employee Relations
30,000
4,253
Dollars ($000)
25,000
Alan Mulally – President & Chief Executive Officer
6,978
7,500
20,000
6,306
7,500
15,000
13,925
10,000
7,500
7,492
3,825
5,000
3,150
1,820
1,325
0
2010
Salary
2011
Bonus
Stock Awards
Options Awards
Source: SEC.gov
2012
Other
Alan Mulally is President and Chief Executive Officer of Ford Motor Company.
He also is a member of the company’s Board of Directors. Prior to joining Ford
in September 2006, Mulally served as executive vice president of The Boeing
Company, and President and Chief Executive Officer of Boeing Commercial
Airplanes. In that role, he was responsible for all of the company’s commercial
airplane programs and related services. The responsibility of chief executive
officer for the business unit was added in March 2001. Mulally holds Bachelor
and Master of Science degrees in aeronautical and astronautical engineering
from the University of Kansas, and earned a Master’s in Management from the
Massachusetts Institute of Technology as a 1982 Alfred P. Sloan fellow. – Ford
Website
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University of Oregon Investment Group
February 14, 2014
Mark Fields – Chief Operating Officer
Figure 21: Mark Fields Compensation Breakdown
10,000
9,000
8,000
Dollars ($000)
7,000
2,887
3,855
4,069
6,000
1,099
5,000
4,000
1,099
3,000
1,000
2,000
1,301
1,000
1,239
3,368
1,231
1,156
1,385
1,350
2010
2011
1,337
0
Salary
Bonus
Stock Awards
Options Awards
Mark Fields is Chief Operating Officer of Ford Motor Company, effective Dec.
1, 2012. In this role, Fields is responsible for all business operations. Formerly,
Fields served as executive vice president of Ford Motor Company, and president
of The Americas, a position to which he was named in October 2005. He led the
development, manufacturing, marketing and sales of Ford and Lincoln vehicles
in the United States, Canada, Mexico and South America, and was responsible
for the transformation of the company’s North American operations and its
record profitability. Fields was named a Global Leader of Tomorrow by the
World Economic Forum in 2000 and CNBC’s Asian Business Leader –
Innovator of the Year for 2001. He holds an Economics degree from Rutgers
University (USA) and a Master of Business Administration from Harvard
Graduate School of Business. – Ford Website
2012
Other
Source: SEC.gov
Figure 22: 2014 Lincoln Navigator
Management Guidance
In conference calls management does not provide numerical guidance on very
many items. For 2014 the one figure that management identified was pre-tax
operating profit should be $7-8 billion. Management increased the first quarter
dividend by 25% to $0.125/share and has stated the dividend will be growing
and consistent. Although Ford does not provide specific guidance, conference
call slides note that the company is on track to achieve key metrics such as
revenue and operating margin by the end of 2014.
Recent News
“Ford to Boost Large Truck Production at Kentucky Plant”
Reuters (January 30, 2014)
Source: Google
Ford is spending $80 million this year to boost production of large pickups and
SUVs, including the F-Series Super Duty trucks, Expedition and Navigator. The
plant will increase output by 55,000 vehicles per year, or about 15%, and add
350 jobs. While this is a large investment, Ford is continuing to put money into
production and expansion, signifying increasing demand in the near future.
“Ford Increases Quarterly Dividend 25% in 2014 First
Quarter”
Figure 23: 2014 Ford F-250 Atlas
Ford Investor Relations Website (January 13, 2014)
Ford Motor Company declared a first quarter 2014 dividend of $0.125 per share
on outstanding Class B and common stock, a 25% increase from the level of
dividend paid in each quarter in 2013. Bob Shanks, CFO, stated that “This
increase in the dividend provides our shareholders with a regular, growing
dividend that we believe is sustainable over an economic or business cycle.”
Source: Google
UOIG 9
University of Oregon Investment Group
Figure 24: 2015 Ford F-150
February 14, 2014
“All New Ford F-150 Redefines Full-Size Trucks as the
Toughest, Smartest, Most Capable F-150 Ever”
Ford News Center (January 9, 2014)
Ford introduced the all-new F-150 that delivers an impressive combination of
power, capability and efficiency. This is the first pickup to use a high-strength,
military-grade aluminum alloys in the body. Combined with a high-strength
steel frame, the F-150 offers customers a strong and safe truck while improving
fuel efficiency through the use of lighter materials. With a range of four engine
options, including a new 2.7-liter EcoBoost with standard Auto Start-Stop, the
engines provide Ford with a competitive edge over the Chevy Silverado and
Ram trucks in the fiercely-competitive truck market.
Source: Google
Portfolio History
11
At no point in time has the Tall Firs, Svigals’ or DADCO portfolios ever held a
position in Ford. While Europe and South America pose a challenge in terms of
profitability at this point in time, Ford is in perfect position to capture the
rebound of emerging markets, the growth in China and the continuing economic
recovery here in the United States. The Tall Firs is slightly underweight
consumer goods and Ford provides a quality long-term value opportunity with
dividends for the portfolio.
10
Catalysts
Figure 25: Average Age of U.S. Cars and
Trucks
Age in Years
12
Upside
9
8
Source: AEI Ideas
-
-
-
2,500
2,000
1,500
1,000
500
0
2000-01-01
2000-10-01
2001-07-01
2002-04-01
2003-01-01
2003-10-01
2004-07-01
2005-04-01
2006-01-01
2006-10-01
2007-07-01
2008-04-01
2009-01-01
2009-10-01
2010-07-01
2011-04-01
2012-01-01
2012-10-01
2013-07-01
New Privately Owned Housing Units
Started
Figure 26: U.S. Housing Starts
Ford has created a market-first pickup using high-strength, military-grade
aluminum alloys designed to improve fuel efficiency, grow market share in
the competitive truck industry and continue the F-150’s streak of 37 years
straight as the best-selling pickup truck
Ford will launch 23 new models worldwide during 2014 and 16 in North
America, add over 5,000 jobs, build three new factories and expand
production to keep up with anticipated demand for vehicles such as the
Fusion and F-150
Increasing momentum in construction and housing industries will spur
spending on vehicles, propelling the sales of Ford trucks and vans, the
vehicles with the highest margins
Increased consumer confidence, pent up demand and the average age of
vehicles on the road being over 11 years combined with historically low
borrowing costs will encourage consumers to purchase or lease a new
vehicle
Rising interest rates will allow Ford to de-risk the underfunded pension
fund and put capital typically restricted for pension toward organic growth
and returning value to shareholders
Downside
-
Expensive down time in factories to prepare for new vehicle launches will
hurt 2014 margins and profitability
Source: FRED Economic Data
UOIG 10
University of Oregon Investment Group
February 14, 2014
-
Figure 27: Ford F-Series U.S. Sales
1,000,000
-
900,000
Ford F-Series U.S. Sales
800,000
700,000
-
600,000
The weakness associated with aluminum may discourage loyal Ford truck
buyers from investing in a new F-150, dropping sales of the highest margin
vehicle and resulting in a loss of market share
The consumer is shifting toward more fuel efficient and smaller vehicles
will decrease the sales of larger, higher-margin vehicles and increase the
sales of smaller, lower-margin vehicles, hurting the bottom line
Recent recalls associated with the EcoBoost technology may discourage
potential buyers from investing in a Ford vehicle with an EcoBoost engine
500,000
400,000
Comparable Analysis
300,000
200,000
100,000
0
Source: Google
Figure 28: General Motors Logo
Comparable companies were screened for beta, enterprise value, growth rates,
product offerings and global exposure. Extra consideration was given to
companies with strong pickup segments due to the fact that the F-150 is one of
Ford’s best-selling vehicles with the highest margins. While a number of
comparable companies were based outside of the United States, the infiltration
of imports from Japan and Tokyo are pressuring American automobile
manufacturers to increase quality, warranties and decrease price. In addition, a
few companies representing macroeconomic trends and suppliers were included
in the comparable analysis.
General Motors Company (GM) – 30%
“General Motors Company (GM) designs, manufactures, and markets cars,
crossovers, trucks, and automobile parts worldwide. The company markets its
vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden,
and Vauxhall brand names, as well as under the Alpheon, Jiefang, Baojun, and
Wuling brand names. The company, through its subsidiary, General Motors
Financial Company, Inc. provides automotive financing services and lease
products through GM dealerships in connection with the sale of used and new
automobiles that target customers with sub-prime and prime credit bureau
scores. The company was founded in 1908 and is based in Detroit, Michigan.” –
Yahoo! Finance
Source: Google
Figure 29: Toyota Motor Corporation Logo
General Motors was weighted as the highest comparable because they compete
directly with Ford in terms of market share, price point, automobile portfolios
and structure of company. General Motors also has a subsidiary that provides
automotive financing for customers and dealerships, similar to Ford. Both
companies were hit hard by the recession, operate in similar geographic regions
and face the same macroeconomic uncertainty.
Toyota Motor Corporation – 30%
“Toyota Motor Corporation engages in the design, manufacture, assembly, and
sale of passenger cars, minivans, commercial vehicles, and related parts and
accessories primarily in Japan, North America, Europe, and Asia. It operates
through Automotive, Financial Services, and All Other segments. \Toyota Motor
Corporation sells its products through dealers. Further, it provides a range of
financial services comprising retail financing, retail leasing, wholesale
financing, insurance, credit cards, and housing loans. As of January 6, 2014, it
had approximately 270 dealerships in Southeast Asian countries. Toyota Motor
Corporation was founded in 1933 and is headquartered in Toyota City, Japan.” –
Yahoo! Finance
Source: Google
UOIG 11
University of Oregon Investment Group
February 14, 2014
Toyota Motor Corporation was weighted the same as General Motors and
although the company does not have headquarters in North America, it still
competes heavily with American automotive manufacturers. Toyota offers
similar product offerings, including the Toyota Prius and Toyota Tundra which
has gained traction in the United States in a highly-competitive environment.
With both an automotive and financial services arm, the company has a similar
structure to Ford and more importantly, is widely considered the pioneer of
hybrid vehicles. Using Toyota in the comparable analysis was also a proxy for
the hybrid automotive market, due to the shift toward “greener” and more fuel
efficient vehicles by consumers.
Figure 30: Volvo Car Corporation Logo
Volvo Car Corporation – 25%
“Volvo AB designs, manufactures and markets automobiles and industrial
trucks. It operates through following business areas: Volvo Group Trucks
Operations, Volvo Construction Equipment, Volvo Buses, Volvo Penta and
Volvo Group Finance and Business Support. The Volvo Group Trucks
Operations business area covers operations in the geographic regions, including
North and South America, Europe, Middle East and Africa and Asia and Pacific.
The Volvo Group Finance & Business Support business area consists of
company's various operations in the financial sphere, such as customer
financing, as well as Information technology, treasury and human resources
services. – Factset
Source: Google
Figure 31: Delphi Automotive Logo
Volvo Car Corporation was chosen as a comparable company due to their
similar company structure, with both an automotive and financial arm, even
though the company has a more diverse product offering. While Volvo does
manufacture heavy equipment and busses, the growth rates can be seen as an
indicative nature for GDP growth, infrastructure expansion and international
markets exposure.
Delphi Automotive PLC – 15%
Source: Google
“Delphi Automotive PLC, together with its subsidiaries, manufactures vehicle
components; and provides electrical and electronic, powertrain, safety, and
thermal technology solutions for the automotive and commercial vehicle
markets worldwide. Delphi Automotive PLC sells its products and services to
the automotive original equipment manufacturers (OEMs), as well as to the
aftermarket for replacement parts, including the aftermarket operations of its
OEM customers, and to other distributors and retailers.” – Yahoo! Finance
Figure 32: Ford Automotive & Financial Revenue
200,000
15%
180,000
10%
160,000
5%
140,000
0%
(5%)
100,000
(10%)
80,000
(15%)
YoY Growth
Dollars ($M)
120,000
Delphi Automotive was chosen as a comparable company because it is global
supplier of electrical and safety components to vehicle markets. The product
offering of Delphi both includes a large portfolio of electric and hybrid systems,
both areas that are becoming increasingly important as vehicles are utilizing
technology increasingly more in the future. As a key supplier, growth rates are
typically indicative of growth for larger automobile manufacturers such as Ford
and General Motors.
Discounted Cash Flow Analysis
60,000
(20%)
40,000
20,000
(25%)
0
(30%)
2008
2009
2010
2011
2012
Automotive
2013
2014
2015
2016
2017
2018
Revenue Model
To project revenues, the revenue model was initially broken down for the two
operating segments: Automotive and Financial. The automotive section was
broken down into four geographic regions: North America, South America,
Financial Services
Source: UOIG Spread
UOIG 12
University of Oregon Investment Group
Figure 33: North America Revenue
120,000
40%
30%
100,000
20%
YoY Growth
Revenue ($M)
80,000
10%
60,000
0%
February 14, 2014
Europe and Asia Pacific Africa. Using historical revenue and wholesale sales
data, a revenue per vehicle figure was determined. Looking forward, the unit
sales growth for each region, including the largest markets in each region, was
projected using a growth figure primarily determined by macroeconomic factors
and any management guidance provided in earnings calls. In addition to the unit
sales, the revenue per vehicle figure was projected using a growth rate, also
dependent on any macroeconomic factors. Below is a short summary of each of
the geographic regions along with any macroeconomic factors taken into
consideration when projecting revenue.
40,000
(10%)
Automotive
20,000
(20%)
0
North America
Although 2013 was a solid year for North American sales, a number of factors
including volatility in the financial markets and the economic recovery pose
challenges for this segment. With that being said, a rebound in housing and
increasing consumer confidence, the number of refreshed models being rolled
out and increasing adoption of Lincoln vehicles will drive the unit sales and
revenue per vehicle growth. During 2014 net pricing of vehicles is expected to
be slightly lower than 2014 due to eliminating outgoing models from inventory
to create room for the new and refreshed models.
(30%)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: UOIG Spread
Figure 34: South America Revenue
14,000
30%
12,000
25%
20%
10,000
10%
6,000
YoY Growth
Revenue ($M)
15%
8,000
South America
In the recent weeks there has been concern about currency volatility in many
countries including Brazil and Argentina, two of the biggest sales segments in
South America. While growth is not as significant as 2013, 2014 growth will be
driven by rising incomes and moderate GDP growth. Through implementation
of the One Ford Plan, many legacy products will be replaced with global
products, helping increase revenue per vehicle and decreasing costs as a result of
uniformity. The government has also issued number of controls on vehicle
imports which may hurt sales slightly.
5%
4,000
0%
2,000
(5%)
0
(10%)
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: UOIG Spread
Figure 35: Ford Europe Revenue
45,000
20%
40,000
15%
10%
35,000
(5%)
20,000
(10%)
15,000
(15%)
10,000
(20%)
5,000
(25%)
0
(30%)
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: UOIG Spreads
20,000
35%
18,000
30%
16,000
25%
14,000
20%
12,000
15%
10,000
10%
8,000
5%
6,000
0%
4,000
(5%)
2,000
(10%)
0
YoY Growth
Figure 36: Asia Pacific Africa Revenue
Revenue ($M)
Revenue ($M)
0%
25,000
YoY Growth
5%
30,000
Europe
Europe is still recovering from the economic disaster that has plagued the region
for the past few years. With unemployment beginning to fall and strong private
investment in Germany, the moderate GDP growth will outweigh the declining
sales and economic volatility in Turkey to moderately grow this segment and
becoming profitable in 2015, according to Ford management. Helping drive this
segment to profitability is the release of 25 new vehicles over the course of the
next five years along with the introduction of the EcoBoost engine in Germany.
Combined with higher volumes and improved operations after a thorough
restructuring, Europe is poised to grow profitability during the stabilization and
rebound of the economy.
Asia Pacific Africa
China performed exceptionally well in 2013 and although the consensus on
growth is expected to be smaller than the prior year, this geographic segment
will continue to grow rapidly. Ford is continuing to expand the vehicle offerings
in the region with a number of One Ford products. In addition, a number of new
facilities and factories are being constructed in this region, driving revenue
higher in the coming years by matching the manufacturer’s ability to produce to
meet demand. With respect to Australia, the weakening Australian currency
poses a challenge for sales but Ford is going through a number of restructuring
efforts to decrease costs.
(15%)
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: UOIG Spreads
2017
2018
UOIG 13
University of Oregon Investment Group
February 14, 2014
Financial Services
With the majority of revenue for the segment coming from receivables
generated by the automotive segment, growth is typically dependent on the sales
of automotive segment and the percentage of vehicles that are leased. The
operating leases grew significantly in 2013 and that growth is projected to
continue into the future. Looking at the financial services segment as a whole, a
rise in rates may diminish demand for new vehicles and leasing through Ford
Motor Credit.
Figure 37: Depreciation on Leased Vehicles
Depreciation on Leased Vehicles ($M)
10,000
9,000
Income Statement
8,000
Two income statements were created for the automotive and financial services
segments. Figures were projected forward using historical rates, combined with
any applicable management guidance. Below are summaries of key line items
and the projections for each respective line.
7,000
6,000
5,000
4,000
3,000
Automotive
Cost of Goods Sold
The cost of goods sold was trended down as a percentage of revenue in the
coming years due to continuing implementation of the One Ford Plan and
increasing efficiency of manufacturing facilities. On the discounted cash flow
analysis, depreciation for the automotive segment was taken out of the cost of
goods sold, and added back to arrive at free cash flow, along with the
depreciation from the financial services segment.
2,000
1,000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: UOIG Spreads
Selling, Administrative and Other Expenses
Similar to the cost of goods sold, the selling, administrative and other expenses
amount was trended down slightly in the coming years due the continued
implementation of the One Ford Plan.
Figure 38: Ford Dividend vs. Share Price
$0.14
$18.00
$16.00
$0.12
$14.00
$0.10
$0.06
$8.00
$6.00
Share Price
$10.00
$0.04
$4.00
$0.02
$2.00
Amount per Share
Source: Ford Investor Relations
1/1/2014
12/1/2013
11/1/2013
9/1/2013
Share Price
10/1/2013
8/1/2013
7/1/2013
6/1/2013
5/1/2013
4/1/2013
3/1/2013
2/1/2013
1/1/2013
12/1/2012
11/1/2012
9/1/2012
10/1/2012
8/1/2012
7/1/2012
6/1/2012
5/1/2012
4/1/2012
3/1/2012
$0.00
2/1/2012
$0.00
1/1/2012
Dividend/Share
$12.00
$0.08
Financial Services
Depreciation on Leased Vehicles
Depreciation expense on leased vehicles is typically the largest or second-largest
expense for the financial services segment. This non-cash expense reduces the
value of the leased vehicles in Ford Credit’s lease portfolio from the original
acquisition cost down to the expected residual value at the end of the lease term.
The residual values are carefully monitored and revised based on any changes in
expected residual value or depreciation rate. The depreciation was projected
forward based a percentage of operating leases held by Ford Credit, while taking
into account any management guidance.
Interest Expense
Typically the largest expense, the interest expense consists of discounts,
premiums, costs and interest all are related to the debt held. Looking forward,
these expenses were projected to remain at historical levels while incorporating
any fluctuations in automotive demand.
Statement of Cash Flows
The statement of cash flows was used to best predict the cash generated by each
segment for the company as a whole. Below are key line items in the statement
of cash flows for both segments.
Debt
Due to the fact that debt is such an instrumental piece to the operations of Ford,
proceeds from issuance of debt was kept constant for projections, assuming the
capital structure remains relatively the same, with the accompanying interest
expense already considered in the interest expense projections.
UOIG 14
University of Oregon Investment Group
February 14, 2014
Capital Expenditures
Capital expenditures were projected forward based off of a historical percentage
of revenue with one exception. In 2014 capital expenditures for the automotive
segment are higher than average due to the construction of new factories along
with the retooling of existing factories to prepare for production of new models.
Dividends
During 2012 Ford reinstated a dividend at $0.05 a share. For the first quarter of
2014, Ford increased the dividend by 25% from a year ago. After a pre-tax profit
of $8.6 billion, one of the company’s best years ever, management explicitly
stated that the dividend will be “regular and growing” which is seen in the cash
flows from financing activities in the automotive segment statement of cash
flows.
Figure 39: Automotive Receivables
8,000
7,000
Automotive Receivables ($M)
6,000
5,000
4,000
3,000
Balance Sheet
2,000
1,000
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: UOIG Spreads
Similar to the income statement and statement of cash flows, there are two
balance sheets, one for each segment. In cases where management did not
provide much guidance, line items were projected at historical levels while
keeping any external factors that may have a material impact. Below is a
summary of significant line items and factors considered when projecting the
line items.
Current Assets
Automotive Receivables
For the automotive segment, the receivables line items consists of receivables
generated from both vehicle/part sales to third parties and Ford Credit. This item
was projected to increase slightly due to an uptick in sales while using historical
data percentages of revenue and days outstanding as a guide.
Finance Receivables
Finance receivables in the financial services segment are purchased typically
purchased from the automotive segment and originated from vehicle
purchases/leases along with miscellaneous non-consumer items. This line item
was projected as a percentage of total financial services assets and days
outstanding, trended down toward the historical average.
Figure 40: Finance Receivables
120,000
Finance Receivables ($M)
100,000
80,000
Non-Current Assets
Net Property
Net property for the automotive segment was projected based off the percentage
of total automotive assets. The net property line item includes land, buildings,
land improvements, machinery and equipment along with other assets used in
normal operations. These items are depreciated primarily using the straight-line
method over the estimated useful life of the asset.
60,000
40,000
20,000
0
2008
2009
2010
2011
2012
2013
2014
2015
Source: UOIG Spreads
2016
2017
2018
Deferred Income Taxes
Deferred income taxes for the automotive segment were projected forward as a
percentage of revenue, using historical data as a guide for the projections.
Current Liabilities
Payables
In the automotive segment there are two types of payables: trade and other. The
majority of these payables are trade payables while both were projected forward
as a percentage of revenue while using historical data as a guide for the
projections.
UOIG 15
University of Oregon Investment Group
Accrued Liabilities and Deferred Revenue
This line item mainly consists of dealer/customer allowances and claims and
employee benefit plans and was projected forward based off a percentage of
revenue using historical percentages while keeping days outstanding in line with
historical figures.
Figure 41: Ford Beta
Ford Beta
Type
5 Year Weekly Regression
5 Year Daily Regression
3 Year Weekly Regression
3 Year Daily Regression
1 Year Daily Regression
3 Year Weekly Vasicek
3 Year Monthly Vasicek
Damodaran Automotive Industry Beta
Final Beta
February 14, 2014
Beta
1.51
1.31
1.38
1.29
1.35
1.29
1.27
1.28
1.29
SD
Weighting
0.13
0%
0.05
25%
0.12
0%
0.04
40%
0.10
0%
15%
15%
5%
100%
Non-Current Liabilities
Long-Term Debt
For both the automotive and financial services segment, debt is a key instrument
to the continuing operations of the company. The outstanding debt for each
segment was projected as a percentage of total liabilities for each respective
segment under the assumption that the capital structure of the company would
remain consistent. Under this assumption, the interest payments on the debt
were packaged into the interest expense projections.
Source: UOIG Spreads
Discounted Cash Flow Analysis Assumptions
Beta
Beta was derived using a number of regressions against the S&P 500, a pair of
Vasicek betas and the Aswath Damodaran automobile industry beta (Figure 41).
Seven regressions were run using different time frames including the 5-year
weekly, 5-year daily, 3-year weekly, 3-year daily and 1-year daily. Using those
seven regressions, weightings were assigned to each regression depending on
the standard deviation, ultimately finding a weighted-average final beta of 1.29.
Figure 42: Intermediate Growth Rate
Intermediate Growth Rate
2019E
2020E
2021E
2022E
2023E
Undiscounted CF
$5,822.39
$6,288.18
$6,665.47
$6,932.09
$7,140.05
Discounted CF
$4,159.53
$4,247.41
$4,256.84
$4,185.79
$4,076.36
10.00%
8.00%
6.00%
4.00%
3.00%
Growth Rate
Cost of Debt
The cost of debt was derived from the debt outstanding and the respective rates,
arriving at a cost of debt of 3.84%. Assuming a similar capital structure, a
premium was added to the terminal risk-free rate to derive a terminal cost of
debt.
Source: UOIG Spreads
Risk-Free Rate
To determine the risk-free rate, the yield on the 10-Year Treasury was used. For
the terminal risk-free rate, the yield on the 30-Year Treasury was used.
Terminal Growth Rate
In accordance with group standards a 3.00% terminal growth rate was applied.
Figure 43: Final Price Target
Final Price Target
Discounted Cash Flow
Forward Comparable Analysis
Implied Price
Weight
$18.41
$15.66
Price Target
Current Price
Undervalued
50%
50%
$17.04
14.80
15.12%
Intermediate Growth Rate
Due to the fact that free cash was growing 13.8% going into the terminal year,
an intermediate growth rate was used under the assumption that Ford cannot
continue to grow free cash flow at 13.8% year-over-year into perpetuity.
Therefore, the intermediate growth rate began at 10% in 2019 and decreased
until it reached 3.00% in 2023.
Recommendation
Source: UOIG Spreads
Based on a 50% weighting of the discounted cash flow analysis and a 50%
weighting of the comparable analysis, I place an OUTPERFORM on Ford. The
continuing investment in production and innovative new vehicles across all
markets will continue to attract new customers and grow Ford’s market share.
With a price target of $17.04, this represents a 15.12% undervaluation in the
stock.
UOIG 16
University of Oregon Investment Group
February 14, 2014
Appendix 1 – Comparables Analysis
F
Comparables Analysis (2014)
Ford Motor
Company
($ in millions)
Stock Characteristics
Current Price
Beta
Size
Short-Term Debt
Long-Term Debt
Cash and Cash Equivalent
Non-Controlling Interest
Preferred Stock
Diluted Basic Shares
Market Capitalization
Enterprise Value
Growth Expectations
% Revenue Growth 2014E
% Revenue Growth 2015E
% EBITDA Growth 2014E
% EBITDA Growth 2015E
% EPS Growth 2014E
% EPS Growth 2015E
Profitability Margins
Gross Margin
EBIT Margin
EBITDA Margin
Net Margin
Credit Metrics
Interest Expense
Debt/EV
Leverage Ratio
Interest Coverage Ratio
Operating Results
Revenue
Gross Profit
EBIT
EBITDA
Net Income
Capital Expenditures
Multiples
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
EV/(EBITDA-Capex)
Market Cap/Net Income = P/E
Max
$61.55
1.65
Min
$0.00
0.00
Median
$24.49
1.17
Weight Avg.
$40.26
1.34
GM
7203-JP
General Motors
Toyota Motor
Corporation
$14.80
1.29
30.00%
$35.23
1.65
30.00%
$56.72
1.14
VOLV.B
DLPH
Volvo
Delphi Automotive
PLC
25.00%
$13.75
1.20
15.00%
$61.55
1.33
66,404.0
91,549.0
37,889.0
6,303.0
7,964.0
3,874.0
199,000.0
321,414.0
676.9
796.4
18,737.0
20,565.0
3,467.0
12,630.5
7,546.0
507.5
848.4
39,142.0
53,487.5
25,900.7
32,206.8
21,385.5
2,168.9
2,389.2
1,497.3
84,587.3
129,314.0
19,678.5
91,549.0
37,642.0
372.0
3,874.0
59,009.0
132,361.0
14,200.0
17,923.0
29,529.0
538.0
7,964.0
1,389.0
50,114.0
61,225.0
66,404.0
82,156.0
37,889.0
6,303.0
3,448.0
199,000.0
321,414.0
6,794.0
7,338.0
4,000.0
180.0
28,170.0
45,750.0
140.0
2,324.0
1,067.0
477.0
307.7
18,737.0
20,565.0
36.3%
48.8%
125.4%
91.6%
166.1%
113.1%
3.9%
3.2%
6.1%
8.6%
(13.40%)
11.1%
5.9%
7.5%
12.5%
13.9%
22.1%
20.3%
5.1%
5.8%
13.5%
17.1%
32.5%
28.5%
3.9%
5.2%
6.1%
10.8%
(13.4%)
38.4%
4.9%
3.2%
9.4%
14.9%
24.6%
23.5%
4.7%
5.2%
6.3%
8.6%
6.6%
11.1%
5.0%
7.3%
27.9%
32.6%
84.6%
62.3%
6.7%
9.6%
12.2%
12.9%
13.4%
17.1%
26.04%
11.54%
14.80%
8.57%
15.19%
5.61%
10.16%
3.30%
20.82%
7.39%
10.96%
5.52%
18.67%
7.87%
11.98%
5.64%
17.27%
6.43%
10.16%
3.63%
15.19%
5.80%
10.17%
4.33%
19.66%
9.98%
13.80%
7.44%
21.98%
5.61%
10.28%
3.30%
18.12%
11.54%
14.80%
8.57%
$857.0
0.8
7.1
177.8
$0.0
0.0
1.0
14.6
$173.6
0.4
2.6
18.3
$262.6
0.4
2.8
73.9
$857.0
0.8
7.1
18.3
$347.0
0.5
1.9
47.5
$203.1
0.5
4.1
177.8
$304.1
0.3
3.2
14.6
$144.0
0.1
1.0
18.0
$261,584.0
$51,435.0
$26,118.0
$36,108.0
$19,452.0
$13,845.0
$3,227.0
$798.0
$241.0
$368.0
$176.0
$282.0
$85,146.0
$17,080.0
$5,852.5
$8,896.5
$4,258.0
$7,589.0
$140,592.2
$25,677.4
$11,570.5
$17,281.6
$8,523.3
$8,902.4
$154,000.9
$26,590.7
$9,901.7
$15,642.5
$5,583.4
$6,548.8
$162,260.0
$24,646.0
$9,419.0
$16,498.0
$7,020.0
$7,804.0
$261,584.0
$51,435.0
$26,118.0
$36,108.0
$19,452.0
$9,948.0
$43,278.0
$9,514.0
$2,428.0
$4,448.0
$1,429.0
$13,845.0
$17,463.0
$3,164.0
$2,016.0
$2,585.0
$1,496.0
$770.0
1.23x
6.50x
18.84x
10.29x
14.56x
19.71x
0.38x
2.48x
6.50x
3.71x
(4.87x)
7.14x
1.12x
5.53x
11.25x
8.43x
9.19x
11.38x
0.92x
4.80x
11.88x
7.55x
6.28x
12.02x
0.86x
4.98x
13.37x
8.46x
14.56x
10.57x
0.38x
2.48x
6.50x
3.71x
7.04x
7.14x
1.23x
6.25x
12.31x
8.90x
12.29x
10.23x
1.06x
4.81x
18.84x
10.29x
(4.87x)
19.71x
1.18x
6.50x
10.20x
7.96x
11.33x
12.52x
Multiple
EV/Revenue
EV/Gross Profit
EV/EBITDA
Market Cap/Net Income = P/E
Price Target
Current Price
Undervalued
Implied Price
$17.69
$13.93
$11.48
$17.32
$15.66
14.80
5.83%
Weight
5.00%
15.00%
20.00%
60.00%
UOIG 17
University of Oregon Investment Group
February 14, 2014
Appendix 2 – Income Statement
Income Statement
($ in millions)
2008A
2009A
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
Automotive
Revenue
Cost of Sales: Automotive
Gross Profit
Gross Margin
Selling, Administrative and Other Expenses
Earnings Before Interest and Taxes
% Revenue
Interest Expense
Net Interest Income/(Loss)
Equity in Net Income/(Loss) of Affiliated Companies
Income Before Income Taxes: Automotive
% Revenue
Provision for/(Benefit From) Income Taxes
Tax Rate
Income/(Loss) from Continuing Operations
Income/(Loss) from Discontinued Operations
Net Income
Less: Income/(Loss) Attributable to Noncontrolling Interests
Net Income Attributable to Automotive Sector
Net Margin
128,800.0
126,620.0
$2,180.0
1.69%
11,356.0
($9,176.0)
(7.12%)
2,061.0
(726.0)
163.0
($11,800.0)
(9.16%)
952.0
(8.07%)
(12,752.0)
9.0
(12,743.0)
214.0
($12,529.0)
(9.73%)
105,500.0
98,866.0
$6,634.0
6.29%
8,583.0
($1,949.0)
(1.85%)
1,515.0
5,288.0
145.0
$1,969.0
1.87%
(655.0)
(33.27%)
2,624.0
5.0
2,629.0
245.0
$2,874.0
2.72%
119,300.0
104,451.0
$14,849.0
12.45%
9,040.0
$5,809.0
4.87%
1,807.0
(362.0)
526.0
$4,166.0
3.49%
(514.0)
(12.34%)
4,680.0
4,680.0
(4.0)
$4,676.0
3.92%
128,200.0
113,345.0
$14,855.0
11.59%
9,060.0
$5,795.0
4.52%
817.0
825.0
479.0
$6,282.0
4.90%
(12,150.0)
(193.41%)
18,432.0
18,432.0
9.0
$18,441.0
14.38%
126,600.0
112,578.0
$14,022.0
11.08%
9,006.0
$5,016.0
3.96%
713.0
1,185.0
555.0
$6,043.0
4.77%
1,573.0
26.03%
4,470.0
4,470.0
(1.0)
$4,469.0
3.53%
139,513.7
122,772.0
$16,741.6
12.00%
9,766.0
$6,975.7
5.00%
209.3
697.6
488.3
$7,952.3
5.70%
2,147.1
27.00%
5,805.2
5,805.2
$5,805.2
4.16%
145,031.5
127,410.2
$17,621.3
12.15%
9,934.7
$7,686.7
5.30%
217.5
725.2
1,087.7
$9,282.0
6.40%
2,552.6
27.50%
6,729.5
6,729.5
$6,729.5
4.64%
152,859.3
134,516.2
$18,343.1
12.00%
9,095.1
$9,248.0
6.05%
382.1
764.3
764.3
$10,394.4
6.80%
2,910.4
28.00%
7,484.0
7,484.0
$7,484.0
4.90%
159,796.0
140,620.5
$19,175.5
12.00%
10,946.0
$8,229.5
5.15%
399.5
799.0
399.5
$9,028.5
5.65%
2,618.3
29.00%
6,410.2
6,410.2
$6,410.2
4.01%
166,817.4
145,548.2
$21,269.2
12.75%
11,677.2
$9,592.0
5.75%
417.0
834.1
166.8
$10,175.9
6.10%
3,052.8
30.00%
7,123.1
7,123.1
$7,123.1
4.27%
174,958.7
153,526.2
$21,432.4
12.25%
11,984.7
$9,447.8
5.40%
437.4
874.8
87.5
$9,972.6
5.70%
3,141.4
31.50%
6,831.3
6,831.3
$6,831.3
3.90%
Income Statement
($ in millions)
2008A
2009A
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
Financial Services
Financing Revenue
Operating Leases
Retail
Interest Supplements and Other Support Costs Earned from Affiliated Companies
Wholesale
Other
Other Revenue
Insurance Premiums Earned
Other Income, net
Total Financing Revenue
% YoY Growth
Depreciation on Vehicles Subject to Operating Leases
Interest Expense
Operating Expenses
Provision for Credit Losses
Insurance Expenses
Income Before Income Taxes: Financial Serviecs
% Revenue
Provision for Income Taxes
Tax Rate
Income from Continuing Operations
Gain on Disposal of Discontinued Operations
Net Income Attributable to Financial Services
Net Margin
Income Before Income Taxes: Total Company
% Revenue
Provision for/(Benefit From) Income Taxes
Tax Rate
Income/(Loss) from Continuing Operations
Income/(Loss) from Discontinued Operations
Net Income
Less: Income/(Loss) Attributable to Noncontrolling Interests
Net Income Attributable to Ford Motor Company
Net Margin
6,519.0
3,270.0
4,774.0
1,721.0
133.0
4,879.0
2,940.0
3,725.0
921.0
174.0
3,312.0
2,335.0
3,226.0
894.0
59.0
2,454.0
2,059.0
2,800.0
952.0
56.0
2,689.0
1,889.0
2,401.0
920.0
56.0
3,409.1
1,851.2
2,160.9
910.8
56.6
3,545.5
1,906.8
2,139.3
942.7
58.0
3,620.3
1,916.3
2,160.7
971.0
58.6
3,719.8
1,938.3
2,135.8
985.5
59.8
3,837.0
1,957.7
2,199.9
994.9
61.0
3,932.9
1,999.8
2,249.4
1,012.3
62.4
140.0
957.0
$17,514.0
(6.03%)
9,019.0
7,634.0
1,548.0
1,769.0
103.0
($2,559.0)
(14.61%)
(1,014.0)
39.62%
(1,545.0)
9.0
($1,536.0)
(8.77%)
100.0
662.0
$13,401.0
(23.48%)
3,857.0
5,162.0
1,262.0
966.0
55.0
$2,099.0
15.66%
724.0
34.49%
1,375.0
2.0
$1,377.0
10.28%
98.0
223.0
$10,147.0
(24.28%)
2,024.0
4,222.0
1,149.0
(269.0)
46.0
$2,975.0
29.32%
1,106.0
37.18%
1,869.0
$1,869.0
18.42%
100.0
302.0
$8,723.0
(14.03%)
1,774.0
3,507.0
1,076.0
(118.0)
80.0
$2,404.0
27.56%
609.0
25.33%
1,795.0
$1,795.0
20.58%
105.0
286.0
$8,346.0
(4.32%)
2,468.0
3,027.0
1,004.0
7.0
70.0
$1,770.0
21.21%
483.0
27.29%
1,287.0
$1,287.0
15.42%
118.7
256.7
$8,763.9
5.01%
2,364.8
2,892.1
876.4
26.3
87.6
$2,516.8
28.72%
830.5
33.00%
1,686.2
$1,686.2
19.24%
121.0
256.2
$8,969.4
2.34%
2,501.8
2,959.9
896.9
26.9
89.7
$2,494.1
27.81%
823.1
33.00%
1,671.1
$1,671.1
18.63%
123.7
257.5
$9,108.0
1.55%
2,636.8
2,823.5
910.8
27.3
91.1
$2,618.5
28.75%
864.1
33.00%
1,754.4
$1,754.4
19.26%
124.3
265.4
$9,229.1
1.33%
2,708.5
2,768.7
922.9
27.7
92.3
$2,708.9
29.35%
893.9
33.00%
1,815.0
$1,815.0
19.67%
125.5
269.4
$9,445.5
2.34%
2,765.0
2,833.6
944.5
28.3
94.5
$2,779.5
29.43%
917.2
33.00%
1,862.3
$1,862.3
19.72%
126.0
274.8
$9,657.6
2.25%
2,795.0
2,897.3
965.8
29.0
96.6
$2,874.0
29.76%
948.4
33.00%
1,925.6
$1,925.6
19.94%
($14,359.0)
(9.81%)
(62.0)
.43%
(14,297.0)
9.0
(14,288.0)
214.0
($14,502.0)
(9.91%)
$4,068.0
3.42%
69.0
1.70%
3,999.0
5.0
4,004.0
245.0
$3,759.0
3.16%
$7,141.0
5.52%
592.0
8.29%
6,549.0
6,549.0
(4.0)
$6,553.0
5.06%
$8,686.0
6.34%
(11,541.0)
(132.87%)
20,227.0
20,227.0
(9.0)
$20,236.0
14.78%
$7,813.0
5.79%
2,056.0
26.32%
5,757.0
5,757.0
(1.0)
$5,758.0
4.27%
$10,469.0
7.06%
2,977.6
28.44%
7,491.4
7,491.4
$7,491.4
5.05%
$11,776.2
7.65%
3,375.6
28.66%
8,400.5
8,400.5
$8,400.5
5.45%
$13,012.9
8.03%
3,774.5
29.01%
9,238.4
9,238.4
$9,238.4
5.70%
$11,737.4
6.94%
3,512.2
29.92%
8,225.2
8,225.2
$8,225.2
4.87%
$12,955.4
7.35%
3,970.0
30.64%
8,985.4
8,985.4
$8,985.4
5.10%
$12,846.7
6.96%
4,089.8
31.84%
8,756.9
8,756.9
$8,756.9
4.74%
UOIG 18
University of Oregon Investment Group
February 14, 2014
Appendix 3 – Statement of Cash Flows (Automotive)
Statement of Cash Flows: Automotive
($ in millions)
Cash Flows From Operating Activities:
Net Income (Loss)
(Income)/Loss of Discontinued Operations
Depreciation and Special Tools Amortization
Provision for Deferred Income Taxes
Decrease/(Increase) in Intersector Receivables/Payables
Decrease/(Increase) in Accounts Receivable and Other Assets
Decrease/(Increase) in Inventory
Increase/(Decrease) in Accounts Payable and Accrued and Other Liabilities
Decrease/(Increase) in Equity Method Investments
Other
Other Amortization
Impairment Charges
Held-for-Sale Impairment
U.S. Dealerships Goodwill Impairment
Provision for Credit and Insurance Losses
Net (Gain)/Loss on Extinguishment of Debt
Net (Gain)/Loss on Investment Securities
Net (Gain)/Loss on Pension and OPEB Curtailment
Net (Gain)/Loss on Settlement of U.S. Health Care Obligation
Dividends in Excess of Equity Investment Earnings
Foreign Currency Adjustements
Net (Gain)/Loss on Sale of Businesses
Gain on Changes in Investments in Affiliates
Stock Compensation
Net Cash Provided by/(Used In) Operating Activities
Cash Flows Used for Investing Activities:
Capital Expenditures
Purchase of Securities
Sales & Maturities of Securities
Cash Paid for Acquisitions
Proceeds from Sale of Business
Settlements of Derivatives
Investing Activity (to)/From Financial Services
Transfer of Cash Balances Upon Disposition of Discontinued/Held-for-Sale Operations
Other
Net Cash Provided by/(Used In) Investing Activities
Cash Flows from Financing Activities of Continuing Operations:
Cash Dividends
Purchases of Common Stock
Sales of Common Stock
Changes in Short-Term Debt
Proceeds from Issuance of Other Debt
Principal Payments on Other Debt
Payments on Notes/Transfer of Cash Equivalents to the UAW VEBA Trust
Other
Net Cash Provided By/(Used In) Financing Activities
Effect of Exchange Rates on Cash & Cash Equivalents
Net Change in Intersector Receivables/Payables and Other Liabilities
Net Increase/(Decrease) in Cash & Cash Equivalents
Cash & Cash Equivalents at January 1
Net Increase/(Decrease) in Cash & Cash Equivalents
Cash & Cash Equivalents at December 31
2008A
2009A
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
(12,529.0)
2,874.0
4,676.0
18,441.0
4,469.0
5,805.2
6,729.5
7,484.0
6,410.2
7,123.1
6,831.3
5,513.0
3,561.0
885.0
(1,473.0)
(137.0)
(13,557.0)
(139.0)
1,208.0
274.0
5,318.0
421.0
88.0
(170.0)
1,364.0
(2,714.0)
42.0
(499.0)
551.0
32.0
(11,961.0)
(3.0)
3,743.0
590.0
(598.0)
407.0
2,201.0
(1,838.0)
74.0
128.0
174.0
157.0
650.0
(4,666.0)
(385.0)
(4.0)
248.0
(38.0)
415.0
29.0
27.0
4,185.0
3,876.0
300.0
321.0
(988.0)
(903.0)
(1,311.0)
(599.0)
703.0
51.0
844.0
(102.0)
(29.0)
(198.0)
(347.0)
23.0
32.0
6,349.0
3,533.0
(11,566.0)
642.0
(1,658.0)
(367.0)
(168.0)
738.0
80.0
2.0
60.0
76.0
(169.0)
(35.0)
(410.0)
163.0
9,362.0
3,655.0
1,444.0
899.0
(2,335.0)
(1,401.0)
(520.0)
662.0
43.0
6.0
(89.0)
20.0
(121.0)
183.0
(780.0)
134.0
6,269.0
3,242.5
700.1
899.0
(3,442.8)
(1,008.8)
1,882.3
8,077.3
3,239.0
168.8
899.0
1,027.1
(331.1)
1,519.6
13,251.9
3,360.6
857.5
899.0
(3,178.6)
(1,234.0)
1,632.9
9,821.5
3,024.6
(2,003.7)
899.0
1,674.5
(450.9)
(1,075.6)
8,478.1
2,467.0
144.6
899.0
(95.5)
(456.4)
(1,312.8)
8,769.1
2,350.6
167.7
899.0
(849.2)
(529.2)
1,984.0
10,854.1
(6,620.0)
(41,347.0)
43,617.0
(13.0)
9,854.0
1,157.0
9.0
(928.0)
40.0
5,769.0
(4,545.0)
(52,882.0)
47,009.0
382.0
(76.0)
19.0
(698.0)
(10,791.0)
(4,066.0)
(53,614.0)
54,857.0
1,318.0
(196.0)
2,455.0
(456.0)
279.0
577.0
(4,272.0)
(44,353.0)
43,525.0
310.0
135.0
2,903.0
(69.0)
280.0
(1,541.0)
(5,459.0)
(73,100.0)
70,202.0
54.0
(788.0)
925.0
142.0
(8,024.0)
(5,441.0)
(55,805.5)
54,369.1
(6,877.4)
(6,526.4)
(58,012.6)
55,774.1
(8,764.9)
(5,197.2)
(61,143.7)
59,633.6
(6,707.3)
(5,033.6)
(63,918.4)
65,307.0
(3,645.0)
(6,505.9)
(66,727.0)
67,358.9
(5,874.0)
(6,123.6)
(69,983.5)
70,716.2
(5,390.8)
756.0
104.0
203.0
(594.0)
2,450.0
227.0
14,727.0
(3,013.0)
(2,574.0)
(395.0)
11,422.0
179.0
(595.0)
4,400.0
6,377.0
4,400.0
10,777.0
1,339.0
391.0
264.0
(9,144.0)
(6,002.0)
292.0
(12,860.0)
75.0
(5,859.0)
9,762.0
(5,859.0)
3,903.0
(396.0)
2,452.0
(8,058.0)
70.0
(5,932.0)
(231.0)
1,658.0
6,301.0
1,658.0
7,959.0
(763.0)
(125.0)
154.0
1,553.0
(810.0)
31.0
40.0
(1,715.0)
7,965.0
(1,715.0)
6,250.0
(1,549.4)
(0.0)
2,000.0
(1,382.0)
(931.4)
268.5
6,250.0
268.5
6,518.5
(1,549.4)
2,000.0
(689.0)
(238.4)
4,248.6
6,518.5
4,248.6
10,767.1
(1,936.8)
2,000.0
(1,895.0)
(1,831.8)
1,282.4
10,767.1
1,282.4
12,049.5
(2,905.2)
2,000.0
(1,476.0)
(2,381.2)
2,452.0
12,049.5
2,452.0
14,501.4
(3,486.2)
2,000.0
(699.0)
(2,185.2)
709.9
14,501.4
709.9
15,211.3
(3,873.6)
2,000.0
(699.0)
(2,572.6)
2,890.7
15,211.3
2,890.7
18,102.0
(252.0)
217.0
(309.0)
(840.0)
(7,124.0)
20,678.0
(7,124.0)
13,554.0
UOIG 19
University of Oregon Investment Group
February 14, 2014
Appendix 4 – Statement of Cash Flows (Financial Services)
Statement of Cash Flows: Financial Services
($ in millions)
Cash Flows Provided by Operating Activities:
Net Income/(Loss)
(Income)/Loss of Discontinued Operations
Depreciation and Special Tools Amortization
Provision for Deferred Income Taxes
Decrease/(Increase) in Intersector Receivables/Payables
Decrease/(Increase) in Accounts Receivable and Other Assets
Increase/(Decrease) in Accounts Payable and Accrued and Other Liabilities
Other
Other Amortization
Impairment Charges
Provision for Credit and Insurance Losses
Net (Gain)/Loss on Extinguishment of Debt
Net (Gain)/Loss on Investment Securities
Dividends in Excess of Equity Investment Earnings
Foreign Currency Adjustements
Net (Gain)/Loss on Sale of Businesses
Stock Compensation
Net Cash Flows Provided By/(Used In) Operating Activities
Cash Flows Used for Investing Activities:
Capital Expenditures
Acquisitions of Retail and Other Finance Receivables and Operating Leases
Collections of Retail and Other Finance Receivables and Operating Leases & Net Collections/(Acquisitions) of
Wholesale Receivables
Purchase of Securities
Sales & Maturities of Securities
Proceeds From Sales of Retail and Other Finance Receivables and Operating Leases
Proceeds from Sale of Business
Settlements of Derivatives
Other
Net Cash Provided by/(Used In) Investing Activities
Cash Flows from Financing Activities of Continuing Operations:
Changes in Short-Term Debt
Proceeds from Issuance of Other Debt
Principal Payments on Othe Debt
Financing Activity To/(From) Automotive
Other
Net Cash Provided By/(Used In) Financing Activities
Effect of Exchange Rates on Cash & Cash Equivalents
Net Change in Intersector Receivables/Payables and Other Liabilities
Cumulative Correction of Prior Period-Error
Net Increase/(Decrease) in Cash & Cash Equivalents From Continuing Operations
Cash Flow from Discountinued Operations
Cash Flow from Operating Activities of Discontinued Operations
Cash & Cash Equivalents at January 1
Net Increase/(Decrease) in Cash & Cash Equivalents
Cash & Cash Equivalents at December 31
2008A
2009A
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
(1,536.0)
1,377.0
1,869.0
1,795.0
1,287.0
1,686.2
1,671.1
1,754.4
1,815.0
1,862.3
1,925.6
(9.0)
7,023.0
(1,681.0)
(885.0)
2,446.0
1,258.0
(666.0)
(643.0)
2,086.0
1,874.0
12.0
(4.0)
(4.0)
(29.0)
3.0
9,245.0
(2.0)
3,924.0
(1,336.0)
598.0
2,205.0
(994.0)
753.0
(1,261.0)
154.0
1,030.0
(71.0)
(25.0)
(7.0)
(323.0)
4.0
2.0
6,028.0
2,024.0
(266.0)
(321.0)
1,683.0
475.0
(587.0)
(1,019.0)
(216.0)
139.0
19.0
(1.0)
(5.0)
2.0
3,796.0
1,843.0
495.0
(642.0)
722.0
(450.0)
(165.0)
(1,200.0)
(33.0)
68.0
6.0
(2.0)
(11.0)
8.0
2,434.0
2,524.0
545.0
(899.0)
713.0
1,005.0
(211.0)
(1,018.0)
86.0
14.0
(16.0)
5.0
4.0
6.0
4,045.0
2,364.8
284.9
(899.0)
(3,370.2)
(12.1)
54.6
2,501.8
91.1
(899.0)
(3,217.1)
288.3
436.1
2,636.8
31.9
(899.0)
1,604.0
76.2
5,204.3
2,708.5
27.8
(899.0)
(4,917.3)
66.6
(1,198.4)
2,765.0
(233.6)
(899.0)
(2,071.1)
119.0
1,542.6
2,795.0
332.2
(899.0)
(2,201.3)
213.2
2,165.7
(76.0)
(44,562.0)
(16.0)
(26,392.0)
(26.0)
(28,811.0)
(21.0)
(35,845.0)
(29.0)
(39,151.0)
(21.9)
(39,063.8)
(22.4)
(40,608.8)
(22.8)
(42,800.6)
(23.1)
(44,742.9)
(23.6)
(46,708.9)
(24.1)
(48,988.4)
45,215.0
(23,831.0)
18,429.0
3,698.0
1,376.0
276.0
525.0
48,021.0
(27,555.0)
28,326.0
911.0
374.0
554.0
321.0
24,544.0
42,433.0
(46,728.0)
46,866.0
159.0
85.0
13,978.0
31,954.0
(24,370.0)
27,270.0
23.0
218.0
185.0
(586.0)
31,098.0
(22,035.0)
23,748.0
12.0
51.0
(12.0)
(6,318.0)
42,087.6
(22,786.2)
23,747.6
3,963.2
42,840.4
(23,320.4)
22,764.4
1,653.2
40,247.9
(23,680.7)
23,719.5
(2,536.7)
49,139.7
(23,995.5)
23,752.6
4,130.8
49,272.4
(24,558.2)
24,612.3
2,594.0
50,936.9
(25,109.7)
25,162.8
1,977.4
(5,224.0)
41,960.0
(45,281.0)
(9.0)
(352.0)
(8,906.0)
(499.0)
840.0
1,205.0
(6,162.0)
31,263.0
(56,508.0)
(19.0)
(601.0)
(32,027.0)
291.0
595.0
(630.0)
(1,199.0)
(2,145.0)
28,173.0
(38,935.0)
(2,455.0)
(192.0)
(15,554.0)
(128.0)
2,092.0
3,237.0
33,469.0
(35,037.0)
(2,903.0)
22.0
(1,212.0)
72.0
708.0
1,054.0
30,883.0
(28,601.0)
(925.0)
128.0
2,539.0
51.0
317.0
1,009.8
30,000.0
(29,744.8)
1,265.0
5,282.8
439.6
30,000.0
(27,596.4)
2,843.3
4,932.6
296.6
30,000.0
(28,282.6)
2,014.0
4,681.7
259.1
30,000.0
(30,211.3)
47.8
2,980.2
652.0
30,000.0
(29,756.6)
895.4
5,032.0
458.2
30,000.0
(28,054.9)
2,403.3
6,546.3
14,605.0
1,205.0
15,810.0
15,672.0
(1,199.0)
14,473.0
11,132.0
2,092.0
13,224.0
8,504.0
708.0
9,212.0
9,183.0
317.0
9,500.0
9,500.0
5,282.8
14,782.8
14,782.8
4,932.6
19,715.5
19,715.5
4,681.7
24,397.1
24,397.1
2,980.2
27,377.3
27,377.3
5,032.0
32,409.4
32,409.4
6,546.3
38,955.7
UOIG 20
University of Oregon Investment Group
February 14, 2014
Appendix 5 – Balance Sheet
Balance Sheet
($ in millions)
2008A
2009A
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
Assets
Automotive
Current Assets
Cash and Cash Equivalents
Marketable Securities
Total Cash, Marketable and Loaned Securities
Receivables, net
Inventories
Deferred Income Taxes Receivable
Net Investment in Operating Leases
Other Current Assets
Current Receivable from Financial Services
Total Current Assets
Equity in Net Assets of Affiliated Companies
Net Property
Deferred Income Taxes
Net Tangible Assets
Goodwill and Other Net Intangible Assets
Assets of Discontinued/Held-For-Sale Operations
Non-Current Receivable from Financial Services
Other Assets
Total Automotive Assets
6,377.0
9,296.0
15,673.0
3,464.0
8,618.0
302.0
4,032.0
2,035.0
34,124.0
1,069.0
28,352.0
7,204.0
1,584.0
1,512.0
73,845.0
10,309.0
15,169.0
25,478.0
3,708.0
5,450.0
511.0
2,845.0
2,568.0
40,560.0
1,429.0
24,596.0
5,663.0
200.0
7,923.0
15,672.0
8,607.0
96,101.0
23,120.0
92.0
523.0
9.0
198.0
7,345.0
151,667.0
(2,535.0)
222,977.0
11,132.0
6,864.0
79,705.0
15,062.0
121.0
1,631.0
82,002.0
6,301.0
14,207.0
20,508.0
3,992.0
5,917.0
359.0
1,282.0
610.0
1,700.0
34,368.0
2,441.0
23,027.0
2,468.0
102.0
181.0
2,019.0
64,606.0
7,965.0
14,984.0
22,949.0
4,219.0
5,901.0
1,791.0
1,356.0
1,053.0
878.0
38,147.0
2,797.0
22,229.0
13,932.0
100.0
32.0
1,549.0
78,786.0
6,247.0
18,178.0
24,425.0
5,361.0
7,362.0
3,488.0
1,415.0
1,124.0
43,175.0
3,112.0
24,813.0
13,325.0
87.0
1,946.0
86,458.0
6,518.5
16,741.6
23,260.2
6,440.0
8,370.8
4,185.4
2,696.5
3,487.8
48,440.8
1,395.1
24,775.8
13,477.7
69.8
1,953.2
90,112.4
10,767.1
14,503.2
25,270.3
5,275.0
8,701.9
4,350.9
2,900.6
3,625.8
50,124.5
3,039.1
25,701.0
14,113.1
65.3
2,030.4
95,073.5
12,049.5
12,993.0
25,042.5
5,965.0
9,935.9
5,203.8
3,057.2
6,114.4
55,318.7
4,585.8
25,050.6
18,191.8
61.1
1,681.5
104,889.5
14,501.4
14,381.6
28,883.1
6,410.0
10,386.7
3,195.9
3,195.9
3,994.9
56,066.5
4,793.9
24,505.7
19,818.1
79.9
1,598.0
106,862.0
15,211.3
15,013.6
30,224.9
6,330.0
10,843.1
3,336.3
3,336.3
4,170.4
58,241.1
5,004.5
25,943.9
19,093.9
636.4
1,668.2
110,588.1
18,102.0
15,746.3
33,848.3
6,975.7
11,372.3
3,499.2
3,499.2
4,374.0
63,568.6
5,248.8
27,095.4
20,967.0
131.7
1,749.6
118,761.2
8,504.0
6,759.0
73,265.0
10,393.0
128.0
4,221.0
103,270.0
(2,083.0)
165,793.0
9,183.0
3,835.0
73,330.0
11,482.0
139.0
3,605.0
101,574.0
(1,112.0)
179,248.0
9,412.0
2,106.0
75,770.0
15,036.0
134.0
252.0
3,450.0
106,160.0
(252.0)
192,366.0
14,782.8
3,067.4
79,522.8
15,765.0
134.0
3,067.4
116,339.4
206,451.8
19,715.5
2,511.4
82,668.0
16,678.6
134.0
3,139.3
124,846.8
219,920.3
24,397.1
2,550.2
81,015.4
17,578.8
134.0
3,187.8
128,863.4
233,752.9
27,377.3
2,307.3
85,890.4
18,057.0
134.0
3,230.2
136,996.1
243,858.1
32,409.4
2,361.4
88,830.3
18,433.3
132.2
2,361.4
144,527.9
255,116.1
38,955.7
2,414.4
90,978.5
18,633.1
144.9
2,414.4
153,541.0
272,302.1
Financial Services
Cash and Cash Equivalents
Marketable Securities
Finance Receivables, net
Net Investment in Operating Leases
Retained Interest in Sold Receivables
Equity in Net Assets of Affiliated Companies
Goodwill and Other Net Intangible Assets
Assets of Discontinued/Held-For-Sale Operations
Receivable From Automotive
Other Assets
Total Financial Services Assets
Intersector Elimination
Total Assets
6,228.0
119,112.0
(3,224.0)
197,890.0
UOIG 21
University of Oregon Investment Group
February 14, 2014
Appendix 5 – Balance Sheet (contd.)
Balance Sheet
($ in millions)
2008A
2009A
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
Liabilities and Stockholders' Equity
Automotive
Trade Payables
Other Payables
Accrued Liabilities and Deferred Revenue
Deferred Income Taxes Payable
Debt Payable Within One Year
Current Payable to Financial Services
Total Current Liabilities
Long-Term Debt
Other Liabilities
Deferred Income Taxes
Liabilities of Discontinued/Held-For-Sale Operations
Total Automotive Liabilities
10,635.0
2,167.0
32,395.0
2,790.0
1,191.0
49,178.0
24,655.0
24,815.0
614.0
99,262.0
11,210.0
2,148.0
18,465.0
3,119.0
2,095.0
37,037.0
32,321.0
23,260.0
561.0
5,356.0
98,535.0
13,466.0
1,544.0
17,065.0
392.0
2,049.0
34,516.0
17,028.0
23,016.0
344.0
74,904.0
14,015.0
2,734.0
15,003.0
40.0
1,033.0
32,825.0
12,061.0
26,910.0
255.0
72,051.0
15,107.0
3,044.0
15,358.0
81.0
1,386.0
252.0
35,228.0
12,870.0
30,549.0
514.0
79,161.0
15,346.5
3,348.3
15,695.3
83.7
2,188.1
697.6
37,359.5
15,641.3
31,550.1
788.5
85,339.4
15,228.3
4,350.9
15,590.9
87.0
2,231.0
725.2
38,213.3
15,051.6
32,289.7
520.2
86,074.9
16,050.2
4,585.8
15,668.1
91.7
2,290.8
764.3
39,450.9
14,508.2
32,788.7
546.5
87,294.2
16,778.6
4,793.9
15,979.6
95.9
2,343.7
799.0
40,790.6
15,544.9
30,465.1
553.7
87,354.3
17,515.8
4,587.5
16,264.7
100.1
2,398.0
1,668.2
42,534.2
15,155.5
28,336.4
566.7
86,592.9
18,370.7
4,811.4
16,533.6
105.0
2,460.6
1,312.2
43,593.4
15,899.8
28,972.8
579.5
89,045.4
1,970.0
128,842.0
3,280.0
6,184.0
55.0
2,035.0
142,366.0
(2,535.0)
239,093.0
1,195.0
1,236.0
98,671.0
1,735.0
4,884.0
2,568.0
109,094.0
(3,224.0)
204,405.0
-
1,352.0
85,112.0
1,505.0
3,764.0
1,881.0
93,614.0
(2,083.0)
166,435.0
-
975.0
86,595.0
1,301.0
3,457.0
910.0
93,238.0
(1,112.0)
164,177.0
-
1,157.0
90,802.0
1,687.0
3,500.0
97,146.0
(252.0)
176,055.0
322.0
1,139.3
91,057.2
1,971.9
3,505.6
97,674.0
183,013.4
-
1,345.4
93,460.9
2,063.0
3,587.7
100,457.0
186,531.9
-
1,366.2
95,178.3
2,094.8
3,643.2
102,282.5
189,576.7
-
1,384.4
94,967.0
2,122.7
3,691.6
102,165.6
189,520.0
-
1,416.8
95,210.3
1,889.1
3,778.2
102,294.4
188,887.3
-
1,545.2
97,155.4
2,221.2
3,863.0
104,784.9
193,830.3
-
23.0
1.0
9,076.0
(10,085.0)
(181.0)
(16,145.0)
(17,311.0)
(17,311.0)
222,977.0
33.0
1.0
16,786.0
(10,864.0)
(177.0)
(13,599.0)
(7,820.0)
1,305.0
(6,515.0)
197,890.0
37.0
1.0
20,803.0
(14,313.0)
(163.0)
(7,038.0)
(673.0)
31.0
(642.0)
165,793.0
37.0
1.0
20,905.0
(18,734.0)
(166.0)
12,985.0
15,028.0
43.0
15,071.0
179,248.0
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(763.0)
18,077.0
15,947.0
42.0
15,989.0
192,366.0
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(1,549.4)
27,117.8
23,438.4
23,438.4
206,451.8
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(1,549.4)
37,067.8
33,388.4
33,388.4
219,920.3
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(1,936.8)
48,243.0
44,176.2
44,176.2
233,752.9
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(2,905.2)
59,373.3
54,338.1
54,338.1
243,858.1
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(3,486.2)
71,844.9
66,228.7
66,228.7
255,116.0
39.0
1.0
20,976.0
(22,854.0)
(292.0)
(3,873.6)
84,475.4
78,471.8
78,471.8
272,302.1
Financial Services
Payables
Debt
Deferred Income Taxes
Other Liabilities and Deferred Income
Liabilities of Discontinued/Held-For-Sale Operations
Payable to Automotive
Total Financial Services Liabilities
Intersector Elimination
Total Liabilities
Minority Interests
Stockholders' Equity
Capital Stock
Common Stock, Par Value $0.01 per share (2,341 million shares issued of 6 billion authorized)
Class B Stock, Par Value $0.01 per share (71 million shares issued of 530 million authorized)
Capital in Excess of Par Value of Stock
Accumulated Other Comprehensive Income/(Loss)
Treasury Stock
Dividends Paid
Retained Earnings/(Accumulated Defecit)
Total Equity/(Defecit) Attributable to Ford Motor Company
Equity/(Defecit) Attributable to Noncontrolling Interests
Total Equity/(Defecit)
Total Liabilities and Stockholders' Equity
UOIG 22
University of Oregon Investment Group
February 14, 2014
Appendix 6 – Discounted Cash Flows Analysis
Discounted Cash Flow Analysis
($ in millions)
Total Company Revenue
% YoY Growth
Cost of Goods Sold
% Total Revenue
Gross Profit
Gross Margin
Selling, Administrative, and Other Expenses
% Total Revenue
Depreciation on Leased Vehicles
% Total Revenue
Depreciation and Special Tools Amortization
% Total Revenue
Operating Expenses
% Total Revenue
Provision for Credit Losses
% Financial Services Revenue
Insurance Expenses
% Financial Services Revenue
Earnings Before Interest & Taxes
Operating Margin
Interest Expense (Automotive Segment)
% Automotive Revenue
Interest Expense (Financial Segment)
% Financial Services Revenue
Net Interest (Income)
% Revenue
Earnings Before Taxes
% Revenue
Less Taxes (Benefits)
Tax Rate
Net Income
Net Margin
Add Back: Depreciation and Amortization
Add Back: Interest Expense*(1-Tax Rate)
Operating Cash Flow
% Revenue
Current Automotive & Financial Assets
% Total Revenue
Current Automotive & Financial Liabilities
% Total Revenue
Net Working Capital
% Revenue
Change in Working Capital
Capital Expenditures
% Revenue
Acquisitions
% Revenue
Unlevered Free Cash Flow
Discounted Free Cash Flow
2008A
146,314.0
121,107.0
82.77%
$25,207.0
17.23%
11,356.0
7.76%
9,019.0
6.16%
5,513.0
3.77%
1,548.0
1.06%
1,769.0
10.10%
103.0
.59%
($4,101.0)
(2.80%)
2,061.0
1.60%
7,634.0
43.59%
(726.0)
(.50%)
(13,070.0)
(8.93%)
(62.0)
0.47%
($13,008.0)
(8.89%)
14,532.0
2,051.2
$3,575.2
2.44%
137672.0
94.09%
123,201.0
84.20%
14,471.0
9.89%
$3,575.2
2009A
118,901.0
(18.74%)
95,123.0
80.00%
$23,778.0
20.00%
8,583.0
7.22%
3,857.0
3.24%
3,743.0
3.15%
1,262.0
1.06%
966.0
7.21%
55.0
.41%
$5,312.0
4.47%
1,515.0
1.44%
5,162.0
38.52%
5,288.0
4.45%
(6,653.0)
(5.60%)
69.0
(1.04%)
($6,722.0)
(5.65%)
7,600.0
1,530.7
$2,408.7
2.03%
109849.0
92.39%
86,762.0
72.97%
23,087.0
19.42%
8,616.0
6,696.0
5.63%
($12,903.3)
2010A
129,447.0
8.87%
100,575.0
77.70%
$28,872.0
22.30%
9,040.0
6.98%
2,024.0
1.56%
3,876.0
2.99%
1,149.0
.89%
(269.0)
(2.65%)
46.0
.45%
$13,006.0
10.05%
1,807.0
1.51%
4,222.0
41.61%
(362.0)
(.28%)
7,339.0
5.67%
592.0
8.07%
$6,747.0
5.21%
5,900.0
1,661.2
$14,308.2
11.05%
97518.0
75.33%
80,755.0
62.38%
16,763.0
12.95%
(6,324.0)
4,561.0
3.52%
$16,071.2
2011A
136,923.0
5.78%
109,812.0
80.20%
$27,111.0
19.80%
9,060.0
6.62%
1,774.0
1.30%
3,533.0
2.58%
1,076.0
.79%
(118.0)
(1.35%)
80.0
.92%
$11,706.0
8.55%
817.0
.64%
3,507.0
40.20%
825.0
.60%
6,557.0
4.79%
(11,541.0)
(176.01%)
$18,098.0
13.22%
5,307.0
2,255.0
$25,660.0
18.74%
100010.0
73.04%
77,283.0
56.44%
22,727.0
16.60%
5,964.0
4,092.0
2.99%
$15,604.0
2012A
134,946.0
(1.44%)
108,923.0
80.72%
$26,023.0
19.28%
9,006.0
6.67%
2,468.0
1.83%
3,655.0
2.71%
1,004.0
.74%
7.0
.08%
70.0
.84%
$9,813.0
7.27%
713.0
.56%
3,027.0
36.27%
1,185.0
.88%
4,888.0
3.62%
2,056.0
42.06%
$2,832.0
2.10%
6,123.0
413.1
$9,368.1
6.94%
109556.0
81.19%
78,323.0
58.04%
31,233.0
23.14%
8,506.0
4,293.0
3.18%
($3,430.9)
2013E
148,277.6
9.88%
122,772.0
82.80%
$25,505.6
17.20%
9,766.0
6.59%
2,364.8
1.59%
3,242.5
2.19%
876.4
.59%
26.3
.30%
87.6
1.00%
$9,142.1
6.17%
209.3
.15%
2,892.1
33.00%
697.6
.47%
8,235.2
5.55%
2,977.6
36.16%
$5,257.6
3.55%
5,607.2
133.6
$10,998.4
7.42%
120468.4
81.25%
83,731.0
56.47%
36,737.5
24.78%
5,504.5
5,462.9
3.68%
$31.0
2014E
2015E
154,000.9
161,967.3
3.86%
5.17%
127,410.2
134,516.2
82.73%
83.05%
$26,590.7
$27,451.1
17.27%
16.95%
9,934.7
9,095.1
6.45%
5.62%
2,501.8
2,636.8
1.62%
1.63%
3,239.0
3,360.6
2.10%
2.07%
896.9
910.8
.58%
.56%
26.9
27.3
.30%
.30%
89.7
91.1
1.00%
1.00%
$9,901.7
$11,329.3
6.43%
6.99%
217.5
382.1
.15%
.25%
2,959.9
2,823.5
33.00%
31.00%
725.2
764.3
.47%
.47%
8,959.0
10,182.9
5.82%
6.29%
3,375.6
3,774.5
37.68%
37.07%
$5,583.4
$6,408.3
3.63%
3.96%
5,740.8
5,997.4
135.6
240.5
$11,459.8
$12,646.3
7.44%
7.81%
124200.9
128870.5
80.65%
79.57%
86,002.2
88,036.9
55.85%
54.35%
38,198.7
40,833.6
24.80%
25.21%
1,461.2
2,634.9
6,548.8
5,220.0
4.25%
3.22%
UOIG $4,791.4
23
$3,449.7
$3,261.6
$4,283.3
2016E
169,025.1
4.36%
140,620.5
83.20%
$28,404.6
16.80%
10,946.0
6.48%
2,708.5
1.60%
3,024.6
1.79%
922.9
.55%
27.7
.30%
92.3
1.00%
$10,682.5
6.32%
399.5
.25%
2,768.7
30.00%
799.0
.47%
9,484.0
5.61%
3,512.2
37.03%
$5,971.8
3.53%
5,733.2
251.5
$11,956.5
7.07%
131130.8
77.58%
89,705.1
53.07%
41,425.7
24.51%
592.2
5,056.6
2.99%
$6,307.7
$5,331.5
2017E
176,262.9
4.28%
145,548.2
82.57%
$30,714.7
17.43%
11,677.2
6.62%
2,765.0
1.57%
2,467.0
1.40%
944.5
.54%
28.3
.30%
94.5
1.00%
$12,738.1
7.23%
417.0
.25%
2,833.6
30.00%
834.1
.47%
11,487.0
6.52%
3,970.0
34.56%
$7,517.0
4.26%
5,232.0
272.9
$13,021.9
7.39%
135279.9
76.75%
92,013.9
52.20%
43,266.0
24.55%
1,840.3
6,529.5
3.70%
$4,652.2
$3,717.8
2018E
184,616.3
4.74%
153,526.2
83.16%
$31,090.0
16.84%
11,984.7
6.49%
2,795.0
1.51%
2,350.6
1.27%
965.8
.52%
29.0
.30%
96.6
1.00%
$12,868.5
6.97%
437.4
.25%
2,897.3
30.00%
874.8
.47%
11,556.3
6.26%
4,089.8
35.39%
$7,466.5
4.04%
5,145.5
282.6
$12,894.6
6.98%
139331.9
75.47%
94,612.1
51.25%
44,719.9
24.22%
1,453.9
6,147.7
3.33%
$5,293.1
$3,999.4
University of Oregon Investment Group
February 14, 2014
Appendix 7 – Revenue Model
Automotive Revenue Model
(Revenues in $millions, Unit Sales in $thousands)
Ford North America Wholesale Units
United States Unit Sales
% YoY Unit Sales Growth
United States Revenue
% YoY Growth
% of North America Unit Sales
Canada Unit Sales
% YoY Unit Sales Growth
Canada Revenue
% YoY Growth
% North America Unit Sales
Mexico Unit Sales
% YoY Unit Sales Growth
Mexico Revenue
% YoY Growth
% North America Unit Sales
Total Unit Sales
% YoY Growth
Revenue/Vehicle
% YoY Growth
Total Ford North America Revenue
% YoY Growth
Ford South America Wholesale Units
Brazil Unit Sales
% YoY Unit Sales Growth
Brazil Revenue
% YoY Growth
% South America Unit Sales
Argentina Unit Sales
% YoY Unit Sales Growth
Argentina Revenue
% YoY Growth
% South America Unit Sales
Other Unit Sales
% YoY Unit Sales Growth
Other Revenue
% YoY Growth
% South America Unit Sales
Total Unit Sales
% YoY Growth
Revenue/Vehicle
% YoY Growth
Total Ford South America Revenue
% YoY Growth
2008A
2009A
2010A
2011A
2012A
2013A
2014E
2015E
2016E
2017E
2018E
1,825.0
(22.77%)
44,842.4
(25.98%)
84.61%
198.0
(18.52%)
4,865.1
(21.91%)
9.18%
134.0
(4.29%)
3,292.5
(8.26%)
6.21%
2,157.0
(25.36%)
24.6
(4.16%)
53,000.0
(24.72%)
1,563.0
(14.36%)
42,048.6
(6.23%)
83.76%
223.0
12.63%
5,999.2
23.31%
11.95%
80.0
(40.30%)
2,152.2
(34.63%)
4.29%
1,866.0
(13.49%)
26.9
9.49%
50,200.0
(5.28%)
1,947.0
24.57%
54,209.6
28.92%
84.18%
278.0
24.66%
7,740.3
29.02%
12.02%
88.0
10.00%
2,450.2
13.84%
3.80%
2,313.0
23.95%
27.8
3.49%
64,400.0
28.29%
2,224.0
14.23%
64,526.1
19.03%
86.03%
273.0
(1.80%)
7,920.7
2.33%
10.56%
88.0
0.00%
2,553.2
4.21%
3.40%
2,585.0
11.76%
29.0
4.21%
75,000.0
16.46%
2,302.0
3.51%
68,990.9
6.92%
86.35%
281.0
2.93%
8,421.6
6.32%
10.54%
83.0
(5.68%)
2,487.5
(2.57%)
3.11%
2,666.0
3.13%
30.0
3.30%
79,900.0
6.53%
2,693.3
17.00%
77,692.4
12.61%
87.22%
303.5
8.00%
8,754.2
3.95%
9.83%
91.3
10.00%
2,633.7
5.88%
2.96%
3,088.1
15.83%
28.8
(3.75%)
89,080.3
11.49%
2,801.1
4.00%
81,204.1
4.52%
87.50%
308.0
1.50%
8,930.0
2.01%
9.62%
92.2
1.00%
2,673.3
1.51%
2.88%
3,201.3
3.67%
29.0
.50%
92,807.3
4.18%
2,899.1
3.50%
85,853.2
5.73%
87.72%
312.7
1.50%
9,258.8
3.68%
9.46%
93.1
1.00%
2,758.1
3.17%
2.82%
3,304.9
3.24%
29.6
2.15%
97,870.1
5.46%
2,957.1
2.00%
88,883.9
3.53%
87.78%
317.3
1.50%
9,538.6
3.02%
9.42%
94.3
1.25%
2,834.4
2.77%
2.80%
3,368.7
1.93%
30.1
1.50%
101,256.9
3.46%
3,031.0
2.50%
92,244.8
3.78%
87.88%
321.3
1.25%
9,778.6
2.52%
9.32%
96.7
2.50%
2,941.6
3.78%
2.80%
3,449.0
2.38%
30.4
1.25%
104,965.0
3.66%
3,106.8
2.50%
96,583.7
4.70%
87.93%
327.7
2.00%
10,188.6
4.19%
9.28%
98.7
2.15%
3,069.5
4.35%
2.79%
3,533.3
2.44%
31.1
2.15%
109,841.8
4.65%
297.0
15.12%
5,940.0
32.69%
68.28%
77.0
1,540.0
(95.43%)
17.70%
61.0
(40.78%)
1,220.0
(31.74%)
14.02%
435.0
(0.68%)
20.0
15.26%
8,700.0
14.47%
336.0
13.13%
6,067.7
2.15%
75.85%
66.0
(14.29%)
1,191.9
(22.61%)
14.90%
41.0
(32.79%)
740.4
(39.31%)
9.26%
443.0
1.84%
18.1
(9.71%)
8,000.0
(8.05%)
358.0
6.55%
7,247.9
19.45%
73.21%
85.0
28.79%
1,720.9
44.38%
17.38%
46.0
12.20%
931.3
25.78%
9.41%
489.0
10.38%
20.2
12.11%
9,900.0
23.75%
346.0
(3.35%)
7,521.7
3.78%
68.38%
105.0
23.53%
2,282.6
32.64%
20.75%
55.0
19.57%
1,195.7
28.39%
10.87%
506.0
3.48%
21.7
7.38%
11,000.0
11.11%
336.0
(2.89%)
6,814.5
(9.40%)
67.47%
107.0
1.90%
2,170.1
(4.93%)
21.49%
55.0
0.00%
1,115.5
-6.71%
11.04%
498.0
(1.58%)
20.3
(6.71%)
10,100.0
(8.18%)
361.2
7.50%
7,288.9
6.96%
67.17%
119.3
11.50%
2,407.5
10.94%
22.19%
57.2
4.00%
1,154.3
3.48%
10.64%
537.7
7.97%
20.2
(0.50%)
10,850.7
7.43%
368.4
2.00%
7,471.9
2.51%
67.32%
119.9
0.50%
2,431.7
1.00%
21.91%
58.9
3.00%
1,194.9
3.52%
10.77%
547.2
1.77%
20.3
0.50%
11,098.4
2.28%
379.5
3.00%
7,773.0
4.03%
67.75%
120.5
0.50%
2,468.3
1.50%
21.52%
60.1
2.00%
1,230.9
3.02%
10.73%
560.1
2.34%
20.5
1.00%
11,472.2
3.37%
386.1
1.75%
8,063.2
3.73%
67.70%
122.9
2.00%
2,566.7
3.99%
21.55%
61.3
2.00%
1,280.0
3.99%
10.75%
570.3
1.83%
20.9
1.95%
11,910.0
3.82%
391.3
1.35%
8,417.3
4.39%
67.76%
123.8
0.75%
2,663.6
3.77%
21.44%
62.4
1.75%
1,341.5
4.80%
10.80%
577.5
1.26%
21.5
3.00%
12,422.3
4.30%
397.4
1.55%
8,740.0
3.83%
67.65%
126.3
2.00%
2,778.0
4.29%
21.50%
63.7
2.15%
1,401.2
4.45%
10.85%
587.4
1.71%
22.0
2.25%
12,919.2
4.00%
UOIG 24
University of Oregon Investment Group
February 14, 2014
Appendix 7 – Revenue Model (contd.)
Automotive Revenue Model
(Revenues in $millions, Unit Sales in $thousands)
Ford Europe Wholesale Units
Britain Unit Sales
% YoY Unit Sales Growth
Britain Revenue
% YoY Growth
% European Unit Sales
Germany Unit Sales
% YoY Unit Sales Growth
Germany Revenue
% YoY Growth
% European Unit Sales
Turkey Unit Sales
% YoY Unit Sales Growth
Turkey Revenue
% YoY Growth
% European Unit Sales
Russia Unit Sales
% YoY Unit Sales Growth
Russia Revenue
% YoY Growth
% European Unit Sales
Other Unit Sales
% YoY Unit Sales Growth
Other Revenue
% YoY Growth
% European Unit Sales
Total Unit Sales
% YoY Growth
Revenue/Vehicle
% YoY Growth
Total Ford Europe Revenue
% YoY Growth
2008A
415.0
0.24%
8,892.9
13.50%
22.80%
250.0
8.70%
5,357.1
23.07%
13.74%
78.0
(22.00%)
1,671.4
(11.69%)
4.29%
183.0
1.67%
3,921.4
15.11%
10.05%
894.0
(10.06%)
19,157.1
1.83%
49.12%
1,820.0
(5.11%)
21.4
13.22%
39,000.0
7.44%
2009A
354.0
(14.70%)
6,614.9
(25.62%)
22.58%
286.0
14.40%
5,344.3
(0.24%)
18.24%
79.0
1.28%
1,476.2
(11.68%)
5.04%
74.0
(59.56%)
1,382.8
(64.74%)
4.72%
775.0
(13.31%)
14,481.8
(24.41%)
49.43%
1,568.0
(13.85%)
18.7
(12.80%)
29,300.0
(24.87%)
2010A
341.0
(3.67%)
6,395.1
(3.32%)
21.68%
216.0
(24.48%)
4,050.9
(24.20%)
13.73%
130.0
64.56%
2,438.0
65.15%
8.26%
93.0
25.68%
1,744.1
26.13%
5.91%
793.0
2.32%
14,871.9
2.69%
50.41%
1,573.0
0.32%
18.8
0.36%
29,500.0
0.68%
2011A
342.0
0.29%
7,215.7
12.83%
21.35%
250.0
15.74%
5,274.7
30.21%
15.61%
140.0
7.69%
2,953.8
21.16%
8.74%
124.0
33.33%
2,616.2
50.00%
7.74%
746.0
(5.93%)
15,739.6
5.83%
46.57%
1,602.0
1.84%
21.1
12.50%
33,800.0
14.58%
2012A
337.0
(1.46%)
6,625.4
(8.18%)
24.91%
208.0
(16.80%)
4,089.3
(22.47%)
15.37%
108.0
(22.86%)
2,123.3
(28.12%)
7.98%
134.0
8.06%
2,634.4
0.70%
9.90%
566.0
(24.13%)
11,127.6
(29.30%)
41.83%
1,353.0
(15.54%)
19.7
(6.82%)
26,600.0
(21.30%)
2013A
348.8
3.50%
7,148.8
7.90%
25.64%
205.9
(1.00%)
4,220.4
3.21%
15.14%
103.1
(4.50%)
2,113.9
(0.44%)
7.58%
142.0
6.00%
2,911.2
10.51%
10.44%
560.3
(1.00%)
11,484.5
3.21%
41.19%
1,360.2
0.53%
20.5
4.25%
27,878.8
4.81%
2014E
354.0
1.50%
7,292.3
2.01%
25.69%
208.0
1.00%
4,284.0
1.51%
15.09%
103.7
0.50%
2,135.1
1.00%
7.52%
146.3
3.00%
3,013.5
3.52%
10.62%
565.9
1.00%
11,657.3
1.50%
41.07%
1,377.9
1.30%
20.6
0.50%
28,382.2
1.81%
UOIG 25
2015E
375.3
6.00%
7,807.1
7.06%
26.42%
214.4
3.10%
4,460.9
4.13%
15.10%
104.2
0.50%
2,167.2
1.51%
7.33%
150.7
3.00%
3,135.0
4.03%
10.61%
575.8
1.75%
11,979.9
2.77%
40.54%
1,420.4
3.08%
20.8
1.00%
29,550.2
4.12%
2016E
394.0
5.00%
8,443.4
8.15%
26.90%
221.9
3.50%
4,755.6
6.60%
15.15%
104.7
0.50%
2,243.4
3.52%
7.15%
153.7
2.00%
3,293.6
5.06%
10.49%
590.2
2.50%
12,647.8
5.58%
40.30%
1,464.6
3.11%
21.4
3.00%
31,383.8
6.21%
2017E
407.8
3.50%
8,913.7
5.57%
27.29%
227.0
2.30%
4,962.3
4.35%
15.19%
105.7
1.00%
2,311.2
3.02%
7.08%
157.5
2.50%
3,443.5
4.55%
10.54%
596.1
1.00%
13,029.8
3.02%
39.89%
1,494.3
2.03%
21.9
2.00%
32,660.3
4.07%
2018E
417.0
2.25%
9,296.5
4.30%
27.20%
232.7
2.50%
5,188.0
4.55%
15.18%
107.3
1.50%
2,392.8
3.53%
7.00%
162.3
3.00%
3,617.7
5.06%
10.58%
614.0
3.00%
13,689.1
5.06%
40.05%
1,533.3
2.61%
22.3
2.00%
34,184.1
4.67%
University of Oregon Investment Group
February 14, 2014
Appendix 7 – Revenue Model (contd.)
Automotive Revenue Model
(Revenues in $millions, Unit Sales in $thousands)
Ford Asia Pacific Africa Wholesale Units
China Unit Sales
% YoY Unit Sales Growth
China Revenue
% YoY Growth
% Asia Pacific Africa Unit Sales
India Unit Sales
% YoY Unit Sales Growth
India Revenue
% YoY Growth
% Asia Pacific Africa Unit Sales
Australia Unit Sales
% YoY Unit Sales Growth
Australia Revenue
% YoY Growth
% Asia Pacific Africa Unit Sales
South Africa Unit Sales
% YoY Unit Sales Growth
South Africa Revenue
% YoY Growth
% Asia Pacific Africa Unit Sales
ASEAN Unit Sales
% YoY Unit Sales Growth
ASEAN Revenue
% YoY Growth
% Asia Pacific Africa Unit Sales
Other Unit Sales
% YoY Unit Sales Growth
Other Revenue
% YoY Growth
% Asia Pacific Africa Unit Sales
Total Unit Sales
% YoY Growth
Revenue/Vehicle
% YoY Growth
Total Asia Pacific Africa Revenue
% YoY Growth
Ford Sold/Discontinued Brand Units
Units
% YoY Growth
Total Sold/Discontinued Brand Revenue
% YoY Growth
Total Global Unit Sales
% YoY Growth
Total Global Automotive Revenue
% YoY Growth
2008A
2009A
2010A
2011A
2012A
2013A
2014E
2015E
2016E
2017E
2018E
251.0
23.65%
3,019.5
13.68%
47.18%
29.0
(25.64%)
348.9
(31.63%)
5.45%
102.0
(5.56%)
1,227.1
(13.16%)
19.17%
51.0
(16.39%)
613.5
(23.13%)
9.59%
36.0
(7.69%)
433.1
(15.13%)
6.77%
63.0
(25.88%)
757.9
(31.85%)
11.84%
532.0
(.56%)
12.0
(8.06%)
6,400.0
(8.57%)
345.0
37.45%
3,198.7
5.93%
57.12%
30.0
3.45%
278.1
(20.27%)
4.97%
92.0
(9.80%)
853.0
(30.49%)
15.23%
38.0
(25.49%)
352.3
(42.58%)
6.29%
38.0
5.56%
352.3
(18.65%)
6.29%
61.0
(3.17%)
565.6
(25.38%)
10.10%
604.0
13.53%
9.3
(22.93%)
5,600.0
(12.50%)
483.0
40.00%
4,265.2
33.34%
57.64%
84.0
180.00%
741.8
166.68%
10.02%
104.0
13.04%
918.4
7.67%
12.41%
45.0
18.42%
397.4
12.79%
5.37%
51.0
34.21%
450.4
27.83%
6.09%
71.0
16.39%
627.0
10.86%
8.47%
838.0
38.74%
8.8
(4.76%)
7,400.0
32.14%
519.0
7.45%
4,838.6
13.45%
57.60%
96.0
14.29%
895.0
20.66%
10.65%
83.0
(20.19%)
773.8
(15.74%)
9.21%
49.0
8.89%
456.8
14.96%
5.44%
74.0
45.10%
689.9
53.19%
8.21%
80.0
12.68%
745.8
18.96%
8.88%
901.0
7.52%
9.3
5.58%
8,400.0
13.51%
627.0
20.81%
6,069.7
25.44%
60.70%
87.0
(9.38%)
842.2
(5.90%)
8.42%
94.0
13.25%
910.0
17.60%
9.10%
49.0
0.00%
474.3
3.84%
4.74%
95.0
28.38%
919.7
33.30%
9.20%
81.0
1.25%
784.1
5.13%
7.84%
1,033.0
14.65%
9.7
3.84%
10,000.0
19.05%
846.5
35.00%
7,579.5
24.88%
64.76%
105.3
21.00%
942.6
11.93%
8.05%
108.1
15.00%
968.0
6.38%
8.27%
52.9
8.00%
473.9
(.10%)
4.05%
109.3
15.00%
978.3
6.38%
8.36%
85.1
5.00%
761.6
(2.88%)
6.51%
1,307.0
26.53%
9.0
(7.50%)
11,703.9
17.04%
931.1
10.00%
8,358.3
10.28%
65.59%
111.6
6.00%
1,001.7
6.26%
7.86%
115.7
7.00%
1,038.3
7.27%
8.15%
53.4
1.00%
479.8
1.25%
3.77%
121.3
11.00%
1,088.6
11.28%
8.54%
86.5
1.75%
776.8
2.00%
6.10%
1,419.6
8.61%
9.0
.25%
12,743.6
8.88%
996.3
7.00%
9,211.7
10.21%
65.95%
115.2
3.20%
1,064.8
6.30%
7.62%
118.0
2.00%
1,090.9
5.06%
7.81%
54.1
1.15%
499.9
4.18%
3.58%
139.5
15.00%
1,289.5
18.45%
9.23%
87.6
1.25%
810.2
4.29%
5.80%
1,510.6
6.41%
9.2
3.00%
13,966.8
9.60%
1,066.0
7.00%
10,147.3
10.16%
66.56%
119.8
4.00%
1,140.0
7.07%
7.48%
122.2
3.55%
1,162.9
6.60%
7.63%
54.7
1.25%
521.1
4.24%
3.42%
150.6
8.00%
1,433.7
11.19%
9.40%
88.3
.75%
840.3
3.72%
5.51%
1,601.6
6.03%
9.5
2.95%
15,245.3
9.15%
1,140.6
7.00%
11,291.9
11.28%
67.33%
124.5
3.95%
1,232.5
8.11%
7.35%
124.6
2.00%
1,233.6
6.08%
7.36%
55.3
1.00%
547.3
5.04%
3.26%
158.9
5.50%
1,573.0
9.72%
9.38%
90.0
2.00%
891.4
6.08%
5.32%
1,694.0
5.77%
9.9
4.00%
16,769.8
10.00%
1,197.7
5.00%
12,194.4
7.99%
67.70%
129.3
3.85%
1,316.4
6.81%
7.31%
128.0
2.75%
1,303.7
5.68%
7.24%
56.2
1.65%
572.2
4.55%
3.18%
165.3
4.00%
1,682.6
6.96%
9.34%
92.7
3.00%
944.3
5.94%
5.24%
1,769.2
4.44%
10.2
2.85%
18,013.6
7.42%
484.0
(37.47%)
21,700.0
21.91%
5,428.0
(3.71%)
128,800.0
(7.40%)
324.0
(33.06%)
12,400.0
(42.86%)
4,805.0
(11.48%)
105,500.0
(18.09%)
(100.00%)
8,100.0
5,213.0
8.49%
119,300.0
13.08%
5,594.0
7.31%
128,200.0
7.46%
5,550.0
(.79%)
126,600.0
(1.25%)
6,293.1
13.39%
139,513.7
10.20%
6,546.1
4.02%
145,031.5
3.96%
6,795.9
3.82%
152,859.3
5.40%
7,005.2
3.08%
159,796.0
4.54%
7,214.8
2.99%
166,817.4
4.39%
7,423.2
2.89%
174,958.7
4.88%
UOIG 26
University of Oregon Investment Group
February 14, 2014
Appendix 7 – Revenue Model (contd.)
Financial Services Revenue Model
(Revenues in $millions, Unit Sales in $thousands)
Financing Revenue
Operating Leases
% YoY Growth
Retail
% YoY Growth
Interest Supplements and Other Support Costs
% YoY Growth
Wholesale
% YoY Growth
Other
% YoY Growth
Other Revenue
Insurance Premiums Earned
% YoY Growth
Other Income, Net
% YoY Growth
Total Financing Revenue
% YoY Growth
2008A
2009A
2010A
2011A
2012A
2013A
2014E
2015E
2016E
2017E
2018E
6,519.0
2.77%
3,270.0
(5.90%)
4,774.0
3.96%
1,721.0
(19.28%)
133.0
75.00%
4,879.0
(25.16%)
2,940.0
(10.09%)
3,725.0
(21.97%)
921.0
(46.48%)
174.0
30.83%
3,312.0
(32.12%)
2,335.0
(20.58%)
3,226.0
(13.40%)
894.0
(2.93%)
59.0
(66.09%)
2,454.0
(25.91%)
2,059.0
(11.82%)
2,800.0
(13.21%)
952.0
6.49%
56.0
(5.08%)
2,689.0
9.58%
1,889.0
(8.26%)
2,401.0
(14.25%)
920.0
(3.36%)
56.0
0.00%
3,409.1
26.78%
1,851.2
(2.00%)
2,160.9
(10.00%)
910.8
(1.00%)
56.6
1.00%
3,545.5
4.00%
1,906.8
3.00%
2,139.3
(1.00%)
942.7
3.50%
58.0
2.50%
3,620.3
2.11%
1,916.3
0.50%
2,160.7
1.00%
971.0
3.00%
58.6
1.10%
3,719.8
2.75%
1,938.3
1.15%
2,135.8
(1.15%)
985.5
1.50%
59.8
2.00%
3,837.0
3.15%
1,957.7
1.00%
2,199.9
3.00%
994.9
0.95%
61.0
2.00%
3,932.9
2.50%
1,999.8
2.15%
2,249.4
2.25%
1,012.3
1.75%
62.4
2.25%
140.0
(17.16%)
957.0
(45.41%)
17,514.0
(5.53%)
100.0
(28.57%)
662.0
(30.83%)
13,401.0
(23.48%)
98.0
(2.00%)
223.0
(66.31%)
10,147.0
(24.28%)
100.0
2.04%
302.0
35.43%
8,723.0
(14.03%)
105.0
5.00%
286.0
(5.30%)
8,346.0
(4.32%)
118.7
13.00%
256.7
(10.25%)
8,763.9
5.01%
121.0
2.00%
256.2
(0.20%)
8,969.4
2.34%
123.7
2.20%
257.5
0.50%
9,108.0
1.55%
124.3
0.50%
265.4
3.10%
9,229.1
1.33%
125.5
1.00%
269.4
1.50%
9,445.5
2.34%
126.0
0.35%
274.8
2.00%
9,657.6
2.25%
2008A
128,800.0
(16.58%)
17,514.0
5.39%
146,314.0
(5.22%)
2009A
105,500.0
(18.09%)
13,401.0
(23.48%)
118,901.0
(18.74%)
2010A
119,300.0
13.08%
10,147.0
(24.28%)
129,447.0
8.87%
2011A
128,200.0
7.46%
8,723.0
(14.03%)
136,923.0
5.78%
2012A
126,600.0
(1.25%)
8,346.0
(4.32%)
134,946.0
(1.44%)
2013A
139,513.7
10.20%
8,763.9
5.01%
148,277.6
9.88%
2014E
145,031.5
3.96%
8,969.4
2.34%
154,000.9
3.86%
2015E
152,859.3
5.40%
9,108.0
1.55%
161,967.3
5.17%
2016E
159,796.0
4.54%
9,229.1
1.33%
169,025.1
4.36%
2017E
166,817.4
4.39%
9,445.5
2.34%
176,262.9
4.28%
2018E
174,958.7
4.88%
9,657.6
2.25%
184,616.3
4.74%
Ford Motor Company Total Revenue
($ in millions)
Automobile Revenue
% YoY Growth
Financing Revenue
% YoY Growth
Total Ford Motor Company Revenue
% YoY Growth
UOIG 27
University of Oregon Investment Group
February 14, 2014
Appendix 8 – Working Capital Model
Working Capital Model
($ in millions)
Total Automotive Revenue
Total Financial Services Revenue
Total Ford Motor Company Revenue
Current Assets
Automotive
Current Assets
Receivables, net
Days Sales Outstanding A/R
% of Automotive Revenue
Inventories
Days Inventory Outstanding
% of Automotive Revenue
Deferred Income Taxes Receivable
Days Deferred Taxes Outstanding
% of Automotive Revenue
Net Investment in Operating Leases
Days Outstanding
% of Automotive Revenue
Current Receivable from Financial Services
Days Outstanding
% of Automotive Revenue
Other Current Assets
Days Outstanding
% of Automotive Revenue
Total Automotive Current Assets
% of Automotive Revenue
Financial Services
Current Assets
Finance Receivables, net
Days Outstanding
% of Total Revenue
Net Investment in Operating Leases
Days Sales Outstanding A/R
% of Financial Services Revenue
Total Financial Services Current Assets
% Total Revenue
2010A
2011A
2012A
$128,800.0
$17,514.0
$146,314.0
2008A
$105,500.0
$13,401.0
$118,901.0
2009A
$119,300.0
$10,147.0
$129,447.0
$128,200.0
$8,723.0
$136,923.0
$126,600.0
$8,346.0
$134,946.0
$139,513.7
$8,763.9
$148,277.6
2013E
$145,031.5
$8,969.4
$154,000.9
2014E
$152,859.3
$9,108.0
$161,967.3
$159,796.0
$9,229.1
$169,025.1
$166,817.4
$9,445.5
$176,262.9
$174,958.7
$9,657.6
$184,616.3
3,464.0
8.7
2.69%
8,618.0
26.0
6.69%
302.0
0.9
0.23%
2,035.0
5.8
1.58%
4,032.0
11.5
3.13%
$18,451.0
14.33%
3,708.0
11.4
3.51%
5,450.0
20.9
5.17%
511.0
1.8
0.48%
2,568.0
8.9
2.43%
2,845.0
9.8
2.70%
$15,082.0
14.30%
3,992.0
11.3
3.35%
5,917.0
21.5
4.96%
359.0
1.1
0.30%
1,282.0
3.9
1.07%
1,700.0
5.2
1.42%
610.0
1.9
0.51%
$13,860.0
11.62%
4,219.0
11.2
3.29%
5,901.0
19.6
4.60%
1,791.0
5.1
1.40%
1,356.0
3.9
1.06%
878.0
2.5
0.68%
1,053.0
3.0
0.82%
$15,198.0
11.85%
5,361.0
14.5
4.23%
7,362.0
24.7
5.82%
3,488.0
10.1
2.76%
1,415.0
4.1
1.12%
1,124.0
3.2
0.89%
$18,750.0
14.81%
6,440.0
15.9
4.62%
8,370.8
24.9
6.00%
4,185.4
11.0
3.00%
2,696.5
7.1
1.93%
3,487.8
9.1
2.50%
$25,180.6
18.05%
5,275.0
12.5
3.64%
8,701.9
24.9
6.00%
4,350.9
11.0
3.00%
2,900.6
7.3
2.00%
3,625.8
9.1
2.50%
$24,854.3
17.14%
5,965.0
13.5
3.90%
9,935.9
27.0
6.50%
5,203.8
12.5
3.40%
3,057.2
7.3
2.00%
6,114.4
14.6
4.00%
$30,276.2
19.81%
6,410.0
13.8
4.01%
10,386.7
27.0
6.50%
3,195.9
7.3
2.00%
3,195.9
7.3
2.00%
3,994.9
9.1
2.50%
$27,183.5
17.01%
6,330.0
13.1
3.79%
10,843.1
27.2
6.50%
3,336.3
7.3
2.00%
3,336.3
7.3
2.00%
4,170.4
9.1
2.50%
$28,016.3
16.79%
6,975.7
13.8
3.99%
11,372.3
27.0
6.50%
3,499.2
7.3
2.00%
3,499.2
7.3
2.00%
4,374.0
9.1
2.50%
$29,720.3
16.99%
96,101.0
240.4
65.68%
23,120.0
57.8
132.01%
$119,221.0
81.48%
79,705.0
244.7
67.03%
15,062.0
46.2
112.39%
$94,767.0
79.70%
73,265.0
206.6
56.60%
10,393.0
29.3
102.42%
$83,658.0
64.63%
73,330.0
195.5
53.56%
11,482.0
30.6
131.63%
$84,812.0
61.94%
75,770.0
205.5
56.15%
15,036.0
40.8
180.16%
$90,806.0
67.29%
79,522.8
195.8
53.63%
15,765.0
38.8
179.89%
$95,287.8
64.26%
82,668.0
195.9
53.68%
16,678.6
39.5
185.95%
$99,346.6
64.51%
81,015.4
183.1
50.02%
17,578.8
39.7
193.00%
$98,594.3
60.87%
85,890.4
185.5
50.82%
18,057.0
39.0
195.65%
$103,947.3
61.50%
88,830.3
183.9
50.40%
18,433.3
38.2
195.16%
$107,263.6
60.85%
90,978.5
179.9
49.28%
18,633.1
36.8
192.94%
$109,611.6
59.37%
UOIG 28
2015E
2016E
2017E
2018E
University of Oregon Investment Group
February 14, 2014
Appendix 8 – Working Capital Model (contd.)
Total Financial Services Current Assets
% of Revenue
Long Term Assets
Net Automotive PP&E Beginning
Net Financial Services PP&E Beginning
Capital Expenditures
Acquistions, Less Goodwill
Depreciation and Amortization
Other
Net PP&E Ending
Total Current Assets & Net PP&E
% of Revenue
Current Liabilities
Automotive
Current Liabilities
Trade Payables
Days Payable Outstanding
% of Automotive Revenue
Other Payables
Days Payable Outstanding
% of Automotive Revenue
Accrued Liabilities and Deferred Revenue
Days Outstanding
% of Automotive Revenue
Deferred Income Taxes Payable
% of Automotive Revenue
Debt Payable Within One Year
% of Automotive Revenue
Current Payable to Financial Services
% of Automotive Revenue
Total Current Automotive Liabilities
% of Revenue
Financial Services
Current Liabilities
Payables
Days Payable Outstanding
% of Financial Services Revenue
Short-Term Debt
% of Financial Services Revenue
Current Portion of Long-Term Debt
% of Financial Services Liabilities
Deferred Income Taxes
% of Financial Services Revenue
Other Liabilities and Deferred Income
Days Outstanding
% of Financial Services Revenue
Total Current Financial Services Liabilities
% of Total Revenue
Total Current Liabilities
% of Total Revenue
$119,221.0
680.72%
$94,767.0
707.16%
$83,658.0
824.46%
$84,812.0
972.28%
$90,806.0
1088.02%
$95,287.8
1087.27%
$99,346.6
1107.62%
$98,594.3
1082.51%
$103,947.3
1126.31%
$107,263.6
1135.61%
$109,611.6
1134.98%
35,979.0
6,620.0
(5,787.0)
8,447.1
28,352.0
$166,024.0
113.47%
28,352.0
4,545.0
(3,917.0)
4,384.0
24,596.0
$134,445.0
113.07%
24,596.0
4,066.0
(4,579.0)
1,056.0
23,027.0
$120,545.0
93.12%
23,027.0
142.0
4,272.0
(3,613.0)
1,599.0
22,229.0
$122,239.0
89.28%
22,229.0
129.0
5,459.0
(3,698.0)
2,875.0
24,942.0
$134,498.0
99.67%
24,942.0
139.6
5,441.0
(5,607.2)
24,915.4
$145,383.9
98.05%
24,915.4
149.8
6,526.4
(5,740.8)
25,850.9
$150,051.7
97.44%
25,850.9
154.6
5,197.2
(5,997.4)
25,205.3
$154,075.7
95.13%
25,205.3
164.4
5,033.6
(5,733.2)
24,670.1
$155,800.9
92.18%
24,670.1
173.4
6,505.9
(5,232.0)
26,117.4
$161,397.2
91.57%
26,117.4
184.2
6,123.6
(5,145.5)
27,279.7
$166,611.6
90.25%
10,635.0
32.1
8.26%
2,167.0
6.5
1.68%
32,395.0
119.4
25.15%
2,790.0
2.17%
1,191.0
0.92%
$49,178.0
38.18%
11,210.0
43.0
10.63%
2,148.0
8.2
2.04%
18,465.0
68.4
17.50%
3,119.0
2.96%
2,095.0
1.99%
$37,037.0
35.11%
13,466.0
48.9
11.29%
1,544.0
5.6
1.29%
17,065.0
83.2
14.30%
392.0
0.33%
2,049.0
1.72%
$34,516.0
28.93%
14,015.0
46.6
10.93%
2,734.0
9.1
2.13%
15,003.0
76.0
11.70%
40.0
0.03%
1,033.0
0.81%
$32,825.0
25.60%
15,107.0
50.8
11.93%
3,044.0
10.2
2.40%
15,358.0
71.0
12.13%
81.0
0.06%
1,386.0
1.09%
252.0
0.20%
$35,228.0
27.83%
15,346.5
45.6
11.00%
3,348.3
10.0
2.40%
15,695.3
66.2
11.25%
83.7
0.06%
2,188.1
1.57%
697.6
0.50%
$37,359.5
26.78%
15,228.3
43.6
10.50%
4,350.9
12.5
3.00%
15,590.9
66.1
10.75%
87.0
0.06%
2,231.0
1.54%
725.2
0.50%
$38,213.3
26.35%
16,050.2
43.7
10.50%
4,585.8
12.5
3.00%
15,668.1
65.7
10.25%
91.7
0.06%
2,290.8
1.50%
764.3
0.50%
$39,450.9
25.81%
16,778.6
43.6
10.50%
4,793.9
12.4
3.00%
15,979.6
66.8
10.00%
95.9
0.06%
2,343.7
1.47%
799.0
0.50%
$40,790.6
25.53%
17,515.8
43.9
10.50%
4,587.5
11.5
2.75%
16,264.7
68.6
9.75%
100.1
0.06%
2,398.0
1.44%
1,668.2
1.00%
$42,534.2
25.50%
18,370.7
43.6
10.50%
4,811.4
11.4
2.75%
16,533.6
67.8
9.45%
105.0
0.06%
2,460.6
1.41%
1,312.2
0.75%
$43,593.4
24.92%
1,970.0
41.2
11.25%
20,085.0
114.68%
42,504.0
29.86%
3,280.0
18.73%
6,184.0
129.2
35.31%
$74,023.0
50.59%
$123,201.0
84.20%
1,236.0
33.7
9.22%
15,825.0
118.09%
26,045.0
23.87%
1,735.0
12.95%
4,884.0
133.0
36.45%
$49,725.0
41.82%
$86,762.0
72.97%
1,352.0
48.6
13.32%
13,656.0
134.58%
25,962.0
27.73%
1,505.0
14.83%
3,764.0
135.4
37.09%
$46,239.0
35.72%
$80,755.0
62.38%
975.0
40.8
11.18%
16,072.0
184.25%
22,653.0
24.30%
1,301.0
14.91%
3,457.0
144.7
39.63%
$44,458.0
32.47%
$77,283.0
56.44%
1,157.0
50.7
13.86%
17,406.0
208.55%
19,345.0
19.91%
1,687.0
20.21%
3,500.0
153.5
41.94%
$43,095.0
31.93%
$78,323.0
58.04%
1,139.3
47.5
13.00%
18,754.8
214.00%
20,999.9
21.50%
1,971.9
22.50%
3,505.6
146.0
40.00%
$46,371.5
31.27%
$83,731.0
56.47%
1,345.4
54.8
15.00%
19,194.5
214.00%
21,598.3
21.50%
2,063.0
23.00%
3,587.7
146.0
40.00%
$47,788.8
31.03%
$86,002.2
55.85%
1,366.2
54.9
15.00%
19,491.1
214.00%
21,990.7
21.50%
2,094.8
23.00%
3,643.2
146.4
40.00%
$48,586.0
30.00%
$88,036.9
54.35%
1,384.4
54.8
15.00%
19,750.2
214.00%
21,965.6
21.50%
2,122.7
23.00%
3,691.6
146.0
40.00%
$48,914.4
28.94%
$89,705.1
53.07%
1,416.8
54.8
15.00%
20,402.2
216.00%
21,993.3
21.50%
1,889.1
20.00%
3,778.2
146.0
40.00%
$49,479.6
28.07%
$92,013.9
52.20%
1,545.2
58.4
16.00%
20,860.4
216.00%
22,528.8
21.50%
2,221.2
23.00%
3,863.0
146.0
40.00%
$51,018.7
27.63%
$94,612.1
51.25%
UOIG 29
University of Oregon Investment Group
February 14, 2014
Appendix 9 – Discounted Cash Flows Analysis Assumptions
Discounted Free Cash Flow Assumptions
Tax Rate
Risk Free Rate
Beta
Market Risk Premium
Considerations
35.39% Terminal Growth Rate
2.67% Terminal Value
3.00%
265,954
1.29 PV of Terminal Value
141,030
7.00% Sum of PV Free Cash Flows
41,519
% Equity
35.61% Firm Value
182,550
% Debt
64.39% Total Debt
111,228
Cost of Debt
3.84% Cash & Cash Equivalents
37,642
CAPM
11.71% Market Capitalization
71,322
WACC
5.77% Fully Diluted Shares
3,874
Terminal Risk-Free Rate
3.69% Implied Price
$18.41
Terminal CAPM
12.73% Current Price
$14.80
Terminal WACC
6.55% Undervalued
24.41%
Final Price Target
Discounted Cash Flow
Forward Comparable Analysis
Implied Price
Weight
$18.41
$15.66
Price Target
Current Price
Undervalued
50%
50%
$17.04
14.80
15.12%
UOIG 30
University of Oregon Investment Group
February 14, 2014
Appendix 10 –Sensitivity Analysis
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
17
2.0%
2.5%
3.0%
3.5%
4.0%
15.12%
2.00%
2.50%
3.00%
3.50%
4.00%
1.09
$14.97
$17.95
$22.25
$28.98
$41.03
1.09
1.14%
21.29%
50.34%
95.82%
177.22%
1.19
$13.42
$15.91
$19.39
$24.59
$33.23
1.19
(9.33%)
7.48%
30.99%
66.15%
124.50%
1.29
$12.07
$14.18
$17.04
$21.16
$27.63
1.29
(18.42%)
(4.22%)
15.12%
43.00%
86.67%
1.39
$10.90
$12.69
$15.08
$18.42
$23.41
1.39
(26.38%)
(14.26%)
1.88%
24.44%
58.19%
1.49
$9.85
$11.40
$13.42
$16.16
$20.13
1.49
(33.41%)
(22.98%)
(9.35%)
9.22%
35.98%
Adjusted Beta
Adjusted Beta
Terminal Growth Rate
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
17
2.0%
2.5%
3.0%
3.5%
4.0%
0
2.0%
2.5%
3.0%
3.5%
4.0%
3.77%
$27.68
$39.03
$65.22
$190.15
($217.06)
3.77%
87.03%
163.74%
340.69%
1184.81%
(1566.63%)
4.77%
$17.15
$21.24
$27.64
$39.10
$65.55
4.77%
15.90%
43.51%
86.77%
164.22%
342.88%
5.77%
$12.07
$14.18
$17.04
$21.16
$27.63
5.77%
(18.42%)
(4.22%)
15.12%
43.00%
86.67%
6.77%
$9.02
$10.31
$11.93
$14.05
$16.94
6.77%
(39.02%)
(30.35%)
(19.37%)
(5.03%)
14.49%
7.77%
$6.96
$7.83
$8.88
$10.17
$11.81
7.77%
(52.98%)
(47.12%)
(40.03%)
(31.27%)
(20.19%)
WACC
WACC
Terminal Growth Rate
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
17
2.3%
2.3%
3.0%
3.8%
4.5%
15.12%
2.25%
2.25%
3.00%
3.75%
4.50%
25.39%
$11.66
$11.66
$14.99
$20.53
$31.56
25.39%
(21.19%)
(21.19%)
1.31%
38.72%
113.24%
30.39%
$12.33
$12.33
$15.97
$22.16
$35.04
30.39%
(16.67%)
(16.67%)
7.91%
49.74%
136.74%
35.39%
$13.05
$13.05
$17.04
$23.99
$39.20
35.39%
(11.83%)
(11.83%)
15.12%
62.13%
164.86%
40.39%
$13.82
$13.82
$18.21
$26.07
$44.27
40.39%
(6.62%)
(6.62%)
23.01%
76.15%
199.09%
45.39%
$14.65
$14.65
$19.49
$28.44
$50.57
45.39%
(1.01%)
(1.01%)
31.69%
92.14%
241.66%
Tax Rate
Tax Rate
Terminal Growth Rate
UOIG 31
University of Oregon Investment Group
February 14, 2014
Appendix 11 – Sources
FactSet
Forbes
Ford Credit Investor Relations
Ford Credit Website
Ford Investor Relations
Ford Website
Google
IBIS World
NPR
Sec.gov
Seeking Alpha
Yahoo! Finance
UOIG 32