Solved by verified expert:In a two- to three-page paper (excluding the title and reference pages), explain the purpose of an income statement and how it reflects the firm’s financial status. Include important points that an analyst would use in assessing the financial condition of the company. Also, analyze Ford Motor Company’s income statement from its 2012 Annual Report (Links to an external site.)Links to an external site..
2012_annual_report.pdf
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Profitable Growth for All
Ford Motor Company 2012 Annual Report
Operating Highlights
Revenues
2012
2011
Worldwide wholesale unit volumes by automotive segment (in thousands)
Ford North America
2,784
2,686
Ford South America
498
Ford Europe
Ford Asia Pacific Africa
Total
506
1,353
1,602
1,033
901
5,668
5,695
Revenues (in millions)
Automotive
$
Financial Services
126,567
$
128,168
7,685
8,096
Total
$
134,252
$
136,264
$
6,010
$
6,250
$
7,720
$
8,681
Net income (in millions)
$
5,665
$
20,213
iluted net income per share of Common
D
and Class B Stock
$
1.42
$
4.94
$
5.5
$
4.3
Financial Results
Income before income taxes (in millions)
Automotive
Financial Services
1,710
Total
2,431
Amounts Attributable to Ford Motor Company
Cash and Spending
Automotive capital expenditures
Amount (in billions)
As a percentage of Automotive sales 4.3%
3.3%
Automotive cash at year end (in billions)
Automotive gross cash (a)
$
24.3
$
22.9
– Cash net of Automotive debt 10.0 9.8
Shareholder Value
Dividends paid per share
$
0.20
$
0.00
Total shareholder returns % (b) 23% (36)%
(a) Automotive gross cash includes cash and cash equivalents and net marketable securities.
(b) Source: Standard & Poor’s, a division of the McGraw Hill Companies, Inc.
Content
1 More Products People Want
2 A Message from the Executive Chairman
3 A Message from the President and CEO
7 Board of Directors and Executives
8 Shareholder Information
9 Financial Content
161 Global Overview
Ford Motor Company | 2012 Annual Report
On the Cover
The One Ford plan enables accelerated development of products
that customers truly want and value, resulting in a full-line of cars,
utilities and trucks that meet and exceed owner expectations
across global markets. The upper photo includes the stylish Ford
Focus hatchback, the sporty subcompact Fiesta ST and the
distinctive Escape utility vehicle. From left to right, lower photos
illustrate the innovative new Lincoln MKZ, the family-friendly Ford
B-MAX and the iconic F-150 pickup truck.
More Products People Want
Ford designs, builds and sells cars, utilities and trucks of all sizes to meet the needs of a diverse global customer base.
From small cars such as the Ka and Fiesta to large trucks like the venerable F-150 and Super Duty, Ford Motor Company
vehicles cover the full spectrum of global automobile requirements.
C-MAX
CARS
Fiesta
Small
Sporting a refreshed look, the Fiesta boasts
the three-cylinder 1-liter EcoBoost engine
providing better power and fuel efficiency
than previous models. The Ka and Figo
round out a global lineup that offers
premium features in smaller packages.
Medium
The C-MAX Hybrid and C-MAX Energi
plug-in hybrid, two ecofriendly yet practical
vehicles large enough to fit a family,
debuted in 2012. In the same segment,
the redesigned Ford Focus is one of the
top-selling vehicles in the world.
UTILITIES
The EcoSport, a market leader in
South America, debuted globally.
This SUV is specifically designed
for the urban environment in South
America, India and Thailand and is
now offered in China.
Medium
The redesigned Kuga offers class-leading
technology, fuel efficiency, safety, and
comfort in Europe, South America and
Asia. Known as Escape in North America,
three robust engine options provide strong
fuel economy and technological features.
TRUCKS
The Transit Connect provides highly
configurable interiors, generous cargo
space, easy loading and unloading,
and exceptional maneuverability
with car-like driving dynamics and
safety features.
LINCOLN
Lincoln MKZ
The new Lincoln brand will be defined
by great new luxury vehicles, such as the
new MKZ, that feature unique style and
innovative technology. These elements
enable Lincoln to appeal to today’s new
luxury customer.
The Mondeo, known as the Fusion in North
America, will debut its striking new look next
year in Europe. Both offer a wide array of
driver assist technologies. Fusion offers a
Hybrid and Energi plug-in hybrid, providing
enhanced fuel economy in a stylish package.
Explorer
Large
The redesigned, sleeker Explorer
combines enhanced fuel economy
with new safety features such as Curve
Control, which can slow the vehicle by
up to 10 mph if it senses a curve is being
taken too fast.
F-Series
Ranger
Transit
Connect
Small
Large
Kuga
EcoSport
Small
Mondeo
Medium
The new Ranger is the truck for work and
play in Europe, South America, Asia and
Africa; offered in three versatile cab
bodystyles. It comes with a choice of two
powerful and economical diesel engines,
and with a 4×2 or 4×4 drivetrain.
Large
F-Series Trucks are the ultimate
work tool for various industries. The
dependable F-150 is the top-selling
light-duty pickup in the U.S. and the
F-Series Super Duty is the most
popular heavy-duty truck.
Lincoln MKC
Concept
Lincoln introduced the MKC Concept,
a vision of how Lincoln will enter the
industry’s fastest-growing segment –
small luxury utilities. The MKC Concept
builds on the foundation of the Lincoln
design DNA found in the new MKZ.
For detailed product and
financial information, view our
full online annual report at:
www.annualreport.ford.com
Ford Motor Company | 2012 Annual Report
1
“ WE ARE ANTICIPATING
NEW CHALLENGES
AND OPPORTUNITIES
THAT ARE EMERGING,
SPECIFICALLY THOSE
AROUND THE FUTURE
OF TRANSPORTATION.”
A Message from the Executive Chairman
In 2012 Ford Motor Company continued to go further to meet
the needs of our customers, the challenges of our industry
and the issues confronting our world. Our efforts produced
strong financial results and our fourth year in a row of
positive net income.
We expect 2013 to be another strong year for our company.
We anticipate our outstanding performance in North
America will continue, with higher pre-tax profits than in
2012. We are refreshing our entire product line in South
America and continuing to invest for growth in Asia Pacific
Africa. The transformation of our European operations,
which is aimed at achieving profitability under difficult
economic conditions, is on track and ongoing.
We will continue to focus on producing vehicles with bestin-class quality, fuel efficiency, safety, smart design and
value – built on global platforms. They will help us toward
our goal of increased global sales and market share, as
well as support our ongoing commitment to reducing the
environmental impact of our vehicles and operations.
Our strong showing in the electrified vehicle market is a
good example of how great products can help build a strong
business as well as a better world. In 2012 we introduced six
new electrified vehicles in North America, including hybrid,
plug-in hybrid and pure battery electric models. By offering
a variety of vehicles, we make it easier for customers to
embrace fuel-saving technologies.
As a result of our aggressive move into this growing segment
we sold more hybrids in the U.S. in the fourth quarter of
2012 than in any other quarter in our history, and that strong
momentum has continued in 2013.
2
Ford Motor Company | 2012 Annual Report
Looking further ahead, we are anticipating new challenges
and opportunities that are emerging, specifically those
around the future of transportation. Currently there are
a billion vehicles on the road worldwide, a number that
is expected to double by 2020 and double again by midcentury. As the number of vehicles on the road continues to
grow, mobility issues are expected to emerge in many major
urban areas, potentially presenting a serious challenge to
economic, social and environmental progress.
To help address this issue, we are committed to being the
automotive leader in wireless communication technology,
developing vehicles that communicate with each other and
the world around them to improve safety and reduce traffic
congestion.
As we move forward, our employees around the world
continue to work together as a global team. We have a
great plan, outstanding leadership and positive momentum.
We are determined to keep going further so that we
can continue rewarding our shareholders and all of our
stakeholders.
Thank you for your continued support of our efforts.
William Clay Ford, Jr.
Executive Chairman
March 14, 2013
“ OUR PROVEN ONE FORD
PLAN PUT US ON THE
PATH TO PROFITABLE
GROWTH, AND WE ARE
CONFIDENT IT WILL
KEEP US ON THAT PATH
GOING FORWARD.”
A Message from the President and CEO
Ford Motor Company continued on our path to deliver
profitable growth in 2012 by following our proven One Ford
plan, despite the ongoing challenges in the global market.
Along the way, we achieved several important milestones,
including restoring Ford’s investment grade status and
reclaiming the Ford Blue Oval, resuming regular dividend
payments to our shareholders and achieving 14 straight
quarters of operating profit.
In a strong North America market, we set full year records for
pre-tax profit and operating margins. In South America, we
are in the middle of launching a new global product lineup.
In Europe, we responded to challenging economic conditions
by beginning a transformation plan to aggressively
accelerate our new product rollouts, strengthen our brand
and restructure our manufacturing operations. In Asia Pacific
Africa, we are undertaking an unprecedented investment
program to grow our business in what is now the world’s
largest automotive market.
The success of our One Ford plan to date gives us
confidence that it will continue to create profitable growth
for us in the future. We remain laser focused on the key
aspects of our plan, which remain unchanged:
• Aggressively restructure to operate profitably at the current
demand and changing model mix.
• Accelerate development of new products our customers
want and value.
• Finance our plan and improve our balance sheet.
• Work together effectively as one team, leveraging our
global assets.
By following this plan, we will continue to build great
products, a strong business and a better world.
For more information visit www.annualreport.ford.com
Great Products
The great products that we build at Ford drive our success.
We launched 25 vehicles and 31 powertrains globally in
2012, a testament to our ongoing commitment to product
development. We also announced plans to revitalize our
Lincoln brand as the Lincoln Motor Company, which will
introduce an exciting new lineup of great luxury vehicles.
Our plan is centered on serving customers in all markets
around the world with a full family of vehicles – small, medium
and large; cars, utilities and trucks – that offer the very best
quality, fuel efficiency, safety, smart design and value.
The best way to measure the success of our products is sales,
and 2012 was a strong year. We sold 2.3 million vehicles in
the United States in 2012. Ford is the only brand to top the
2 million mark in the United States since 2007, and it has
topped 2 million for 2 years in a row. In Asia Pacific Africa, we
sold more than 1 million vehicles for the first time, including
record sales in China.
Our strong global performance was led by Focus, which was
the best-selling nameplate in the world in 2012, and Fiesta,
which was the best-selling B-Car in the world based on the
latest global data. Ford also was the only brand to have three
vehicles among the top 10 best-sellers worldwide, with the
F-Series truck coming in as the fourth best-selling global
nameplate.
Leveraging key new technologies across multiple regions
and on global platforms helps drive tremendous scale
and efficiency savings that can be reinvested, enabling
us to have one of the freshest showrooms in the industry.
Our outstanding product lineup, which we are continually
transforming and improving, is the foundation on which we
have built our strong business.
Ford Motor Company | 2012 Annual Report
3
Ford’s Senior
Management Team
The senior management team
continues to successfully advance
the company’s One Ford global
plan. Pictured with the Ford
Escape, all-new Transit Connect
and Fiesta ST from left to right:
Bob Shanks, Jim Farley,
Ray Day, Tony Brown, Nick Smither,
Felicia Fields, David Schoch,
Stephen Odell, Mark Fields,
Alan Mulally, Bernard Silverstone,
Joe Hinrichs, Ziad Ojakli,
Robert Brown, David Leitch,
Bennie Fowler, Raj Nair and
John Fleming.
Strong Business
Our 2012 full year pre-tax operating profit, excluding special items, was
$8 billion, or $1.41 per share. We delivered record results of $8.3 billion in
North America, continued solid performance from Ford Credit of $1.7 billion,
positive results in South America, continued investment in Asia Pacific Africa
and began a challenging transition in Europe.
We remain committed to strengthening our balance sheet. We ended 2012 with
Automotive gross cash of $24.3 billion, exceeding debt by $10 billion. We also have
a strong liquidity position of $34.5 billion, an increase of $2.1 billion over 2011.
We also worked to de-risk our pension obligations, contributing $3.4 billion in cash
contributions to our worldwide funded plans.
With an eye to the future, we continued our largest and fastest manufacturing
expansion in more than 50 years, adding capacity to support growth plans in
North America and Asia Pacific Africa.
In 2012, we added more than 8,100 hourly and salaried jobs in the U.S. as we
increased production capacity and expanded other areas to meet the growing
demand for our fuel-efficient, high-tech vehicles.
In Europe, we are moving quickly to carry out our transformation plan. As we did in
North America, we are making tough choices and intelligent investments now to
transform our European business for profitable growth in the future.
Additionally, we further strengthened and developed our leadership team by
announcing the appointment of our chief operating officer, a new chief financial
officer, a new Global Product Development leader and senior leadership changes
for the Americas, Europe, Asia Pacific, Ford Credit and our Lincoln Brand.
4
Ford Motor Company | 2012 Annual Report
Better World
Even as we strive to improve our products and enhance our
business, we recognize that doing our part to contribute to
a better world is at the core of our business. In addition to
economic goals, we also pursue environmental and social
objectives.
Ford is going further than our competitors by offering an
industry-best seven Ford-brand vehicles in the U.S. that
deliver 40 or more miles per gallon.
We reached this milestone by developing the best
conventional and alternative powertrains. In 2012, we
produced our 500,000th fuel-saving EcoBoost engine just
three years after its launch. We also introduced six new
electrified vehicles, including hybrids, plug-in hybrids and
a pure battery electric vehicle.
We are giving customers the power of choice among a range
of powertrains that generate fewer emissions and consume
less gasoline.
Serving in our communities is another important part of
building a better world. In 2012, 25,000 Ford employees
and retirees volunteered more than 115,000 hours at 1,350
projects to help people in their local communities. As part
of that effort, our seventh annual Global Week of Caring
featured 12,000 employees, retirees and dealers working
on more than 300 community projects on six continents.
For more information visit www.annualreport.ford.com
ONE FORD:
ONE Ford expands on the company’s four-point business plan
for achieving success globally. It encourages focus, teamwork
and a single global approach, aligning employee efforts toward
a common definition of success and optimizing their collective
strengths worldwide. The elements of ONE Ford are:
ONE TEAM:
ONE Ford emphasizes the importance of working together as
one team to achieve automotive leadership, which is measured
by the satisfaction of our customers, employees and essential
business partners, such as our dealers, investors, suppliers,
unions/councils and communities.
ONE PLAN:
• Aggressively restructure to operate profitably at the current
demand and changing model mix.
• Accelerate development of new products our customers want
and value.
• Finance our plan and improve our balance sheet.
• Work together effectively as one team.
ONE GOAL:
The goal of ONE Ford is to create an exciting and viable
company delivering profitable growth for all.
Ford Motor Company | 2012 Annual Report
5
Nine hundred Ford employees formed a human Ford logo outside Ford World Headquarters to celebrate the return of the “Blue Oval”
and other assets that had been used as collateral to secure Ford’s revolving credit facility. The celebration took place on May 22, 2012
after Fitch and Moody’s Investor Service restored Ford’s credit rating to investment grade.
Going Further
In the coming year, we expect global growth to
continue, despite ongoing challenges in the external
environment. We anticipate global economic growth
in the 2 to 3 percent range, and global industry sales
of 80 million to 85 million units.
In North America, we expect our strong performance
to continue, and we anticipate higher pre-tax profits
than 2012, due to our strong Ford brand and products,
the growing industry, a lean cost structure and our
continued success in matching production with
demand.
Overall, we expect 2013 will be another strong year for
the Ford Motor Company with pre-tax operating profit
about equal to 2012, Automotive operating-related
cash flow to be higher than 2012, and pre-tax profit for
Ford Credit to be about the same as 2012.
Conditions in South America will be uneven, with
some countries experiencing growth while others face
increasing economic and political risks. We expect
results in the region to be about breakeven in 2013, as
the benefits of new global products will be tempered
by the competitive environment and currency risks
across the region that are expected to affect our
profits adversely.
Our proven One Ford plan put us on the path to
profitable growth, and we are confident it will keep us
on that path going forward.
Asia Pacific Africa also is expected to be about
breakeven in 2013, as growing volume and revenue
are offset by continued strong investment across the
region. This investment will pay off as we look even
further forward, and our goal is to have a full third of
our global sales in Asia Pacific Africa by 2020.
Alan R. Mulally
President and Chief Executive Officer
March 14, 2013
In Europe, we are working to deliver our European
transformation plan, but we expect weak economic
6
conditions in several markets to extend into 2013 and
industry volume to be lower in 2013 than 2012. As a
result, we expect to incur another substantial loss in
Europe in 2013. We believe that 2013 is likely the trough
for European industry sales volume, and we expect
industry sales volume and our results to begin to
improve in 2014.
Ford Motor Company | 2012 Annual Report
As always, we thank you for your support of our efforts.
Board of Directors and Executives*
Board of Directors
Stephen G. Butler (1,5)
Irvine O. Hockaday, Jr. (1,5)
Kimberly A. Casiano (1,3,5)
Jon M. Huntsman, Jr. (2,3,5)
Anthony F. Earley, Jr. (2,3,5)
Richard A. Manoogian (2,5)
Edsel B. Ford II (3,4)
Ellen R. Marram (2,3,5)
William Clay Ford, Jr. (3,4)
Alan R. Mulally (4)
Richard A. Gephardt (3,5)
Homer A. Neal (3,4,5)
James H. Hance, Jr. (1,4,5)
Gerald L. Shaheen (1,5)
William W. Helman IV (3,4,5)
John L. Thornton (2,4,5)
Executive Officer Group
William Clay Ford
(Director Emeritus)
Committee Membership
( 1 ) Audit
(2) Compensation
(3) Sustainability
(4) Finance
(5) Nominating and Governance
William Clay Ford, Jr.
Robert L. Shanks
Raj Nair
Alan R. Mulally
Thomas K. Brown
Stuart J. Rowley
Mark Fields
Raymond F. Day
Ziad S. Ojakli
James D. Farley, Jr.
Felicia J. Fields
Executive Chairman and
Chairman of the Board
President and Chief Executive Officer
Chief Operati …
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