Ford

Introduction

Ford Motor Company is an american multinational corporation and one of the largest automobile manufacturers in the world. Based in Dearborn, Michigan, a suburb of Metro Detroit, the automaker was founded by Henry Ford and incorporated in 1903. Ford now encompasses seven global brands, including Lincoln and Mercury of the US, Jaguar, Aston Martin and Land Rover of Great Britain, and Volvo of Sweden. Ford also owns a one-third controlling interest of Mazda, and is listed as the world's third largest automaker based on vehicle sales in 2005. Ford has also been one of the world's ten largest corporations by revenue. In 1999, Ford ranked as one of the world's most profitable corporations. However, in recent years, it has not fared as well. Ford has not gained market share in North America since 1995. In this paper,an examination of Fords financials (income statements, balance sheets), improvements and deprovemnets of thesteadyly fallen company and corrective action underway. Also a discussion of the bond rating and value and the amount of cash on hand versus what Ford is burning.

Finanacials

Although the history of ford and it's respect in the automobile and financial sector is in a class by itself, ford has experienced an increasingly challenging and competitive marketplace within the last couple of years. Recently, ford has been undergone tremendous tranformations in order to uphold the sustainability of the company. Fords financials have plummeted due to various economical issues and decreasing sales. Market share in the United States has declined in each of the past five years, from 22.8%

in 2001 to 18.2% in 2005." During the past year, there has been a general shift in consumer preferences away from medium- and large-sized sport utility vehicles, which has adversely affected Ford's profitability. A continuation or acceleration of this general shift in consumer preferences away from sport utility vehicles, or a similar shift in consumer preferences away from truck sales or other more profitable vehicle sales, whether because of higher fuel prices or otherwise, could have an increasingly adverse effect on Ford's results of operations and financial condition. " According to the financials and 10 K of 2005 net income was $2.0 billion or $ 1.05 per share stock in 2005 down $ 1.05 billion from a profit of 3.5 billion or 1.73 per share in 2004 (numbers from 10k pg.17). The automotive sector of ford has received negative status 2003 through 2005 the loss before income taxes primarily reflected lower viseteon related charges, higher net pricing, favrable cost performance and the favorable effect of tax-related interset on refunds and settlements of prior year federal and state audits, offset partially by lower vehicle unit sales and unfavorable changes in currency exchange rates.(10 k pg. 39). While the financial sector is increasing in income from 2003 reported income of 3,247 in millions and in 2005 increased to 5,891 due to fewer possessions and a lower average per repossession. The improvement in leasing results primarily reflected higher used vehicle prices and a reduction in the percentage of vehicles returned to ford credit . Income before taxes in the automotive sector are as follows: 2003 (1,908) , 2004 (155), 2005 (3,895). Operating loss carryforwards for tax purposes were 4.2 billion last December 31, 2005. Total assets in 2004 decreased from $295,506 to 269, 476 due to liquidating. Ford for the third quarter reported a net loss of 5.8 billion, or $3.08 per share. This compares with net income of $284 million, or 15 cents per share, in the 2005 third quarter. The performance from continuing operations primarily reflected operating challenges in the company's North america, Asia Pacific and Africa, and Premier Automotive Group operations. Total liabilites ($255, 397) outweighing total cash ($31,499). Liabilites have decreased from $292, 943.0 to $256, 519.0 due to selling Ford stock and liquidating hertz. A continued decline in the market has caused ford to decline in sales. Also the economic distress of increased prices of fuel and the shift away from sport utility vehicles has caused ford to suffer . Slow economic growth has also contributed to decline in industry sales particularly in the United States and in Europe. Ford has also experienced lower than anticipated market acceptance on new and existing products. Higher than expected credit losses, changes in intersets rates with Ford's credit sector and decling sales in North America have all had a effect in the declining status of ford. Ford Motor Company is now in one of the worst financial crises in it's 103 year history according to( hoover' financials). Ford has lost 5.8 billion in the third quarter of 2006 because of sluggish sales and the cost of it's restructuring plans that are now underway. Projected losses for fourth quarter are subject to be worse than third quarter (Ford.com President's press release).

Improvements and Deprovements / Overall Performance/Corrective Actions

To create a more viable business, Ford is now seeking ways to restructure the financials and reinvigorate automotive business. In all fourteen manufacturing companies to be Idled The Atlanta assemblies to idled in October 2006 and the Norfolk, Windsor, Wixom assemblies are to be idled in 2007. All ACH( Automotive Component Holdings) operations will be either closed or sold.

Accelerated actions were initated to improve cost structure; Personnel reductions, capacity actions and ACH restructuring. Developing more new products to deliver profitable growth. Leveraging global product development and production systems and taking further steps to enhance liquidity are just a few of the changes ford is making to sustain its company. More products are reported to be delivered faster to the consumer(Annual Report from President Mullaly). Financials are to be revised. North America profitability not expected before 2009. Ford motor company's 2006 year end liquidity is expected to include automotive gross cash of about 20 billion. The board has also issued a hault dividends on it's common and class B stock beginning in the fourth quarter of 2006. Although these changes are not inviting to everyone. Ford is now shrinking it's work force and offering buyouts and other incentives valued at as much as 140,000 thousand each to all 75,000 thousand of its hourly employees in the United States to persuade them to leave their jobs. Workers have until November 27 to decide whether to take one of eight severance packages. Ford also indicated that it would eliminate bonuses for management