FORD UNIVERSITY. Stuart Rowley Vice President and Controller

Transcription

1 FORD UNIVERSITY Stuart Rowley Vice President and Controller March 17, 2014

2 FORD UNIVERSITY Agenda for today s discussion Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) Topics from prior Ford University Presentations are included in the reference section at the end of the slide deck. Also posted for your reference is the updated Ford Credit University deck SLIDE 2

3 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 3

4 AUTOMOTIVE SEGMENT REPORTING STRUCTURE CHANGE Impact Beginning January 1, 2014 we have restructured our Automotive Segment reporting structure We now have five Automotive segments that report on a where sold basis Prior Structure (2013) New Structure (2014) North America South America Europe Asia Pacific Africa North America South America Europe Middle East & Africa Asia Pacific Memo: Direct Export Markets (included above on a where produced basis) Direct Export Markets (included above on a where sold basis) New Reporting Based On Five Automotive Segments SLIDE 4

5 AUTOMOTIVE SEGMENT REPORTING PRIOR STRUCTURE (2013) North America South America Europe Asia Pacific Africa Direct Export Markets Segments Not Aligned Geographically; Multiple Regions Servicing Direct Export Markets SLIDE 5

6 AUTOMOTIVE SEGMENT REPORTING NEW STRUCTURE (2014) Impact We have reorganized our segments to increase focus on growth markets and to ensure clear responsibility and accountability for all markets within each geographic region Beginning January 1, 2014, we: Established a fifth Automotive Segment, Middle East & Africa - Includes what were direct export markets in the Middle East & Africa as well as South Africa which was previously included in Asia Pacific Africa reporting Realigned remaining export markets on a geographic basis - Direct export markets located within each region are now included in these segments Revenue and profits for direct export markets, previously reported as part of the Automotive segment which was the production source, will now be reported on a where sold basis Direct Export Market Reporting Is Now On A Where Sold Basis SLIDE 6

7 AUTOMOTIVE SEGMENT REPORTING NEW STRUCTURE (2014) North America South America Europe Middle East & Africa Asia Pacific Reduces Complexity And Enhances Regional Focus For Profitable Growth SLIDE 7

8 AUTOMOTIVE SEGMENT REPORTING MIDDLE EAST & AFRICA SEGMENT Population billion Average age in Middle East; 19 in Africa 67 countries and currencies 1,000+ languages Three closed markets -- Iran, Syria, and Sudan Industry size -- about 4 million units, about 22% of which is closed Ford s 2013 market share about 5.2% Ford 2013 unit sales about 200,000 Large, Complex, And Diverse Region SLIDE 8

9 AUTOMOTIVE SEGMENT REPORTING SEGMENT RESULTS IMPACT Impact Based on 2013 results, the estimated directional impact of establishing Middle East & Africa would have resulted in the following profit impacts (none of the effects are considered material) North America -- about unchanged South America -- about unchanged Europe -- positive Asia Pacific Africa -- negative Revised 2013 results will be updated through the year Total Automotive sector bottom line reporting is unchanged No Impact To Automotive Sector Bottom Line SLIDE 9

10 AUTOMOTIVE SEGMENT REPORTING INDUSTRY AND MARKET SHARE REPORTING Industry and Market Share 2013 (Prior) 2014 (New) Impact North America U.S. U.S. (Retail) Total Segment U.S. U.S. (Retail) South America SA6* Total Segment Brazil Europe EU19* EU5 (Retail)** Total Segment EU20* EU5 (Retail)** Middle East & Africa N/A Total Segment Asia Pacific APA11* Total Segment China Total Automotive N/A Global * See detail of major markets in reference section ** Passenger car Industry And Market Share Reporting Revised To Include All Markets Globally SLIDE 10

11 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 11

12 PRODUCTION COMPARED WITH WHOLESALES Overall Company 1Q 2Q 3Q 4Q FY Production Base Base Base Base Base +/- Net Imports / Exports ~ 0 ~ 0 ~ 0 ~ 0 ~ 0 +/- Changes in Company Stocks - +/- +/- + ~ 0 Wholesales Lower +/- +/- Higher Similar North America Production Base Base Base Base Base +/- Net Imports / Exports /- Changes in Company Stocks - +/- +/- + ~ 0 Wholesales Lower Lower Lower +/- Lower SLIDE 12

13 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 13

14 AUTOMOTIVE SEGMENT AND JOINT VENTURE Impact PROFITS Ford s operations include investments in major unconsolidated joint ventures Ford s equity share of after-tax profit of the joint ventures is included in the respective Automotive segment results Engineering and other costs for Ford s global platforms are allocated to our Automotive segments as they are incurred, based on expected volumes over the vehicle s cycle life. These costs are included in Automotive segment results, but are not in joint venture results Joint ventures pay royalties to Ford for use of related intellectual property as compensation for Ford s investment in engineering In total, Ford s Automotive segment results include the following related to joint ventures: - Ford s share of joint venture profits - Royalty income - Engineering and other costs incurred for Joint Venture products and support SLIDE 14

15 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 15

16 FIXED ASSET DEPRECIATION & IMPAIRMENT POLICY Depreciation A systematic and rational manner to allocate costs of investments with the benefits of their use Included in operating expense, even in situations where we accelerate depreciation (Europe, Australia) Impairment A write-off of a fixed asset group when significant triggering events cause the fair value to fall below its carrying value Testing is performed at lowest grouping of assets where we have independent cash flows. We use our segments -- North America, South America, Europe, Middle East & Africa, Asia Pacific, and Ford Credit If segment cash flows do not support the level of related fixed assets -- we record an impairment Impairments are infrequent; treated as special items Last recorded impairments* were in North America $5.3 billion and Ford Credit $2.1 billion (related to investments in vehicles on lease) * Excludes impairment on asset groups that were held for sale (Volvo, JLR, and ACH) SLIDE 16

17 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 17

18 TAXES OPERATING EFFECTIVE TAX RATE 2013 Actual 1Q 2Q 3Q 4Q FY (Mils.) (Mils.) (Mils.) (Mils.) (Mils.) Reference Operating results* Pre-tax results $ 2,146 $ 2,555 $ 2,589 $ 1,279 $ 8,569 A Less: Equity in net income of affiliated companies** ,069 B Adjusted pre-tax results $ 1,932 $ 2,282 $ 2,296 $ 990 $ 7,500 C (Provision for) / Benefit from income taxes $ (503) $ (721) $ (767) $ (19) $ (2,010) D Effective tax rate 26.0 % 31.6 % 33.4 % 1.9 % 26.8 % E * Excludes special items; see reference section for detail and reconciliation to GAAP ** Available in Appendix 4 of Earnings Review and page FS-2 of 2013 Form 10-K Effective tax rate = (Provision for) / Benefit from income taxes Adjusted pre-tax results Calculation D E = C Equity In Net Income Of Affiliated Companies Excluded From Denominator In Our Calculation Of An Operating Effective Tax Rate SLIDE 18

19 TAXES CASH TAXES Worldwide cash taxes to remain low for a number of years Worldwide tax assets generated in prior periods reduce current period cash tax liabilities Cash Taxes Remain Low SLIDE 19

20 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 20

21 PENSION SENSITIVITIES GLOBAL PENSION FUNDED STATUS SENSITIVITY TO INTEREST RATES Our strategy is to fully fund and de-risk global funded pension plans As plans de-risk, asset allocation will migrate to a higher percentage of fixed income assets that better match plan liabilities At year-end 2013, the fixed income mix in our global plans was 60%, up from 50% at year-end 2012, driven largely by our U.S. plans; the U.S. fixed income mix was 70%, up from 55% at year-end 2012 Commencing with our K, we are disclosing our global net funded status sensitivity to changes in interest rates In the U.S., as our mix of fixed income assets has increased, our plans are now less sensitive to changes in interest rates Non-U.S. plans remain more sensitive to interest rate changes, reflecting a lower mix of fixed income assets Global funded status sensitivity will decrease as our de-risking strategy progresses SLIDE 21

22 PENSION SENSITIVITIES GLOBAL PENSION FUNDED STATUS SENSITIVITY TO INTEREST RATES U.S. Plans Increase / (Decrease) in Funded Status 2013 Year End 2012 Year End bps bps bps bps (Bils.) (Bils.) (Bils.) (Bils.) Liabilities $ 4.3 $ (5.3) $ 5.2 $ (6.4) Assets* (3.5) 4.3 (2.9) 3.6 Net Sensitivity $ 0.8 $ (1.0) $ 2.3 $ (2.8) Non-U.S. Plans Liabilities $ 4.2 $ (4.8) $ 4.0 $ (4.7) Assets* (1.2) 1.5 (1.1) 1.4 Net Sensitivity 3.0 (3.3) 2.9 (3.3) Global Net Sensitivity** $ 3.8 $ (4.3) $ 5.2 $ (6.1) Increase / (Decrease) Global Net Sensitivity $ (1.4) $ (1.8) * Fixed inco me sensit ivit y only, exclud es o t her asset s ** R ef lect s imp act s o f int erest rat e chang es o nly; o t her f act o rs no t includ ed Global Pension Sensitivity To Interest Rates Has Declined Due To De-Risking Actions In Our U.S. Plans SLIDE 22

23 AGENDA Automotive Segment Reporting Production compared with Wholesales Automotive Segment and Joint Venture Profits Fixed Asset Depreciation and Impairment Policy Taxes Pension Sensitivities Annual Incentive Compensation Plan (AICP) SLIDE 23

24 AICP METRICS AND LINKAGE TO TSR 2013 METRICS TSR DRIVERS 2014 METRICS Market Share 10% Revenue Growth 20% Automotive Revenue Corporate PBT* 35% Cost Performance 10% Automotive Operating-Related Cash Flow* 35% Quality 10% Corporate Operating Margin Shareholder Distributions / Balance Sheet Actions Automotive Operating Margin* 30% Ford Credit PBT 10% Automotive Operating-Related Cash Flow* 20% Quality 20% * Excludes special items 2014 AICP Metrics More Directly Align With The Drivers Of TSR And Elevate The Importance Of Quality SLIDE 24

25 REFERENCE MATERIAL Subjects from prior Ford University Presentations Auto University Major Markets Defined Automotive Operating Margin Special Items Reporting on a Where Sold Basis Treatment of Chinese Joint Ventures Production / Wholesales / Retail Sales Profit Variance Analysis Automotive Cost Details Automotive Cash and Balance Sheet Calendarization Factors Appendix Reconciliation to GAAP SLIDE 25

26 REFERENCE BUSINESS UNIT REPORTING -- MARKET SHARE 2013 MAJOR MARKETS DEFINED North America -- U.S. South America 6 -- Argentina, Brazil, Chile, Colombia, Ecuador, and Venezuela Europe Austria, Belgium, Britain, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Spain, Sweden, and Switzerland Europe 5 -- Britain, France, Germany, Italy, and Spain Asia Pacific Africa Australia, China, Japan, India, Indonesia, New Zealand, Philippines, South Africa, Taiwan, Thailand, and Vietnam 2014 Europe 20 reporting includes Europe 19 plus Romania SLIDE 26

27 REFERENCE AUTOMOTIVE OPERATING MARGIN* Revenue Cost = Earnings Before Interest & Taxes (EBIT)** Volume And Mix Contribution Cost Revenue Net Pricing Structural Cost = * Excluding special items. Automotive business only; excludes Financial Services; EBIT excludes Other Automotive ** Also includes equity in net income of affiliated companies and other income / (loss) Operating (Or EBIT) Margin Earnings Before Interest And Taxes As A Percentage Of Revenue SLIDE 27

28 REFERENCE AUTOMOTIVE OPERATING MARGIN KEY ELEMENTS Volume And Mix Net Pricing Contribution Cost Structural Cost* Wholesale Volumes Pricing Material Cost Manufacturing Component Sales Product Mix Series Mix and Option Rates Incentives Component Purchases Commodities Freight Warranty Engineering Depreciation and Amortization Advertising and Sales Promotions Administrative and Selling Expenses * All salaries, wages, and fringe benefits are included in structural cost Pension and Other Fringe Benefits Key Elements Of Automotive Operating Margin SLIDE 28

29 REFERENCE AUTOMOTIVE OPERATING MARGIN KEY ELEMENTS -- STRUCTURAL COSTS Structural Cost* Manufacturing Engineering Depreciation and Amortization Advertising and Sales Promotions Administrative and Selling Expenses Pension and Other Fringe Benefits Components Personnel, Plant Overhead, Launch Personnel, Prototype Material, Outside Engineering Services Depreciation and Amortization, Asset Retirements, Op. Leases Advertising (all media), marketing programs, Brand promos, Auto Shows Salary and Purchased Service cost related to Staff activities, IT Pension, OPEB Key Cost Drivers Volume, Sourcing Changes, Content Product Programs Past and Present Period Capital Spending Vehicle Launches, Brand Building Growth Support Discount Rates and Asset Returns * All salaries, wages, and fringe benefits are included in structural cost SLIDE 29

30 REFERENCE -- SPECIAL ITEMS SLIDE 30

31 REFERENCE OPERATING SEGMENT REPORTING -- WHERE SOLD BASIS Segment results generally are reported on a where sold basis Segment results include total corporate profit on all vehicles sold in its markets no matter where the vehicle or its components are produced For example, the revenue and profit of Edges produced in North America and sold in China would be reported in our Asia Pacific Segment Profits associated with vehicles or components sold to another OEM accrue to the production source SLIDE 31

32 REFERENCE TREATMENT OF CHINESE JOINT VENTURES Joint venture results are reported within each segment as follows: Unit Volumes Revenue Profits Capital Expenditures Included - Not included Ford s share of after-tax profits included - Not included Profit variances related to Ford share of profits at most Joint Ventures are included in Other variance category Variances related to our two major China Joint Ventures with Changan and Jiangling are reported at Ford share across all variance categories (Volume / Mix, Net Pricing, Costs, etc.) SLIDE 32

33 REFERENCE PRODUCTION / WHOLESALES / RETAIL SALES Production + / - Net Imports / Exports + / - Changes in Company Stocks = Wholesales + / - Changes in Dealer Stocks = Retail Sales - Sales to Other OEMs SLIDE 33

34 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 34

35 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 35

36 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 36

37 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 37

38 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 38

39 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 39

40 REFERENCE -- PROFIT VARIANCE ANALYSIS SLIDE 40

41 REFERENCE AUTOMOTIVE COST DETAILS -- FINANCIAL STATEMENTS Ford s financial statements break costs into two categories: Cost of Sales -- costs related to the development, manufacture and distribution of our vehicles, parts, and accessories Material (including commodities) Freight Warranty and related costs Labor and other costs directly related to the development and manufacture of our products Depreciation and amortization Other associated costs Selling, administrative and other Labor and other costs not directly related to the development and manufacture of our products Advertising and Sales Promotions Other associated costs SLIDE 41

42 REFERENCE AUTOMOTIVE COST DETAILS -- VARIANCE ANALYSIS* Our variance analysis breaks costs into two major buckets: Contribution costs (variances reflect changes in cost per unit) Material» Commodities» Material excluding commodities (includes design changes and cost reductions) Freight Warranty and related costs (includes base coverage, recalls, etc.) Other Costs (variances reflect absolute changes) Structural» Manufacturing» Engineering» Depreciation and Amortization» Advertising and Sales Promotions» Administrative and Selling Expenses» Pension and Other Fringe Benefits Other -- such as legal costs * All cost changes are measured primarily at present-year exchange and exclude special items. Contribution costs also are measured at present-year volume and mix SLIDE 42

43 REFERENCE AUTOMOTIVE COST DETAILS -- MAJOR TYPES OF COSTS AND HOW THEY VARY WITH PRODUCTION Costs largely vary with production volume Costs do not largely vary with production volume * Note Engineering cost is generally expensed in the period it is incurred SLIDE 43

44 REFERENCE AUTOMOTIVE COST DETAILS -- WHERE TO FIND THEM Income Statement Published Statement Contribution Costs Material (including commodity costs) Cost of Sales K P.33 Commodity / Material are about 2/3 of Total Automotive Freight Cost of Sales Not disclosed separately Warranty (costs for basic warranty coverages and field service actions) Cost of Sales K P. FS cost $2.65 Bils. Customer service actions Cost of Sales Not disclosed separately Structural Depreciation / Amortization Cost of Sales K P cost $4.1 Bils. Labor Cost of Sales / S&A K P.16 Total number of employees was approximately 181,000; cost not disclosed separately Engineering / R&D Cost of Sales K P.16 and P. FS cost $6.4 Bils. Advertising S&A K P. FS cost $4.4 Bils. Other Cost of Sales / S&A Not disclosed separately Legal Cost of Sales Not disclosed separately SLIDE 44

45 REFERENCE AUTOMOTIVE DETAILS -- WHERE TO FIND THEM Income Statement Published Statement Special Items Separation-related actions (primarily related to separation costs for personnel at the Genk and U.K. facilities) U.S. pension lump-sum program Mixed K P. 40 $(856) Mils. in Reduction actions attributable to hourly labor fall primarily into COS, salary-related reductions primarily fall into S&A Cost of Sales K P. 40 $(594) Mils. in 2013 FCTA -- subsidiary liquidation Total Automotive Cost of Sales Interest income and other income / (loss), net K P. 40 $(103) Mils. in K P. FS cost $125.2 Bils. S&A K P. FS cost $10 Bils. Total Automotive Cost and Expense Summarized Financial Results of Unconsolidated Affiliates Unconsolidated affiliates Equity in net income Royalty Income- Related Party K P. 33 and P. FS cost $135.2 Bils K P. FS-32 New Disclosure K P. FS-76-FS Income $1.069 Bils K P. FS $526 Mils. SLIDE 45

46 REFERENCE 2013 AUTOMOTIVE CASH AND BALANCE SHEET -- CASH FLOW SLIDE 46

47 REFERENCE AUTOMOTIVE CASH AND BALANCE SHEET -- WORKING CAPITAL* Other Mfg. Companies* Ford (Bils.) $7.7 $15.1 $5.6 Inventories / Receivables Trade Payables Inventories / Receivables Trade Payables * Ford data are based on year end 2013 balances; other manufacturing company based on 2010 data from Capital IQ; drawn to relative scale Working Capital Changes At Ford Tends To Improve Cash Flow As Volumes Improve SLIDE 47

48 REFERENCE CALENDARIZATION FACTORS -- STRUCTURAL COST SEASONALITY* Higher Cost Lower Cost * Based on historical data 1Q 2Q 3Q 4Q 1Q Due To A Number Of Factors, Structural Costs Tend To Be Lowest In First Quarter And Highest In Fourth Quarter SLIDE 48

49 REFERENCE CALENDARIZATION FACTORS -- CASH FLOW SEASONALITY Inventory Movements Trade Payable Movements $17.0 $15.1 $16.4 $8.2 $7.4 $8.4 3Q 4Q 1Q 3Q 4Q 1Q Working Capital Also Is Subject To Seasonal Timing Differences Primarily Associated With Our End Of Year Production Shutdown SLIDE 49

50 REFERENCE CALENDARIZATION FACTORS -- ADDITIONAL FACTORS THAT CAN VARY QUARTER BY QUARTER Product launches Reserve Adjustments Warranty Marketing Year-to-date true-ups Compensation Taxes One-time gains or losses Distress supplier Payments / Recoveries Insurance Settlements Fair Market Value / Balance Sheet revaluations SLIDE 50

51 REFERENCE -- APPENDIX TOTAL COMPANY 2013 INCOME FROM CONTINUING OPERATIONS SLIDE 51

52 REFERENCE -- APPENDIX AUTOMOTIVE SECTOR NET INTEREST RECONCILIATION TO GAAP Fourth Quarter Full Year (Mils.) (Mils.) (Mils.) (Mils.) Interest expense (GAAP) $ (142) $ (212) $ (713) $ (829) Interest income (GAAP) Subtotal $ (90) $ (174) $ (441) $ (666) Adjusted for items included / excluded from net interest Include: Gains / (Losses) on cash equiv. and marketable securities* 5-69 (7) Change in amortized value of debt included in interest expense (45) - (45) - Include: Gains / (Losses) on extinguishment of debt (18) Other (17) (30) (72) (110) Net Interest $ (147) $ (204) $ (489) $ (801) * Excludes mark-to-market adjustments of our investment in Mazda SLIDE 52

53 REFERENCE -- APPENDIX AUTOMOTIVE SECTOR GROSS CASH RECONCILIATION TO GAAP SLIDE 53

54 REFERENCE -- APPENDIX OPERATING-RELATED CASH FLOWS RECONCILIATION TO GAAP Fourth Quarter Full Year (Bils.) (Bils.) (Bils.) (Bils.) Net cash provided by / (used in) operating activities (GAAP) $ 2.2 $ 1.3 $ 6.3 $ 7.7 Items included in operating-related cash flows Capital spending (1.9) (2.0) (5.5) (6.6) Proceeds from the exercise of stock options Net cash flows from non-designated derivatives (0.2) - (0.8) (0.3) Items not included in operating-related cash flows Cash impact of Job Security Benefits and personnel-reduction actions Funded pension contributions Tax refunds and tax payments from affiliates - - (0.1) (0.3) Settlement of outstanding obligation with affiliates - - (0.3) - Other (0.1) Operating-related cash flows $ 1.0 $ 0.5 $ 3.4 $ 6.1 SLIDE 54

55 RISK FACTORS Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation: Decline in industry sales volume, particularly in the United States or Europe, due to financial crisis, recession, geopolitical events, or other factors; Decline in Ford's market share or failure to achieve growth; Lower-than-anticipated market acceptance of Ford's new or existing products; Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States; An increase in or continued volatility of fuel prices, or reduced availability of fuel; Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors; Fluctuations in foreign currency exchange rates, commodity prices, and interest rates; Adverse effects resulting from economic, geopolitical, or other events; Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions; Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors); Single-source supply of components or materials; Labor or other constraints on Ford's ability to maintain competitive cost structure; Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition; Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns); Restriction on use of tax attributes from tax law "ownership change;" The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs; Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and / or sales restrictions; Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise; A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-or-pay" contracts); Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments; Inherent limitations of internal controls impacting financial statements and safeguarding of assets; Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier; Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities; Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors; Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles; Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles; and New or increased credit, consumer, or data protection or other regulations resulting in higher costs and / or additional financing restrictions. We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. SLIDE 55