PENSION AND OPEB UPDATE

Transcription

1 Go Further PENSION AND OPEB UPDATE JANUARY 7, 2016

2 PENSION DE-RISKING PROGRESS Limited the growth in pension obligations Closed plans to new entrants, e.g., U.S. plans closed since 2011 Settled $4.2 billion of U.S. obligation in 2012 and 2013 through lump sum program Contributed $11 billion since 2012 to global funded plans; expect these plans to be fully funded in aggregate in 2016 Progressively rebalanced asset mix to higher fixed income to reduce funded status volatility Substantially reduced underfunded status, with further improvement expected at year-end 2015 Adopted immediate recognition for pension and OPEB expense, also referred to as mark-to-market, at year-end 2015 Significant Progress Achieved In Funding And De-Risking Our Pension Plans SLIDE 2

3 MARK-TO-MARKET ADOPTION AND REPORTING EFFECTS Provides greater transparency of our operating performance and segment results eliminates costs associated with prior periods Improves alignment of operating results with cash flows; reflects current performance of our pension and OPEB plans in net income Enhances comparability with key automotive competitors Has no impact on cash, funding requirements, or employees pension and OPEB benefits Expected to improve 2015 Company pre-tax profit by about $1.5 billion; full year profit guidance, excluding special items, revised from $8.5 billion - $9.5 billion to $10.0 billion - $11.0 billion Mark-To-Market Provides Greater Transparency To Operating Results SLIDE 3

4 PENSION AND OPEB EXPENSE Estimated Impact to 2015 Pre-Tax Operating Results (Bils.) Pension / OPEB Methods Prior New New Method B / (W) Prior Service cost $ (1.2) $ (1.2) $ - Interest Cost (3.0) (3.0) - Amortization - Prior Period Gains / (Losses) (1.4) Amortization - Prior Service Cost Expected Return on Assets Total Pension & OPEB (Expense) / Income $ (1.5) $ 0.2 $ 1.7 Non-Pension / OPEB Inventory Impact/ Other (0.2) Total Estimated FY Impact - Excluding Special Items $ 1.5 A B C A B C Amortization of gains/losses eliminated Expected returns on assets calculated based on fair value Includes impact of capitalization of fringe costs on inventory SLIDE 4

5 GREATER TRANSPARENCY OF OPERATING RESULTS Company Pre-tax Results *(Mils) Automotive Operating Margin* $9,334 $8,865 $10,095 $7,293 $8, % 6.0% 6.5% 4.6% 7.1% First Nine Months Historical Results Revised; First Nine Months 2015 Pre-Tax Results Increased By $1.2 Billion First Nine Months 2015 B / (W) Reported Mils: $606 $981 $1,487 $1,011 $1,224 Pts: * Excludes Special Items; see Appendix for reconciliation to GAAP SLIDE 5

6 IMPROVED COMPARABILITY Amortization Expense (Mils)* Ford (Prior Method) GM (Post Bankruptcy) Chrysler / FCA U.S. LLC (Post Bankruptcy) $1,499 $589 $966 $891 $330 $21 $13 $6 $ * Gain / (Loss) Amortization from Annual Form 10-K reports $318 $127 $305 $101 $95 $71 Elimination Of Ford s Amortization Expense Improves Comparability To Competitors SLIDE 6

7 2015 PLANNING ASSUMPTIONS AND KEY METRICS 2014 FY 2015 FY Outlook Results* Prior Updated Planning Assumptions (Mils) Industry Volume - U.S About Europe About China 24.0 About 24.0 Key Metrics Automotive: - Revenue (Bils) $ Higher** - Operating Margin 4.6 % Higher** - Operating-Related Cash Flow (Bils)*** $ 3.6 Higher** Ford Credit (Compared with 2014): - Pre-Tax Profit (Bils) $ 1.9 Equal To Or Higher** Total Company: - Pre-Tax Profit (Bils)*** $ 7.3 $8.5 - $9.5 $ $11.0 * After revision; see Appendix A and B ** Compared with 2014 *** Excludes special items 2015 Full Year Guidance Updated To $10.0 Billion - $11.0 Billion SLIDE 7

8 Q&A

9 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, Europe, or China due to financial crisis, recession, geopolitical events, or other factors; Decline in Ford's market share or failure to achieve growth; Lower-than-anticipated market acceptance of Ford's new or existing products; Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States; An increase in or continued volatility of fuel prices, or reduced availability of fuel; Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors; Fluctuations in foreign currency exchange rates, commodity prices, and interest rates; Adverse effects resulting from economic, geopolitical, or other events; Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions; Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors); Single-source supply of components or materials; Labor or other constraints on Ford's ability to maintain competitive cost structure; Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition; Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns); Restriction on use of tax attributes from tax law "ownership change ; The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs; Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and / or sales restrictions; Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise; A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-or-pay" contracts); Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments; Inherent limitations of internal controls impacting financial statements and safeguarding of assets; Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier; Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities; Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors; Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles; Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and New or increased credit, consumer, or data protection or other regulations resulting in higher costs and / or additional financing restrictions. We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. SLIDE 9

10 APPENDIX

11 PENSION AND OPEB UPDATE APPENDIX INDEX Item Appendix Revised Results A Revised Results By Quarter B Pre-Tax Special Items C

12 TOTAL COMPANY REVISED RESULTS (MILS) Pre-Tax Results Revised Year End First Nine Months Reported North America $ 6,665 $ 509 $ 8,925 $ 800 $ 9,877 $ 1,068 $ 7,443 $ 545 $ 7,316 $ 709 Europe (1,525) 195 (1,025) 417 (598) Rest of World* 755 (14) 225 (14) (591) 2 (198) 6 Other Automotive (601) - (470) - (656) - (755) - (542) - Total Automotive $ 6,903 $ 606 $ 7,155 $ 981 $ 8,423 $ 1,487 $ 5,499 $ 1,011 $ 6,704 $ 1,224 Financial Services 2,431-1,710-1,672-1,794-1,486 - Pre-Tax Results (Excl. Special Items) $ 9,334 $ 606 $ 8,865 $ 981 $ 10,095 $ 1,487 $ 7,293 $ 1,011 $ 8,190 $ 1,224 Special Items (5,647) (5,565) (6,860) (6,614) 4,276 5,844 (6,059) (4,119) Total Company $ 3,687 $ (4,959) $ 2,005 $ (5,633) $ 14,371 $ 7,331 $ 1,234 $ (3,108) $ 8,356 $ 1,224 Operating Margin North America 8.9% 0.6 Pts. 11.2% 0.8 Pts. 11.4% 1.2 Pts. 9.0% 0.6 Pts. 10.9% 1.0 Pts. Total Automotive 5.9% 0.5 Pts. 6.0% 0.7 Pts. 6.5% 1.1 Pts. 4.6% 0.7 Pts. 7.1% 1.2 Pts. * Includes South America, Middle East & Africa, and Asia Pacific Automotive segments APPENDIX A

13 TOTAL COMPANY REVISED RESULTS BY QUARTER (MILS) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Pre-Tax Results Revised Reported North America $ 1,725 $ 225 $ 2,567 $ 127 $ 1,537 $ 127 $ 1,614 $ 66 $ 1,569 $ 229 $ 2,838 $ 241 $ 2,909 $ 239 Europe (95) (330) 109 (297) 146 (42) Rest of World* (164) 1 (112) 1 (141) - (174) - (5) 2 (37) 2 (156) 2 Other Automotive (222) - (171) - (144) - (218) - (212) - (167) - (163) - Total Automotive $ 1,244 $ 325 $ 2,408 $ 238 $ 922 $ 236 $ 925 $ 212 $ 1,310 $ 374 $ 2,795 $ 418 $ 2,599 $ 432 Financial Services Pre-Tax Results (Excl. Special Items) $ 1,706 $ 325 $ 2,837 $ 238 $ 1,417 $ 236 $ 1,333 $ 212 $ 1,779 $ 374 $ 3,286 $ 418 $ 3,125 $ 432 Special Items (122) - (481) - (160) - (5,296) (4,119) Total Company $ 1,584 $ 325 $ 2,356 $ 238 $ 1,257 $ 236 $ (3,963) $ (3,907) $ 1,779 $ 374 $ 3,286 $ 418 $ 3,291 $ 432 Operating Margin North America 8.4% 1.1 Pts. 12.2% 0.6 Pts. 7.7% 0.6 Pts. 7.7% 0.3 Pts. 7.8% 1.1 Pts. 12.2% 1.1 Pts. 12.3% 1.0 Pts. Total Automotive 4.3% 0.9 Pts. 7.3% 0.7 Pts. 3.3% 0.8 Pts. 3.4% 0.6 Pts. 4.8% 1.2 Pts. 8.4% 1.2 Pts. 7.7% 1.2 Pts. * Includes South America, Middle East & Africa, and Asia Pacific Automotive segments APPENDIX B

14 TOTAL COMPANY PRE-TAX SPECIAL ITEMS (MILS) Full Year First Nine Months Revised Reported Pension and OPEB Remeasurements $ (5,674) $ (5,674) $ (6,864) $ (6,864) $ 5,250 $ 5,250 $ (4,119) $ (4,119) $ - $ - Personnel and Dealer-Related Items Separation-related actions $ (269) $ - $ (498) $ - $ (856) $ - $ (685) $ - $ - $ - Job Security Benefits / Other (58) - (54) Total Personnel and Dealer-Related Items $ (327) $ - $ (552) $ - $ (856) $ - $ (685) $ - $ - $ - Other Items Venezuela accounting change $ - $ - $ - $ - $ - $ - $ (800) $ - $ - $ - U.S. pension lump sum program Ford Sollers equity impairment (329) Belgium pension settlement CFMA restructuring Ford Sollers Gain Other (47) - (69) - (118) - (126) Total Other Items $ 354 $ 109 $ 556 $ 250 $ (118) $ 594 $ (1,255) $ - $ 166 $ - Total Special Items $ (5,647) $ (5,565) $ (6,860) $ (6,614) $ 4,276 $ 5,844 $ (6,059) $ (4,119) $ 166 $ - APPENDIX C