Ford Motor Company (F, Financial) filed Quarterly Report for the period ended 2009-09-30.
Ford Motor Company produces cars and trucks. The company and its subsidiaries also engage in other businesses including manufacturing automotive components and systems and financing and renting vehicles and equipment. The company is divided up into the following four operating segments: Automotive Visteon Automotive Systems Ford Motor Credit Company and The Hertz Corporation. Ford Motor Company has a market cap of $24 billion; its shares were traded at around $7.45 with and P/S ratio of 0.2.
Foreign Currency Risk. The net fair value of foreign exchange forward and option contracts (including adjustments for credit risk) at September 30, 2009 was an asset of approximately $2 million, compared to a net fair value asset of $249 million at December 31, 2008. The potential decrease in fair value of foreign exchange forward and option contracts (excluding adjustments for credit risk), assuming a 10% adverse change in the underlying foreign currency exchange rates, would be approximately $974 million at September 30, 2009 and was $600 million at December 31, 2008. If adjustments for credit risk were to be included, the decrease would be smaller.
Commodity Price Risk. The net fair value of commodity forward and option contracts (including adjustments for credit risk) at September 30, 2009 was a liability of $88 million, compared to a liability of $212 million at December 31, 2008. The potential decrease in fair value of commodity forward and option contracts (excluding adjustments for credit risk), assuming a 10% decrease in the underlying commodity prices, would be approximately $22 million at September 30, 2009, compared with a decrease of $26 million at December 31, 2008. If adjustments for credit risk were to be included, the decrease would be smaller.
Interest Rate Risk. To provide a quantitative measure of the sensitivity of Ford Credit s pre-tax cash flow to changes in interest rates, Ford Credit uses interest rate scenarios that assume a hypothetical, instantaneous increase or decrease in interest rates of 100 basis points (or 1%) across all maturities, as well as a base case that assumes that interest rates remain constant at existing levels. These interest rate scenarios are purely hypothetical and do not represent Ford Credit s view of future interest rate movements. The differences in pre-tax cash flow between these scenarios and the base case over a twelve-month period represent an estimate of the sensitivity of Ford Credit s pre-tax cash flow. Under this model, Ford Credit estimates that at September 30, 2009, all else constant, such an increase in interest rates would reduce pre-tax cash flow by $8 million over the next twelve months, compared with $28 million at December 31, 2008. The sensitivity analysis presented above assumes a one-percentage point interest rate change to the yield curve that is both instantaneous and parallel. In reality, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in Ford Credit s analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.
Read the The complete ReportF is in the portfolios of Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Keeley of Keeley Fund Management, Charles Brandes of Brandes Investment.
Ford Motor Company produces cars and trucks. The company and its subsidiaries also engage in other businesses including manufacturing automotive components and systems and financing and renting vehicles and equipment. The company is divided up into the following four operating segments: Automotive Visteon Automotive Systems Ford Motor Credit Company and The Hertz Corporation. Ford Motor Company has a market cap of $24 billion; its shares were traded at around $7.45 with and P/S ratio of 0.2.
Highlight of Business Operations:
At September 30, 2009 and December 31, 2008 our net deferred tax assets, net of the valuation allowances of $16.9 billion and $17.2 billion, respectively, were $1 billion and $1.1 billion, respectively. Unlike our U.S. operations where, considering the pattern of recent relevant losses and the uncertainties associated with projected future taxable income exclusive of reversing temporary differences, we gave no weight to projections showing future taxable income, these net deferred tax assets relate to certain operations outside North America where we generally have had a long history of profitability and believe it is more likely than not that the net deferred tax assets will be realized through future taxable earnings. Accordingly, we have not established a valuation allowance on our remaining net deferred tax assets. Most notably, at September 30, 2009 and December 31, 2008, we recognized a net deferred tax asset of $1.6 billion and $1.4 billion, respectively, in our U.K. Automotive operations, primarily based upon the tax return consolidation of our Automotive operations with our U.K. FCE operation. Our U.K. FCE operation has a long history of profitability, and we believe it will provide a source of future taxable income that can be reasonably estimated. Even with lower volumes and higher credit losses in the recent past as discussed in "Results of Operations" above, FCE operations remain profitable in the first nine months of 2009. If in the future FCE profits in the United Kingdom decline, additional valuation allowances may be required. We will continue to assess the need for a valuation allowance in the future.Foreign Currency Risk. The net fair value of foreign exchange forward and option contracts (including adjustments for credit risk) at September 30, 2009 was an asset of approximately $2 million, compared to a net fair value asset of $249 million at December 31, 2008. The potential decrease in fair value of foreign exchange forward and option contracts (excluding adjustments for credit risk), assuming a 10% adverse change in the underlying foreign currency exchange rates, would be approximately $974 million at September 30, 2009 and was $600 million at December 31, 2008. If adjustments for credit risk were to be included, the decrease would be smaller.
Commodity Price Risk. The net fair value of commodity forward and option contracts (including adjustments for credit risk) at September 30, 2009 was a liability of $88 million, compared to a liability of $212 million at December 31, 2008. The potential decrease in fair value of commodity forward and option contracts (excluding adjustments for credit risk), assuming a 10% decrease in the underlying commodity prices, would be approximately $22 million at September 30, 2009, compared with a decrease of $26 million at December 31, 2008. If adjustments for credit risk were to be included, the decrease would be smaller.
Interest Rate Risk. To provide a quantitative measure of the sensitivity of Ford Credit s pre-tax cash flow to changes in interest rates, Ford Credit uses interest rate scenarios that assume a hypothetical, instantaneous increase or decrease in interest rates of 100 basis points (or 1%) across all maturities, as well as a base case that assumes that interest rates remain constant at existing levels. These interest rate scenarios are purely hypothetical and do not represent Ford Credit s view of future interest rate movements. The differences in pre-tax cash flow between these scenarios and the base case over a twelve-month period represent an estimate of the sensitivity of Ford Credit s pre-tax cash flow. Under this model, Ford Credit estimates that at September 30, 2009, all else constant, such an increase in interest rates would reduce pre-tax cash flow by $8 million over the next twelve months, compared with $28 million at December 31, 2008. The sensitivity analysis presented above assumes a one-percentage point interest rate change to the yield curve that is both instantaneous and parallel. In reality, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in Ford Credit s analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.
Read the The complete ReportF is in the portfolios of Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Keeley of Keeley Fund Management, Charles Brandes of Brandes Investment.
