What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-28 compared with 2022-04-28 · 100 added, 156 removed, 411 unchanged (38% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Material Cash Requirements.

Our material cash requirements include:

(1) capital expenditures (for additional information, see the “Changes in Company Cash” section below) and other payments for engineering, software, product development, and implementation of our plans for battery electric vehicles;

(2) the purchase of raw materials and components to support the manufacturing and sale of vehicles (including electric vehicles), parts, and accessories (for additional information, see the Aggregate Contractual Obligations table and the accompanying description of our “Purchase obligations” in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 of our 2021 Form 10-K Report);

(3) marketing incentive payments to dealers;

(4) payments for warranty and field service actions (for additional information, see Note 20 of the Notes to the Financial Statements herein);

(5) debt repayments (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 19 of the Notes the Financial Statements in our 2021 Form 10-K Report);

(6) discretionary and mandatory payments to our global pension plans (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 of our 2021 Form 10-K Report, the “Changes in Company Cash” section below, and Note 13 of the Notes to the Financial Statements herein);

(7) employee wages, benefits, and incentives;

(8) operating lease payments (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 18 of the Notes the Financial Statements in our 2021 Form 10-K Report);

(9) cash effects related to the global redesign of our business (for additional information, see the “Changes in Company Cash” section below);

and (10) strategic acquisitions and investments to grow our business, including electrification.

In addition, subject to approval by our Board of Directors, shareholder distributions in the form of dividend payments and/or a share repurchase program may require the expenditure of a material amount of cash.

Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions, and other matters.

We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements.

Changes in Company Cash.

In managing our business, we classify changes in Company cash into operating and non-operating items.

Operating items include:

Company adjusted EBIT excluding Ford Credit EBT, capital spending, depreciation and tooling amortization, changes in working capital, Ford Credit distributions, interest on debt, cash taxes, and all other and timing differences (including timing differences between accrual-based EBIT and associated cash flows).

Non-operating items include:

global redesign (including separation payments), changes in Company debt excluding Ford Credit, contributions to funded pension plans, shareholder distributions, and other items (including gains and losses on investments in equity securities, acquisitions and divestitures, and other transactions with Ford Credit).

With respect to “Changes in working capital,” in general we carry relatively low Automotive segment trade receivables compared with our trade payables because the majority of our Automotive wholesales are financed (primarily by Ford Credit) immediately upon the sale of vehicles to dealers, which generally occurs shortly after being produced.

In contrast, our Automotive trade payables are based primarily on industry-standard production supplier payment terms of about 45 days.

As a result, our cash flow deteriorates if wholesale volumes (and the corresponding revenue) decrease while trade payables continue to become due.

Conversely, our cash flow improves if wholesale volumes (and the corresponding revenue) increase while new trade payables are generally not due for about 45 days.

For example, the suspension of production at most of our assembly plants and lower industry volumes due to COVID-19 in early 2020 resulted in an initial deterioration of our cash flow, while the subsequent resumption of manufacturing operations and return to pre-COVID-19 production levels at most of our assembly plants resulted in a subsequent improvement of our cash flow.

Even in normal economic conditions, however, these working capital balances generally are subject to seasonal changes that can impact cash flow.

For example, we typically experience cash flow timing differences associated with inventories and payables due to our annual summer and December shutdown periods when production, and therefore inventories and wholesale volumes, are usually at their lowest levels, while payables continue to come due and be paid.

The net impact of this typically results in cash outflows from changes in our working capital balances during these shutdown periods.

Our inventory includes vehicles completed but awaiting installation of components, including semiconductors.

As a result of the shortage, our inventory is higher than in periods prior to the supply shortage.

In response to, or in anticipation of, supplier disruptions, we may stockpile certain components or raw materials to help prevent disruption in our production of vehicles.

Such actions could have a short-term adverse impact on our cash and increase our inventory.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Financial institutions participate in a supply chain finance (“SCF”) program that enables our suppliers, at their sole discretion, to sell their Ford receivables (i.e., our payment obligations to the suppliers) to the financial institutions on a non-recourse basis in order to be paid earlier than our payment terms provide.

Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on our payment terms, the amounts we pay, or our liquidity.

We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the SCF financial institutions.

Moreover, we do not provide any guarantees in connection with the SCF program.

As of March 31, 2022, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $144 million.

The amount settled through the SCF program during the first quarter of 2022 was $306 million.

Changes in Company cash excluding Ford Credit are summarized below (in billions):

First Quarter

Company Excluding Ford Credit

Company Adjusted EBIT excluding Ford Credit (a) $ 2.9 $ 1.4

Capital spending $ (1.4) $ (1.3)

Depreciation and tooling amortization 1.2 1.3

Net spending $ (0.1) $ (0.1)

Receivables $ (0.6) $ —

Inventory (2.2) (2.7)

Trade Payables 1.6 1.5

Changes in working capital $ (1.2) $ (1.2)

Ford Credit distributions $ 1.0 $ 1.0

Interest on debt and cash taxes (0.4) (0.3)

All other and timing differences (2.6) (1.3)

Company adjusted free cash flow (a) $ (0.4) $ (0.6)

Global Redesign (including separations) $ (0.3) $ (0.1)

Changes in debt 1.9 (0.3)

Funded pension contributions (0.2) (0.2)

Shareholder distributions — (0.4)

All other (b) (0.4) (6.2)

Change in cash $ 0.5 $ (7.8)

(a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.

(b) 2022 includes the $5.4 billion mark-to-market loss on our Rivian investment.

Numbers may not sum due to rounding.

Our first quarter 2022 Net cash provided by/(used in) operating activities was negative $1.1 billion, a decrease of $5.6 billion from a year ago (see page 59 for additional information).

The year-over-year decrease was driven primarily by lower Ford Credit operating cash flow.

Company adjusted free cash flow was negative $0.6 billion, $0.2 billion lower than a year ago, driven by lower adjusted EBIT, partially offset by less adverse timing differences.

Capital spending was $1.3 billion in the first quarter of 2022, $0.1 billion lower than a year ago.

We now expect full year 2022 capital spending to be about $7.0 billion.

First quarter 2022 working capital impact was $1.2 billion negative, driven by higher inventory.

All other and timing differences were negative $1.3 billion, reflecting assorted differences including differences between accrual-based EBIT and the associated cash flows (e.g., pension and OPEB income or expense;

compensation payments;

marketing incentive and warranty payments to dealers).

We expect the working capital and timing differences to normalize when supply is restored, dealer stocks rebound, and incentives potentially increase.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

In the first quarter of 2022, we contributed $174 million to our global funded pension plans.

In the second quarter of 2022, we contributed $154 million to our global funded pension plans.

We now expect to contribute between $600 million and $700 million to our global funded pension plans in 2022.

Shareholder distributions were $408 million in the first quarter of 2022, all of which was attributable to our regular

Shareholder distributions were $407 million in the second quarter of 2022, all of which was attributable to our regular

quarterly dividend.

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Beginning with the actions we took in 2018, we expect our global redesign to have a potential cash effect of about $6 billion through 2023.

The cash effect related to our global redesign activities was $3.7 billion through March 31, 2022.

The cash effect related to our global redesign activities was $3.4 billion through June 30, 2022.

Available Credit Lines .

Total Company committed credit lines, excluding Ford Credit, at March 31, 2022 were $18.2 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.5 billion of our delayed draw term loan facility, and $1.3 billion of local credit facilities.

At March 31, 2022, the utilized portion of the corporate credit facility was $25 million, representing amounts utilized for letters of credit, and no portion of the supplemental revolving credit facility was utilized.

The $1.5 billion delayed draw term loan facility was drawn in full in 2019 and remains outstanding.

In addition, $848 million of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of March 31, 2022.

Lenders under our corporate credit facility have $3.4 billion of commitments maturing on September 29, 2024 and $10.1 billion of commitments maturing on September 29, 2026.

Lenders under our supplemental revolving credit facility have $2.0 billion of commitments maturing on September 29, 2024.

The corporate and supplemental credit agreements include certain sustainability-linked targets, pursuant to which the applicable margin and facility fees may be adjusted if Ford achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, renewable electricity consumption, and Ford Europe CO 2 tailpipe emissions.

Total Company committed credit lines, excluding Ford Credit, at June 30, 2022 were $19.3 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.75 billion of our new 364-day revolving credit facility (as described below), and $2.1 billion of local credit facilities.

At June 30, 2022, the utilized portion of the corporate credit facility was $25 million, representing amounts utilized for letters of credit, and the utilized portion of our 364-day revolving credit facility was $750 million.

In addition, $1.7 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of June 30, 2022.

Our $1.5 billion delayed draw term loan facility, which was drawn in full in 2019, was repaid on June 23, 2022 as described below.

Our corporate and supplemental revolving credit facilities were amended as of June 23, 2022 to, among other things, extend the maturity dates of the commitments under each facility.

Following the corporate credit facility amendment, $3.4 billion of commitments mature on June 23, 2025 and $10.1 billion of commitments mature on June 23, 2027.

Following the supplemental revolving credit facility amendment, $0.1 billion of commitments mature on September 29, 2024 and $1.9 billion of commitments mature on June 23, 2025.

Also on June 23, 2022, we entered into a 364-day revolving credit facility, with $1.75 billion of commitments maturing on June 22, 2023.

This new 364-day revolving credit facility further strengthens our liquidity, provides working capital funding, and is intended to be utilized.

On June 23, 2022, we drew $750 million under the 364-day revolving credit facility, which, along with $750 million of Company cash, was used to prepay the full $1.5 billion outstanding under our delayed draw term loan facility.

The maturity date of the delayed draw term loan facility was December 31, 2022.

The corporate, supplemental, and 364-day credit agreements include certain sustainability-linked targets, pursuant to which the applicable margin and facility fees may be adjusted if Ford achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, renewable electricity consumption, and Ford Europe CO 2 tailpipe emissions.

The corporate credit facility is unsecured and free of material adverse change conditions to borrowing, restrictive financial covenants (for example, interest or fixed-charge coverage ratio, debt-to-equity ratio, and minimum net worth requirements), and credit rating triggers that could limit our ability to obtain funding or trigger early repayment.

The corporate credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the facility.

The terms and conditions of the delayed draw term loan (other than the sustainability-linked provisions) and the supplemental revolving credit facility are consistent with our corporate credit facility.

Each of the corporate credit facility, supplemental revolving credit facility, delayed draw term loan, and our Loan Arrangement and Reimbursement Agreement with the U.S.

Department of Energy (the “DOE”) include a covenant that requires us to provide guarantees from certain of our subsidiaries in the event that our senior, unsecured, long-term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P.

The following subsidiaries have provided unsecured guarantees to the lenders under the credit facilities and to the DOE:

The terms and conditions of the supplemental and 364-day revolving credit facilities are consistent with our corporate credit facility.

Each of the corporate credit facility, supplemental revolving credit facility, and 364-day revolving credit facility include a covenant that requires us to provide guarantees from certain of our subsidiaries in the event that our senior, unsecured, long-term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P.

The following subsidiaries have provided unsecured guarantees to the lenders under the credit facilities:

Ford Component Sales, LLC;

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and Ford Trading Company, LLC.

As shown in Note 14 of the Notes to the Financial Statements, at March 31, 2022, Company debt excluding Ford Credit was $20.1 billion.

This balance is $0.3 billion lower than at December 31, 2021, primarily due to scheduled maturities.

On June 28, 2022, Ford Motor Company Limited, our operating subsidiary in the United Kingdom (“Ford Britain”), entered into a £750 million term loan credit facility with a syndicate of banks to support Ford Britain’s general export activities.

Accordingly, U.K.

Export Finance (“UKEF”) provided a £600 million guarantee of the credit facility under its Export Development Guarantee scheme, which supports high value commercial lending to U.K.

We have also guaranteed Ford Britain’s obligations under the credit facility to the lenders.

On June 30, 2022, Ford Britain drew the full £750 million available under the facility.

This five-year, non-amortizing loan matures on June 30, 2027.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

As shown in Note 14 of the Notes to the Financial Statements, at June 30, 2022, Company debt excluding Ford Credit was $19.4 billion.

This balance is $1.0 billion lower than at December 31, 2021, due to the repayment in full of our $1.5 billion delayed draw term loan facility, repayment of the remaining $954 million under our Loan Arrangement and Reimbursement Agreement with the U.S.

Department of Energy, and scheduled maturities.

These debt repayments were partially offset by the $750 million draw on our 364-day revolving credit facility and the £750 million ($908 million as of June 30, 2022) draw on our UKEF term loan credit facility.

We manage Company debt (excluding Ford Credit) levels with a leverage framework that targets investment grade credit ratings through a normal business cycle.

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Ford Credit Segment

Ford Credit ended the first quarter of 2022 with $28.4 billion of liquidity.

Ford Credit ended the second quarter of 2022 with $25 billion of liquidity.

During the quarter, Ford Credit completed $4.4 billion of public term funding.

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2021 December 31,

2021 March 31,

2021 June 30,

Funding Structure

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Securitized Funding as Percent of Total Debt 37.9 % 38.5 % 43.0 %

Net receivables were $117.4 billion at March 31, 2022 and were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 40.8% at the end of the first quarter of 2022.

Net receivables were $115.6 billion at June 30, 2022 and were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 43.0% at the end of the second quarter of 2022.

Public Term Funding Plan.

The following table shows Ford Credit’s issuances for full year 2020 and 2021, planned issuances for full year 2022, and its global public term funding issuances through April 26, 2022, excluding short-term funding programs (in billions):

The following table shows Ford Credit’s issuances for full year 2020 and 2021, planned issuances for full year 2022, and its global public term funding issuances through July 26, 2022, excluding short-term funding programs (in billions):

Forecast Through

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(a) See Definitions and Information Regarding Ford Credit Causal Factors section.

For 2022, Ford Credit projects full year public term funding in the range of $14 billion to $20 billion.

Through April 26, 2022, Ford Credit has completed $7 billion of public term issuances.

For 2022, Ford Credit now projects full year public term funding in the range of $12 billion to $17 billion.

Through July 26, 2022, Ford Credit has completed $10 billion of public term issuances.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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2021 December 31,

2021 March 31,

2021 June 30,

Liquidity Sources (a)

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Ford Credit’s net liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth and decline, and timing of funding transactions.

At March 31, 2022, Ford Credit’s net liquidity available for use was $28.4 billion, $3.6 billion lower than year-end 2021.

Ford Credit’s sources of liquidity include cash, committed asset-back facilities, and unsecured facilities.

At March 31, 2022, Ford Credit’s liquidity sources totaled $50.8 billion, down $1.4 billion from year-end 2021.

In June 2022, Ford Credit used its excess liquidity to repurchase approximately $3 billion of its public unsecured debt securities maturing in 2023, reducing interest expense and near-term maturities.

At June 30, 2022, Ford Credit’s net liquidity available for use was $25 billion, $7 billion lower than year-end 2021.

At June 30, 2022, Ford Credit’s liquidity sources including cash, committed asset-backed facilities, and unsecured credit facilities totaled $44.6 billion, down $7.6 billion from year-end 2021.

Material Cash Requirements.

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Ford Credit plans to utilize its liquidity (as described above) and its cash flows from business operations to fund its material cash requirements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Balance Sheet Liquidity Profile.

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This positive maturity profile is intended to provide Ford Credit with additional liquidity after all of its assets have been funded and is in addition to its liquidity available to protect for stress scenarios.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

The following table shows Ford Credit’s cumulative maturities for assets and total debt for the periods presented and unsecured long-term debt maturities in the individual periods presented (in billions):

April - December

July - December

2022 2023 2024 2025 and Beyond

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The table above also reflects adjustments to debt maturities to match the asset-backed debt maturities with the underlying asset maturities.

All wholesale securitization transactions and wholesale receivables are shown maturing in the next 12 months, even if the maturities extend beyond first quarter 2023.

All wholesale securitization transactions and wholesale receivables are shown maturing in the next 12 months, even if the maturities extend beyond second quarter 2023.

The retail securitization transactions under certain committed asset-backed facilities are assumed to amortize immediately rather than amortizing after the expiration of the commitment period.

As of March 31, 2022, Ford Credit had $134 billion of assets, $72 billion of which were unencumbered.

As of June 30, 2022, Ford Credit had $127 billion of assets, $65 billion of which were unencumbered.

Funding and Liquidity Risks.

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2021 December 31,

2021 March 31,

2021 June 30,

Leverage Calculation

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Ford Credit plans its leverage by considering market conditions and the risk characteristics of its business.

At March 31, 2022, Ford Credit’s financial statement leverage was 9.5:1.

Ford Credit targets financial statement leverage in the range of 9:1 to 10:1.

At June 30, 2022, Ford Credit’s financial statement leverage was 9.1:1, at the lower end of Ford Credit’s 9:1 to 10:1 target range.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Total Company

Pension Plans - Funded Balances.

As of March 31, 2022, our total Company pension overfunded status reported on our consolidated balance sheets was $0.2 billion and reflects the net funded status at December 31, 2021, updated for:

As of June 30, 2022, our total Company pension overfunded status reported on our consolidated balance sheets was $0.7 billion and reflects the net funded status at December 31, 2021, updated for:

service and interest cost;

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The discount rate and rate of expected return assumptions are unchanged from year-end 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Return on Invested Capital (“ROIC”).

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Four Quarters Ending

2021 March 31,

2021 June 30,

Adjusted Net Operating Profit/(Loss) After Cash Tax

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Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency.

There have been no rating actions taken by these NRSROs since the filing of our 2021 Form 10-K Report.

The following rating actions were taken by these NRSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022:

• On May 2, 2022, Fitch affirmed the credit ratings for Ford and Ford Credit at BB+ and revised the outlook to positive, from stable.

• On May 17, 2022, DBRS affirmed the credit ratings for Ford and Ford Credit at BB (high) and revised the outlook to positive, from stable.

The following table summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs:

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Unsecured Outlook / Trend Minimum Long-Term Investment Grade Rating

DBRS BB (high) BB (high) Stable BB (high) R-4 Stable BBB (low)

Fitch BB+ BB+ Stable BB+ B Stable BBB-

DBRS BB (high) BB (high) Positive BB (high) R-4 Positive BBB (low)

Fitch BB+ BB+ Positive BB+ B Positive BBB-

Moody’s N/A Ba2 Stable Ba2 NP Stable Baa3

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

We provided 2022 Company guidance in our earnings release furnished on Form 8-K dated April 27, 2022.

We provided 2022 Company guidance in our earnings release furnished on Form 8-K dated July 27, 2022.

Our actual results could differ materially from our guidance due to risks, uncertainties, and other factors, including those set forth in “Risk Factors” in Item 1A of our 2021 Form 10-K Report and as updated by our subsequent filings with the SEC.

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Pension contributions $0.6 - $0.7 billion

Global Redesign EBIT charges (b) $1.0 - $1.5 billion

Global Redesign EBIT charges (b) About $1.5 billion

Global Redesign cash effects (b) $1.0 - $1.5 billion

EBT Strong but lower than 2021

EBT About $3 billion

(a) When we provide guidance for adjusted EBIT and adjusted free cash flow, we do not provide guidance for the most comparable GAAP measures because, as described in more detail below in “Non-GAAP Measures That Supplement GAAP Measures,” they include items that are difficult to predict with reasonable certainty.

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Such actions may result in global redesign EBIT charges and cash effects in 2022 that are incremental to those set forth in the table.

A strong demand and pricing environment for existing and new vehicles support maintaining our full-year 2022 outlook of $11.5 billion to $12.5 billion in adjusted EBIT.

Adjusted free cash flow for the year is expected to be $5.5 billion to $6.5 billion.

Underlying assumptions for our 2022 guidance include:

• Improved semiconductor availability during the second half of the year

• Full-year vehicle wholesale volumes increasing 10% to 15% from 2021

• Continued strong pricing, though with a dynamic relationship between prices and vehicle volumes

• Commodity costs up about $4 billion year over year, along with inflationary effects on a range of other expenses

• EBT from Ford Credit that remains strong, but is lower than in 2021

• Ongoing investment in the Ford+ plan for growth and value creation

Our outlook also assumes that disruptions in the supply chain and local vehicle manufacturing operations resulting from renewed COVID-19-related health concerns and lockdowns in China do not further deteriorate.

Separately, to date, the tragic conflict in Ukraine has had limited direct effect on our supply chain.

However, the situation in Eastern Europe could exacerbate broader supply issues over time.

For full-year 2022, we continue to expect adjusted EBIT of $11.5 billion to $12.5 billion, which would represent 15% to 25% growth from last year, and adjusted free cash flow of $5.5 billion to $6.5 billion, with a significant portion coming from Automotive operations.

Our guidance continues to assume 10% to 15% growth in vehicle wholesales from 2021 and assumes that semiconductor availability continues to improve.

Our adjusted EBIT range assumes significantly higher profits in North America, collective profitability from other regional markets, strong but lower Ford Credit EBT of about $3 billion, and modest improvement in Mobility and Corporate Other EBIT.

Other assumptions include:

• Strong order banks and pent-up demand for our new and iconic products

• Continued strength in pricing, which includes the benefit of pricing actions taken during the year

• Commodity headwinds of about $4 billion, which we expect to offset with improvements in net pricing and mix

• Continuation of other broad-based inflationary pressures, now expected to total about $3 billion for the year, up $1 billion from our estimate last quarter, while we are actively looking at opportunities to offset increases

• Lower Ford Credit EBT reflecting primarily lower credit loss reserve releases, fewer returned off-lease vehicles, and more normalized credit losses.

We also expect auction values to remain strong but to decline in the second half of the year as the supply of new vehicles improves

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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Net Income/(Loss) Reconciliation to Adjusted EBIT ($M)

First Quarter

Second Quarter First Half

2021 2022 2021 2022

Net income/(loss) attributable to Ford (GAAP) $ 561 $ 667 $ 3,823 $ (2,443)

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Earnings per Share Reconciliation to Adjusted Earnings per Share

First Quarter

Second Quarter First Half

2021 2022 2021 2022

Diluted After-Tax Results ($M)

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Adjusted earnings/(loss) per share – diluted (Non-GAAP) $ 0.13 $ 0.68 $ 0.83 $ 1.06

(a) The first quarter of 2022 calculation excludes 56 million shares of net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt due to their anti-dilutive effect.

(a) The first half of 2022 calculation excludes 43 million shares of net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt due to their anti-dilutive effect.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate

First Quarter

Second Quarter First Half

2021 2022 2021 2022 Memo:

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Net Cash Provided by/(Used in) Operating Activities Reconciliation to Company Adjusted Free Cash Flow ($M)

First Quarter

Second Quarter First Half

2021 2022 2021 2022

Net cash provided by/(used in) operating activities (GAAP) $ 756 $ 2,947 $ 5,248 $ 1,863

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Funded pension contributions (164) (154) (393) (328)

Global Redesign (including separations) (345) (148)

Global Redesign (including separations) (a) (954) (137) (1,244) (285)

Ford Credit tax payments/(refunds) under tax sharing agreement — — 4 —

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Company adjusted free cash flow (Non-GAAP) $ (5,122) $ 3,619 $ (5,505) $ 3,039

(a) Global Redesign excludes cash flows reported in investing activities.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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The following tables provide supplemental cash flow information (in millions):

For the period ended March 31, 2022

First Quarter

For the period ended June 30, 2022

Cash flows from operating activities Company excluding Ford Credit Ford Credit Eliminations Consolidated

Net income $ (3,962) $ 843 $ — $ (3,119)

Net income/(loss) $ (4,164) $ 1,683 $ — $ (2,481)

Depreciation and tooling amortization 2,691 1,083 — 3,774

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Stock compensation 165 5 — 170

Provision for deferred income taxes (1,090) 37 — (1,053)

Provision for/(Benefit from) deferred income taxes (1,352) 192 — (1,160)

Decrease/(Increase) in finance receivables (wholesale and other) — (4,611) — (4,611)

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The following table provides supplemental income statement information (in millions):

For the period ended March 31, 2022

First Quarter

For the period ended June 30, 2022

Second Quarter

Company excluding Ford Credit Ford Credit Consolidated

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Net income/(loss) attributable to Ford Motor Company $ (173) $ 840 $ 667

For the period ended June 30, 2022

Company excluding Ford Credit Ford Credit Consolidated

Revenues $ 70,129 $ 4,537 $ 74,666

Total costs and expenses 67,726 2,729 70,455

Operating income/(loss) 2,403 1,808 4,211

Interest expense on Company debt excluding Ford Credit 620 — 620

Other income/(loss), net (6,722) 49 (6,673)

Equity in net income/(loss) of affiliated companies 15 10 25

Income/(Loss) before income taxes (4,924) 1,867 (3,057)

Provision for/(Benefit from) income taxes (760) 184 (576)

Net income/(loss) (4,164) 1,683 (2,481)

Income/(Loss) attributable to noncontrolling interests (38) — (38)

Net income/(loss) attributable to Ford Motor Company $ (4,126) $ 1,683 $ (2,443)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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The following tables provide supplemental balance sheet information (in millions):

March 31, 2022

June 30, 2022

Assets Company excluding Ford Credit Ford Credit Eliminations Consolidated

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Selected Other Information.

At March 31, 2022, total equity attributable to Ford was $45 billion, a decrease of $3.5 billion compared with December 31, 2021.

At June 30, 2022, total equity attributable to Ford was $44.2 billion, a decrease of $4.3 billion compared with December 31, 2021.

The detail for this change is shown below (in billions):

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Shareholder distributions (0.8)

Other comprehensive income/(loss), net (1.1)

Total $ (4.3)

Sales by Type.

The following table shows first quarter 2022 U.S.

The following table shows second quarter 2022 U.S.

sales volume and U.S.

7 unchanged sentences

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

The Financial Accounting Standards Board (“FASB”) has issued the following Accounting Standards Updates (“ASU”).

ASU Effective Date (a)

2018-12 Targeted Improvements to the Accounting for Long Duration Contracts January 1, 2023

2022-01 Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method January 1, 2023

2022-02 Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures January 1, 2023

(a) Early adoption for each of the standards is permitted.

ASUs 2018-12 and 2022-01 were assessed and are not expected to have a material impact on our consolidated financial statements and disclosures.

We are presently assessing the impact of ASU 2022-02.

For additional information, see Note 2 of the Notes to the Financial Statements.

For a discussion of recent accounting standards, see Note 2 of the Notes to the Financial Statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis