What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-04-25 compared with 2023-10-27 · 76 added, 356 removed, 183 unchanged (70% of the section changed)

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

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:

restructuring costs, 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, equity investments, and other transactions with Ford Credit).

With respect to “Changes in working capital,” in general, the Company excluding Ford Credit carries relatively low trade receivables compared with our trade payables because the majority of our 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 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.

The UAW labor disruption has impacted production at several of our manufacturing facilities and, similar to our experience during COVID-19, could result in a significant deterioration 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 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 finished product inventory at September 30, 2023 was higher than at December 31, 2022.

The increase primarily reflects higher in-plant and in-transit inventory, both of which include vehicles on hold for quality control.

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.

Moreover, in order to secure critical materials for production of electric vehicles, we have entered into and we may, in the future enter into, offtake agreements with raw material suppliers and make investments in certain raw material and battery suppliers, including contributing up to $6.6 billion in capital to BlueOval SK, LLC over a five-year period ending in 2026.

Such investments, which are part of our plan to invest over $50 billion in electric vehicles through 2026, could have an additional adverse impact on our cash in the near-term.

The terms of the offtake agreements we have entered into, and those we may enter into in the future, vary by transaction, though they generally obligate us to purchase a certain percentage or minimum amount of output produced by the counterparty over an agreed upon period of time.

The purchase price mechanism included in the offtake agreement is typically based on the market price of the material at the time of delivery.

The terms may also include conditions to our obligation to purchase the materials, such as quality or minimum output.

Subject to satisfaction of those conditions, we will be obligated to purchase the materials at the cost determined by the purchase price mechanism.

As of September 30, 2023, our estimated expenditures for the maximum quantity that we are committed to purchase under these offtake agreements, subject to certain conditions, total about $12 billion through 2035 based on our present pricing forecast;

however, our pricing forecast could fluctuate significantly from period to period, which could result in significant increases or decreases in the estimate of our overall purchase commitment.

The actual price paid for these materials will be recorded on our balance sheet at the time of purchase.

In addition, we may enter into additional offtake agreements with raw material suppliers, the costs under which could be significant.

Based on the offtake agreements we have entered into thus far, the earliest date by which we could be obligated to purchase any output, subject to satisfaction of the applicable conditions, will be in 2024.

Risk Factors in our 2022 Form 10-K Report and as updated by our subsequent filings with the SEC for a discussion of the risks related to our offtake agreements and other long-term purchase contracts.

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 do not provide any guarantees in connection with it.

As of September 30, 2023, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $236 million.

The amount settled through the SCF program during the first nine months of 2023 was $1.4 billion.

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

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

Third Quarter First Nine Months

2022 2023 2022 2023

Company Excluding Ford Credit

Company Adjusted EBIT excluding Ford Credit (a) $ 1.2 $ 1.8 $ 5.4 $ 8.3

Capital spending $ (1.6) $ (2.2) $ (4.5) $ (5.9)

Depreciation and tooling amortization 1.3 1.3 3.9 3.9

Net spending $ (0.3) $ (0.9) $ (0.6) $ (2.0)

Receivables $ (0.1) $ (0.6) $ (0.6) $ (0.8)

Inventory (1.7) (0.8) (4.1) (4.2)

Trade Payables 3.9 0.2 5.9 1.9

Changes in working capital $ 2.2 $ (1.1) $ 1.1 $ (3.1)

Ford Credit distributions $ 0.5 $ — $ 2.1 $ —

Interest on debt and cash taxes (0.3) (0.4) (1.2) (1.7)

All other and timing differences 0.3 1.8 (0.2) 3.3

Company adjusted free cash flow (a) $ 3.6 $ 1.2 $ 6.6 $ 4.8

Restructuring $ (0.2) $ (0.3) $ — $ (0.4)

Changes in debt 1.0 — 0.1 (0.2)

Funded pension contributions (0.1) (0.2) (0.5) (0.4)

Shareholder distributions (0.6) (0.6) (1.4) (4.4)

All other (b) (0.3) (0.9) (9.3) (2.6)

Change in cash $ 3.3 $ (0.8) $ (4.5) $ (3.2)

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

(b) Includes a $0.6 billion gain and a $7.3 billion loss on our Rivian investment in the third quarter and first nine months of 2022, respectively.

Numbers may not sum due to rounding.

Our third quarter 2023 Net cash provided by/(used in) operating activities was positive $4.6 billion, $0.8 billion higher than a year ago (see page 63 for additional information).

The increase was driven primarily by higher net income and higher Ford Credit operating cash flow, offset partially by a decrease in working capital.

Company adjusted free cash flow was $1.2 billion, $2.4 billion lower than a year ago.

The decrease was driven by unfavorable working capital and higher capital spending, offset partially by more favorable timing differences and higher adjusted EBIT excluding Ford Credit.

Capital spending was $2.2 billion in the third quarter of 2023, an increase of $0.6 billion from a year ago.

We now expect full year 2023 capital spending to be in the range of $8 billion to $8.5 billion.

Third quarter 2023 working capital impact was $1.1 billion negative, driven by higher inventory and higher receivables, offset partially by higher trade payables, each compared to June 30, 2023.

All other and timing differences were positive $1.8 billion.

Timing differences include 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).

In the third quarter of 2023, we contributed $190 million to our global funded pension plans.

We continue to expect to contribute between $500 million and $600 million to our global funded pension plans in 2023.

Shareholder distributions were $0.6 billion in the third quarter of 2023, all of which was attributable to our regular dividend.

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

Available Credit Lines .

Total Company committed credit lines, excluding Ford Credit, at September 30, 2023 were $23.3 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.8 billion of our 364-day revolving credit facility (initially entered into in June 2022 and amended most recently in April 2023), $4.0 billion of our new 364-day revolving credit facility (discussed below), and $2.1 billion of local credit facilities.

At September 30, 2023, the utilized portion of the corporate credit facility was $18 million, representing amounts utilized for letters of credit.

In addition, $1.7 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of September 30, 2023.

Lenders under our corporate credit facility have $3.4 billion of commitments maturing on April 26, 2026 and $10.1 billion of commitments maturing on April 26, 2028.

Lenders under our supplemental revolving credit facility have $0.1 billion of commitments maturing on September 29, 2024 and $1.9 billion of commitments maturing on April 26, 2026.

Lenders under our 364-day revolving credit facility initially entered into in 2022 and amended most recently in April 2023 (the “April 2023 364-day revolving credit facility”) have $1.8 billion of commitments maturing on April 24, 2024.

On August 17, 2023, we entered into a new 364-day revolving credit facility (the “August 2023 364-day revolving credit facility”), with $4 billion of commitments maturing on August 15, 2024.

This new 364-day revolving credit facility provides additional working capital flexibility to manage through uncertainties in the present environment.

The corporate, supplemental, and April 2023 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.

Ford outperformed the 2022 targets for all three of the sustainability-linked metrics, which favorably impacted pricing beginning in the third quarter of 2023.

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 corporate credit facility, supplemental revolving credit facility, and April 2023 364-day revolving credit facility.

The terms and conditions of the supplemental, April 2023 364-day, and August 2023 364-day revolving credit facilities are consistent with our corporate credit facility.

Ford Credit has been designated as a subsidiary borrower under the corporate credit facility and the April 2023 364-day revolving credit facility.

Each of the corporate credit facility, supplemental revolving credit facility, April 2023 364-day revolving credit facility, and August 2023 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;

Ford European Holdings Inc.;

Ford Global Technologies, LLC;

Ford Holdings LLC (the parent company of Ford Credit);

Ford International Capital LLC;

Ford Mexico Holdings LLC;

Ford Motor Service Company;

Ford Next LLC;

Ford Trading Company, LLC;

and Ford Van Dyke Investment Fund, Inc.

As shown in Note 14 of the Notes to the Financial Statements, at September 30, 2023, Company debt excluding Ford Credit was $19.8 billion.

This balance is $0.2 billion lower than at December 31, 2022.

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

The leverage framework includes a ratio of total Company debt (excluding Ford Credit), underfunded pension liabilities, operating leases, and other adjustments, divided by Company adjusted EBIT (excluding Ford Credit EBT), and further adjusted to exclude depreciation and tooling amortization (excluding Ford Credit).

Ford Credit’s leverage is calculated as a separate business as described in the ”Liquidity and Capital Resources - Ford Credit Segment” section of Item 2.

Ford Credit is self-funding and its debt, which is used to fund its operations, is separate from our Company debt excluding Ford Credit.

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

Ford Credit Segment

Ford Credit remains well capitalized with a strong balance sheet and funding diversified across platforms and markets.

Ford Credit ended the third quarter of 2023 with $27 billion of liquidity, up $5.9 billion from year-end.

Ford Credit continues to have robust access to the capital markets, completing $22 billion of public term issuances through October 25, 2023.

Key elements of Ford Credit’s funding strategy include:

• Maintain strong liquidity and funding diversity

• Prudently access public markets

• Continue to leverage retail deposit funding in Europe

• Flexibility to increase ABS mix as needed;

preserving assets and committed capacity

• Target financial statement leverage of 9:1 to 10:1

• Maintain self-liquidating balance sheet

Ford Credit’s liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet its business and funding requirements.

Ford Credit regularly stress tests its balance sheet and liquidity to ensure that it can continue to meet its financial obligations through economic cycles.

The following table shows funding for Ford Credit’s net receivables (in billions):

September 30,

2022 December 31,

2022 September 30,

Funding Structure

Term unsecured debt $ 46.4 $ 48.3 $ 50.7

Term asset-backed securities 48.9 56.4 55.9

Retail Deposits / Ford Interest Advantage 12.7 14.3 16.3

Other 3.6 2.6 2.2

Equity 11.4 11.9 12.6

Adjustments for cash (7.5) (11.2) (11.4)

Total Net Receivables $ 115.5 $ 122.3 $ 126.3

Securitized Funding as Percent of Total Debt 45.3 % 47.4 % 45.5 %

Net receivables were $126.3 billion at September 30, 2023 and were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 45.5% as of September 30, 2023.

Public Term Funding Plan.

The following table shows Ford Credit’s issuances for full year 2021 and 2022, planned issuances for full year 2023, and its global public term funding issuances through October 25, 2023, excluding short-term funding programs (in billions):

Forecast Through

Unsecured $ 5 $ 6 $ 10 - 13 $ 10

Securitizations (a) 9 10 13 - 14 12

Total public $ 14 $ 16 $ 23 - 27 $ 22

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

For 2023, Ford Credit now projects full year public term funding in the range of $23 billion to $27 billion.

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

The following table shows Ford Credit’s liquidity sources and utilization (in billions):

September 30,

2022 December 31,

2022 September 30,

Liquidity Sources (a)

Cash $ 7.6 $ 11.3 $ 11.6

Committed asset-backed facilities 34.2 37.4 42.3

Other unsecured credit facilities 2.1 2.3 2.4

Total liquidity sources $ 43.9 $ 51.0 $ 56.3

Utilization of Liquidity (a)

Securitization and restricted cash $ (2.7) $ (2.9) $ (2.9)

Committed asset-backed facilities (20.0) (26.6) (25.8)

Other unsecured credit facilities (0.5) (0.8) (0.7)

Total utilization of liquidity $ (23.2) $ (30.3) $ (29.4)

Gross liquidity $ 20.7 $ 20.7 $ 26.9

Other adjustments 0.3 0.4 0.1

Net liquidity available for use $ 21.0 $ 21.1 $ 27.0

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

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 September 30, 2023, Ford Credit’s net liquidity available for use was $27 billion, $5.9 billion higher than year-end 2022, reflecting strong access to public funding markets and the addition of $4.9 billion in committed asset-backed capacity.

At September 30, 2023, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and unsecured credit facilities, totaled $56.3 billion, up $5.3 billion from year-end 2022.

Material Cash Requirements.

Ford Credit’s material cash requirements include:

(1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles;

and (2) debt repayments (for additional information on debt, 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 to the Financial Statements in our 2022 Form 10-K Report).

In addition, subject to approval by Ford Credit’s Board of Directors, shareholder distributions may require the expenditure of a material amount of cash.

Moreover, Ford Credit 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.

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

Funding and Liquidity Risks.

Ford Credit’s funding plan is subject to risks and uncertainties, many of which are beyond its control, including disruption in the capital markets, that could impact both unsecured debt and asset-backed securities issuance and the effects of regulatory changes on the financial markets.

Refer to the “Liquidity - Ford Credit Segment - Funding and Liquidity Risks” section of Item 7 of Part II of our 2022 Form 10-K Report for more information.

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

Ford Credit uses leverage, or the debt-to-equity ratio, to make various business decisions, including evaluating and establishing pricing for finance receivable and operating lease financing, and assessing its capital structure.

The table below shows the calculation of Ford Credit’s financial statement leverage (in billions):

September 30,

2022 December 31,

2022 September 30,

Leverage Calculation

Debt $ 108.0 $ 119.0 $ 122.9

Equity (a) 11.4 11.9 12.6

Financial statement leverage (to 1) 9.4 10.0 9.7

(a) Total shareholder’s interest reported on Ford Credit’s balance sheets.

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

At September 30, 2023, Ford Credit’s financial statement leverage was 9.7:1.

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

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

Total Company

Pension Plans - Funded Balances.

As of September 30, 2023, our total Company pension underfunded status reported on our consolidated balance sheets was $0.2 billion and reflects the net funded status at December 31, 2022, updated for:

service and interest cost;

expected return on assets;

curtailments, settlements, and associated interim remeasurement (where applicable);

separation expense;

actual benefit payments;

and cash contributions.

For plans without interim remeasurement, the discount rate and rate of expected return assumptions are unchanged from year-end 2022.

Return on Invested Capital (“ROIC”).

We analyze total Company performance using an adjusted ROIC financial metric based on an after-tax, rolling four-quarter average.

The following table contains the calculation of our ROIC for the periods shown (in billions):

Four Quarters Ending

September 30,

2022 September 30,

Adjusted Net Operating Profit/(Loss) After Cash Tax

Net income/(loss) attributable to Ford $ 9.0 $ 6.2

Noncontrolling interest 0.1 (0.3)

Income tax 1.8 (0.9)

Cash tax (0.6) (1.1)

Interest on debt (1.4) (1.3)

Total pension/OPEB income/(cost) 4.3 (1.2)

Pension/OPEB service costs (1.0) (0.7)

Net operating profit/(loss) after cash tax $ 2.7 $ 7.5

Special items (excl.

pension/OPEB) pre-tax (4.9) (2.7)

Adjusted net operating profit/(loss) after cash tax $ 7.6 $ 10.2

Invested Capital

Equity $ 42.1 $ 44.3

Ford Credit) 20.3 19.8

Net pension and OPEB liability 4.6 4.6

Invested capital (end of period) $ 66.9 $ 68.6

Average invested capital $ 71.0 $ 67.5

ROIC (a) 3.8 % 11.1 %

Adjusted ROIC (Non-GAAP) (b) 10.7 % 15.1 %

(a) Calculated as the sum of net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

(b) Calculated as the sum of adjusted net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

Numbers may not sum due to rounding.

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

CREDIT RATINGS

Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the U.S.

Securities and Exchange Commission:

DBRS, Fitch, Moody’s, and S&P.

In several markets, locally recognized rating agencies also rate us.

A credit rating reflects an assessment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity.

Rating agencies’ ratings of us are based on information provided by us and other sources.

Credit ratings are not recommendations to buy, sell, or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency.

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

The following rating actions were taken by these NRSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023:

• On September 6, 2023, Fitch upgraded the credit ratings for Ford and Ford Credit to BBB- from BB+ and revised the outlook to stable from positive.

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

NRSRO RATINGS

Ford Ford Credit NRSROs

Issuer Rating Long-Term Senior Unsecured Outlook / Trend Long-Term Senior Unsecured Short-Term

Unsecured Outlook / Trend Minimum Long-Term Investment Grade Rating

DBRS BBB (low) BBB (low) Stable BBB (low) R-2 (low) Stable BBB (low)

Fitch BBB- BBB- Stable BBB- F3 Stable BBB-

Moody’s N/A Ba1 Stable Ba1 NP Stable Baa3

S&P BB+ BB+ Positive BB+ B Positive BBB-

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

On July 27, 2023, we affirmed an adjusted EBIT range of $11 billion to $12 billion for full-year 2023 with adjusted free cash flow of $6.5 billion to $7 billion.

Based on the $9.4 billion in adjusted EBIT we earned through the third quarter, we were on track to deliver our prior guidance.

However, the UAW strike created significant uncertainty regarding our full-year results, and, although a tentative agreement has been reached with the UAW, given the impact of the strike and the fact that the agreement is subject to ratification, we are withdrawing our full-year 2023 guidance.

This is in part because of the continued disruption in the industry with ongoing strikes and the follow-on impact to our shared supply base, the ramp of production in our plants and at our supplier partners, as well as other additional impacts.

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

Cautionary Note on Forward-Looking Statements

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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:

• Ford and Ford Credit’s financial condition and results of operations have been and may continue to be adversely affected by public health issues, including epidemics or pandemics such as COVID-19;

• Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to acquire key components, such as semiconductors, or raw materials, such as lithium, cobalt, nickel, graphite, and manganese, can disrupt Ford’s production of vehicles;

• To facilitate access to the raw materials necessary for the production of electric vehicles, Ford has entered into, and expects to continue to enter into, multi-year commitments to raw material suppliers that subject Ford to risks associated with lower future demand for such materials as well as costs that fluctuate and are difficult to accurately forecast;

• Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to acquire key components or raw materials, such as lithium, cobalt, nickel, graphite, and manganese, can disrupt Ford’s production of vehicles;

• To facilitate access to the raw materials and other components necessary for the production of electric vehicles, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast;

• Ford’s long-term competitiveness depends on the successful execution of Ford+;

• Ford’s vehicles could be affected by defects that result in delays in new model launches, recall campaigns, or increased warranty costs;

• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, restructurings, or new business strategies;

• Operational systems, security systems, vehicles, and services could be affected by cyber incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers;

• Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors;

• Ford’s vehicles could be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of our vehicles and services could continue to have an adverse effect on our business;

• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or business strategies;

• Ford may not realize the anticipated benefits of restructuring actions and such actions may cause Ford to incur significant charges, disrupt our operations, or harm our reputation;

• Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers;

• Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, public health issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors;

• Failure to develop and deploy secure digital services that appeal to customers could have a negative impact on Ford’s business;

• Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;

• Ford’s ability to attract and retain talented, diverse, and highly skilled employees is critical to its success and competitiveness;

• Ford’s ability to attract, develop, grow, and reward talent is critical to its success and competitiveness;

• Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and its reputation may be harmed if it is unable to achieve the initiatives it has announced;

• Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;

• With a global footprint, Ford’s results could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;

• Industry sales volume can be volatile and could decline if there is a financial crisis, recession, or significant geopolitical event;

• Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors;

• With a global footprint and supply chain, Ford’s results and operations could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;

• Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event;

• Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors, particularly for electric vehicles;

• Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results;

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• Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations;

• Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, and data protection laws and regulations as well as consumers’ heightened expectations to safeguard their personal information;

• Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information;

• Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.

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

Third Quarter First Nine Months

2022 2023 2022 2023

First Quarter

Net income/(loss) attributable to Ford (GAAP) $ 1,757 $ 1,332

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Earnings per Share Reconciliation to Adjusted Earnings per Share

Third Quarter First Nine Months

2022 2023 2022 2023

First Quarter

Diluted After-Tax Results ($M)

Diluted after-tax results (GAAP) $ 1,757 $ 1,332

Impact of pre-tax and tax special items (a) (2,063) (376) (8,819) (2,098)

Impact of pre-tax and tax special items (768) (653)

Adjusted net income/(loss) – diluted (Non-GAAP) $ 2,525 $ 1,985

3 unchanged sentences

Diluted shares 4,029 4,023

Earnings/(Loss) per share – diluted (GAAP) (b) $ (0.21) $ 0.30 $ (0.81) $ 1.21

Earnings/(Loss) per share – diluted (GAAP) $ 0.44 $ 0.33

Net impact of adjustments (0.19) (0.16)

Adjusted earnings/(loss) per share – diluted (Non-GAAP) $ 0.63 $ 0.49

(a) Includes adjustment for noncontrolling interest in 2023.

(b) In the third quarter and first nine months of 2022, there were 38 million and 42 million shares, respectively, excluded from the calculation of diluted

earnings/(loss) per share, 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

Third Quarter First Nine Months

First Quarter

2023 2024 Memo:

3 unchanged sentences

Adjusted earnings before taxes (Non-GAAP) $ 3,071 $ 2,485 $ 9,114

(Provision for)/Benefit from income taxes (GAAP) $ 195 $ (214) $ 771 $ (982) $ 864

Impact of special items (a) 544 87 2,273 408 2,573

(Provision for)/Benefit from income taxes (GAAP) (a) $ (496) $ (278) $ 362

Impact of special items (b) 144 220 1,273

Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ (640) $ (498) $ (911)

1 unchanged sentence

Adjusted effective tax rate (Non-GAAP) 20.8 % 20.0 % 10.0 %

(a) The first nine months of 2022 reflects the tax consequences of unrealized losses on marketable securities.

Full Year 2022 reflects the tax consequences of unrealized losses on marketable securities and favorable changes in our valuation allowances.

(a) Full Year 2023 reflects benefits from U.S.

research tax credits and legal entity restructuring within our leasing operations and China.

(b) Full Year 2023 reflects benefits from China legal entity restructuring.

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

Third Quarter First Nine Months

2022 2023 2022 2023

First Quarter

Net cash provided by/(used in) operating activities (GAAP) $ 2,800 $ 1,385

4 unchanged sentences

Ford Credit tax payments/(refunds) under tax sharing agreement (5) (33)

Other, net (150) (151) (150) (364)

Other, net (b) (140) (608)

Items included in Company Adjusted Free Cash Flows

4 unchanged sentences

(a) Restructuring excludes cash flows reported in investing activities.

(b) First quarter 2024 includes a $365 million settlement payment for the Transit Connect customs matter.

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

4 unchanged sentences

Eliminations, where presented, primarily represent eliminations of intersegment transactions and deferred tax netting.

Selected Cash Flow Information.

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

For the period ended September 30, 2023

First Nine Months

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

Net income/(loss) $ 4,078 $ 774 $ — $ 4,852

Depreciation and tooling amortization 3,956 1,722 — 5,678

Other amortization 4 (857) — (853)

Provision for/(Benefit from) credit and insurance losses 104 245 — 349

Pension and OPEB expense/(income) 1,026 — — 1,026

Equity method investment dividends received in excess of (earnings)/losses and impairments (59) (12) — (71)

Foreign currency adjustments (3) (96) — (99)

Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments 193 (6) — 187

Net (gain)/loss on changes in investments in affiliates (19) — — (19)

Stock compensation 340 10 — 350

Provision for/(Benefit from) deferred income taxes (43) (2) — (45)

Decrease/(Increase) in finance receivables (wholesale and other) — (1,234) — (1,234)

Decrease/(Increase) in intersegment receivables/payables 369 (369) — —

Decrease/(Increase) in accounts receivable and other assets (2,876) (89) — (2,965)

Decrease/(Increase) in inventory (4,229) — — (4,229)

Increase/(Decrease) in accounts payable and accrued and other liabilities 8,967 228 — 9,195

Other 374 (70) — 304

Interest supplements and residual value support to Ford Credit (2,763) 2,763 — —

Net cash provided by/(used in) operating activities $ 9,419 $ 3,007 $ — $ 12,426

Cash flows from investing activities

Capital spending $ (5,882) $ (59) $ — $ (5,941)

Acquisitions of finance receivables and operating leases — (40,162) — (40,162)

Collections of finance receivables and operating leases — 33,726 — 33,726

Purchases of marketable and other investments (3,981) (1,918) — (5,899)

Sales and maturities of marketable securities and other investments 8,405 1,979 — 10,384

Settlements of derivatives 7 (214) — (207)

Capital contributions to equity method investments (1,615) — — (1,615)

Other (505) — — (505)

Investing activity (to)/from other segments — 1 (1) —

Net cash provided by/(used in) investing activities $ (3,571) $ (6,647) $ (1) $ (10,219)

Cash flows from financing activities

Cash payments for dividends and dividend equivalents $ (4,394) $ — $ — $ (4,394)

Purchases of common stock — — — —

Net changes in short-term debt (57) (885) — (942)

Proceeds from issuance of long-term debt — 36,582 — 36,582

Payments of long-term debt (156) (31,663) — (31,819)

Other (117) (109) — (226)

Financing activity to/(from) other segments (1) — 1 —

Net cash provided by/(used in) financing activities $ (4,725) $ 3,925 $ 1 $ (799)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash (84) (30) — (114)

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

Selected Income Statement Information.

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

For the period ended September 30, 2023

Third Quarter

Company excluding Ford Credit Ford Credit Consolidated

Revenues $ 41,176 $ 2,625 $ 43,801

Total costs and expenses 40,219 2,453 42,672

Operating income/(loss) 957 172 1,129

Interest expense on Company debt excluding Ford Credit 324 — 324

Other income/(loss), net 142 177 319

Equity in net income/(loss) of affiliated companies 254 9 263

Income/(Loss) before income taxes 1,029 358 1,387

Provision for/(Benefit from) income taxes 95 119 214

Net income/(loss) 934 239 1,173

Income/(Loss) attributable to noncontrolling interests (26) — (26)

Net income/(loss) attributable to Ford Motor Company $ 960 $ 239 $ 1,199

For the period ended September 30, 2023

First Nine Months

For the period ended March 31, 2024

First Quarter

Company excluding Ford Credit Ford Credit Consolidated

13 unchanged sentences

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

September 30, 2023

March 31, 2024

Assets Company excluding Ford Credit Ford Credit Eliminations Consolidated

26 unchanged sentences

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

Selected Cash Flow Information.

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

For the period ended March 31, 2024

First Three Months

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

Net income/(loss) $ 1,100 $ 234 $ — $ 1,334

Depreciation and tooling amortization 1,259 622 — 1,881

Other amortization 5 (381) — (376)

Provision for credit and insurance losses 8 118 — 126

Pension and OPEB expense/(income) 166 — — 166

Equity method investment dividends received in excess of (earnings)/losses and impairments (146) (8) — (154)

Foreign currency adjustments (1) (11) — (12)

Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments 25 4 — 29

Stock compensation 120 6 — 126

Provision for/(Benefit from) deferred income taxes (62) 34 — (28)

Decrease/(Increase) in finance receivables (wholesale and other) — (1,121) — (1,121)

Decrease/(Increase) in intersegment receivables/payables (202) 202 — —

Decrease/(Increase) in accounts receivable and other assets (697) (109) — (806)

Decrease/(Increase) in inventory (3,154) — — (3,154)

Increase/(Decrease) in accounts payable and accrued and other liabilities 3,080 253 — 3,333

Other 73 (32) — 41

Interest supplements and residual value support to Ford Credit (1,370) 1,370 — —

Net cash provided by/(used in) operating activities $ 204 $ 1,181 $ — $ 1,385

Cash flows from investing activities

Capital spending $ (2,073) $ (21) $ — $ (2,094)

Acquisitions of finance receivables and operating leases — (14,829) — (14,829)

Collections of finance receivables and operating leases — 11,238 — 11,238

Purchases of marketable and other investments (2,934) (51) — (2,985)

Sales and maturities of marketable securities and other investments 3,456 123 — 3,579

Settlements of derivatives 23 (207) — (184)

Capital contributions to equity method investments (639) — — (639)

Other 34 — — 34

Investing activity (to)/from other segments — 4 (4) —

Net cash provided by/(used in) investing activities $ (2,133) $ (3,743) $ (4) $ (5,880)

Cash flows from financing activities

Cash payments for dividends and dividend equivalents $ (1,326) $ — $ — $ (1,326)

Purchases of common stock — — — —

Net changes in short-term debt 215 (1,416) — (1,201)

Proceeds from issuance of long-term debt — 16,488 — 16,488

Payments of long-term debt (46) (14,179) — (14,225)

Other (143) (51) — (194)

Financing activity to/(from) other segments (4) — 4 —

Net cash provided by/(used in) financing activities $ (1,304) $ 842 $ 4 $ (458)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (46) $ (125) $ — $ (171)

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

Selected Other Information.

At September 30, 2023, total equity attributable to Ford was $44.3 billion, an increase of $1.0 billion compared with December 31, 2022.

At March 31, 2024, total equity attributable to Ford was $42.9 billion, an increase of $0.1 billion compared with December 31, 2023.

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

4 unchanged sentences

Sales by Type.

The following table shows third quarter 2023 U.S.

The following table shows first quarter 2024 U.S.

sales volume and U.S.

8 unchanged sentences

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