Company Business analysis-prepare a report

-prepare a report on a particular company related to its business operations and the internal dynamics of the company.-The report is from MD&A section (Management’s Discussion and Analysis of Financial Condition and Results of Operations)in the attached file 10K-Ford from page -The paper should review what management has done to improve profitability and strengthen the company The paper should review what management has done to improve profitability and strengthen the company. A primary focus should be on true cost management issues such as (cost reductions , improvements in processes , new efficiencies , capital improvements , economies of scale , debt refinancing)A second focus could include other operational improvements and avenues for growth such as expanded revenues through customer initiatives or new segments; new facilities; additional staffing; technology improvements.- 4 Pages only
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2017
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-3950
Ford Motor Company
(Exact name of Registrant as specified in its charter)
Delaware
(State of incorporation)
38-0549190
(I.R.S. Employer Identification No.)
One American Road, Dearborn, Michigan
(Address of principal executive offices)
48126
(Zip Code)
313-322-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $.01 per share
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Yes
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
No
Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
No
Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.
Yes
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
No
As of June 30, 2017, Ford had outstanding 3,900,795,510 shares of Common Stock and 70,852,076 shares of Class
B Stock. Based on the New York Stock Exchange Composite Transaction closing price of the Common Stock on that date
($11.19 per share), the aggregate market value of such Common Stock was $43,649,901,757. Although there is no
quoted market for our Class B Stock, shares of Class B Stock may be converted at any time into an equal number of
shares of Common Stock for the purpose of effecting the sale or other disposition of such shares of Common Stock. The
shares of Common Stock and Class B Stock outstanding at June 30, 2017 included shares owned by persons who may
be deemed to be “affiliates” of Ford. We do not believe, however, that any such person should be considered to be an
affiliate. For information concerning ownership of outstanding Common Stock and Class B Stock, see the Proxy
Statement for Ford’s Annual Meeting of Stockholders currently scheduled to be held on May 10, 2018 (our “Proxy
Statement”), which is incorporated by reference under various Items of this Report as indicated below.
As of January 31, 2018, Ford had outstanding 3,902,499,580 shares of Common Stock and 70,852,076 shares of
Class B Stock. Based on the New York Stock Exchange Composite Transaction closing price of the Common Stock on
that date ($10.97 per share), the aggregate market value of such Common Stock was $42,810,420,393.
DOCUMENTS INCORPORATED BY REFERENCE
Document
Proxy Statement*
Where Incorporated
Part III (Items 10, 11, 12, 13, and 14)
__________
*
As stated under various Items of this Report, only certain specified portions of such document are incorporated by
reference in this Report.
Exhibit Index begins on page 99
FORD MOTOR COMPANY
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2017
Table of Contents
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Item 4A
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Part I
Business
Overview
Automotive Segment
Financial Services Segment
Governmental Standards
Employment Data
Engineering, Research, and Development
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers of Ford
Part II
Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Results of Operations – 2017
Automotive Segment
Financial Services Segment
All Other
Special Items
Taxes
Results of Operations – 2016
Automotive Segment
Financial Services Segment
All Other
Special Items
Taxes
Liquidity and Capital Resources
Credit Ratings
2018 Major External Factors Assumptions
Production Volumes
Outlook
Non-GAAP Financial Measure Reconciliations
2017 Supplemental Financial Information
Critical Accounting Estimates
Accounting Standards Issued But Not Yet Adopted
Aggregate Contractual Obligations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
i
Page
1
2
2
6
7
12
12
12
18
18
20
21
22
23
24
25
25
30
32
45
48
48
48
49
51
62
64
64
64
65
74
75
76
77
79
81
85
91
92
93
96
96
Table of Contents
(continued)
Item 9A
Item 9B
Item 10
Item 11
Item 12
Item 13
Item 14
Item 15
Item 16
Controls and Procedures
Other Information
Part III
Directors, Executive Officers of Ford, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Part IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
Ford Motor Company and Subsidiaries Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Equity
Notes to the Financial Statements
Schedule II — Valuation and Qualifying Accounts
ii
97
97
98
98
98
98
98
99
102
103
FS-1
FS-3
FS-3
FS-4
FS-5
FS-6
FS-7
FSS-1
PART I.
ITEM 1. Business.
Ford Motor Company was incorporated in Delaware in 1919. We acquired the business of a Michigan company, also
known as Ford Motor Company, which had been incorporated in 1903 to produce and sell automobiles designed and
engineered by Henry Ford. We are a global company based in Dearborn, Michigan. With about 202,000 employees
worldwide, the Company designs, manufactures, markets, and services a full line of Ford cars, trucks, sport utility vehicles
(“SUVs”), electrified vehicles, and Lincoln luxury vehicles, provides financial services through Ford Motor Credit Company
LLC (“Ford Credit”), and is pursuing leadership positions in electrification, autonomous vehicles, and mobility solutions.
In addition to the information about Ford and our subsidiaries contained in this Annual Report on Form 10-K for the
year ended December 31, 2017 (“2017 Form 10-K Report” or “Report”), extensive information about our Company can be
found at http://corporate.ford.com, including information about our management team, our brands and products, and our
corporate governance principles.
The corporate governance information on our website includes our Corporate Governance Principles, Code of Ethics
for Senior Financial Personnel, Code of Ethics for the Board of Directors, Code of Corporate Conduct for all employees,
and the Charters for each of the Committees of our Board of Directors. In addition, any amendments to our Code of
Ethics or waivers granted to our directors and executive officers will be posted on our corporate website. All of these
documents may be accessed by going to our corporate website, or may be obtained free of charge by writing to our
Shareholder Relations Department, Ford Motor Company, One American Road, P.O. Box 1899, Dearborn, Michigan
48126-1899.
Our recent periodic reports filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge at http://shareholder.ford.com.
This includes recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
as well as any amendments to those Reports. Recent Section 16 filings made with the SEC by the Company or any of
our executive officers or directors with respect to our Common Stock also are made available free of charge through our
website. We post each of these documents on our website as soon as reasonably practicable after it is electronically filed
with the SEC. Our reports filed with the SEC also may be found on the SEC’s website at www.sec.gov.
The foregoing information regarding our website and its content is for convenience only and not deemed to be
incorporated by reference into this Report nor filed with the SEC.
1
Item 1. Business (Continued)
OVERVIEW
Segments. We have four operating segments that represent the primary businesses reported in our consolidated
financial statements: Automotive, Financial Services, Ford Smart Mobility LLC, and Central Treasury Operations.
Automotive Segment. Our Automotive segment primarily includes the sale of Ford and Lincoln vehicles, service parts,
and accessories worldwide, together with the associated costs to develop, manufacture, distribute, and service the
vehicles, parts, and accessories. The segment includes five regional business units: North America, South America,
Europe, Middle East & Africa, and Asia Pacific.
Financial Services Segment. The Financial Services segment primarily includes our vehicle-related financing and
leasing activities at Ford Credit.
All Other. Ford Smart Mobility LLC and Central Treasury Operations are combined in All Other. See Note 24 of the
Notes to the Financial Statements for more information regarding All Other.
In the first quarter of 2018, we will change our reportable segments to better reflect the manner in which we now
manage our business, including resource allocation and assessment. We will report our results in three operating
segments that represent the primary businesses reported in our consolidated financial statements. These operating
segments will be Automotive, Mobility, and Ford Credit. Net income will comprise the financial results of these operating
segments, Corporate Other (which includes corporate governance costs, interest income on our cash, and portfolio gains
and losses), Interest on Debt, Special Items, and Taxes.
AUTOMOTIVE SEGMENT
General
Our vehicle brands are Ford and Lincoln. In 2017, we sold approximately 6,607,000 vehicles at wholesale throughout
the world. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” (“Item 7”) for a discussion of our calculation of wholesale unit volumes.
Substantially all of our vehicles, parts, and accessories are sold through distributors and dealers (collectively,
“dealerships”), the substantial majority of which are independently owned. At December 31, 2017, the approximate
number of dealerships worldwide distributing our vehicle brands was as follows:
Number of Dealerships
at December 31, 2017
Brand
Ford
10,345
Ford-Lincoln (combined)
820
Lincoln
263
Total
11,428
We do not depend on any single customer or a few customers to the extent that the loss of such customers would
have a material adverse effect on our business.
In addition to the products we sell to our dealerships for retail sale, we also sell vehicles to our dealerships for sale to
fleet customers, including commercial fleet customers, daily rental car companies, and governments. We also sell parts
and accessories, primarily to our dealerships (which in turn sell these products to retail customers) and to authorized parts
distributors (which in turn primarily sell these products to retailers). We also offer extended service contracts.
The worldwide automotive industry is affected significantly by general economic conditions over which we have little
control. Vehicles are durable goods, and consumers have latitude in determining whether and when to replace an existing
vehicle. The decision whether to purchase a vehicle may be affected significantly by slowing economic growth,
geopolitical events, and other factors (including the cost of purchasing and operating cars, trucks, and SUVs and the
availability and cost of financing and fuel). As we have seen in the United States and Europe, in particular, the number of
cars, trucks, and SUVs sold may vary substantially from year to year. Further, the automotive industry is a highly
competitive business that has a wide and growing variety of product offerings from a growing number of manufacturers.
2
Item 1. Business (Continued)
Our wholesale unit volumes vary with the level of total industry demand and our share of that industry demand. Our
wholesale unit volumes also are influenced by the level of dealer inventory. Our share is influenced by how our products
are perceived in comparison to those offered by other manufacturers based on many factors, including price, quality,
styling, reliability, safety, fuel efficiency, functionality, and reputation. Our share also is affected by the timing and
frequency of new model introductions. Our ability to satisfy changing consumer preferences with respect to type or size of
vehicle, as well as design and performance characteristics, affects our sales and earnings significantly.
As with other manufacturers, the profitability of our business is affected by many factors, including:
•
•
•
Wholesale unit volumes
Margin of profit on each vehicle sold – which in turn is affected by many factors, such as:
Market factors – volume and mix of vehicles and options sold, and net pricing (reflecting, among other factors,
incentive programs)
Costs of components and raw materials necessary for production of vehicles
Costs for customer warranty claims and additional service actions
Costs for safety, emissions, and fuel economy technology and equipment
A high proportion of relatively fixed structural costs, so that small changes in wholesale unit volumes can
significantly affect overall profitability
Our industry has a very competitive pricing environment, driven in part by industry excess capacity, which is
concentrated in Europe and Asia but affects other markets because much of this capacity can be redirected to other
markets. Prior to its recent strengthening, the decline in the value of the yen over the last several years also has
contributed significantly to competitive pressures in many of our markets. For the past several decades, manufacturers
typically have given price discounts and other marketing incentives to maintain market share and production levels.
Competitive Position. The worldwide automotive industry consists of many producers, with no single dominant
producer. Certain manufacturers, however, account for the major percentage of total sales within particular countries,
especially their countries of origin. Key competitors with global presence include Fiat Chrysler Automobiles, General
Motors Company, Groupe PSA, Honda Motor Company, Hyundai-Kia Automotive Group, Renault-Nissan B.V., Suzuki
Motor Corporation, Toyota Motor Corporation, and Volkswagen AG Group.
Seasonality. We manage our vehicle production schedule based on a number of factors, including retail sales (i.e.,
units sold by our dealerships to their customers at retail) and dealer stock levels (i.e., the number of units held in inventory
by our dealerships for sale to their customers). Historically, we have experienced some seasonal fluctuation in the
business, with production in many markets tending to be higher in the first half of the year to meet demand in the spring
and summer (typically the strongest sales months of the year).
Backlog Orders. We generally produce and ship our products on average within approximately 20 days after an order
is deemed to become firm. Therefore, no significant amount of backlog orders accumulates during any period.
Raw Materials. We purchase a wide variety of raw materials from numerous suppliers around the world for use in
production of our vehicles. These materials include base metals (e.g., steel, iron castings, and aluminum), precious
metals (e.g., palladium), energy (e.g., natural gas), and plastics/resins (e.g., polypropylene). We believe we have
adequate supplies or sources of availability of raw materials necessary to meet our needs. There always are risks and
uncertainties with respect to the supply of raw materials, however, which could impact availability in sufficient quantities to
meet our needs. See the “Overview” section of Item 7 for a discussion of commodity and energy price trends, and
“Item 7A. Quantitative and Qualitative Disclosures about Market Risk” (“Item 7A”) for a discussion of commodity price
risks.
Intellectual Property. We own or hold licenses to use numerous patents, copyrights, and trademarks on a global
basis. Our policy is to protect our competitive position by, among other methods, filing U.S. and international patent
applications to protect technology and improvements that we consider important to the development of our business. We
have generated a large number of patents, and expect this portfolio to continue to grow as we actively pursue additional
technological innovation. We have approximately 57,000 active patents and pending patent applications globally, with an
average age for patents in our active patent portfolio of just under five years. In addition to this intellectual property, we
also rely on our proprietary knowledge and ongoing technological innovation to develop and maintain our competitive
position. Although we believe these patents, patent applications, and know-how, in the aggregate, are important to the
conduct of our business, and we obtain licenses to use certain intellectual property owned by others, none is individually
considered material to our business. We also own numerous trademarks and service marks that contribute to the identity
3
Item 1. Business (Continued)
and recognition of our Company and its products and services globally. Certain of these marks are integral to the conduct
of our business, a loss of any of which could have a material adverse effect on our business.
Warranty Coverage, Field Service Actions, and Customer Satisfaction Actions. We provide warranties on vehicles we
sell. Warranties are offered for specific periods of time and/or mileage, and vary depending upon the type of product and
the geographic location of its s …
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