I was having a nice conversation with the Ford Finance folks one day on the phone, talking about how I was a loyal Ford fan. Somehow the conversation drifted towards Harleys and the woman said "You ARE a loyal fan, we own Harley." I responded that I had no idea and she said it is somewhat well known, but not necessarily publicized. She said Ford is a very diversified company and that is one of the reasons they are still doing OK despite the current auto crisis in America. They were after all the only one of the Big3 that came out and said they didn't want a bailout from the government.
The Ford Finance person you were talking to was blowing smoke up your posterior. Neither Ford Motor Company nor Ford Motor Credit Company own Harley-Davidson. Never have, never will. As a matter of fact, Ford Motor Company will be lucky to continue to own Ford Motor Company if something doesn't turn around drastically in the next year or two. The entire company has been mortgaged, including all the plants and equipment, trademarks, etc., and that is why Ford doesn't need the government bailout at this time. I don't know if management had a crystal ball a few years back and somehow figured out that a credit market crisis was coming, or they just got lucky with the timing. However, early on in the "reorganization of the reorganization" under new CEO Mulally we locked up a huge line of credit by offering up everything of value as collateral. The company just recently requested the last $10B available from that huge line of credit. So one difference between Ford and the others is that the others got caught by the collapse in the credit markets before they could hock all their assets. While Mulally is all smug right now because he won't have to give up his multimillion dollar salary to partake of the Federal largess, if his plans don't result in a major turnaround in the next two years there will be no money and no assets left to divvy up. The following press release about fourth quarter results mentions the draw down of the entire balance of the line of credit.
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Ford Reports Fourth Quarter 2008 Net Loss Of $5.9 Billion; Gained Market Share In U.S., Europe, Achieved Cost Target
DEARBORN, Mich., Jan. 29, 2009 – Ford Motor Company [NYSE: F] today reported a fourth quarter net loss of $5.9 billion, or $2.46 per share. This compares with a net loss of $2.8 billion, or $1.33 per share, in the fourth quarter of 2007.
Ford’s fourth quarter pre-tax operating loss from continuing operations, excluding special items, was $3.7 billion, a decline from a loss of $620 million a year ago. On an after-tax basis, Ford lost $3.3 billion in the fourth quarter or $1.37 per share, compared with a loss of $487 million, or 23 cents per share, a year ago.
“Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results,” said Ford President and CEO Alan Mulally. “We continued to take the decisive actions necessary to lower production to match the lower worldwide demand and reduce costs, which we expect will allow us to significantly reduce negative operating cash flow in 2009 and position Ford for growth when the economy rebounds.
“The progress we continued to make in the fourth quarter gives us great confidence that we have the right plan, the right people and the right products to create a viable, profitably growing Ford for all of our stakeholders,” Mulally added. “Our market share growth in the fourth quarter in the U.S. and Europe is a positive sign that customers recognize the value of our new products and understand that a new and different Ford is emerging.”
Based on current planning assumptions, Ford reiterated it has sufficient liquidity to fund its business plan and product investments. Ford said it finished 2008 with $24 billion in available Automotive liquidity, including $13.4 billion in Automotive gross cash. In January 2009, as permitted by its underlying agreement with the UAW, Ford converted the Temporary Asset Account funds into a new Ford note, payable at year-end. This will provide the flexibility to utilize more than $2 billion of funds to support operations, if needed. As a result, this amount will improve liquidity and be included as part of Ford’s Automotive gross cash beginning with the first quarter of 2009.
Ford also reconfirmed that, based on current planning assumptions, it does not need a bridge loan from the U.S. government, barring a significantly deeper economic downturn or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company’s supply base, dealers or creditors.
Ford also said it remains on track for both its overall and North American Automotive pre-tax results to be breakeven or profitable in 2011 – excluding special items – based on current planning assumptions.
Due to concerns about the instability of the capital markets with the uncertain state of the global economy, Ford announced it is drawing its available credit lines. The company said it expects to receive the funds on Feb. 3 and will add the $10.1 billion to its cash and reflect it on its first quarter 2009 balance sheet.
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Ford went to the credit markets two years ago when they were functioning normally and obtained the funding necessary – including our credit lines – to support our product transformation and restructuring,” Mulally said. “Given the instability of the capital markets with the uncertain state of the global economy, we believe it is prudent to draw these credit facilities at this time.”-------------------------------
Jerry
Author
Topic: Harley Davidson Bailout (Read 5624 times)