FDM Group Regulatory News (FDM)

20 Jul 2006 14:53

Ford Motor Co20 July 2006 NEWS Contact: Media: Equity Investment Fixed Income Shareholder Inquiries:Becky Sanch Community: Investment Community: 1.800.555.5259 or1.313.594.4410 Raj Modi Rob Moeller 1.313.845.8540bsanch@ford.com 1.313.323.8221 1.313.621.0881 stockinf@ford.com ford@ford.com fixedinc@ford.com FOR IMMEDIATE RELEASE FORD REPORTS SECOND QUARTER 2006 FINANCIAL RESULTS • Net loss of 7 cents per share, or $123 million, for the second quarter of 2006. • Loss from continuing operations, excluding special items, of 3 cents per share, or $48 million.* • Strong liquidity with total automotive cash, including cash equivalents, marketable securities and loaned securities, at $23.6 billion. • Ford Credit pre-tax profit of $656 million. DEARBORN, Mich., July 20, 2006 - Ford Motor Company (NYSE: F) today reported a net loss of 7 cents per share, or $123 million, for the second quarter of 2006. This compares with net income of 47 cents per share, or $946 million, in the second quarter of 2005. Ford's second-quarter loss from continuing operations, excluding special items, was 3 cents per share, or $48 million, compared with a profit of 47 cents per share, or $936 million, in the same period a year ago.* Ford's second-quarter total sales and revenue was $42 billion, down $2.5 billion from a year ago. * Earnings per share from continuing operations, excluding special items, is calculated on a basis that includes pre-tax profit and provision for taxes and minority interest. See table following "Safe Harbor/Risk Factors" for the nature and amount of these special items and a reconciliation to GAAP. "We've seen an improvement in North America results in the second quarter, but the external factors we face aren't going to get any easier," said Chairman and Chief Executive Officer Bill Ford. "Mark Fields (executive vice president and president - The Americas) and his team have been working on plans to accelerate their efforts. Within the next 60 days, we'll be in a position to discuss the additional actions we will be taking." Special items reduced earnings by 4 cents per share in the second quarter. The pre-tax effect of these items included: o A favorable adjustment of $146 million, or 5 cents per share, to the previously announced first-quarter $1.7 billion special charge pertaining to expected layoff and jobs bank benefits and voluntary termination packages. This adjustment is based on recent agreements at the Atlanta Assembly Plant and the St. Louis Assembly Plant for buyouts and employee relocation. o A charge of $171 million, or 6 cents per share, associated with additional personnel reduction programs at facilities other than those being idled, as well as a related charge of $315 million, or 11 cents per share, associated with pension curtailments related to second-quarter buyouts. The pension curtailment charge represents the impact of earlier retirements, enhanced benefits, and the accelerated recognition of future service costs associated with our U.S. hourly pension plan. o Other gains of $148 million, or 8 cents per share, primarily associated with our equity interest in a non-recurring gain that Mazda realized on the transfer of its pension liabilities back to the Japanese government. Year-to-date highlights included: o Continued strong performance of Ford Fusion, Mercury Milan and Lincoln Zephyr in North America. o Significant warranty enhancements to our 2007-model Ford, Lincoln and Mercury vehicles sold in the United States and Canada, as well as increased standardization of customer-valued safety features. o Court approval of the U.A.W.-Ford health care agreement. o Successful introduction of the all-new S-MAX, new Galaxy, and new Transit in Europe. o Successful launch of the all-new Jaguar XK Coupe and Convertible, continued strong global sales growth at Land Rover and Aston Martin, and positive initial reception of the new Volvo S80 sedan. o Continued strong year-to-date sales growth in major international markets, including a 100 percent increase in China, and a 75 percent increase in India. Executive Vice President and Chief Financial Officer Don Leclair said, "Although we've made progress on a number of fronts, clearly we have more to do. This includes maintaining our focus on improving our quality, reducing our costs and maintaining our strong liquidity as we respond to the tougher operating environment we face." The following discussion of the results of our Automotive sector and Automotive business units is on a basis that excludes special items. See table following "Safe Harbor/Risk Factors" for the nature and amount of these special items and a reconciliation to GAAP. AUTOMOTIVE SECTOR On a pre-tax basis, worldwide Automotive sector losses in the second quarter were $808 million. This compares with a pre-tax loss of $245 million during the same period a year ago. Worldwide automotive sales for the second quarter declined to $37.7 billion from $38.7 billion in the same period last year. Worldwide vehicle unit sales in the quarter were 1,732,000, up from 1,718,000 a year ago. Total cash, including cash equivalents, marketable securities and loaned securities, at June 30, 2006 was $23.6 billion, down from $23.7 billion at the end of the first quarter. THE AMERICAS For the second quarter, The Americas reported a pre-tax loss of $702 million, compared with a pre-tax loss of $819 million in the same period a year ago. North America: In the second quarter, Ford's North America automotive operations reported a pre-tax loss of $797 million, compared with a pre-tax loss of $907 million a year ago. The improvement is more than explained by cost reductions in most areas of the business, partially offset by a mix shift from trucks to passenger cars, higher incentives and adverse foreign currency exchange. Sales were $19.2 billion, down from $19.9 billion for the same period a year ago. South America; Ford's South America automotive operations reported a second-quarter pre-tax profit of $95 million, an improvement from a pre-tax profit of $88 million a year ago. The improvement was more than explained by higher industry volume. Sales for the second quarter improved to $1.3 billion from $1 billion in 2005. INTERNATIONAL OPERATIONS In the second quarter, International Operations reported a pre-tax loss of $21 million, compared with a pretax profit of $176 million in second quarter 2005. FORD EUROPE AND PREMIER AUTOMOTIVE GROUP (PAG) The combined second-quarter pre-tax loss for Ford Europe and PAG automotive operations was $57 million, compared with a pre-tax profit of $83 million in the same period a year ago. Ford Europe: Ford Europe's second-quarter pre-tax profit was $105 million compared with a pre-tax profit of $66 million during the 2005 period. The improvement was explained by cost reductions, primarily in material costs. Unfavorable market mix of vehicle sales and lower net pricing were partial offsets. During the second quarter, Ford Europe's sales were $7.4 billion, compared with $7.9 billion during second quarter 2005. Premier Automotive Group (PAG): PAG reported a pre-tax loss of $162 million for the second quarter, compared with a pre-tax profit of $17 million for the same period in 2005. The decline is more than explained by the impact of the expiration of favorable hedges that were put in place in previous years, adjustments to warranty accruals for prior models, and lower market share at Volvo in advance of new model introductions. These factors were partially offset by favorable product and market mix, driven largely by the success of new products at Land Rover, Jaguar and Aston Martin. Second-quarter sales for PAG were $7.8 billion, compared with $7.9 billion a year ago. ASIA PACIFIC AND AFRICA/MAZDA In the second quarter, Asia Pacific and Africa/Mazda reported a combined pre-tax profit of $36 million, compared with a pre-tax profit of $93 million in 2005. Asia Pacific and Africa: For the second quarter, Asia Pacific and Africa reported a pre-tax profit of $4 million, compared with a pre-tax profit of $36 million a year ago. Lower Ford Falcon volumes and weaker industry volumes in traditional markets were partially offset by cost reductions. Sales were $1.8 billion, compared with $2 billion in 2005. Mazda: During the second quarter of 2006, Ford's share of Mazda pre-tax profits and associated operations was $32 million; compared with $57 million during the same period a year ago. The decline is more than explained by the non-recurrence of gains during the second quarter of 2005 on our investment in Mazda's convertible bonds, which have now been entirely converted to equity. OTHER AUTOMOTIVE Second-quarter results included a pre-tax loss of $85 million in Other Automotive, compared with a profit of $398 million a year ago. The year-over-year decline is more than explained by the non-recurrence of tax-related interest adjustments, partially offset by higher interest income from the company's cash portfolio reflecting higher short-term interest rates and higher average cash balances, FINANCIAL SERVICES SECTOR For the second quarter, Financial Services sector earned a pre-tax profit of £646 million, compared with pre-tax profits of $1.3 billion a year ago. Ford Motor Credit Company: Ford Motor Credit Company reported net income of $441 million in the second quarter of 2006, down $299 million from earnings of $740 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $656 million in the second quarter, compared with $1.2 billion in the previous year. The decrease in earnings primarily reflected higher borrowing costs, the impact of lower average receivable levels, lower credit loss reserve reductions and higher depreciation expense. THIRD-QUARTER PRODUCTION VOLUMES North America third-quarter production is projected at 670,000 units, down 58,000 units on a year-over-year basis, and 40,000 units less than what was previously announced. This change from the prior level is more than explained by lower truck production, reflecting our intention to maintain appropriate dealer inventory levels. Ford Europe production is projected at 410,000 units, up 38,000 units from last year, primarily reflecting the timing of vacation shutdowns. PAG production is projected at 150,000 units, down 3,000 units from last year. SECOND-QUARTER CONFERENCE CALL DETAILS Ford Motor Company will release second-quarter 2006 financial results at 7 a.m. EDT on Thursday, July 20. The following briefings will be held after the announcement: At 9 a.m. EDT, Chairman and CEO Bill Ford and Executive Vice President and CFO Don Leclair will host a conference call for news media and analysts to discuss second-quarter financial results. Following the earnings call, at 11 a.m. EDT, Ford Vice President and Treasurer Ami Marie Petach, Ford Motor Credit Company Vice Chairman and CFO K.R, Kent, and Ford Vice President and Controller Jim Gouin will host a conference call for fixed income analysts and investors. The presentations (listen-only) and supporting materials will be available on the Internet at www.shareholderSord.com. Representatives of the news media and the investment community participating by teleconference will have the opportunity to ask questions following the presentations. Access Information - Thursday, July 20Toll Free: 800-706-7741 International: 617-614-3471 Earnings: 9:00 a.m. EDTEarnings Passcode: "Ford Earnings Call" Fixed Income: 11:00 a.m. EDTFixed Income Passcode: "Ford Fixed Income" Replays - Available through Thursday, July 27www.shareholder, ford, com Toll Free: 888-286-8010 International: 617-801-6888 Passcodes:Earnings: 29481628 Fixed Income: 55865600 Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures and distributes automobiles in 200 markets across six continents. With about 300,000 employees and more than 100 plants worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company. Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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: o Continued decline in market share;o Continued or increased price competition resulting from industry overcapacity, currency fluctuations or other factors;o A market shift (or an increase in or acceleration of market shift) away from sales of trucks or sport utility vehicles, or from sales of other more profitable vehicles, in the United States;o A significant decline in industry sales, particularly in the United States or Europe, resulting from slowing economic growth, geo-political events (e.g., an escalation or expansion of armed conflict in or beyond the Middle East) or other factors;o Lower-than-anticipated market acceptance of new or existing products;o Continued or increased high prices for or reduced availability of fuel;o Currency or commodity price fluctuations;o Adverse effects from the bankruptcy or insolvency of, change in ownership or control of, or alliances entered into by a major competitor;o Economic distress of suppliers that has in the past and may in the future require us to provide financial support or take other measures to ensure supplies of components or materials;o Work stoppages at Ford or supplier facilities or other interruptions of supplies;o Single-source supply of components or materials;o Labor or other constraints on our ability to restructure our business;o Worse-tban-assumed economic and demographic experience for our postretirement benefit plans (e.g., discount rates, investment returns, and health care cost trends);o The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs;o Increased safety, emissions, fuel economy or other (e.g., pension funding) regulation resulting in higher costs, cash expenditures, and/or sales restrictions;o Unusual or significant litigation or governmental investigations arising out of alleged defects hi our products or otherwise;o A change in our requirements for parts or materials where we have entered into long-term supply arrangements that commit us to purchase minimum or fixed quantities of certain parts or materials, or to pay a minimum amount to the seller ("take-or-pay contracts");o Inability to access debt or securitization markets around the world at competitive rates or in sufficient amounts due to additional credit rating downgrades or otherwise;o Higher-than-expected credit losses;o Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles;o Changes in interest rates;o Collection and servicing problems related to finance receivables and net investment in operating leases;o Lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;o New or increased credit, consumer or data protection or other regulations resulting in higher costs and/or additional financing restrictions; ando Inability to implement the Way Forward plan. We cannot be certain that any expectation, forecast or assumption made by management in preparing these forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our 2005 10-K Report. TOTAL COMPANY 2006 SECOND QUARTER INCOME FROM CONTINUING OPERATIONS COMPARED WITH NET INCOME Second Quarter Earnings After-Tax Pre-Tax Per Share* Profit Profit (Mils.) (Mils.) __________________________________lncome/(Loss) from Continuing Operations $ (0.03) $ (48) $ (162)Excluding Special ItemsSpecial Items • Jobs Bank/Employee Separation Programs $ 0.05 $ 95 $ 146• Additional Personnel Reduction Programs (0.06) (111) (171)• Pension Curtailment Charges (0.11) (205) (315)• Other Gains (Primarily Mazda Pension 0.08 144 148 Adjustment) __________________________________ Total Special Items $ (0.04) $ (77) $ (192) __________________________________ Income/(Loss) from Continuing Operations $ (0.07) $ (125) $ (354) __________________________________Memo: Total Net lncome/(Loss) $ (0.07) $ (123) * Earnings per share from continuing operations is calculated on a basis that includes pre-tax profit, provision for taxes, and minority interest; additional information regarding the method of calculating earnings per share is available in the materials supporting the July 20, 2006, conference calls at wmv.siiareholder. ford.com. FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME For the Periods Ended June 30, 2006 and 2005 (in millions, except per share amounts) Second Quarter First Half 2006 2005 2006 2005 (unaudited) (unaudited) Sales and revenues Automotive sales $37,747 $38,685 $74,732 $78,017 Financial Services revenues 4,218 5,863 8,288 11,667 Total sales and revenues 41,965 44,548 83,020 89,684 Costs and expenses Automotive cost of sales 35,964 36,713 72,638 72,271 Selling, administrative and other expenses 4,631 6,127 9,223 12,217 Interest expense 2,178 1,719 4,197 3,683 Financial Services provision for credit and insurance losses 61 (17) 96 168 Total costs and expenses 42,834 44,542 86,154 88,339 Automotive interest income and other non-operating income/ (expense), net 310 651 525 804 Automotive equity in net income/(loss) of affiliated companies 205 69 284 126 Income/(loss) before income taxes (354) 726 (2,325) 2,275 Provision for/(benefit from) income taxes (248) (301) (1,091) 13 Income/(loss) before minority interests (106) 1,027 (1,234) 2,262 Minority interests in net income/(loss) of subsidiaries 19 84 78 142 Income/(loss) from continuing operations (125) 943 (1,312) 2,120 Income/(loss) from discontinued operations 2 3 2 38 Net income/(loss) $(123) $946 $(1,310) $2,158 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income/(loss) Income/(loss) from continuing operations $(0.07) $0.51 $(0.70) $1.16 Income/(loss) from discontinued operations - - - 0.02 Net income/(loss) $(0.07) $0.51 $(0.70) $1.18 Diluted income/(loss) Income/(loss) from continuing operations $(0.07) $0.47 $(0.70) $1.05 Income/(loss) from discontinued operations - - - 0.01 Net income/(loss) $(0.07) $0.47 $(0.70) $1.06 Cash dividends $0.10 $0.10 $0.20 $0.20 FORD MOTOR COMPANY AND SUBSIDIARIES SECTOR STATEMENT OF INCOME For the Periods Ended June 30, 2006 and 2005 (in millions, except per share amounts) Second Quarter First Half 2006 2005 2006 2005 (unaudited) (unaudited) AUTOMOTIVE Sales $37,747 $38,685 $74,732 $78,017 Costs and expenses Cost of sales 35,964 36,713 72,638 72,271 Selling, administrative and other expenses 2,950 3,076 5,924 6,185 Total costs and expenses 38,914 39,789 78,562 78,456 Operating income/(loss) (1,167) (1,104) (3,830) (439) Interest expense 348 187 694 589 Interest income and other non-operating income/ (expense), net 310 651 525 804 Equity in net income/ (loss) of affiliated companies 205 69 284 126 Income/(loss) before income taxes - Automotive (1,000) (571) (3,715) (98) FINANCIAL SERVICES Revenues 4,218 5,863 8,288 11,667 Costs and expenses Interest expense 1,830 1,532 3,503 3,094 Depreciation 1,291 1,540 2,499 3,054 Operating and other expenses 390 1,511 800 2,978 Provision for credit and insurance losses 61 (17) 96 168 Total costs and expenses 3,572 4,566 6,898 9,294 Income/(loss) before income taxes - Financial Services 646 1,297 1,390 2,373 TOTAL COMPANY Income/(loss) before income taxes (354) 726 (2,325) 2,275 Provision for/(benefit from) income taxes (248) (301) (1,091) 13 Income/(loss) before minority interests (106) 1,027 (1,234) 2,262 Minority interests in net income/(loss) of subsidiaries 19 84 78 142 Income/(loss) from continuing operations (125) 943 (1,312) 2,120 Income/(loss) from discontinued operations 2 3 2 38 Net income/(loss) $(123) $946 $(1,310) $2,158 AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income/(loss) Income/(loss) from continuing operations $(0.07) $0.51 $(0.70) $1.16 Income/(loss) from discontinued operations - - - 0.02 Net income/(loss) $(0.07) $0.51 $(0.70) $1.18 Diluted income/(loss) Income/(loss) from continuing operations $(0.07) $0.47 $(0.70) $1.05 Income/(loss) from discontinued operations - - - 0.01 Net income/(loss) $(0.07) $0.47 $(0.70) $1.06 Cash dividends $0.10 $0.10 $0.20 $0.20 FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) June 30, December 31, 2006 2005 (unaudited) ASSETS Cash and cash equivalents $27,985 $28,406 Marketable securities 12,600 10,672 Loaned securities 33 3,461 Finance receivables, net 106,554 105,975 Other receivables, net 9,194 8,522 Net investment in operating leases 31,884 27,099 Retained interest in sold receivables 1,150 1,420 Inventories 12,116 10,271 Equity in net assets of affiliated companies 2,751 2,579 Net property 41,639 40,706 Deferred income taxes 6,879 5,881 Goodwill and other intangible assets 6,392 5,945 Assets of discontinued/held-for-sale operations - 5 Other assets 17,945 18,534 Total assets $277,122 $269,476 LIABILITIES AND STOCKHOLDERS' EQUITY Payables $23,595 $22,813 Accrued liabilities and deferred revenue 78,444 72,977 Debt 153,478 154,332 Deferred income taxes 5,800 5,275 Total liabilities 261,317 255,397 Minority interests 1,054 1,122 Stockholders' equity Capital stock Common Stock, par value $0.01 per share (1,837 million shares issued) 18 18 Class B Stock, par value $0.01 per share (71 million shares issued) 1 1 Capital in excess of par value of stock 4,636 4,872 Accumulated other comprehensive income/(loss) (262) (3,562) Treasury stock (420) (833) Earnings retained for use in business 10,778 12,461 Total stockholders' equity 14,751 12,957 Total liabilities and stockholders' equity $277,122 $269,476 Prior year amounts have been revised to reflect a reclassification between Financial Services sector Cash and cash equivalents and Marketable securities as of December 31, 2005. FORD MOTOR COMPANY AND SUBSIDIARIES SECTOR BALANCE SHEET (in millions) June 30, December 31, 2006 2005 (unaudited) ASSETS Automotive Cash and cash equivalents $14,700 $13,388 Marketable securities 8,887 6,860 Loaned securities 33 3,461 Total cash, marketable and loaned securities 23,620 23,709 Receivables, net 3,496 3,061 Inventories 12,116 10,271 Deferred income taxes 832 1,187 Other current assets 9,397 8,177 Total current assets 49,461 46,405 Equity in net assets of affiliated companies 1,949 1,756 Net property 41,328 40,378 Deferred income taxes 11,855 11,049 Goodwill and other intangible assets 6,374 5,928 Assets of discontinued/held-for-sale operations - 5 Other assets 9,679 8,308 Total Automotive assets 120,646 113,829 Financial Services Cash and cash equivalents 13,285 15,018 Marketable securities 3,713 3,812 Finance receivables, net 112,252 111,436 Net investment in operating leases 26,073 22,951 Retained interest in sold receivables 1,150 1,420 Goodwill and other intangible assets 18 17 Other assets 5,943 7,457 Receivable from Automotive 759 83 Total Financial Services assets 163,193 162,194 Intersector elimination (759) (83) Total assets $283,080 $275,940 LIABILITIES AND STOCKHOLDERS' EQUITY Automotive Trade payables $18,393 $16,554 Other payables 3,253 4,222 Accrued liabilities and deferred revenue 31,743 28,733 Deferred income taxes 953 804 Debt payable within one year 1,269 978 Current payable to Financial Services 52 83 Total current liabilities 55,663 51,374 Long-term debt 16,450 16,900 Other liabilities 41,401 38,639 Deferred income taxes 563 586 Non-current payable to Financial Services 707 - Total Automotive liabilities 114,784 107,499 Financial Services Payables 1,949 2,037 Debt 135,759 136,454 Deferred income taxes 10,242 10,349 Other liabilities and deferred income 5,300 5,605 Total Financial Services liabilities 153,250 154,445 Minority interests 1,054 1,122 Stockholders' equity Capital stock Common Stock, par value $0.01 per share (1,837 million shares issued) 18 18 Class B Stock, par value $0.01 per share (71 million shares issued) 1 1 Capital in excess of par value of stock 4,636 4,872 Accumulated other comprehensive income/(loss) (262) (3,562) Treasury stock (420) (833) Earnings retained for use in business 10,778 12,461 Total stockholders' equity 14,751 12,957 Intersector elimination (759) (83) Total liabilities and stockholders' equity $283,080 $275,940 Prior year amounts have been revised to reflect a reclassification betweenFinancial Services sector Cash and cash equivalents and Marketable securities asof December 31, 2005. FORD MOTOR COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Periods Ended June 30, 2006 and 2005 (in millions) 2006 2005 (unaudited) Cash flows from operating activities of continuing operations Net cash (used in)/provided by operating activities $10,295 $14,582 Cash flows from investing activities of continuing operations Capital expenditures (3,403) (3,572) Acquisitions of retail and other finance receivables and operating leases (29,407) (28,951) Collections of retail and other finance receivables and operating leases 21,021 25,150 Net acquisitions of daily rental vehicles - (2,997) Purchases of securities (11,170) (3,044) Sales and maturities of securities 11,247 2,395 Proceeds from sales of retail and other finance receivables and operating leases 2,947 12,506 Proceeds from sale of businesses 54 2,070 Cash paid for acquisitions (37) (1,296) Transfer of cash balances upon disposition of discontinued/held-for-sale operations (4) (4) Other 49 71 Net cash (used in)/provided by investing activities (8,703) 2,328 Cash flows from financing activities of continuing operations Cash dividends (374) (367) Sales of Common Stock 234 447 Purchases of Common Stock (97) (263) Changes in short-term debt 378 834 Proceeds from issuance of other debt 23,900 14,765 Principal payments on other debt (26,433) (25,769) Other 134 (6) Net cash (used in)/provided by financing activities (2,258) (10,359) Effect of exchange rate changes on cash 241 (526) Net increase/(decrease) in cash and cash equivalents from continuing operations (425) 6,025 Cash flows from discontinued operations Cash flows from operating activities of discontinued operations - 70 Cash flows from investing activities of discontinued operations - (50) Cash flows from financing activities of discontinued operations - - Net increase/(decrease) in cash and cash equivalents $(425) $6,045 Cash and cash equivalents at January 1 $28,406 $22,828 Cash and cash equivalents of discontinued/ held-for-sale operations at January 1 4 681 Net increase/(decrease) in cash and cash equivalents (425) 6,045 Less: cash and cash equivalents of discontinued/ held-for-sale operations at June 30 - (722) Cash and cash equivalents at June 30 $27,985 $28,832 Prior year amounts have been revised to reflect a reclassification betweenFinancial Services sector Cash and cash equivalents and Marketable securitiesand to separately disclose cash flows from discontinued operations. FORD MOTOR COMPANY AND SUBSIDIARIES CONDENSED SECTOR STATEMENT OF CASH FLOWS For the Periods Ended June 30, 2006 and 2005 (in millions) First Half 2006 First Half 2005 Financial Financial Automotive Services Automotive Services (unaudited) (unaudited) Cash flows from operating activities of continuing operations Net cash (used in)/provided by operating activities $5,297 $4,228 $5,093 $5,322 Cash flows from investing activities Capital expenditures (3,381) (22) (3,347) (225) Acquisitions of retail and other finance receivables and operating leases - (29,407) - (28,951) Collections of retail and other finance receivables and operating leases - 20,923 - 24,979 Net (increase)/decrease of wholesale receivables - 868 - 599 Net acquisitions of daily rental vehicles - - - (2,997) Purchases of securities (2,478) (8,692) (2,149) (895) Sales and maturities of securities 2,300 8,947 1,883 512 Proceeds from sales of retail and other finance receivables and operating leases - 2,947 - 12,506 Proceeds from sales of wholesale receivables - - - 3,739 Proceeds from sale of businesses 54 - 29 2,041 Transfer of cash balances upon disposition of discontinued/ held-for-sale operations (4) - 1 (5) Investing activity from Financial Services 552 - 1,402 - Investing activity to Financial Services (1,400) - - - Cash paid for acquisitions (37) - (1,296) - Other 11 38 (11) 82 Net cash (used in)/ provided by investing activities (4,383) (4,398) (3,488) 11,385 Cash flows from financing activities Cash dividends (374) - (367) - Sales of Common Stock 234 - 447 - Purchases of Common Stock (97) - (263) - Changes in short-term debt 239 139 158 676 Proceeds from issuance of other debt 175 23,725 84 14,681 Principal payments on other debt (550) (25,883) (595) (25,174) Financing activity from Automotive - 1,400 - - Financing activity to Automotive - (552) - (1,402) Other 150 (16) (4) (2) Net cash (used in)/ provided by financing activities (223) (1,187) (540) (11,221) Effect of exchange rate changes on cash 4 237 (39) (487) Net change in intersector receivables/payables and other liabilities 613 (613) (356) 356 Net increase/(decrease) in cash and cash equivalents from continuing operations 1,308 (1,733) 670 5,355 Cash flows from discontinued operations Cash flows from operating activities of discontinued operations - - (1) 71 Cash flows from investing activities of discontinued operations - - 16 (66) Cash flows from financing activities of discontinued operations - - - - Net increase/(decrease) in cash and cash equivalents $1,308 $(1,733) $685 $5,360 Cash and cash equivalents at January 1 $13,388 $15,018 $10,139 $12,689 Cash and cash equivalents of discontinued/held-for- sale operations at January 1 4 - 2 679 Net increase/(decrease) in cash and cash equivalents 1,308 (1,733) 685 5,360 Less: cash and cash equivalents of discontinued/held-for- sale operations at June 30 - - (18) (704) Cash and cash equivalents at June 30 $14,700 $13,285 $10,808 $18,024 Prior year amounts have been revised to reflect a reclassification betweenFinancial Services sector Cash and cash equivalents and Marketable securitiesand to separately disclose cash flows from discontinued operations. 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