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FORD MOTOR CO - Quarter Report: 2023 September (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2023

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)
Delaware38-0549190
(State of incorporation)(I.R.S. Employer Identification No.)
One American Road
Dearborn,Michigan48126
(Address of principal executive offices)(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 classTrading symbolsName of each exchange on which registered
Common Stock, par value $.01 per shareFNew York Stock Exchange
6.200% Notes due June 1, 2059FPRBNew York Stock Exchange
6.000% Notes due December 1, 2059FPRCNew York Stock Exchange
6.500% Notes due August 15, 2062FPRDNew York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files).  Yes  ☑   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 23, 2023, Ford had outstanding 3,932,102,361 shares of Common Stock and 70,852,076 shares of Class B Stock.

Exhibit Index begins on page 70



FORD MOTOR COMPANY
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2023
 Table of ContentsPage
 Part I - Financial Information 
Item 1Financial Statements
Consolidated Statements of Cash Flows
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Equity
Notes to the Financial Statements
Item 2Management’s Discussion and Analysis of Financial Condition and Results of Operations
Recent Developments
Results of Operations
Ford Blue Segment
Ford Model e Segment
Ford Pro Segment
Ford Next Segment
Ford Credit Segment
Corporate Other
Interest on Debt
Taxes
Liquidity and Capital Resources
Credit Ratings
Outlook
Cautionary Note on Forward-Looking Statements
Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measure Reconciliations
Supplemental Information
Accounting Standards Issued But Not Yet Adopted
Item 3Quantitative and Qualitative Disclosures About Market Risk
Item 4Controls and Procedures
Part II - Other Information
Item 1Legal Proceedings
Item 5Other Information
Item 6Exhibits
Signature

i


PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the periods ended September 30,
 20222023
First Nine Months
(unaudited)
Cash flows from operating activities  
Net income/(loss)$(3,411)$4,852 
Depreciation and tooling amortization5,669 5,678 
Other amortization(876)(853)
(Gain)/Losses on extinguishment of debt (Note 4)121  
Held-for-sale impairment charges32  
Provision for/(Benefit from) credit and insurance losses(70)349 
Pension and other postretirement employee benefits (“OPEB”) expense/(income) (Note 13)(595)1,026 
Equity method investment dividends received in excess of (earnings)/losses and impairments2,975 (71)
Foreign currency adjustments(71)(99)
Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments (Note 4)
7,365 187 
Net (gain)/loss on changes in investments in affiliates (Note 4)137 (19)
Stock compensation277 350 
Provision for/(Benefit from) deferred income taxes(1,557)(45)
Decrease/(Increase) in finance receivables (wholesale and other)(6,601)(1,234)
Decrease/(Increase) in accounts receivable and other assets(2,370)(2,965)
Decrease/(Increase) in inventory(4,160)(4,229)
Increase/(Decrease) in accounts payable and accrued and other liabilities8,453 9,195 
Other357 304 
Net cash provided by/(used in) operating activities 5,675 12,426 
Cash flows from investing activities
Capital spending(4,801)(5,941)
Acquisitions of finance receivables and operating leases(32,988)(40,162)
Collections of finance receivables and operating leases35,676 33,726 
Proceeds from sale of business (Note 17)435  
Purchases of marketable securities and other investments(14,115)(5,899)
Sales and maturities of marketable securities and other investments16,208 10,384 
Settlements of derivatives233 (207)
Capital contributions to equity method investments(349)(1,615)
Other326 (505)
Net cash provided by/(used in) investing activities625 (10,219)
Cash flows from financing activities  
Cash payments for dividends and dividend equivalents(1,410)(4,394)
Purchases of common stock—  
Net changes in short-term debt1,650 (942)
Proceeds from issuance of long-term debt32,855 36,582 
Payments of long-term debt(37,395)(31,819)
Other(244)(226)
Net cash provided by/(used in) financing activities(4,544)(799)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(772)(114)
Net increase/(decrease) in cash, cash equivalents, and restricted cash$984 $1,294 
Cash, cash equivalents, and restricted cash at beginning of period (Note 7)$20,737 $25,340 
Net increase/(decrease) in cash, cash equivalents, and restricted cash984 1,294 
Cash, cash equivalents, and restricted cash at end of period (Note 7)$21,721 $26,634 

The accompanying notes are part of the consolidated financial statements.
1

Item 1. Financial Statements (continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share amounts)
For the periods ended September 30,
 2022202320222023
 Third QuarterFirst Nine Months
(unaudited)
Revenues  
Company excluding Ford Credit$37,205 $41,176 $107,334 $122,688 
Ford Credit2,187 2,625 6,724 7,541 
Total revenues (Note 3)39,392 43,801 114,058 130,229 
Costs and expenses  
Cost of sales34,354 37,548 96,581 109,688 
Selling, administrative, and other expenses2,847 2,671 8,346 7,927 
Ford Credit interest, operating, and other expenses1,687 2,453 4,416 6,911 
Total costs and expenses38,888 42,672 109,343 124,526 
Operating income/(loss)504 1,129 4,715 5,703 
Interest expense on Company debt excluding Ford Credit321 324 941 936 
Other income/(loss), net (Note 4)1,318 319 (5,355)798 
Equity in net income/(loss) of affiliated companies (Note 17)
(2,626)263 (2,601)269 
Income/(Loss) before income taxes(1,125)1,387 (4,182)5,834 
Provision for/(Benefit from) income taxes(195)214 (771)982 
Net income/(loss)(930)1,173 (3,411)4,852 
Less: Income/(Loss) attributable to noncontrolling interests(103)(26)(141)(21)
Net income/(loss) attributable to Ford Motor Company$(827)$1,199 $(3,270)$4,873 
EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 6)
Basic income/(loss)$(0.21)$0.30 $(0.81)$1.22 
Diluted income/(loss)(0.21)0.30 (0.81)1.21 
Weighted-average shares used in computation of earnings/(loss) per share
Basic shares4,0214,0044,0173,999
Diluted shares4,0214,0504,0174,040

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
 For the periods ended September 30,
 2022202320222023
 Third QuarterFirst Nine Months
(unaudited)
Net income/(loss)$(930)$1,173 $(3,411)$4,852 
Other comprehensive income/(loss), net of tax (Note 18)
Foreign currency translation(949)(371)(1,821)400 
Marketable securities(148)28 (484)94 
Derivative instruments367 325 417 (99)
Pension and other postretirement benefits13 7 33 13 
Total other comprehensive income/(loss), net of tax(717)(11)(1,855)408 
Comprehensive income/(loss)(1,647)1,162 (5,266)5,260 
Less: Comprehensive income/(loss) attributable to noncontrolling interests(100)(28)(142)(19)
Comprehensive income/(loss) attributable to Ford Motor Company$(1,547)$1,190 $(5,124)$5,279 

The accompanying notes are part of the consolidated financial statements.
2

Item 1. Financial Statements (continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)
 December 31,
2022
September 30,
2023
 (unaudited)
ASSETS  
Cash and cash equivalents (Note 7)$25,134 $26,427 
Marketable securities (Note 7)18,936 14,688 
Ford Credit finance receivables, net of allowance for credit losses of $255 and $257 (Note 8)
38,720 42,572 
Trade and other receivables, less allowances of $105 and $149
15,729 15,129 
Inventories (Note 9)14,080 18,326 
Other assets3,877 4,219 
Total current assets116,476 121,361 
Ford Credit finance receivables, net of allowance for credit losses of $590 and $619 (Note 8)
49,903 53,434 
Net investment in operating leases22,772 21,415 
Net property37,265 39,370 
Equity in net assets of affiliated companies2,798 4,403 
Deferred income taxes15,552 15,662 
Other assets11,118 12,428 
Total assets$255,884 $268,073 
LIABILITIES  
Payables$25,605 $27,813 
Other liabilities and deferred revenue (Note 12 and Note 20)21,097 23,817 
Debt payable within one year (Note 14)
Company excluding Ford Credit730 437 
Ford Credit49,434 48,201 
Total current liabilities96,866 100,268 
Other liabilities and deferred revenue (Note 12 and Note 20)25,497 27,851 
Long-term debt (Note 14)
Company excluding Ford Credit19,200 19,333 
Ford Credit69,605 74,691 
Deferred income taxes1,549 1,654 
Total liabilities212,717 223,797 
EQUITY  
Common Stock, par value $0.01 per share (4,084 million shares issued of 6 billion authorized)
41 41 
Class B Stock, par value $0.01 per share (71 million shares issued of 530 million authorized)
1 
Capital in excess of par value of stock22,832 23,032 
Retained earnings31,754 32,169 
Accumulated other comprehensive income/(loss) (Note 18)(9,339)(8,933)
Treasury stock(2,047)(2,047)
Total equity attributable to Ford Motor Company43,242 44,263 
Equity attributable to noncontrolling interests(75)13 
Total equity43,167 44,276 
Total liabilities and equity$255,884 $268,073 
The following table includes assets to be used to settle liabilities of the consolidated variable interest entities (“VIEs”). These assets and liabilities are included in the consolidated balance sheets above.
December 31,
2022
September 30,
2023
(unaudited)
ASSETS  
Cash and cash equivalents$2,274 $2,348 
Ford Credit finance receivables, net49,142 51,805 
Net investment in operating leases12,545 10,563 
Other assets264 215 
LIABILITIES
Other liabilities and deferred revenue$$ 
Debt45,451 46,664 

The accompanying notes are part of the consolidated financial statements.

3

Item 1. Financial Statements (Continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, unaudited)
 Equity Attributable to Ford Motor Company 
 Capital StockCap. in Excess of Par Value of StockRetained EarningsAccumulated Other Comprehensive Income/(Loss) (Note 18)Treasury StockTotalEquity Attributable to Non-controlling InterestsTotal
Equity
Balance at December 31, 2021$41 $22,611 $35,769 $(8,339)$(1,563)$48,519 $103 $48,622 
Net income/(loss)— — (3,110)— — (3,110)(9)(3,119)
Other comprehensive income/(loss), net
— — — 45 — 45 — 45 
Common Stock issued (a)(61)— — — (60)— (60)
Treasury stock/other — — — — (1)(1)
Dividends and dividend equivalents declared ($0.10 per share) (b)
— — (408)— — (408)— (408)
Balance at March 31, 2022$42 $22,550 $32,251 $(8,294)$(1,564)$44,985 $99 $45,084 
Net income/(loss)— — 667 — — 667 (29)638 
Other comprehensive income/(loss), net
— — — (1,179)— (1,179)(4)(1,183)
Common Stock issued (a)— 103 — — — 103 — 103 
Treasury stock/other — — — — — — 
Dividends and dividend equivalents declared ($0.10 per share) (b)
— — (407)— — (407)— (407)
Balance at June 30, 2022$42 $22,653 $32,511 $(9,473)$(1,564)$44,169 $68 $44,237 
Net income/(loss)— — (827)— — (827)(103)(930)
Other comprehensive income/(loss), net
— — — (720)— (720)(717)
Common stock issued (a)
— 115 — — — 115 — 115 
Treasury stock/other— — — — — — (4)(4)
Dividends and dividend equivalents declared ($0.15 per share) (b)
— — (612)— — (612)— (612)
Balance at September 30, 2022$42 $22,768 $31,072 $(10,193)$(1,564)$42,125 $(36)$42,089 
Balance at December 31, 2022$42 $22,832 $31,754 $(9,339)$(2,047)$43,242 $(75)$43,167 
Net income/(loss)— — 1,757 — — 1,757 (94)1,663 
Other comprehensive income/(loss), net
— — — 551 — 551 — 551 
Common Stock issued (a)— 57 — — — 57 — 57 
Treasury stock/other — — — — — — — — 
Dividends and dividend equivalents declared ($0.80 per share) (b)
— — (3,241)— — (3,241)— (3,241)
Balance at March 31, 2023$42 $22,889 $30,270 $(8,788)$(2,047)$42,366 $(169)$42,197 
Net income/(loss)— — 1,917 — — 1,917 99 2,016 
Other comprehensive income/(loss), net
— — — (136)— (136)(132)
Common Stock issued (a)— 140 — — — 140 — 140 
Treasury stock/other — — — — — — (5)(5)
Dividends and dividend equivalents declared ($0.15 per share) (b)
— — (610)— — (610)— (610)
Balance at June 30, 2023$42 $23,029 $31,577 $(8,924)$(2,047)$43,677 $(71)$43,606 
Net income/(loss)  1,199   1,199 (26)1,173 
Other comprehensive income/(loss), net
   (9) (9)(2)(11)
Common stock issued (a)
 115    115  115 
Treasury stock/other (112)   (112)112  
Dividends and dividend equivalents declared ($0.15 per share) (b)
  (607)  (607) (607)
Balance at September 30, 2023$42 $23,032 $32,169 $(8,933)$(2,047)$44,263 $13 $44,276 
__________
(a)Includes impact of share-based compensation.
(b)Dividends and dividend equivalents declared for Common and Class B Stock. In the first quarter of 2023, in addition to a regular dividend of $0.15 per share, we declared a supplemental dividend of $0.65 per share.

The accompanying notes are part of the consolidated financial statements.
4

Item 1. Financial Statements (Continued)
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

Table of Contents
Footnote Page
Note 1Presentation
Note 2New Accounting Standards
Note 3Revenue
Note 4Other Income/(Loss)
Note 5Income Taxes
Note 6Capital Stock and Earnings/(Loss) Per Share
Note 7Cash, Cash Equivalents, and Marketable Securities
Note 8Ford Credit Finance Receivables and Allowance for Credit Losses
Note 9Inventories
Note 10Other Investments
Note 11Goodwill
Note 12Other Liabilities and Deferred Revenue
Note 13Retirement Benefits
Note 14Debt
Note 15Derivative Financial Instruments and Hedging Activities
Note 16Employee Separation Actions and Exit and Disposal Activities
Note 17Acquisitions and Divestitures
Note 18Accumulated Other Comprehensive Income/(Loss)
Note 19Variable Interest Entities
Note 20Commitments and Contingencies
Note 21Segment Information
5

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1.  PRESENTATION

For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us,” or similar references mean Ford Motor Company, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise. We also make reference to Ford Motor Credit Company LLC, herein referenced to as Ford Credit. Our consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X. We reclassified certain prior year amounts in our consolidated financial statements to conform to the current year presentation.

In the opinion of management, these unaudited financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of our results of operations and financial condition for the periods, and at the dates, presented.  The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.  Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K Report”).

NOTE 2. NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

Accounting Standards Update (“ASU”) 2022-02, Financial Instruments – Credit Losses, Troubled Debt Restructurings and Vintage Disclosures. Effective January 1, 2023, we adopted the new standard, which eliminates the troubled debt recognition and measurement guidance and requires disclosure of current period gross charge-offs by year of origination (vintage disclosure). Adoption of the new standard did not have a material impact to our consolidated financial statements or financial statement disclosures.

ASU 2022-04, Liabilities – Supplier Finance Programs, Disclosure of Supplier Finance Program Obligations. Effective January 1, 2023, we adopted the new standard, which requires that entities that use supplier finance programs disclose information about the nature and potential magnitude of the programs, activity during the period, and changes from period to period.

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. The outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions, reported in Payables, was $253 million and $236 million at December 31, 2022 and September 30, 2023, respectively. The amount settled through the SCF program during the third quarter and first nine months of 2023 was $465 million and $1.4 billion, respectively.

We also adopted the following ASUs during 2023, none of which had a material impact to our consolidated financial statements or financial statement disclosures:

ASUEffective Date
2022-01
Derivatives and Hedging Fair Value Hedging Portfolio Layer Hedging
January 1, 2023
2022-03Fair Value Measurement of Equity Securities Subject to Contractual Sale RestrictionsJanuary 1, 2023
2018-12Targeted Improvements to the Accounting for Long Duration Contracts (and related amendments)January 1, 2023
2023-03Amendments to SEC Paragraphs Pursuant to SEC Bulletins & AnnouncementsJuly 14, 2023
2023-04Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121August 3, 2023

Accounting Standards Issued But Not Yet Adopted

ASUs issued but not yet adopted were assessed and determined to be not applicable or are not expected to have a material impact on our consolidated financial statements or financial statement disclosures.

6

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. REVENUE

The following tables disaggregate our revenue by major source for the periods ended September 30 (in millions):
Third Quarter 2022
Company excluding Ford CreditFord CreditConsolidated
Vehicles, parts, and accessories$36,111 $— $36,111 
Used vehicles378 — 378 
Services and other revenue (a)664 13 677 
Revenues from sales and services
37,153 13 37,166 
Leasing income52 1,123 1,175 
Financing income— 1,037 1,037 
Insurance income— 14 14 
Total revenues$37,205 $2,187 $39,392 
Third Quarter 2023
Company excluding
Ford Credit
Ford CreditConsolidated
Vehicles, parts, and accessories$39,916 $— $39,916 
Used vehicles482 — 482 
Services and other revenue (a)733 20 753 
Revenues from sales and services
41,131 20 41,151 
Leasing income45 1,017 1,062 
Financing income— 1,563 1,563 
Insurance income— 25 25 
Total revenues$41,176 $2,625 $43,801 
First Nine Months 2022
Company excluding
Ford Credit
Ford CreditConsolidated
Vehicles, parts, and accessories$103,933 $— $103,933 
Used vehicles1,180 — 1,180 
Services and other revenue (a)2,063 84 2,147 
Revenues from sales and services
107,176 84 107,260 
Leasing income158 3,500 3,658 
Financing income— 3,103 3,103 
Insurance income— 37 37 
Total revenues$107,334 $6,724 $114,058 
First Nine Months 2023
Company excluding
Ford Credit
Ford CreditConsolidated
Vehicles, parts, and accessories$119,084 $— $119,084 
Used vehicles1,408 — 1,408 
Services and other revenue (a)2,061 86 2,147 
Revenues from sales and services
122,553 86 122,639 
Leasing income135 3,095 3,230 
Financing income— 4,290 4,290 
Insurance income— 70 70 
Total revenues$122,688 $7,541 $130,229 
__________
(a)Includes extended service contract revenue.


7

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. REVENUE (Continued)

The amount of consideration we receive and revenue we recognize on our vehicles, parts, and accessories varies with changes in return rights and marketing incentives we offer to our customers and their customers. Estimates of marketing incentives are based on expected retail and fleet sales volumes, mix of products to be sold, and incentive programs to be offered. Customer acceptance of products and programs, as well as other market conditions, will impact these estimates. As a result of changes in our estimate of marketing incentives, we recorded a de minimis adjustment related to revenue recognized in prior periods during both the third quarter of 2022 and 2023.

We had a balance of $4.4 billion and $4.7 billion of unearned revenue associated primarily with outstanding extended service contracts reported in Other liabilities and deferred revenue at December 31, 2022 and September 30, 2023, respectively. We expect to recognize approximately $400 million of the unearned amount in the remainder of 2023, $1.4 billion in 2024, and $2.9 billion thereafter. We recognized $343 million and $385 million of unearned amounts from prior years as revenue during the third quarter of 2022 and 2023, respectively, and $1.1 billion during both the first nine months of 2022 and 2023.

Amounts paid to dealers to obtain extended service contracts are deferred and recorded as Other assets. We had a balance of $315 million and $317 million in deferred costs as of December 31, 2022 and September 30, 2023, respectively. We recognized $22 million and $26 million of amortization during the third quarter of 2022 and 2023, respectively, and $66 million and $77 million in the first nine months of 2022 and 2023, respectively.
8

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4. OTHER INCOME/(LOSS)

The amounts included in Other income/(loss), net for the periods ended September 30 were as follows (in millions):
Third QuarterFirst Nine Months
 2022202320222023
Net periodic pension and OPEB income/(cost), excluding service cost (Note 13)
$431 $(273)$1,320 $(605)
Investment-related interest income181 414 331 1,134 
Interest income/(expense) on income taxes
(6)(12)
Realized and unrealized gains/(losses) on cash equivalents, marketable securities, and other investments (a)609 (24)(7,365)(187)
Gains/(Losses) on changes in investments in affiliates(137)19 
Gains/(Losses) on extinguishment of debt(135)— (121)— 
Royalty income118 124 373 354 
Other104 82 236 95 
Total$1,318 $319 $(5,355)$798 
__________
(a)    Includes a $646 million gain on our Rivian investment in the third quarter of 2022 and a $7.3 billion loss and a $31 million loss in the first nine months of 2022 and 2023, respectively.

NOTE 5. INCOME TAXES

For interim tax reporting, we estimate one single effective tax rate for tax jurisdictions not subject to a valuation allowance, which is applied to the year-to-date ordinary income/(loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

NOTE 6. CAPITAL STOCK AND EARNINGS/(LOSS) PER SHARE

Earnings/(Loss) Per Share Attributable to Ford Motor Company Common and Class B Stock

Basic and diluted earnings/(loss) per share were calculated using the following (in millions):
Third QuarterFirst Nine Months
 2022202320222023
Net income/(loss) attributable to Ford Motor Company$(827)$1,199 $(3,270)$4,873 
Basic and Diluted Shares   
Basic shares (average shares outstanding)4,021 4,004 4,017 3,999 
Net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt (a)— 46 — 41 
Diluted shares4,021 4,050 4,017 4,040 
__________
(a)    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.

9

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

The fair values of cash, cash equivalents, and marketable securities measured at fair value on a recurring basis were as follows (in millions):
December 31, 2022
 Fair Value LevelCompany excluding Ford CreditFord CreditConsolidated
Cash and cash equivalents  
U.S. government1$3,295 $1,045 $4,340 
U.S. government agencies22,245 150 2,395 
Non-U.S. government and agencies21,048 199 1,247 
Other cash equivalents210 — 10 
Corporate debt2593 792 1,385 
Total marketable securities classified as cash equivalents
7,191 2,186 9,377 
Cash, time deposits, and money market funds7,550 8,207 15,757 
Total cash and cash equivalents$14,741 $10,393 $25,134 
Marketable securities
U.S. government1$4,947 $187 $5,134 
U.S. government agencies22,641 221 2,862 
Non-U.S. government and agencies22,625 658 3,283 
Corporate debt26,755 266 7,021 
Equities (a)1223 — 223 
Other marketable securities2252 161 413 
Total marketable securities$17,443 $1,493 $18,936 
Restricted cash$79 $127 $206 
September 30, 2023
Fair Value LevelCompany excluding Ford CreditFord CreditConsolidated
Cash and cash equivalents  
U.S. government1$3,019 $2,111 $5,130 
U.S. government agencies23,148 100 3,248 
Non-U.S. government and agencies2673 280 953 
Corporate debt2889 659 1,548 
Total marketable securities classified as cash equivalents
7,729 3,150 10,879 
Cash, time deposits, and money market funds8,047 7,501 15,548 
Total cash and cash equivalents$15,776 $10,651 $26,427 
Marketable securities
U.S. government1$4,022 $274 $4,296 
U.S. government agencies21,645 223 1,868 
Non-U.S. government and agencies22,242 549 2,791 
Corporate debt24,951 269 5,220 
Equities (a)123 — 23 
Other marketable securities2341 149 490 
Total marketable securities$13,224 $1,464 $14,688 
Restricted cash$83 $124 $207 
__________
(a)Net unrealized gains/losses recognized during full year 2022 and the first nine months of 2023 on all equity securities held at December 31, 2022 and September 30, 2023 were a $968 million loss and a $6 million loss, respectively.

10

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

The cash equivalents and marketable securities accounted for as available-for-sale (“AFS”) securities were as follows (in millions):
December 31, 2022
Fair Value of Securities with
Contractual Maturities
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueWithin 1 YearAfter 1 Year through
5 Years
After 5 Years
Company excluding Ford Credit  
U.S. government$4,797 $$(145)$4,653 $1,008 $3,645 $— 
U.S. government agencies2,508 — (119)2,389 1,244 1,109 36 
Non-U.S. government and agencies2,248 — (132)2,116 294 1,810 12 
Corporate debt7,511 (197)7,320 3,117 4,195 
Other marketable securities246 — (9)237 — 181 56 
Total$17,310 $$(602)$16,715 $5,663 $10,940 $112 
 
September 30, 2023
Fair Value of Securities with
Contractual Maturities
Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueWithin 1 YearAfter 1 Year through
5 Years
After 5 Years
Company excluding Ford Credit
U.S. government$4,073 $— $(119)$3,954 $1,787 $2,158 $
U.S. government agencies1,728 — (90)1,638 511 1,108 19 
Non-U.S. government and agencies2,173 — (108)2,065 762 1,291 12 
Corporate debt5,958 (149)5,810 1,536 4,257 17 
Other marketable securities314 — (6)308 — 247 61 
Total
$14,246 $$(472)$13,775 $4,596 $9,061 $118 

Sales proceeds and gross realized gains/losses from the sale of AFS securities for the periods ended September 30 were as follows (in millions):
Third QuarterFirst Nine Months
2022202320222023
Company excluding Ford Credit
Sales proceeds$692 $506 $5,814 $2,384 
Gross realized gains— — 
Gross realized losses20 27 

11

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

The present fair values and gross unrealized losses for cash equivalents and marketable securities accounted for as AFS securities that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position, were as follows (in millions):
December 31, 2022
Less than 1 Year1 Year or GreaterTotal
 Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Company excluding Ford Credit  
U.S. government$2,860 $(52)$1,570 $(93)$4,430 $(145)
U.S. government agencies707 (14)1,658 (105)2,365 (119)
Non-U.S. government and agencies751 (23)1,271 (109)2,022 (132)
Corporate debt4,571 (79)1,737 (118)6,308 (197)
Other marketable securities123 (4)108 (5)231 (9)
Total
$9,012 $(172)$6,344 $(430)$15,356 $(602)
 
September 30, 2023
Less than 1 Year1 Year or GreaterTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Company excluding Ford Credit
U.S. government$1,014 $(19)$2,939 $(100)$3,953 $(119)
U.S. government agencies290 (3)1,348 (87)1,638 (90)
Non-U.S. government and agencies304 (4)1,760 (104)2,064 (108)
Corporate debt3,000 (31)2,644 (118)5,644 (149)
Other marketable securities161 (1)140 (5)301 (6)
Total
$4,769 $(58)$8,831 $(414)$13,600 $(472)

We determine credit losses on AFS debt securities using the specific identification method. During the first nine months of 2023, we did not recognize any credit loss. The unrealized losses on securities are due to changes in interest rates and market liquidity.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash, as reported in the consolidated statements of cash flows, were as follows (in millions):
December 31,
2022
September 30,
2023
Cash and cash equivalents$25,134 $26,427 
Restricted cash (a)206 207 
Total cash, cash equivalents, and restricted cash$25,340 $26,634 
__________
(a)Included in Other assets in the non-current assets section of our consolidated balance sheets.

12

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

Ford Credit manages finance receivables as “consumer” and “non-consumer” portfolios.  The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, Ford Credit defines “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.

Ford Credit finance receivables, net were as follows (in millions):
 December 31,
2022
September 30,
2023
Consumer  
Retail installment contracts, gross$66,954 $71,134 
Finance leases, gross6,765 7,339 
Retail financing, gross73,719 78,473 
Unearned interest supplements(2,305)(2,967)
Consumer finance receivables71,414 75,506 
Non-Consumer 
Dealer financing18,054 21,376 
Non-Consumer finance receivables18,054 21,376 
Total recorded investment$89,468 $96,882 
Recorded investment in finance receivables$89,468 $96,882 
Allowance for credit losses(845)(876)
Total finance receivables, net$88,623 $96,006 
Current portion$38,720 $42,572 
Non-current portion49,903 53,434 
Total finance receivables, net$88,623 $96,006 
Net finance receivables subject to fair value (a)$82,200 $89,078 
Fair value (b)79,521 86,812 
__________
(a)Net finance receivables subject to fair value exclude finance leases.
(b)The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Ford Credit’s finance leases are comprised of sales-type and direct financing leases. Financing revenue from finance leases for the third quarter of 2022 and 2023 was $73 million and $102 million, respectively, and for the first nine months of 2022 and 2023 was $223 million and $276 million, respectively, and is included in Ford Credit revenues on our consolidated income statements.

At December 31, 2022 and September 30, 2023, accrued interest was $187 million and $245 million, respectively, which we report in Other assets in the current assets section of our consolidated balance sheets.

Included in the recorded investment in finance receivables at December 31, 2022 and September 30, 2023, were consumer receivables of $43.9 billion and $45.2 billion, respectively, and non-consumer receivables of $18.2 billion and $17.7 billion, respectively, (including Ford Blue, Ford Model e, and Ford Pro receivables sold to Ford Credit, which we report in Trade and other receivables) that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. The receivables are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of Ford Credit’s other creditors. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.
13

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on Ford Credit’s aging analysis. Consumer receivables credit quality ratings are as follows:

Pass – current to 60 days past due;
Special Mention – 61 to 120 days past due and in intensified collection status; and
Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral less costs to sell.

The credit quality analysis of consumer receivables at December 31, 2022 was as follows (in millions):
Amortized Cost Basis by Origination Year
Prior to 201820182019202020212022TotalPercent
Consumer
31 - 60 days past due$41 $60 $91 $181 $150 $126 $649 0.9 %
61 - 120 days past due12 20 39 40 29 149 0.2 
Greater than 120 days past due38 0.1 
Total past due59 76 116 227 197 161 836 1.2 
Current883 2,563 6,137 13,844 18,357 28,794 70,578 98.8 
Total$942 $2,639 $6,253 $14,071 $18,554 $28,955 $71,414 100.0 %

The credit quality analysis of consumer receivables at September 30, 2023 was as follows (in millions):
Amortized Cost Basis by Origination Year
Prior to 201920192020202120222023TotalPercent
Consumer
31 - 60 days past due$50 $58 $140 $129 $172 $96 $645 0.9 %
61 - 120 days past due12 30 35 50 28 164 0.2 
Greater than 120 days past due10 10 41 — 
Total past due67 74 176 174 232 127 850 1.1 
Current1,296 3,090 8,787 12,867 22,254 26,362 74,656 98.9 
Total$1,363 $3,164 $8,963 $13,041 $22,486 $26,489 $75,506 100.0 %
Gross charge-offs$38 $30 $55 $61 $81 $14 $279 

Non-Consumer Portfolio. The credit quality of dealer financing receivables is evaluated based on Ford Credit’s internal dealer risk rating analysis. Ford Credit uses a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that are considered most significant in predicting a dealer’s ability to meet its financial obligations. Ford Credit also considers numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with Ford Credit and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

Group I – strong to superior financial metrics;
Group II – fair to favorable financial metrics;
Group III – marginal to weak financial metrics; and
Group IV – poor financial metrics, including dealers classified as uncollectible.

14

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The credit quality analysis of dealer financing receivables at December 31, 2022 was as follows (in millions):
Amortized Cost Basis by Origination YearWholesale Loans
Dealer Loans
Prior to 201820182019202020212022TotalTotalPercent
Group I$402 $148 $35 $67 $185 $224 $1,061 $13,888 $14,949 82.8 %
Group II21 — 42 72 2,751 2,823 15.6 
Group III— — — — — 10 10 233 243 1.4 
Group IV— — — — 35 39 0.2 
Total (a)$404 $169 $36 $72 $187 $279 $1,147 $16,907 $18,054 100.0 %
__________
(a)Total past due dealer financing receivables at December 31, 2022 were $9 million.

The credit quality analysis of dealer financing receivables at September 30, 2023 was as follows (in millions):
Amortized Cost Basis by Origination YearWholesale Loans
Dealer Loans
Prior to 201920192020202120222023TotalTotalPercent
Group I$491 $31 $66 $159 $62 $285 $1,094 $17,393 $18,487 86.5 %
Group II— 50 60 2,384 2,444 11.4 
Group III— — — — 386 393 1.8 
Group IV— — — — 49 52 0.3 
Total (a)$493 $32 $68 $163 $65 $343 $1,164 $20,212 $21,376 100.0 %
Gross charge-offs$— $— $— $— $— $— $— $— $— 
__________
(a)Total past due dealer financing receivables at September 30, 2023 were $4 million.

Non-Accrual of Revenue. The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Loan Modifications. Consumer and non-consumer receivables that have a modified interest rate and/or a term extension (including receivables that were modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code) are typically considered to be loan modifications. Ford Credit does not grant modifications to the principal balance of the receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.

The use of interest rate modifications and term extensions helps Ford Credit mitigate financial loss. Term extensions may assist in cases where Ford Credit believes the customer will recover from short-term financial difficulty and resume regularly scheduled payments. The effect of most loan modifications made to borrowers experiencing financial difficulty is included in the historical trends used to measure the allowance for credit losses. A loan modification that improves the delinquency status of a borrower reduces the probability of default, which results in a lower allowance for credit losses. At September 30, 2023, an insignificant portion of Ford Credit's total finance receivables portfolio had been granted a loan modification, and these modifications are generally treated as a continuation of the existing loan.



15

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Allowance for Credit Losses

The allowance for credit losses represents an estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly.

Adjustments to the allowance for credit losses are made by recording charges to Ford Credit interest, operating, and other expenses on our consolidated income statements. The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors.

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses. In the event Ford Credit repossesses the collateral, the receivable is charged off and the collateral is recorded at its estimated fair value less costs to sell and reported in Other assets on our consolidated balance sheets.

An analysis of the allowance for credit losses related to finance receivables for the periods ended September 30 was as follows (in millions):
Third Quarter 2022First Nine Months 2022
 ConsumerNon-ConsumerTotalConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$754 $$763 $903 $22 $925 
Charge-offs(73)— (73)(196)(1)(197)
Recoveries39 40 126 129 
Provision for/(Benefit from) credit losses40 (1)39 (67)(14)(81)
Other (a)(9)— (9)(15)(1)(16)
Ending balance$751 $$760 $751 $$760 

Third Quarter 2023First Nine Months 2023
 ConsumerNon-ConsumerTotalConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$866 $$873 $838 $$845 
Charge-offs(105)— (105)(279)— (279)
Recoveries37 — 37 113 114 
Provision for/(Benefit from) credit losses75 (1)74 193 (2)191 
Other (a)(3)— (3)— 
Ending balance$870 $$876 $870 $$876 
__________
(a)    Primarily represents amounts related to translation adjustments.

During the third quarter and first nine months of 2023, the allowance for credit losses increased $3 million and $31 million, respectively, driven by an increase in Ford Credit finance receivables. Net charge-offs increased from a year ago reflecting normalization from extraordinarily low levels. The impact of higher inflation and higher interest rates on future credit losses remains uncertain. Ford Credit will continue to monitor economic trends and conditions and portfolio performance and will adjust the reserve accordingly.
16

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 9. INVENTORIES

Inventories were as follows (in millions):
 December 31,
2022
September 30,
2023
Raw materials, work-in-process, and supplies$5,997 $6,408 
Finished products8,083 11,918 
Total inventories$14,080 $18,326 

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.

NOTE 10. OTHER INVESTMENTS

We have investments in entities not accounted for under the equity method for which fair values are not readily available. We record these investments at cost (less impairment, if any), adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer. We report the carrying value of these investments in Other assets in the non-current assets section of our consolidated balance sheets. These investments were $384 million and $252 million at December 31, 2022 and September 30, 2023, respectively. The cumulative net unrealized gain from adjustments related to Other Investments held at September 30, 2023 was $13 million.

NOTE 11. GOODWILL

The net carrying amount of goodwill was $603 million and $597 million at December 31, 2022 and September 30, 2023, respectively, and is reported in Other assets in the non-current assets section of our consolidated balance sheets.

17

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12. OTHER LIABILITIES AND DEFERRED REVENUE

Other liabilities and deferred revenue were as follows (in millions):
 December 31,
2022
September 30,
2023
Current
Dealer and dealers’ customer allowances and claims$9,219 $10,636 
Deferred revenue2,404 2,754 
Employee benefit plans2,020 1,725 
Accrued interest935 1,100 
Operating lease liabilities404 473 
OPEB (a)329 329 
Pension (a)196 197 
Other (b)5,590 6,603 
Total current other liabilities and deferred revenue$21,097 $23,817 
Non-current  
Dealer and dealers’ customer allowances and claims$6,095 $7,767 
Pension (a)5,673 5,967 
OPEB (a)4,130 4,055 
Deferred revenue4,883 4,938 
Operating lease liabilities1,101 1,407 
Employee benefit plans834 825 
Other (b)2,781 2,892 
Total non-current other liabilities and deferred revenue$25,497 $27,851 
__________
(a)Balances at September 30, 2023 reflect pension and OPEB liabilities 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. The discount rate and rate of expected return assumptions are unchanged from year-end 2022. Included in Other assets are pension assets of $5.7 billion and $5.9 billion at December 31, 2022 and September 30, 2023, respectively.
(b)Includes current derivative liabilities of $1.3 billion and $1.4 billion at December 31, 2022 and September 30, 2023, respectively. Includes non-current derivative liabilities of $1.7 billion and $1.5 billion at December 31, 2022 and September 30, 2023, respectively (see Note 15).

18

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 13. RETIREMENT BENEFITS

Defined Benefit Plans - Expense

The pre-tax net periodic benefit cost/(income) for our defined benefit pension and OPEB plans for the periods ended September 30 were as follows (in millions):
Third Quarter
 Pension Benefits  
 U.S. PlansNon-U.S. PlansWorldwide OPEB
 202220232022202320222023
Service cost$125 $74 $101 $62 $10 $
Interest cost263 413 123 245 36 58 
Expected return on assets(642)(474)(245)(227)— — 
Amortization of prior service costs/(credits)
— — (1)
Net remeasurement (gain)/loss176 — (7)— — 
Separation programs/other11 57 — 
Settlements and curtailments
20 — — — 
Net periodic benefit cost/(income)
$(237)$212 $(4)$138 $46 $64 
First Nine Months
 Pension Benefits  
 U.S. PlansNon-U.S. PlansWorldwide OPEB
 202220232022202320222023
Service cost$375 $221 $319 $184 $31 $16 
Interest cost790 1,226 390 724 110 173 
Expected return on assets(1,927)(1,440)(772)(669)— — 
Amortization of prior service costs/(credits)
— 18 17 (2)
Net remeasurement (gain)/loss370 16 — — 
Separation programs/other20 15 28 118 — — 
Settlements and curtailments
65 — — — 
Net periodic benefit cost/(income)
$(733)$457 $(1)$377 $139 $192 

The service cost component is included in Cost of sales and Selling, administrative, and other expenses. Other components of net periodic benefit cost/(income) are included in Other income/(loss), net on our consolidated income statements.

In the third quarter and first nine months of 2023, we paid lump sums for two of our pension plans, which resulted in remeasurement losses of $169 million and $371 million, respectively, and settlement expenses of $21 million and $67 million, respectively.

Pension Plan Contributions

During 2023, we continue to expect to contribute between $500 million and $600 million of cash to our global funded pension plans. We also expect to make about $400 million of benefit payments to participants in unfunded plans. In the first nine months of 2023, we contributed $424 million to our global funded pension plans and made $301 million of benefit payments to participants in unfunded plans.
19

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14. DEBT
The carrying value of Company debt excluding Ford Credit and Ford Credit debt was as follows (in millions):
December 31,
2022
September 30,
2023
Company excluding Ford Credit  
Debt payable within one year
Short-term$359 $284 
Long-term payable within one year 
Other debt (including finance leases)372 154 
Unamortized (discount)/premium(1)(1)
Total debt payable within one year730 437 
Long-term debt payable after one year 
Public unsecured debt securities14,935 14,935 
Convertible notes (a)2,300 2,300 
U.K. Export Finance Program1,654 1,684 
Other debt (including finance leases)682 751 
Unamortized (discount)/premium(180)(160)
Unamortized issuance costs(191)(177)
Total long-term debt payable after one year19,200 19,333 
Total Company excluding Ford Credit$19,930 $19,770 
Fair value of Company debt excluding Ford Credit (b)$18,557 $18,582 
Ford Credit  
Debt payable within one year
Short-term$19,624 $18,811 
Long-term payable within one year 
Unsecured debt7,980 10,664 
Asset-backed debt21,839 18,756 
Unamortized (discount)/premium— — 
Unamortized issuance costs
(13)(14)
Fair value adjustments (c)(16)
Total debt payable within one year49,434 48,201 
Long-term debt payable after one year
Unsecured debt39,620 42,700 
Asset-backed debt31,840 34,046 
Unamortized (discount)/premium23 13 
Unamortized issuance costs
(184)(219)
Fair value adjustments (c)(1,694)(1,849)
Total long-term debt payable after one year69,605 74,691 
Total Ford Credit$119,039 $122,892 
Fair value of Ford Credit debt (b)$117,214 $122,386 
__________
(a)As of September 30, 2023, each $1,000 principal amount of the notes will be convertible into 64.5755 shares of our Common Stock, which is equivalent to a conversion price of approximately $15.49 per share. We recognized issuance cost amortization of $2 million and $5 million during the third quarter and first nine months of 2022, respectively, and $2 million and $5 million during the third quarter and first nine months of 2023, respectively.
(b)At December 31, 2022 and September 30, 2023, the fair value of debt includes $359 million and $284 million of Company excluding Ford Credit short-term debt, respectively, and $16.9 billion and $15.7 billion of Ford Credit short-term debt, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.
(c)These adjustments are related to hedging activity and include discontinued hedging relationship adjustments of $31 million and $(320) million at December 31, 2022 and September 30, 2023, respectively. The carrying value of hedged debt was $33.3 billion and $37.3 billion at December 31, 2022 and September 30, 2023, respectively.



20

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended September 30 were as follows (in millions):
 Third QuarterFirst Nine Months
Cash flow hedges
2022202320222023
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$(44)$21 $(224)$111 
Commodity contracts (b)
(18)151 (42)
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
(39)(137)62 (407)
Fair value changes on hedging instruments(600)(219)(1,922)(285)
Fair value changes on hedged debt615 210 1,991 223 
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
(8)(23)(17)(56)
Fair value changes on hedging instruments(66)(46)(164)(48)
Fair value changes on hedged debt67 44 173 47 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)44 22 125 44 
Cross-currency interest rate swap contracts
(494)(137)(1,164)(112)
Interest rate contracts130 28 342 125 
Commodity contracts(41)(4)(72)(60)
Total$(427)$(259)$(719)$(460)
__________
(a)For the third quarter and first nine months of 2022, a $535 million gain and a $641 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax. For the third quarter and first nine months of 2023, a $372 million gain and a $19 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the third quarter and first nine months of 2022, a $90 million loss and a $166 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the third quarter and first nine months of 2023, a $58 million gain and a $42 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the third quarter and first nine months of 2022, a $68 million loss and a $12 million loss, respectively, were reported in Cost of sales, and a $112 million gain and a $137 million gain, respectively, were reported in Other income/(loss), net. For the third quarter and first nine months of 2023, a $37 million loss and a $14 million gain, respectively, were reported in Cost of sales, and a $59 million gain and a $30 million gain, respectively, were reported in Other income/(loss), net.

21

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):
December 31, 2022September 30, 2023
NotionalFair Value of
Assets
Fair Value of
Liabilities
NotionalFair Value of
Assets
Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$11,536 $376 $52 $17,139 $218 $42 
Commodity contracts990 16 56 1,007 12 48 
Fair value hedges
Interest rate contracts16,883 — 1,653 16,821 — 1,439 
Cross-currency interest rate swap contracts
885 — 161 2,078 — 202 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts20,851 162 285 20,654 181 115 
Cross-currency interest rate swap contracts
6,635 15 653 6,396 55 515 
Interest rate contracts63,210 931 483 59,155 830 720 
Commodity contracts841 26 35 1,015 13 49 
Total derivative financial instruments, gross (a) (b)
$121,831 $1,526 $3,378 $124,265 $1,309 $3,130 
Current portion
$1,101 $1,656 $981 $1,650 
Non-current portion
425 1,722 328 1,480 
Total derivative financial instruments, gross
$1,526 $3,378 $1,309 $3,130 
__________
(a)At December 31, 2022 and September 30, 2023, we held collateral of $210 million and $128 million, respectively, and we posted collateral of $201 million and $203 million, respectively.
(b)At December 31, 2022 and September 30, 2023, the fair value of assets and liabilities available for counterparty netting was $451 million and $512 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.


22

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES

We generally record costs associated with voluntary separations at the time of employee acceptance. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

Company Excluding Ford Credit

Employee separation actions and exit and disposal activities include employee separation costs, facility and other asset-related charges (e.g., impairment, accelerated depreciation), dealer and supplier payments, other statutory and contractual obligations, and other expenses, which are recorded in Cost of sales and Selling, administrative, and other expenses. Below are actions that have been initiated:

Brazil. Exited manufacturing operations in 2021 resulting in the closure of facilities in Camaçari, Taubaté, and Troller. A sale of the Taubaté plant was completed in the second quarter of 2023
India. Ceased vehicle manufacturing in Sanand in the fourth quarter of 2021 and ceased manufacturing in Chennai in the third quarter of 2022. A sale of the Sanand vehicle assembly and powertrain plants was completed in the first quarter of 2023 (see Note 17)
Spain. Ceased production of the Mondeo at the Valencia plant in the first quarter of 2022
China. Ceased development of certain product programs in the first half of 2023

In addition, we are continuing to reduce our global workforce and take other restructuring actions, including the separation of salaried workers as announced during 2023.

The following table summarizes the activities for the periods ended September 30, which are recorded in Other liabilities and deferred revenue (in millions):
Third QuarterFirst Nine Months
2022202320222023
Beginning balance$691 $1,277 $950 $588 
Changes in accruals (a)329 148 445 1,067 
Payments(188)(298)(539)(493)
Foreign currency translation and other(21)(54)(45)(89)
Ending balance$811 $1,073 $811 $1,073 
__________
(a)Excludes pension costs of $11 million and $58 million in the third quarter of 2022 and 2023, respectively, and $27 million and $117 million in the first nine months of 2022 and 2023, respectively.

We recorded $35 million and $101 million in the third quarter and first nine months of 2022, respectively, for accelerated depreciation, impairment of our India assets, and other non-cash items and recognized a $38 million pre-tax net gain on sale of assets during the first nine months of 2022. We recorded $0 and $50 million in the third quarter and first nine months of 2023, respectively, for accelerated depreciation and other non-cash items. In addition, we recognized a $4 million and $23 million pre-tax net gain on sale of assets in the third quarter and first nine months of 2023, respectively.

We recorded costs of $535 million and $1.2 billion in the first nine months of 2022 and 2023, respectively, related to the actions above. We estimate that we will incur about $1.5 billion in total charges in 2023 related to such actions, primarily attributable to employee separations and supplier settlements. In October 2023, we announced that 1,000 positions will be retained as part of a planned new technology center at our Saarlouis facility in Germany after 2025. Accordingly, we will engage in discussions with our Social Partners related to the remaining affected positions at the Saarlouis Body and Assembly Plant. Our plans for the site beyond the 1,000 positions are uncertain, and there are no existing employee benefit programs covering non-voluntary separations. Therefore, potential future charges are not included in the estimate of total charges to be incurred in 2023 but could be significant once decisions are made. In addition, we continue to review our global businesses and may take additional restructuring actions where a path to sustained profitability is not feasible when considering the capital allocation required for those businesses.

23

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)

Ford Credit

Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at September 30, 2023 of $223 million are associated with Ford Credit’s investments in Brazil and Argentina that have ceased operations. We expect to reclassify these losses to income upon substantially complete liquidation of Ford Credit’s investments, which may occur over multiple reporting periods. In the first nine months of 2022, we reclassified losses of $155 million to Other income/(loss), net, upon the liquidation of three investments in Brazil.

NOTE 17. ACQUISITIONS AND DIVESTITURES

Company Excluding Ford Credit

Argo AI, LLC (“Argo AI”). In the third quarter of 2022, Ford made the strategic decision to shift our capital spending from L4 technology being developed by Argo AI to advanced L2/L3 systems, which we believe will ultimately be essential to achieve profitable commercialization of L4 autonomy at scale in the future. We determined that Argo AI no longer had value as a going concern, and as a result, we reassessed the carrying value of our investment as of September 30, 2022. Our valuation assumed an orderly conclusion of operations at Argo AI, in which the cash required to satisfy the remaining obligations would consume all of Argo AI’s remaining capital. In addition, we assessed whether Argo AI’s technology components have value in isolation, and we concluded that the cost to integrate into currently anticipated technology ecosystems would be prohibitive. Accordingly, we recorded a $2.7 billion pre-tax impairment in the third quarter of 2022. The non-cash charge was reported in Equity in net income/(loss) of affiliated companies.

In the fourth quarter of 2022, Ford and Volkswagen AG, who held equal interests that together comprised a majority ownership of Argo AI, initiated the process of exiting the joint development of highly automated driving technology (L4) through Argo AI. At December 31, 2022, the carrying value of our equity method investment in Argo AI was $0, and we had $65 million in Other liabilities and deferred revenue related to our funding commitment for our share of Argo AI’s expenses previously incurred. Argo AI is in the process of winding down operations, and in the second quarter of 2023, we settled our expected funding commitment.

Sanand, India (“Sanand”) Plants. In the third quarter of 2022, we entered into an agreement to sell our Sanand vehicle assembly and powertrain plants to Tata Passenger Electric Mobility Limited (“Tata”), a subsidiary of Tata Motors Limited. The sale transaction included the land, buildings, and other fixed assets (excluding the powertrain machinery and equipment) for the plants. We recognized, in Cost of sales, pre-tax impairment charges of $32 million in the third quarter of 2022 to adjust the carrying value of the assets to fair value less costs to sell. We determined fair value using the market approach, based on the negotiated value of the assets. Accordingly, we reported $88 million of fixed assets for this operation as held for sale for the period ended December 31, 2022, which we report in Other assets in the current assets section of our consolidated balance sheets.

On January 10, 2023, we completed the sale of the plants to Tata. Ford continues to operate the powertrain facility by leasing back the associated land and building. As a result of the sale transaction, we derecognized the fixed assets and recognized the powertrain facility operating lease right-of-use asset and related lease liability in the first quarter of 2023. The fair value of the cash consideration received approximated the carrying value of the fixed assets at the time of sale.


24

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 17. ACQUISITIONS AND DIVESTITURES (Continued)

Ford Romania S.R.L. (“Ford Romania”). On July 1, 2022, we completed the sale of Ford Romania, our wholly-owned Romanian manufacturing subsidiary, to Ford Otosan, a joint venture in which Ford has a 41% ownership share. The transaction resulted in deconsolidation of our Ford Romania subsidiary in the third quarter of 2022. The fair value of consideration received, consisting of cash and a note receivable, approximated the carrying value of Ford Romania at the time of sale. The Ford Romania plant in Craiova, Romania continues to manufacture Ford-branded vehicles for Ford and Ford Otosan. Ford’s portion of the output is expected to be significant; as a result, at the time of the sale there were about $100 million of assets, such as embedded leases, and related liabilities that continue to be reported as part of our financial statements.

Skinny Labs Inc., dba Spin (“Spin”). On April 1, 2022, we completed the sale of Spin, our wholly-owned micro-mobility provider, to TIER Mobility SE, a German-based micro-mobility provider, which resulted in the deconsolidation of our Spin subsidiary in the second quarter of 2022. In exchange for our shares of Spin, we received preferred equity in TIER Mobility SE.




25

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 18. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in the balances for each component of accumulated other comprehensive income/(loss) attributable to Ford Motor Company for the periods ended September 30 were as follows (in millions):
Third QuarterFirst Nine Months
2022202320222023
Foreign currency translation
Beginning balance$(6,355)$(5,649)$(5,487)$(6,416)
Gains/(Losses) on foreign currency translation(996)(368)(2,063)393 
Less: Tax/(Tax benefit) (a)36 (1)(11)
Net gains/(losses) on foreign currency translation (1,032)(367)(2,068)404 
(Gains)/Losses reclassified from AOCI to net income (b)80 (2)248 (6)
Other comprehensive income/(loss), net of tax (c)(952)(369)(1,820)398 
Ending balance$(7,307)$(6,018)$(7,307)$(6,018)
Marketable securities
Beginning balance$(355)$(376)$(19)$(442)
Gains/(Losses) on available for sale securities(199)30 (647)98 
Less: Tax/(Tax benefit)(47)(153)24 
Net gains/(losses) on available for sale securities(152)23 (494)74 
(Gains)/Losses reclassified from AOCI to net income13 26 
Less: Tax/(Tax benefit)
Net (gains)/losses reclassified from AOCI to net income (b)10 20 
Other comprehensive income/(loss), net of tax(148)28 (484)94 
Ending balance$(503)$(348)$(503)$(348)
Derivative instruments
Beginning balance$(143)$(295)$(193)$129 
Gains/(Losses) on derivative instruments445 430 475 (61)
Less: Tax/(Tax benefit)105 111 112 (16)
Net gains/(losses) on derivative instruments340 319 363 (45)
(Gains)/Losses reclassified from AOCI to net income35 (3)73 (69)
Less: Tax/(Tax benefit)(9)19 (15)
Net (gains)/losses reclassified from AOCI to net income (d)27 54 (54)
Other comprehensive income/(loss), net of tax367 325 417 (99)
Ending balance$224 $30 $224 $30 
Pension and other postretirement benefits
Beginning balance$(2,620)$(2,604)$(2,640)$(2,610)
Amortization and recognition of prior service costs/(credits)
17 20 
Less: Tax/(Tax benefit)
Net prior service costs/(credits) reclassified from AOCI to net income
13 15 
Translation impact on non-U.S. plans
20 (2)
Other comprehensive income/(loss), net of tax13 33 13 
Ending balance$(2,607)$(2,597)$(2,607)$(2,597)
Total AOCI ending balance at September 30$(10,193)$(8,933)$(10,193)$(8,933)
__________
(a)We do not recognize deferred taxes for a majority of the foreign currency translation gains and losses because we do not anticipate reversal in the foreseeable future. However, we have made elections to tax certain non-U.S. operations simultaneously in U.S. tax returns, and have recorded deferred taxes for temporary differences that will reverse, independent of repatriation plans, in U.S. tax returns. Taxes or tax benefits resulting from foreign currency translation of the temporary differences are recorded in Other comprehensive income/(loss), net of tax.
(b)Reclassified to Other income/(loss), net.
(c)Excludes a $3 million gain and a $1 million loss in the third quarter and first nine months of 2022, respectively, and a $2 million loss and $2 million gain in the third quarter and first nine months of 2023, respectively, related to noncontrolling interest.
(d)Reclassified to Cost of sales. During the next twelve months, we expect to reclassify existing net gains on cash flow hedges of $97 million (see Note 15).

26

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 19. VARIABLE INTEREST ENTITIES

Certain of our affiliates are variable interest entities in which we are not the primary beneficiary. Our maximum exposure to any potential losses associated with these unconsolidated affiliates is limited to our equity investments, accounts receivable, loans, and guarantees and was $1.0 billion and $3.0 billion at December 31, 2022 and September 30, 2023, respectively. Of these amounts, guarantees of $113 million at both December 31, 2022 and September 30, 2023 related to certain obligations of our VIEs also are included in Note 20.

On July 13, 2022, Ford, SK On Co., Ltd., and SK Battery America, Inc. (a wholly owned subsidiary of SK On) completed the creation of BlueOval SK, LLC (“BOSK”), a 50/50 joint venture that will build and operate electric vehicle battery plants in Tennessee and Kentucky to supply batteries to Ford and Ford affiliates. BOSK is a variable interest entity of which we are not the primary beneficiary, and we use the equity method of accounting for our investment. As of September 30, 2023, Ford has contributed to BOSK $2.2 billion of its agreed capital contribution of up to $6.6 billion through 2026, subject to any adjustments agreed to by the parties.




27

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies primarily consist of guarantees and indemnifications, litigation and claims, and warranty and field service actions.

Guarantees and Indemnifications

Financial Guarantees. Financial guarantees and indemnifications are recorded at fair value at their inception. Subsequent to initial recognition, the guarantee liability is adjusted at each reporting period to reflect the current estimate of expected payments resulting from possible default events over the remaining life of the guarantee. The maximum potential payments for financial guarantees were $518 million and $561 million at December 31, 2022 and September 30, 2023, respectively. The carrying value of recorded liabilities related to financial guarantees was $31 million and $39 million at December 31, 2022 and September 30, 2023, respectively.

Our financial guarantees consist of debt and lease obligations of certain joint ventures, as well as certain financial obligations of outside third parties, including suppliers, to support our business and economic growth. Expiration dates vary through 2037, and guarantees will terminate on payment and/or cancellation of the underlying obligation. A payment by us would be triggered by failure of the joint venture or other third party to fulfill its obligation covered by the guarantee. In some circumstances, we are entitled to recover from a third party amounts paid by us under the guarantee.

Non-Financial Guarantees. Non-financial guarantees and indemnifications are recorded at fair value at their inception. We regularly review our performance risk under these arrangements, and in the event it becomes probable we will be required to perform under a guarantee or indemnity, the amount of probable payment is recorded. The maximum potential payments for non-financial guarantees were $273 million and $8 million at December 31, 2022 and September 30, 2023, respectively. The carrying value of recorded liabilities related to non-financial guarantees was $0 at both December 31, 2022 and September 30, 2023.

Included in the $8 million of maximum potential payments at September 30, 2023 are guarantees for the resale value of vehicles sold in certain arrangements to daily rental companies. The maximum potential payment of $2 million as of September 30, 2023 represents the total proceeds we guarantee the rental company will receive on resale.  Reflecting our present estimate of proceeds the rental companies will receive on resale from third parties, we do not expect we will have to pay under the guarantee.

In the ordinary course of business, we execute contracts involving indemnifications standard in the industry and indemnifications specific to a transaction, such as the sale of a business. These indemnifications might include and are not limited to claims relating to any of the following: environmental, tax, and shareholder matters; intellectual property rights; power generation contracts; governmental regulations and employment-related matters; dealer, supplier, and other commercial contractual relationships; and financial matters, such as securitizations. Performance under these indemnities generally would be triggered by a breach of contract claim brought by a counterparty, including a joint venture or alliance partner, or a third-party claim. While some of these indemnifications are limited in nature, many of them do not limit potential payment. Therefore, we are unable to estimate a maximum amount of future payments that could result from claims made under these unlimited indemnities.

28

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20. COMMITMENTS AND CONTINGENCIES (Continued)

Litigation and Claims

Various legal actions, proceedings, and claims (generally, “matters”) are pending or may be instituted or asserted against us. These include, but are not limited to, matters arising out of alleged defects in our products; product warranties; governmental regulations relating to safety, emissions, and fuel economy or other matters; government incentives; tax matters, including trade and customs; alleged illegal acts resulting in fines or penalties; financial services; employment-related matters; dealer, supplier, and other contractual relationships; intellectual property rights; environmental matters; shareholder or investor matters; and financial reporting matters. Certain of the pending legal actions are, or purport to be, class actions. Some of the matters involve or may involve claims for compensatory, punitive, or antitrust or other treble damages in very large amounts, or demands for field service actions, environmental remediation programs, sanctions, loss of government incentives, assessments, or other relief, which, if granted, would require very large expenditures.

The extent of our financial exposure to these matters is difficult to estimate. Many matters do not specify a dollar amount for damages, and many others specify only a jurisdictional minimum. To the extent an amount is asserted, our historical experience suggests that in most instances the amount asserted is not a reliable indicator of the ultimate outcome.

We accrue for matters when losses are deemed probable and reasonably estimable. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood that we will prevail, and the severity of any potential loss. We reevaluate and update our accruals as matters progress over time.

For the majority of matters, which generally arise out of alleged defects in our products, we establish an accrual based on our extensive historical experience with similar matters. We do not believe there is a reasonably possible outcome materially in excess of our accrual for these matters.

For the remaining matters, where our historical experience with similar matters is of more limited value (i.e., “non-pattern matters”), we evaluate the matters primarily based on the individual facts and circumstances. For non-pattern matters, we evaluate whether there is a reasonable possibility of a material loss in excess of any accrual that can be estimated. Our estimate of reasonably possible loss in excess of our accruals for all material matters currently reflects indirect tax and customs matters, for which we estimate the aggregate risk to be a range of up to about $1.4 billion. In addition, we have a reasonably possible risk of loss related to supplier claims for an EV program in Europe. Because the matter is preliminary, we cannot estimate the amount of the potential loss or predict the outcome and cannot provide reasonable assurance that it will not have a material adverse effect on us.

As noted, the litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Our assessments are based on our knowledge and experience, but the ultimate outcome of any matter could require payment substantially in excess of the amount that we have accrued and/or disclosed.

29

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20. COMMITMENTS AND CONTINGENCIES (Continued)

Warranty and Field Service Actions

We accrue the estimated cost of both base warranty coverages and field service actions at the time of sale. We establish our estimate of base warranty obligations using a patterned estimation model, using historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year. We establish our estimates of field service action obligations using a patterned estimation model, using historical information regarding the nature, frequency, severity, and average cost of claims for each model year. In addition, from time to time, we issue extended warranties at our expense, the estimated cost of which is accrued at the time of issuance. Warranty and field service action obligations are reported in Other liabilities and deferred revenue. We reevaluate the adequacy of our accruals on a regular basis.

We recognize the benefit from a recovery of the costs associated with our warranty and field service actions when specifics of the recovery have been agreed with our supplier and the amount of recovery is virtually certain. Recoveries are reported in Trade and other receivables, net and Other assets.

The estimate of our future warranty and field service action costs, net of estimated supplier recoveries, for the periods ended September 30 was as follows (in millions):
First Nine Months
 20222023
Beginning balance$8,451 $9,193 
Payments made during the period(3,063)(3,481)
Changes in accrual related to warranties issued during the period2,806 3,331 
Changes in accrual related to pre-existing warranties449 2,016 
Foreign currency translation and other(241)(274)
Ending balance$8,402 $10,785 

Changes to our estimated costs are reported as changes in accrual related to pre-existing warranties in the table above. Our estimate of reasonably possible costs in excess of our accruals for material field service actions and customer satisfaction actions is a range of up to about $1.5 billion in the aggregate.
30

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 21. SEGMENT INFORMATION

We report segment information consistent with the way our chief operating decision maker (“CODM”) evaluates the operating results and performance of the Company.

On January 1, 2023, we implemented a new operating model and reporting structure. As a result of this change, we analyze the results of our business through the following segments: Ford Blue, Ford Model e, and Ford Pro (combined, replacing the previous Automotive segment), Ford Next (previously the Mobility segment), and Ford Credit. Company adjusted earnings before interest and taxes (“EBIT”) include the financial results of these five reportable segments and Corporate Other, and net income comprises the financial results of the five reportable segments and Corporate Other, as well as Interest on Debt, Special Items, and Taxes.

Additionally, past service pension and OPEB income and expense plus related assets, previously reported in the Automotive segment, have been realigned to Corporate Other.

Prior period amounts were adjusted retrospectively to reflect each of the above changes.

Below is a description of our reportable segments and other activities.

Ford Blue Segment

Ford Blue primarily includes the sale of Ford and Lincoln internal combustion engine (“ICE”) and hybrid vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services. This segment focuses on developing Ford and Lincoln ICE and hybrid vehicles. Additionally, this segment provides hardware engineering and manufacturing capabilities to Ford Model e and manufactures vehicles on behalf of Ford Pro and, in certain cases, Ford Model e. Ford Blue also includes:
All sales for markets not presently in scope for Ford Model e or Ford Pro (as further described below)
In markets outside of the United States and Canada, sales to commercial, government, and rental customers of ICE and hybrid vehicles not considered core to Ford Pro
Sales of electric vehicles (“EVs”) by our unconsolidated affiliates in China
All sales of vehicles manufactured and sold to other OEMs

Ford Model e Segment

Ford Model e primarily includes the sale of our electric vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services. This segment focuses on developing EV and digital vehicle technologies, as well as software development. Additionally, Ford Model e provides software and connected vehicle technologies on behalf of the enterprise, and manufactures certain EVs, including for Ford Pro. Ford Model e operates in North America, Europe, and China. Ford Model e also includes EV and related sales not considered core to Ford Pro to commercial, government, and rental customers in Europe, China, and Mexico.



31

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 21. SEGMENT INFORMATION (Continued)

Ford Pro Segment

Ford Pro primarily includes the sale of Ford and Lincoln vehicles, service parts, accessories, and services for commercial, government, and rental customers. Included in this segment are sales of all core Ford Pro vehicles, such as Super Duty and the Transit range of vans in North America and Europe and all sales of Ranger in Europe. In the United States and Canada, Ford Pro also includes all vehicle sales to commercial, government, and rental customers. This segment focuses on selling ICE, hybrid, and electric vehicles, and providing digital and physical services to optimize and maintain fleets, including telematics and EV charging solutions. This segment reflects external sales of vehicles produced by Ford Blue and Ford Model e, and the costs (including intersegment markup) associated with acquiring vehicles for sale and providing services are reflected in this segment. Ford Pro operates in North America and Europe.

Ford Next Segment

The Ford Next segment (formerly the Mobility segment) primarily includes expenses and investments for emerging business initiatives aimed at creating value for Ford in vehicle-adjacent market segments. 

Ford Credit Segment

The Ford Credit segment is comprised of the Ford Credit business on a consolidated basis, which is primarily vehicle-related financing and leasing activities.

Corporate Other

Corporate Other primarily includes corporate governance expenses, past service pension and OPEB income and expense, interest income (excluding Ford Credit interest income and interest earned on our extended service contract portfolio) and gains and losses from our cash, cash equivalents, and marketable securities (excluding gains and losses on investments in equity securities), and foreign exchange derivatives gains and losses associated with intercompany lending. Corporate governance expenses are primarily administrative, delivering benefit on behalf of the global enterprise, that are not allocated to operating segments. These include expenses related to setting and directing global policy, providing oversight and stewardship, and promoting the Company’s interests. Corporate Other assets include: cash, cash equivalents and marketable securities, tax related assets, defined benefit pension plan net assets, and other assets managed centrally.

Interest on Debt

Interest on Debt is presented as a separate reconciling item and consists of interest expense on Company debt excluding Ford Credit.

Special Items

Special Items are presented as a separate reconciling item. They consist of (i) pension and OPEB remeasurement gains and losses, (ii) gains and losses on investments in equity securities, (iii) significant personnel expenses, supplier- and dealer-related costs, and facility-related charges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix, and (iv) other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities. Our management ordinarily excludes these items from its review of the results of the operating segments for purposes of measuring segment profitability and allocating resources. We also report these special items separately to help investors track amounts related to these activities and to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.



32

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 21. SEGMENT INFORMATION (Continued)

Segment Revenue, Cost, and Asset Principles for Ford Blue, Ford Model e, and Ford Pro

External vehicle and digital services revenue is generally vehicle-specific and included in the segment responsible for the external vehicle sale. A majority of parts and accessories revenue and cost is attributed to customer sales channels or vehicle lines based on recent end customer sales and is included in the respective segment.

In the normal course of business, Ford Blue, Ford Model e, and Ford Pro transact between segments and cooperate to leverage synergies, including developing and manufacturing vehicles on behalf of another segment. When one segment produces a vehicle that is sold externally by another segment, an intersegment transaction occurs. The producing segment will report intersegment revenue to recoup the costs associated with the unit produced. This includes material cost, labor and overhead (including depreciation and amortization), inbound freight, and an intersegment markup. The intersegment markup amount is set to deliver a competitive return to the producing segment for its manufacturing and distribution service. Costs are reflected in the associated segment externally reporting the vehicle sale, as detailed in the table below:

Income Statement ElementsExamplesSegment Reporting
Costs specific to a particular vehicleBill of material cost and initial warranty accrualReported in the segment externally selling the vehicle
Costs identifiable by product lineManufacturing and logistics costs, depreciation & amortization expense, direct research & development costsTypically identifiable to the product line or production location. Reported in the segment externally selling the vehicle, based on relative volume
Shared costsSelling, general & administrative expense, and indirect/cross product line research & development costsTypically shared across all segments, generally based on relative volume. Certain costs clearly linked to a segment are reported in the specific segment
Intersegment markup costs for intersegment vehicle transactionsContract manufacturing and distribution feesReported in the segment externally selling the vehicle, for each applicable vehicle transaction

Assets are reported in each segment, aligned to the appropriate operational responsibility. Manufacturing assets, e.g., our plants and the machinery and equipment therein, are included in our Ford Blue and Ford Model e segments. Manufacturing assets producing only, or primarily, EVs and related components are reflected in Ford Model e. Manufacturing assets that support the production of ICE and hybrid vehicles, including those producing ICE and electric in the same facility, are included in Ford Blue. Vendor tooling dedicated to producing EV parts is reported in Ford Model e. There are no Ford manufacturing or vendor tooling assets reported in Ford Pro. Regardless of the segment reporting the asset, depreciation and amortization expense is reflected on the basis of production volume and reported in the segment that reports the external vehicle sale.

Equity in net income/(loss) of affiliated companies is included in Income/(Loss) before income taxes, based primarily on which segment the entity supports or has the majority of the entity’s purchases or sales. The table below shows the segment reporting for our most significant unconsolidated entities:

Ford BlueFord Model eFord Pro
∘ Changan Ford Automobile Corporation, Ltd. (“CAF”)
∘ BlueOval SK, LLC
∘ Ford Otomotiv Sanayi Anonim Sirketi (“Ford Otosan”)
∘ Jiangling Motors Corporation, Ltd. (“JMC”)
∘ AutoAlliance (Thailand) Co., Ltd. (“AAT”)



33

Item 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 21. SEGMENT INFORMATION (Continued)

Key financial information for the periods ended or at September 30 was as follows (in millions):
 Ford BlueFord Model eFord ProFord NextFord CreditCorporate
Other
Interest
on Debt
Special ItemsEliminations/AdjustmentsTotal
Third Quarter 2022     
External revenues$23,824 $1,401 $11,961 $11 $2,187 $$— $— $— $39,392 
Intersegment revenues (a)8,923 16 — — — — — — (8,939)— 
Total revenues$32,747 $