FORD MOTOR COMPANY RECENT DEVELOPMENTS
The impact of COVID-19 has created significant volatility in the global economy and led to reduced economic activity. There have been extraordinary actions taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world, including travel bans, quarantines, "stay-at-home" orders, and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Although restrictions have been eased in many locations, some areas that had previously eased restrictions have reverted to more stringent limitations on daily activities.
Remote Work Arrangements and Resumption of Manufacturing Operations
We released our first quarter 2020 results on
The remote work arrangements that we implemented in the first quarter remain in place. Our remote work arrangements have been designed to allow for continued operation of non-production business-critical functions, including financial reporting systems and internal control. Our controls and procedures have incorporated remote work arrangements using appropriate digital tools.
A phased restart of our manufacturing plants, supply network, and other
dependent functions occurred in the second quarter of 2020. In significant
regions, we have returned to pre-COVID-19 production levels. For example, by the
end of the second quarter,
Liquidity
We ended the second quarter of 2020 with
Enhanced Safety Standards
We established new protocols to help protect the health and safety of our workforce. The actions include a daily, online health self-certification, a no-touch temperature scan upon entering our premises, a policy requiring the use of face masks in our facilities, and measures to provide additional personal protective equipment, such as gloves and face shields or goggles, in instances where employees' jobs do not allow them to follow social distancing guidelines. We have also scheduled more time between shifts to minimize potential interaction between employees and allow for additional cleaning between shifts.
During the second quarter, we worked with medical equipment makers, including
We also worked with Thermo Fisher Scientific to produce COVID-19 test kits. We continue to produce ventilators, face shields, and medical masks.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Forward Looking Information
Due to the successful restart of our manufacturing operations, our strong
liquidity, and the repayment of
The full impact of COVID-19 on our full year financial results will depend on future developments, such as the ultimate duration and scope of the outbreak, its impact on our customers, dealers, and suppliers, and the rate at which economic conditions return to pre-COVID-19 levels. Accordingly, the ultimate impact on us cannot be determined at this time; however, despite the uncertainty of the COVID-19 situation, we expect our full year 2020 results of operations to be adversely affected. For additional information on the impact and potential impact of COVID-19 on us, please see Item 1A. Risk Factors on page 73.
RESULTS OF OPERATIONS
In the second quarter of 2020, the net income attributable to
Net income/(loss) includes certain items ("special items") that are excluded
from Company adjusted EBIT. These items are discussed in more detail in Note 20
of the Notes to the Financial Statements. We report special items separately 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. Our pre-tax and tax special items were as follows (in
millions):
Second Quarter First Half
2019 2020 2019 2020
Global Redesign
Europe excl. Russia $ (707 ) $ (94 ) $ (822 ) $ (199 )
India - (15 ) - (18 )
South America (235 ) (1 ) (436 ) (18 )
Russia (211 ) (3 ) (385 ) 17
China (2 ) (6 ) (2 ) (6 )
Separations and Other (not included
above) (56 ) - (80 ) (1 )
Subtotal Global Redesign $ (1,211 ) $ (119 ) $ (1,725 ) $ (225 )
Other Items
Gain on transaction with Argo AI and
VW $ - $ 3,454 $ - $ 3,454
Other incl. Focus Cancellation,
Transit Connect Customs Ruling*,
UAW Retirement Buyout, and Chariot (5 ) (3 ) (83 ) (206 )
Subtotal Other Items $ (5 ) $ 3,451 $ (83 ) $ 3,248 Pension and OPEB Gain/(Loss)
Pension and OPEB remeasurement
- - - -
Subtotal Pension and OPEB Gain/(Loss)
$ (1,205 ) $ 3,480 $ (1,797 ) $ 3,193 Cash effect of Global Redesign (incl. separations)$ (222 ) $ (99 ) $ (358 ) $ (271 ) Tax special items**$ 216 $ (955 ) $ 223 $ (1,742 ) __________
* Transit Connect impact of
2019.
** Includes related tax effect on special items and tax special items.
We recorded
In Note 20 of the Notes to the Financial Statements, special items are reflected
as a separate reconciling item, as opposed to being allocated among the
Automotive, Mobility, and
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)
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