福特汽車 (F) 2010 Q1 法說會逐字稿

Great day, ladies and gentlemen, and welcome to the first quarter Ford Motor Company earnings conference call.

My name is Katena and I will be your coordinator for today.

At this time all participants are in a listen-only mode.

We will facilitate a question-and-answer session towards the end of this presentation.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr.

Brian Harris, Director of Investor Relations.

Please proceed.

Thank you, Katena, and good morning, ladies and gentlemen.

Welcome to all of you who are joining us today either by phone or webcast.

On behalf of the entire Ford management team I would like to thank you for spending time with us this morning.

With me here today are Alan Mulally, President and CEO of Ford Motor Company, and Lewis Booth, Chief Financial Officer.

Also in attendance are Bob Shanks, Vice President and Controller; Neil Schloss, Vice President and Treasurer; Paul Andonian, Director of Accounting; and K.R.

Kent, Ford Credit CFO.

Before we begin I would like to cover a few items.

Copies of this morning's press release and the presentation slides that we will be using today have been posted on Ford's investor and media website for your reference.

The financial results discussed herein are presented on a preliminary basis.

Final data will be included in our Form 10-Q.

Additionally, the financial results presented here are on a GAAP basis and in some cases on a non-GAAP basis.

The non-GAAP financial measures discussed in this call are reconciled to the US GAAP equivalent as part of the appendix to the slide deck.

Finally, today's presentation includes some forward-looking statements about our expectations for Ford's future performance.

Actual results could differ materially from those suggested by our comments made here.

The most significant factors that could affect future results are summarized at the end of this presentation.

These risk factors and other key information are detailed in our SEC filings, including our annual, quarterly, and current reports.

With that I would now like to turn the presentation over to Ford's President and CEO, Mr.

Alan Mulally.

Thank you, Brian, and good morning to everyone.

We are very pleased to be able to share today our first-quarter 2010 financial results.

This was another solid quarter for us and further evidence that our plan is working and we are delivering profitable growth.

Despite challenging economic conditions and below-trend global demand for vehicles, Ford posted a pretax operating profit of $2 billion, our best quarterly pretax operating profit in six years.

The basic engine that drives our business results -- products, market share, revenue, and cost structure -- is performing stronger each quarter.

Each of our Ford business units -- North America, South America, Europe, Asia Pacific Africa, and Ford Credit -- delivered operating profits; and each improved substantially compared with a year ago.

Perhaps most importantly, we continued to accelerate the development of products people really want and value.

Vehicles like the global Fiesta, the new Figo for India, and the redesigned Super Duty pickup here in North America are further strengthening our balanced lineup of cars, utilities, and trucks that offer the very best quality, fuel efficiency, safety, smart design, and value.

Based on our improving performance, the gradually strengthening economy, and our present assumptions, we now expect to deliver solid profits this year with positive Automotive operating-related cash flow.

While we are pleased with our progress, we do not underestimate the challenges ahead.

We plan to stay completely focused on delivering our One Ford plan.

I will start off this morning by providing you with an overview of our financial results and business, product, and sales highlights.

Then Lewis will walk us through the financial results in even greater detail.

Finally, I will summarize our 2010 outlook and our plan going forward.

Turning to slide 3, I'll begin by reviewing the key financial results.

Please note, as a result of our agreement to sell Volvo all of our Volvo's 2010 results are being reported as special items and excluded from our operating results.

2009 results do include Volvo.

As shown at the top of the slide, first-quarter vehicle wholesales were 1.3 million units, up 267,000 units from a year ago.

The increase was explained by higher wholesales in all of our Automotive segments, offset partially by the exclusion of Volvo wholesales.

Our first-quarter revenue was $28.1 billion, a $3.7 billion increase.

The increase was more than explained by higher volumes, favorable exchange translation, and favorable net pricing, offset partially by the exclusion of Volvo revenue.

If Volvo had been excluded from 2009, Automotive revenue would have increased by $7 billion or more than 30%.

Our first-quarter pretax operating profit excluding special items was $2 billion, a $4 billion improvement.

Automotive results improved by $3.2 billion and Financial Services improved by $877 million.

Our first-quarter net income attributable to Ford was $2.1 billion including favorable pretax special items of $125 million.

This was a $3.5 billion improvement.

We ended the quarter with $25.3 billion of Automotive gross cash, up $4.4 billion.

Slide 4 details some of our key business highlights since our last earnings release.

At the end of March, Ford entered into a definitive agreement to sell Volvo and related assets to Geely for $1.8 billion, subject to customary purchase price adjustments.

We expect to close the sale in the third quarter of 2010.

We also announced a series of new investments around the world.

In Brazil and Argentina we announced plans to increase our commitment by $450 million to more than $2.6 billion by 2015.

In the UK, we announced a $2.3 billion investment in manufacturing facilities over the next five years to support production of low-carbon emission vehicles.

In South Africa, we announced a $400 million investment to support production of Ford's next-generation compact pickup and the Puma diesel engine, primarily for export.

Early in the quarter, we confirmed a $400 million investment at our Chicago Assembly Plant and the addition of 1,200 jobs to support production of the next-generation Ford Explorer.

Finally, as part of our plan to improve our balance sheet, on April 6 we paid down $3 billion of our revolving credit facility, which remains available through December of 2013.

Turning to slide 5, we'll look at Ford's product highlights since our last earnings release.

Ford, Lincoln and Mercury vehicles achieved the highest customer satisfaction and the fewest number of "things gone wrong" among all full-line manufacturers in the first-quarter GQRS study for the US.

We started the year strongly with the reveal of the global Focus at the North American International Auto Show.

The vehicle goes on sale in North America and Europe early next year and in 2012 for Asia.

We also revealed the 2011 Ford Edge and the Lincoln MKX, set to be the first vehicles equipped with MyFord Touch and MyLincoln Touch driver connectivity when they reach the showrooms this fall.

At the New York Auto Show we debuted the Lincoln MKZ Hybrid, which is expected to be America's most fuel-efficient luxury sedan.

We also announced our partnership with Microsoft to use Microsoft Hohm as a platform to help future owners of Ford's electric vehicles manage their energy use.

Meanwhile in India, our new Figo is off to a strong start, collecting 10,000 orders in the first month on the market.

We also began production of the next-generation F-Series Super Duty lineup at the Kentucky Truck Plant, with new fuel-efficient diesel and gasoline engines.

And at the Geneva Auto Show we announced the extension of our electric vehicle plan to Europe.

By 2013, we plan to launch five full-electric and hybrid vehicles.

Turning to slide 6, we'll look at Ford's sales highlights since our last earnings release.

All of our Automotive segments reported an increase in sales compared with the first quarter of 2009.

In the US we increased market share 2.7 percentage points to 16.6%, our highest share increase since 1977.

The Fusion, F-150, Taurus, and the Focus fueled our performance.

Our product strength is also evident in Canada where we stood as market leader over the entire quarter, achieving a 29% increase in sales and a 15.5% market share.

In South America, we increased sales by 14% and sold a record 88,000 vehicles in Brazil.

In Europe, we increased sales and achieved a 9.4% market share.

In March, Ford was the best-selling brand in the 19 markets that we track.

In the Asia Pacific region, Ford posted a 39% increase thanks to the increasing momentum of the Fiesta in several of the markets.

Now I would like to turn it over to Lewis to provide even more detail on our first-quarter financial results.

Thanks, Alan.

Let's move on to slide 8.

Our first-quarter pretax operating profit excluding special items was $2 billion, a $4 billion improvement from a year ago.

Most of the remaining slides will focus on these pretax operating results.

Our pretax operating profit excluded favorable special items of $125 million, which we will cover on the next slide.

We recognized $50 million of tax expense, a $277 million increase from a year ago, explained primarily by the non-recurrence of a prior year tax recovery.

Bottom line, first-quarter net income attributable to Ford was $2.1 billion, a $3.5 billion improvement from a year ago.

As we mentioned last quarter, the new accounting standard on Variable Interest Entity consolidation effective January 1, 2010, required us to deconsolidate many of our joint ventures; and our 2009 results have been adjusted to reflect the new accounting standard.

Slide 9 covers special items, which were a favorable pretax amount of $125 million in the first quarter.

We recorded $63 million of personnel and dealer related charges related primarily to global personnel reduction programs.

As mentioned earlier, based on our agreement to sell Volvo, all of Volvo's 2010 financial results are being reported as special items.

We recorded $188 million of held-for-sale adjustments for Volvo reflecting primarily the elimination of depreciation.

As shown in the memo, if we had continued to report Volvo as an ongoing operation, we would have reported a first-quarter pretax operating profit of $49 million for Volvo.

This would represent an improvement of about $300 million compared with the first-quarter 2009, explained primarily by higher volume and favorable net pricing.

Now on to slide 10, which shows our pre-tax operating results by sector.

Our first-quarter pretax operating profit was $2 billion.

This includes a profit of $1.2 billion for the Automotive sector and a profit of $815 million for Financial Services.

As Alan mentioned and as shown in the memo, total Company first-quarter pretax operating results improved by $4 billion compared to the same period last year.

Although not shown, our results improved by $395 million compared with fourth-quarter 2009 despite a decline in wholesale volumes of 95,000 units for ongoing Automotive operations.

Let's move now to slide 11, which shows first-quarter pretax operating results for each of our Automotive segments and Other Automotive.

In the first quarter, all of our ongoing Automotive segments reported a profit for the quarter and, as shown in the memo, showed significant improvement compared with a year ago.

We will cover the ongoing Automotive segment in more detail on the upcoming slides.

The first-quarter Other Automotive loss was $391 million.

This is more than explained by net interest expense of $492 million, which was composed of about $550 million of interest expense offset partially by interest income.

In addition, there was $101 million of favorable fair market value adjustments associated primarily with our investment in Mazda.

As shown in the memo, the non-recurrence of Volvo's prior-year losses improved our pretax operating results by $249 million compared to the year ago.

Slide 12 shows the change in first-quarter pretax operating results compared with 2009 by causal factor.

Overall, first-quarter results improved by $3.2 billion compared with a year ago.

Volume and mix was $1.7 billion favorable, explained primarily by the non-recurrence of prior-year stock reductions to align with demand, higher global industry volumes, and US market share improvements.

Net pricing was $1 billion favorable, explained primarily by improvements across all of our Automotive segments and continued reductions in incentive spending in the US.

Costs were about flat, reflecting primarily lower structural costs offset by the non-recurrence of favorable prior-year warranty reserve adjustments.

Total material cost was flat, with higher raw material costs offset by a decrease in distressed supplier spending.

Exchange was $100 million favorable; and net interest and fair market value adjustments were largely unchanged in total.

Volvo's impact represents the change in reporting, as previously mentioned.

For the next section of slides we will cover each of the Automotive segments, starting with North America on slide 13.

In the first quarter, wholesales were 547,000 units, up 197,000 units from a year ago, reflecting primarily market share improvements, a planned increase in dealer stocks compared with prior-year stock reductions, and US industry growth.

Although not shown, we substantially lowered our days supply of vehicles in the US to align with market demand for our products.

First-quarter US total market share for Ford, Lincoln, and Mercury was 16.6%, up 2.7 percentage points from a year ago, which will be discussed in more detail later.

First-quarter revenue was $14.1 billion, a $4.1 billion increase from a year ago, more than explained by higher volumes and favorable net pricing.

For the first quarter, Ford North America reported a pretax operating profit of more than $1.2 billion, a $1.9 billion improvement from a year ago.

We will cover this in more detail on the next slide.

Slide 14 provides an explanation of the change in North America results compared with 2009 by causal factor.

Volume and mix was $1.3 billion favorable, reflecting primarily market share improvements, favorable changes in dealer stocks, and higher industry volumes.

Net pricing was $800 million favorable, reflecting primarily the success of our new products, selective top-line pricing, and continued reductions in incentive spending.

Costs increased by $100 million, more than explained by the non-recurrence of favorable prior-year warranty reserve adjustments and higher material costs, offset partially by lower manufacturing and engineering costs.

Excluding warranty reserve adjustments, the trend of warranty cost remains favorable as we continue to improve our overall quality.

Exchange was $100 million unfavorable, reflecting primarily the non-recurrence of favorable prior-year balance sheet revaluations.

Slide 15 shows US market share for Ford, Lincoln, and Mercury.

In the first quarter, US total market share was 16.6%, up 2.7 percentage points from a year ago, reflecting higher shares across our full family of vehicles -- cars, utilities, and trucks.

We also improved fleet market share and performed strongly in all channels -- rental, commercial and government -- reflecting growing consideration from fleet buyers for Ford's improving quality, fuel economy, and strengthening residual values.

Additionally, US retail share of the retail industry was an estimated 14.1% for the first quarter, up 1.5 percentage points from a year ago.

First-quarter US total and retail shares were the highest for any quarter in over three years.

Although not shown, Canada total market share in the first quarter was 15.5%, up 1.8 percentage points from a year ago, making Ford the market share leader for the quarter for the first time in at least 30 years.

Growing consideration for Ford products has enabled the Company to achieve these market share gains while reducing incentives.

In addition, customers continue to equip their vehicles with higher levels of content and technology, which further contributed to higher transaction prices on most Ford vehicles.

Now on to South America on slide 16.

In the first quarter, wholesales were 101,000 units, up 8,000 units from a year ago, reflecting primarily higher industry volumes offset partially by a decrease in dealer stocks and lower market share.

First-quarter market share was 10.7%, down 2/10 of a point from a year ago.

Although down slightly compared to first-quarter 2009, our market share is up compared with the last three quarters.

First-quarter revenue was $2 billion, a $600 million increase from a year ago, reflecting primarily favorable exchange translation, favorable net pricing, and higher volumes.

For the first quarter, Ford South America reported a pretax operating profit of $203 million, a $140 million increase from a year ago.

The increase is more than explained by favorable exchange and net pricing, offset partially by higher costs.

Slide 17 covers Europe.

In the first quarter, wholesales were 416,000 units, up 73,000 units from a year ago, reflecting primary the non-recurrence of substantial prior-year stock reductions to align with demand as economic conditions weakened, and higher European industry volumes in the 19 markets that we track.

Although not shown, our days supply of vehicles is below our normal planning levels, based in part from demand related to the end of the scrappage programs.

First-quarter industry SAAR for the 19 markets that we track was 16 million units, up 1.2 million units from a year ago, driven by continuation of scrappage programs in a number of markets.

First-quarter market share was 9.4%, unchanged from last year.

First-quarter revenue was $7.7 billion, a $1.9 billion increase from a year ago, reflecting primarily higher volumes, favorable exchange translation, and higher pricing, offset partially by increased incentive spending.

For the first quarter, Ford Europe reported a pretax operating profit of $107 million, a $692 million improvement from a year ago.

We will cover this in more detail on the next slide.

Slide 18 provides an explanation of the change in Europe results compared with 2009 by causal factor.

Volume and mix was $300 million favorable, more than explained by the non-recurrence of substantial prior-year stock reductions and the higher industry volumes.

Net pricing was unchanged compared to a year ago.

Higher vehicle pricing was offset by higher incentives in response to competitors' spending increases in reaction to the end of the scrappage programs.

Costs decreased by $300 million, reflecting primarily lower material costs, driven in part by a decrease in distressed supplier spending and lower warranty costs.

Other was $100 million favorable, explained primarily by higher parts profits and improved earnings at our unconsolidated joint ventures due to higher volumes.

Slide 19 covers Asia Pacific.

We have revised our volume reporting for the Asia Pacific Africa operation to include local brand vehicles produced by our JMC joint venture.

For the first-quarter 2010, volumes include JMC brand vehicles of 30,000 units, up 13,000 units from the same period last year.

Our pretax operating results continue to include our share of joint venture profits.

For the first quarter, wholesales were 189,000 units, up 58,000 units from a year ago, with overall China wholesales up 51,000 units, largely reflecting strong industry performance.

First-quarter industry SAAR was 30.2 million units, up 9.4 million units from a year ago, explained primarily by the 61% increase in the Chinese industry and a 33% increase in India.

First-quarter market share was 2%, down 1/10 of a point from last year.

First-quarter revenue, which excludes sales at our unconsolidated China joint ventures, was $1.6 billion, a $400 million increase from a year ago, reflecting primarily favorable exchange translation and higher volumes outside of China.

For the first quarter, Asia Pacific Africa reported a pretax operating profit of $23 million, a $120 million improvement from a year ago.

The improvement was more than explained by higher China joint venture profits driven by higher industry volumes, favorable net pricing, increases in industry volume outside of China, and favorable exchange.

Slide 20 shows Automotive gross cash and operating related cash flow.

We ended the first quarter with $25.3 billion in Automotive gross cash, up $400 million from the fourth quarter of 2009.

Our Automotive operating related cash flow was $100 million negative in the first quarter, reflecting an Automotive pretax operating profit of $1.2 billion, capital spending during the quarter that was equal to depreciation and amortization, and changes in working capital that were $400 million negative, and other timing differences that were $600 million negative.

These changes are related to seasonal inventory increases and normal timing differences related to our end of year production shutdowns.

These are a partial offset to the $2.3 billion of favorable inventory reductions and timing differences that we realized during fourth-quarter 2009.

And payment of $300 million to Ford Credit, reflecting upfront payment of subvention.

Excluding our upfront subvention payments to Ford Credit, our first-quarter operating related cash flow was $200 million positive.

Other major changes in first-quarter Automotive gross cash include separation payments of $100 million and pension contributions of $300 million.

Net receipts from our Financial Services sector of $500 million related to a Ford Credit distribution.

Net receipts of about $500 million in loans, including $300 million in loans from the US Department of Energy for the development of more fuel-efficient vehicles.

And the equity issuance proceeds of about $500 million and other cash outflows of $600 million including the net cash flows of Volvo, investments to support unconsolidated subsidiaries, and the impact of exchange on our non-US cash balances.

Including these impacts, the total increase in Automotive gross cash during the first quarter was $400 million.

Slide 21 summarizes our Automotive sector's cash and debt position.

As shown on the left column, at the end of the first quarter Automotive debt was $34.3 billion.

Included with our debt repayment within one year is $3 billion for repayment of our revolving line of credit.

This was repaid on April 6, lowering our outstanding debt obligations and interest costs.

Excluding this repayment, our debt payable within one year was $2 billion.

Our gross cash net of debt as of March 31 was $9 billion negative.

The right column provides a pro forma of cash, debt, and liquidity after the revolver repayment.

It's important to note that while that action reduced our gross cash and debt by $3 billion, it did not affect Automotive liquidity because the commitments of the revolving lenders have not been reduced.

Now let's turn to slide 22 and Financial Services.

For the first quarter, the Financial Services sector reported a pretax operating profit of $815 million, an $877 million improvement from a year ago.

Other Financial Services reported a pretax operating loss of $13 million in the first quarter, a $13 million improvement from a year ago.

For the first quarter, Ford Credit reported a pretax operating profit of $828 million, an $864 million improvement from a year ago which we will cover in more detail on the next slide.

Slide 23 provides an explanation of the change in Ford Credit results compared to 2009 by causal factor.

Volume was $130 million unfavorable reflecting declining receivables.

As shown in the memo on the lower left of the slide, Ford Credit's March 31, 2010, managed receivables were $90 billion, $16 billion lower than the year ago.

This decline reflects primarily the transition of Jaguar, Land Rover, Mazda, and Volvo financing to other finance providers and the decline in industry volumes over the past few years.

Financing margin improved by $50 million reflecting primarily lower borrowing costs.

The decline in the provision for credit losses of $440 million reflects primarily lower credit loss reserves and improved charge-off performance.

Residual losses declined by $440 million reflecting primarily the impact of higher auction values on vehicles returned during the quarter.

Other improvements of about $60 million were more than explained by the non-recurrence of net losses related to market valuation adjustments to derivatives and lower operating costs.

We now expect Ford Credit's full-year 2010 profits to be about the same as 2009.

The recent improvements in used vehicle auction values and credit loss performances are expected to offset the effect of lower average receivables and the non-recurrence of certain favorable 2009 factors.

Ford Credit is projecting distributions of about $2 billion to its parent during 2010, up from the $1.5 billion projected previously.

Slide 24 covers the liquidity and funding outlook for Ford Credit.

The left box shows Ford Credit's committed liquidity programs and cash, and the utilization of its liquidity sources at the end of the first quarter.

Ford Credit's liquidity exceeded utilization by about $21 billion.

Ford Credit's access to the capital markets and credit spreads continues to improve.

In the first quarter, Ford Credit issued $500 million of unsecured debt and also completed more than $7 billion of securitizations.

Ford Credit remains dependent on capital market access for its funding strategy and will continue to extend the terms of securitization and unsecured lending.

Ford Credit plans to renew committed capacity consistent with the size of its balance sheet and will continue to explore and execute alternative business and funding arrangements in those locations where it lacks diverse funding capability.

Ford Credit's funding strategy remains focused on maintaining liquidity to meet short-term funding obligations, including holding a substantial cash balance.

At the end of the first quarter, Ford Credit's managed leverage was 6.9 to 1 and Ford Credit's equity was about $11 billion.

Slide 25 covers our second-quarter 2010 production plans.

In North America, the second-quarter production schedule is 625,000 units, up 174,000 units from a year ago and up 30,000 units from our prior guidance.

The improvement in guidance is based on strengthening demand in the US and Canada.

In South America, the second-quarter production schedule is 135,000 units, up 25,000 units from a year ago.

For Ford Europe we expect second-quarter production of 448,000 units, up 50,000 units from a year ago.

For Asia Pacific and Africa, we expect second-quarter production of 213,000 units, up 73,000 units from a year ago.

Overall, the second-quarter production increase from a year ago reflects continued strong customer demand for our products, the maintenance of competitive stock levels, and the non-recurrence of prior-year stock reductions.

Now I would like to turn it back to Alan to summarize our 2010 outlook and our plan going forward.

Thank you very much, Lewis.

Slide 27 provides an overview of our business environment.

Global economic conditions are improving.

Modest recoveries in some markets are held back by weak labor markets and tight consumer credit conditions.

The consumer spending outlook for the US and Europe is likely to remain below trend in 2010.

In addition, our suppliers and dealers have been weakened by the impacts of the global economic downturn.

Financial market conditions appear to be stabilizing.

Global central banks are likely to remove some stimulus by retiring special lending programs and to begin modest policy interest rate increases.

Even with this, interest rates are likely to remain relatively low in 2010 and supportive of economic recovery.

Upward pressure on commodity prices has resumed in conjunction with the emergence of an economic recovery.

This trend is likely to continue throughout 2010.

Our business continues to be affected by currency volatility.

Recently, the US dollar has gained some ground against the British pound and the euro.

This year's global industry volume is projected to exceed last year's level of 65 million units, although excess industry capacity continues to persist in key markets.

Many scrappage and other government incentive programs are ending, primarily in the European markets.

This impact on global volume, however, is offset by gains in China, India, US, and Brazil as well as other emerging markets.

Slide 28 summarizes the status of our key planning assumptions and operational metrics for the first quarter and for our 2010 full-year outlook.

First-quarter industry volume was equal to a SAAR of 11.2 million units in the US and 16 million units in the 19 markets we track in Europe.

We expect full-year US industry volume to be consistent with our previous guidance.

Full-year European industry volume is now expected to be in the 14 million to 15 million unit range, which is somewhat higher than our previous guidance.

This change reflects strong first-quarter results, although uncertainty remains in Europe about the extent of the payback from the scrappage programs.

On the Automotive operational metrics, initial quality improved across all of our regions based on our latest Global Quality Research System surveys.

Automotive structural costs were reduced by about $100 million in the first quarter.

As mentioned last year, we have achieved significant structural cost reductions over the past four years; and in 2010 we still expect full-year Automotive structural costs to be somewhat higher, as we increase production to meet demand and increase investment in our new products.

US total market share was 16.6%; and the US share of the retail market was 14.1% in the first quarter.

Both improved compared with 2009 and consistent with our plan.

Europe market share in the first quarter was 9.4%, equal to a year ago and on track with our plan.

Automotive operating related cash flow was $100 million negative in the first quarter, reflecting primarily seasonal timing differences and was consistent also with our plan.

For the full year we remain on track with our plan to generate positive operating related cash flow.

Capital expenditures were $900 million in the first quarter and consistent with our plan.

Spending is projected to be higher during the remainder of the year to support our new product programs.

Overall, our performance this year is off to a more encouraging start than anticipated.

Based on our improving business performance, a gradually strengthening economy, and our present assumptions, we now expect to deliver solid profits this year with positive Automotive operating related cash flow.

Slide 29 summarizes our plan.

We are encouraged by our continued progress this quarter and remain focused on delivering the key aspects of our plan, which have not changed.

Aggressively restructure to operate profitably at the current demand and the changing model mix.

Accelerate the development of the new products our customers want and value.

Finance our plan and continuously improve our balance sheet.

And work together effectively as One Team, leveraging our global assets.

Our product momentum is growing and our leadership in quality, fuel-efficiency, safety, smart design, and value is resonating with our customers.

Going forward, we are entering another period of exciting new product introductions around the world such as the new 2011 Mustang with new fuel-efficient powertrains.

The redesigned Ford Explorer that will redefine the SUV segment with vastly improved fuel economy and creature comforts.

And the new Transit Connect Electric, the first of several new Ford electric vehicles coming out over the next few years.

In India, the new Figo is off to a very strong start.

The Fiesta is already a success in China and is rolling out to other markets in Asia.

In Europe, we are bringing out the new C-MAX and Grand C-MAX multi-activity vehicles, the first offerings of our new global C car platform.

This will eventually underpin more than 2 million vehicles a year around the world, including the new Focus that launches next year, an important next step in our One Ford plan.

As the graphic on the slide shows, we are committed to serving all the major global markets with a complete family of small, medium, and large vehicles, cars utilities, and trucks, and deliver profitable growth for all Ford's stakeholders.

While we are pleased with our momentum, the business environment remains challenging.

Even as we see positive signs emerging in the global economy, the recovery is fragile.

Consumer confidence remains relatively weak and the global auto industry continues to wrestle with excess capacity.

But we are committed to remaining absolutely focused on executing our business plan while developing the better plan for the future.

Now we would be happy to take your questions.

Thank you, Alan.

Ladies and gentlemen, we are now going to start the Q&A session.

We have about 50 minutes for the question-and-answer period.

We will begin with questions from the investment community and then take questions from the media who are also on the call.

In order to allow as many questions as possible within our time frame, please keep your questions brief.

Katena, can we have the first question, please?

(Operator Instructions) Joe Amaturo, Buckingham Research.

Good morning.

I was wondering if you could tell us what percentage of the cash is domiciled in the US.

And also what would make you -- what do you need to see to make you more comfortable to further reduce the outstanding balances on some of the revolver?

Joe, about 70% of it, I think, is domiciled in the US.

In terms of balances on the revolver, you know, we have paid roughly half the revolver that we drew last February if you include the amend and extend in December, where we paid off over $2 billion, and the $3 billion we have just paid off.

We are committed to gradually pay it down, and we haven't set a timetable for that.

Okay.

Then just one other one.

Could you just tell us, give us some idea of how we should now think -- since production volumes are a little more normal this year or expected to be anyhow, compared to last year -- how we should think about the seasonality and the timing differences in the working capital as it relates to the cash flow?

Well, it is clear the worst of the seasonality is behind us in the first quarter as we brought production back up and the inventory in the plants came back up.

Towards the end of the year we expect to see some change in payables because we have quite a lot of downtime as we change over around the world, particularly in North America and Europe for the new Focus.

So we're still, frankly, assessing the impact of that.

Then we will also have the boost we had in the last quarter from -- in the fourth-quarter last year from running down the inventory in the plants as we go towards the Christmas shutdown.

Okay, great.

Thanks, Lewis, and great quarter.

Take care.

John Murphy, Bank of America/Merrill Lynch.

Good morning, guys.

If we look at the pretax margin in the quarter, it was 8.9% in North America; and that is a level approaching the late '90s.

We haven't seen that kind of a margin since the late 1990s.

I was just wondering as we look at slide 14 and the major factors you cited in the quarter, if there was anything that you think is sort of one-time in nature, or anything that will reverse through the course of the year?

Will there be more launch costs that come in?

Will there be other raw material costs that come in?

Just trying to understand the sustainability of that 8.9% margin.

Yes, we've got a couple of things that will hit us towards -- as we go through the rest of the year.

We have a lot of product launches planned towards -- in the balance of the year.

So you will see things like launch costs go up and some fixed marketing go up.

We are also concerned about raw materials.

We have seen the pressure on commodities beginning to raise, so we expect to see some commodity pressure in the second half.

Those I think are the principal.

Oh, we may see a bit of mix -- well, we will see a bit of mix as we bring in Fiesta in this quarter and we start getting towards Focus at the very end of the year.

We can expect to see some mix deterioration, I think.

Okay.

We're sort of -- not really thinking of the $2 billion as a good going rate, because typically we always have a strong first quarter to the year.

Okay.

Then if we look at Ford Motor Credit, the equity at the end of the quarter was $11 billion.

I know you guys have talked about that balance sheet or the Ford Motor Credit balance sheet shrinking over time.

Is that balance sheet -- does that shrinkage mean in the equity and the potential profits in returns there?

Because the returns, or the profit I should say, is really outpacing what we are expecting.

I'm just trying to understand if that equity stays relatively high and that might support Ford Motor Credit profits going forward.

I think we'd expect to see Credit's profits come off a bit as the receivables come down.

They will come down as we transition away from the other brands, until we start seeing the Ford volume coming back up again.

So that is a sort of three- or four-year period, I think.

Secondly, we have obviously been very fortunate in the way residual values have come back in the last six or eight months.

That has enabled K.R.

and Mike to write down some of the credit loss reserves a bit.

I think that will run out in the second or third quarter.

So we are guiding that we expect Ford Credit to make about the same amount of money this year as they did last year, which is obviously not 4 times 8.

Okay.

That would imply a $1.1 billion to $1.2 billion pretax profit for the next three quarters.

Is that sort of a normal run rate on a quarterly basis do you think, going forward?

I don't know, John.

I think I will just take a save on that and have a think about it.

I think we do expect over time to perhaps free up some capital to return to the Auto Company.

We think the Credit Company managed leverage has dropped lower than we would like, particularly as we see our access to the credit markets improving quite significantly as you saw, for example, last week.

We think we will be able to consider reducing the amount of liquidity we've been holding at the Credit Company.

Great.

Thank you very much.

Itay Michaeli, Citi.

Great.

Thanks.

Good morning.

You raised your Q2 North American production schedule nicely.

Can you maybe share with us what the underlying assumptions for Q2 SAAR and market share, maybe incentives, and also what you are targeting for inventory?

Yes and no.

I'm not going to give you too much detail.

The full-year SAAR we are still projecting between the 11.5 million and 12.5 million.

I think we're probably feeling better about that than we were as we finished the end of March and we have not had a bad start to April in terms of the SAAR.

We are expecting net pricing to improve during the year.

So we are going to be watching very carefully our incentive levels of spending.

And you know, our share in the first quarter is up, but we're still only saying our plan is to sort of equal or improve over -- for the year.

Because we really are focused on profitability, and market share will be one of the outcomes rather than the measure.

We have tried driving the business, as you know, by market share in the past, and it's not the best way to success.

Absolutely.

And a quick follow-up on Automotive structural costs.

Can you maybe --?

I'm sorry.

I didn't answer your question on days supply.

We are going to keep dealer days supply well under control and about flat as we go out of the first quarter.

That's very helpful.

Then quickly on Automotive structural costs, you had a bit of a tailwind in the quarter.

Can you maybe help us in terms of the order of magnitude of what the rest of the year looks like?

Then should we just plan in 2011, as production recovers, Automotive structural costs continue to go somewhat higher?

Or is 2010 more of a catch-up from some of the cuts you made last year?

Well, 2010, frankly our view of sort of somewhat higher that we talked about at the end of last year -- is about where we are.

We didn't incur quite what we expected in the first quarter, but we think they are just around the corner.

A couple of things going on.

One is, as you point out, is the increased production.

Then the other is we are continuing to invest heavily in new product.

We are looking at further growth opportunities.

I think -- thinking about 2011, while we are not giving guidance, we are obviously very intent on making sure that we keep our product lineup fully competitive, because we are demonstrating the success of having a competitive product lineup.

And we're talking about growth around the world as you saw in Alan's section, where we are really looking to make sure we are participating around the world now we have sort of fixed the base of the business.

That's helpful.

Thank you.

Patrick Archambault, Goldman Sachs.

Good morning.

Just on -- I just wanted to dig into the timing differences on slide 20 again a little bit more.

I guess you said that there was seasonal inventory increases.

I take -- generally speaking, most of your inventory is in the hands of dealers, right?

So is that international, where maybe some of that is on your books, that is causing that?

It's two things.

It is in-plant inventory on just parts; and obviously as we go towards the end of the year and we know we have got the Christmas shutdown, we are essentially trying to run down the in-plant inventory to as minimal as possible.

Because we don't want parts lying around on line side, during the shutdown.

Then the second thing is, any vehicles that haven't yet been shipped to dealers -- and again when you have a week or 10 days after the end of production before the end of the year, you do your best to clear those out and ship them.

As we come back into production in the first quarter, you start seeing the line side inventory going up for obvious reasons.

You also see a little bit of Company vehicle inventory arise.

For example, at the end of the first quarter, we're right in the middle of the Super Duty launch.

And you know we have this sort of batch and hold process where we hold vehicles until we are comfortable that we have had a clear run of production.

So our inventory at the end of the quarter, our vehicle inventory at the end of the quarter was just a little bit higher than we would normally be because of our launch processes.

So it's not -- it's nothing to do with dealer stocks.

Our practices around the world are the same as they are in the US.

Oh, okay.

Great.

There is nothing in here that is related to like incentive accruals or timing differences on that?

Is that where that would impact cash flow to the extent there were any differences?

Not material, as best I could find.

Just a couple more comments about cash flow.

First of all, although we are obviously disappointed it was a tenth negative, it is actually a little better than we had projected a couple of months ago.

So we are pleased with the work the team did.

And because it was a bit better than we projected we now feel very, very confident about our ability to achieve full-year positive operating related cash flow.

Okay.

One just forward-looking question on costs.

You used to -- and it's maybe somewhere in the slide deck.

But you used to kind of break out product costs in three buckets.

You had commodities; product adds; and then I guess procurement savings from your global platforms.

On a go-forward basis, can you talk a little bit about how you see those playing out this year?

You did talk about commodities a little bit.

But in terms of the cost savings and then some of the additional regulatory product adds.

Then if you are willing to look out a little further than 2010, that would be helpful as well, just so we can understand how those opportunities and headwinds stack up.

Yes, without being too explicit, if you take the three buckets, we will continue to add some product costs for a couple of reasons.

Some of it is regulatory; but really a lot of our increased product costs are to get the cars and the vehicles that customers want and value.

So we have said we are going to launch vehicles that are best in class.

And best in class does in some cases require some additional product costs to ensure they are fully competitive.

And we have seen the benefit of that in terms of the incremental revenue we achieve from that.

We are also seeing some increasing cost because we are equipping our vehicles better.

I think that will continue particularly in North America, as we're moving from one generation of products to the next generation of world-class competitive products.

And particularly on the car side of the business.

We do expect to see some bad news on commodities.

Our expectation is that that's probably not just a this-year phenomenon.

Then we continue to work very productively with our suppliers to make material cost savings, and that will continue.

I think as we globalize Ford we are seeing real benefits with our suppliers of the global supply base and getting the economies of scale that we're leveraging with reduced numbers of platforms.

So we will -- I think in terms of this year you can think of product costs and material cost savings as we will be doing our best to try and wash those out, with commodity costs as the area that will continue to grow directionally.

Tim Denoyer, Wolfe Trahan.

Hey, good morning.

Quick question on the distressed supplier payments you mentioned.

You said that there was a reduction in that that offset some of the higher commodity costs in the first quarter.

Can you give a sense of magnitude of what those supplier payments are in the first quarter?

Is there any room for those to continue to decline?

No, and I am not going to give you the magnitude because they vary what the payments are and why we help particular suppliers varies tremendously by the individual supplier.

We're going to continue to, I think, I think as the supply base also returns to a better outlook, I think we can hope to see distressed supplier costs being more containable.

I think we should however expect some supplier rationalization still ahead of us.

Because not -- the numbers of suppliers that went out of business in the down period maybe weren't as many as we expected.

So there are still some suppliers that are struggling a little bit.

Okay.

That's helpful.

Then just a quick question on labor.

Can you give us a number, a rough number of employees on the sub and TAP programs and whether or not you have begun to hire any of the lower tier wages yet?

We haven't begun to hire any of the lower tier employees yet.

I am just looking to one of my colleagues to see if we have got a number.

I don't think we have.

We haven't got it.

There is not a lot of people as far as I remember, but I don't have a number in front of me, I'm afraid.

Okay.

Thanks very much.

Colin Langan, UBS.

Good morning.

Can you provide a little color?

They are sort of related questions.

North American revenue per unit was actually down year-over-year.

Was that mostly related to lower F-Series mix?

Then I guess on a similar note, when I look at the walk for North America earnings, there was actually no negative mix for -- there is no negative mix highlighted.

So is mix actually neutral in the quarter?

I would've thought it had been negative with less F-150s.

No, actually the revenue walk is a bit peculiar because of some special factors from really pertaining to last year.

The first was -- and they more than explain the reduction that you see, because we did get positive net pricing.

The two special factors were -- I think you know in most of our daily rental units we book the wholesales when we ship the vehicles; but we book most of the revenue when we sell the used vehicle.

Last year when we were right in the middle of the economic turmoil, our shipment -- so our wholesales to daily rental companies was very low.

But we were still putting a more normalized number of units through the auctions.

And therefore we had quite a lot of revenue without the equivalent amount of wholesales.

For example, this year in the first quarter, it was just about flat.

We're putting through about the same number of vehicles through the auctions as we are wholesaling to rental companies.

So that's the biggest distorting factor; that is a last year's phenomenon, not this-year phenomenon.

The other issue is because our wholesales were so low last year, our parts revenue made a significant contribution to the total revenue.

Our parts revenue has grown year to year, but nothing like the amount our vehicle wholesale revenue has grown.

So again, that gives you a distorting effect in mix.

I would say those two items more than explain the apparent reduction per unit.

In fact we did get positive net pricing.

I don't think there was much mix effect.

Slightly -- well, one person is saying slightly positive, one is saying slightly negative.

So it's about a wash.

Even with lower truck production?

Is that a positive comment on the profitability of the car portfolio today?

I think that might be a step too far.

Let me have a look at that, Colin.

I don't know for certain.

And just one last one.

You commented that Q1 is usually a seasonally strong quarter.

Aside from the effects of production are there other any other adjustments in Q1 that help earnings?

No, no, it's really the things that are going to affect the balance of the year that I described I think to Joe or John.

Higher fixed marketing, higher launch costs, commodity costs begin to hit us a little bit, some incremental engineering as I said with the launch.

Those things.

So it's really second over first.

The final three quarters compared to the first.

Again, let's just remind what Alan said, because we now feel this is a more encouraging start than we had anticipated.

So we feel very good about giving guidance that we will be solidly profitable this year, which as you know is an adjective we previously used for next year.

So we have pulled ahead the adjective.

Okay.

Thanks for taking my questions.

Himanshu Patel, JPMorgan.

Hi, good morning, guys.

Can we get any kind of color on how net pricing trended sequentially in North America?

Yes.

Net pricing was about flat first over fourth.

Which we did get some -- a little bit of positive pricing, a little bit of negative incentive spending.

But in the first quarter of this year we have the runout of the Super Duty and the runout of the Mustang.

So we have got a couple of big runout programs.

So we're obviously keeping a very close eye on that, Himanshu, because of some of our competitors' activities.

But first over fourth was about flat.

Okay, what was the impact on European profits of the deconsolidation of the subsidiaries?

I think it was about half the total.

So it was about somewhere between $200 million and $250 million.

And that was the '09 profit that we have now taken now taken out.

So I am not telling you what was in the first -- what would have been in the first quarter.

I'm telling you what was in '09; and that is a full-year number.

Full year was the$200 million to $300 million?

$200 million to $250 million.

$230 million, I think to be precise.

And that is mainly the Turkish JV?

That is the Ford Otosan JV primarily, yes.

We have a couple of other JVs, but the big one is Ford Otosan.

Okay.

Then lastly, any comment on just how long these lease residual gains last and to what magnitude over the next few quarters?

We are watching it closely.

We saw a continued modest improvement in the first couple of weeks of April.

They have started to plateau off, and we would expect to see a seasonal decline as we go towards the end of the year.

Okay.

Thank you.

Chris Ceraso, Credit Suisse.

Thank you.

Good morning.

I think it was a couple of years ago that you changed something with the way you accrue for or account for incentives.

I am just wondering if there is something here in the first quarter where you had cash going out the door for incentives but it was not running through the P&L.

Is that part of the $600 million negative on the cash flow?

Is that partly why the year-over-year change in price was so strong in North America?

No.

You are right, we did make the change a couple of years ago, so the year-over-year comparison is clean of any effect.

But there is no cash going out the door for incentives in Q1 that did not go through the P&L?

There is a subvention payment that we show in the cash of -- I can't remember if it was $250 million or $300 million -- $300 million.

But year-over-year, we had that in last year as well.

Okay.

Then on the cost front, I am just hoping you can help us, order of magnitude.

You have mentioned that both structural cost will be going higher and material cost will be going higher.

Is this $100 million?

Is it $500 million?

What is the ballpark that we are dealing with here?

We're really not going to go into that amount of detail, Chris.

I'm sorry.

All right, then.

If I can squeak in another just a housecleaning item.

Can you use the loss carryforwards from the Motor business to offset taxable income at the Finance Company?

Yes.

Okay.

Then just one last quick one.

What was the share count at the end of the quarter?

What do you expect it to be in Q2?

The share count at the end of the quarter was 3.4 billion.

I think that was the average outstanding.

Is that a fully diluted number?

Assuming -- let's assume you earn the same amount in Q2 that you did in Q1.

Well, if you go to Appendix 1, Chris, I think all the detail is in there.

If it is not quite adequate, just give us a call.

Okay, thank you.

Rod Lache, Deutsche Bank.

Good morning, everybody.

I had a couple remaining questions on North America.

First of all, I think last year in the first quarter you had called out a $600 million warranty reversal; and I believe that $400 million of that was in North America.

I did see the $200 million negative in the first quarter.

Was there some remaining benefit there from warranty in Q1 in North America or elsewhere?

Also, I think you said something about you are expecting North American pricing to improve going forward.

Could you just elaborate on that?

I would imagine the pricing comparisons get a little tougher as you go through the course of this year.

Yes, clean of the warranty reserve adjustment we made last first quarter, we are seeing positive warranty performance as the quality of our vehicles improves.

I don't think that's just a North America phenomenon.

I think that's a more global phenomenon.

So I don't -- in terms of reconciling to the $600 million and the $400 million I have to just check that out.

But I don't -- I think we are essentially clean.

We are seeing good news in warranty over the period.

Yes, we are still expecting to see positive net pricing in North America, particularly as we launch our new products.

That is where we have really got the benefit of world-class products.

Okay, so over the course of the year, even though the comparisons are more difficult, there should be a plus.

Can you quantify your expectations for commodities at this point?

It's pretty frequently in the news; I think Toyota said something yesterday about steel.

How meaningful is that based on where spot prices are today?

Then lastly, you did comment just qualitatively on some of the headwinds that you see cropping up.

But you have got a pretty nice uptick in production as you head into Q2, which should contribute some operating leverage.

Just the net of these things, is it your view that you would not be able to sustain these kinds of margins for a while?

Or do you feel pretty comfortable for the time being with this level of profitability?

Well, obviously we are very comfortable with the first quarter.

We are suggesting that people recognize there will be some other events during the year that make that probably not a good guide for a running rate.

And I have enunciated those pretty clearly.

And the commodity headwinds, any color on that for us?

Well, it's meaningful, but we are not giving out specific details.

Okay.

Thank you.

Brian Johnson, Barclays Capital.

Good.

My three questions that are left all relate to your international operations -- Europe, South America, and then China.

On Europe, can you give us your sense of how you expect the pricing to play out over the remainder of the year as scrappage programs wear off, as you are past the Fiesta launch and waiting for the Focus towards the end of the year?

Yes, we are keeping a very close eye on incentive spending levels in Europe.

They are up sequentially, reflecting a couple of things.

One, that natural demand has gone down in some cases, and our competitors are trying to match the old scrappage incentives with their own incentives.

So we are keeping a close eye on that.

You're right, we had a bonanza year last year with a brand-new Fiesta and a brand-new Ka.

So the Ka is staying very fresh.

The Fiesta in particular I think it was very close to being the top-selling car, if not the top-selling car in March.

We're having a bit of a dispute with one of our competitors.

But it was right up there.

And then we have -- I think the thing that is going to work in our favor during this year is we have a really great freshening on S-MAX and Galaxy just in the marketplace.

Then we've got in the middle of the year the Grand C-MAX, which is a new segment entry to us and one we're desperate to get a hold of to go against some of our competitors.

And then by the end of the third quarter we will have the new five-seater C-MAX which is -- I think you have seen it -- a knockout product.

We've got a lot of powertrain activities going on with substantial upgrades to diesels.

And we're launching EcoBoost in Europe as well.

So we think we've got lots of the product activity.

And the strength of the European story is just the same as the strength of the North American story.

Great product helps you offset some of these pressures.

In South America, your margin ticked down sequentially.

Was that pricing, seasonality, weaknesses in markets outside of Brazil?

Where other automakers have reported, although they don't break out their earnings to the same extent, fairly good results in the quarter.

We did see some material cost pressure.

I think there was a little bit of industry mix as well.

Okay.

Finally, you're at a point where you are ready to break out your Chinese joint venture equity income for our enjoyment?

No, I'm sorry, we're going to have to disappoint you.

You will have to find other enjoyment Brian.

I think there's lots and lots in the pitch to enjoy.

Okay.

Thanks.

I just -- we have had a lot of these discussions about the calendarization of our year.

But again I just want to emphasize that we did feel good enough to say we now expect to be solidly profitable this year.

And given where we were even three or four months ago, that is a -- sends to you that we are really encouraged by the start we've had.

Ladies and gentlemen, at this time we would now like to welcome questions from the media community.

(Operator Instructions) Bryce Hoffman, The Detroit News.

Thank you.

Congratulations, gentlemen, on a good quarter.

A couple of questions.

First, looking at Appendix 5, it looks like your North American headcount is down by 1,000 people year-over-year.

Where are you at in your rightsizing, if you will, of your North American staffing levels?

Should we expect to see continued declines?

Or are you pretty much stable now?

We're pretty much stable.

We are not in a position to start hiring yet, but we're pretty much stable.

The emphasis now I think is -- continue to see our volumes grow and then we will take a hard look at our people levels.

Then second question, could you talk a little bit more about, if you will, the threat posed by the end of scrappage programs in Europe?

How much could that negatively impact your performance going forward?

Well, it's actually quite difficult to assess.

We were forecasting a year of between 13.5 million and 14.5 million when you started this, the year in January.

The first quarter came in at 16 million.

That was held up by two things.

One was the completion of some orders that had been placed that got scrappage vouchers, for example in Germany, but hadn't been delivered.

But secondly this increased level of incentive spend.

But within that 16 million, Germany for example, which is the biggest market in Europe, was down about 20%.

So we can see the impact as scrappage comes off.

Now the German program was the strongest of the scrappage programs.

So the reason we have increased our expectations for European industry to between 14 million and 15 million units now is because of the strong first quarter.

But we're still expecting to see a pretty significant volume drop.

And if we don't see that volume drop, then we think it will be at the expense of increased incentives.

So that's what we're trying to understand, what is going on with our competitors, and how we would react appropriately.

Thank you.

Jeff Bennett, The Wall Street Journal.

Lewis, you said that Ford Motor Credit will give Ford Motor $2 billion this year.

It that up from $1.5 billion?

That's correct.

When we talked to you in January, we said we expect the dividend to be $1.5 billion.

We now expect it to be $2 billion.

And why is that?

Because frankly they are making more money than we expected in January.

Very strong first quarter and just a bang-up job by the team in Ford Credit.

Helped by some, frankly, the recovery of the economy is translating into improved residual values.

But because they are making a little bit more money, we think they can afford to dividend a little bit more money to the parent.

But what you are also telling us, though, is that is going to begin to wind down a little bit into the third quarter as those residuals come down and as you are replacing the Volvo credit?

It is going to come down a little bit.

That is why we're saying we don't recommend you take $800 million and multiply it by 4.

We are giving guidance that we think it's going to be about $2 billion, about equal to last year.

Okay.

Okay, thanks.

Just while everybody is on the phone, we'd just like to clarify one thing that we have had one or two people slightly confused about.

That is on slide 3, and it's the revenue where we showed $28.1 billion.

I know one or two people thought that was somewhat of a disappointment.

The reason it looks a relatively modest increase compared to a year ago is because that number excludes Volvo whereas the prior year included Volvo.

And that number has also been adjusted for the variable interest entities, i.e.

the deconsolidation of the joint ventures.

To put it in perspective, for the first quarter if we had included Volvo, the Volvo revenue was about $3.5 billion.

And if we hadn't made the deconsolidation, the VIE revenue is about $0.5 billion.

So that number, instead of being $28.1 billion, would have been about $32.1 billion, which I think was closer in line to some people's expectations.

I just wanted to clarify that because we have seen a few comments that implied we hadn't laid it out quite as clearly as we should have done.

I am sorry to interrupt whoever was about to ask a question.

Tom Walsh, Free Press.

Morning, guys.

One for Alan here.

As the turmoil of 2008 and early '09 recedes into the rearview mirror, how much residual goodwill do you think you have with the American car buyer for not taking the money?

I heard in an interview this morning where you mentioned that Ford had honored the shareholders and the bondholders.

Just if you could elaborate on that a little bit.

Sure, Tom.

I think that we have gained quite a bit by the fact that not only are we clearly making some of the best cars and trucks in the world but also that we have continued to create a very strong business for the long term.

Because people want to be associated with a going concern and somebody that cares about them and is going to be there for them.

And clearly the fact that we have done this and we respected the shareholders, we respected the bondholders, we respected everybody that had invested in Ford, and now we are creating a very strong business, I think that resonates very well with our consumers.

Thanks.

Dee-Ann Durbin, The Associated Press.

Good morning.

Thanks for taking the call.

How much do you feel that the first quarter was artificially inflated because we were making up for fleet low volumes last year, we had Toyota's incentive spending, China cars and trucks sales way up.

Or how much shows a real fundamental strength and real economic improvement?

I think it's absolutely a manifestation of the strength of our products, the breadth of them, and the quality of our products.

Because we're seeing so many new customers coming to Ford based on the strength of the products and the fact that we are running a strong business.

But I think that is absolutely the reason that you are seeing these results.

As we have talked about in the past, these results now are a result of the three or four fundamental decisions that we made a few years ago.

One was we were going to focus on the Ford brand, as you well know.

The second, that we were going to have a complete family of vehicles -- small, medium, and large, cars, utilities, and trucks.

Then the third big decision of course was that every new vehicle that we introduced would be the very best in the world in terms of quality and of fuel efficiency and safety and smart design.

When you look at that -- and then of course to leverage our global assets worldwide.

So we brought all of that intelligence and scale to the consumer.

You look at the sales numbers, and in the first quarter they are up 37% in the US.

The market share itself is up 2.7 percentage points to 16.6%.

That is absolutely on the strength of this product line.

If you look at all of the products, the small and medium and large, they are all growing at double-digit rates.

So I think it's a real testament to the strength of the products because at the end of the day that is what people really do want, in addition to buying from a strong company.

Robert Schoenberger, The Plain Dealer.

Good morning.

When you calculate your profit sharing for the UAW workers, is that done on a quarterly basis or is that on an annual basis?

Annually, yes.

It is done at the end of the year.

Okay, so this won't have an immediate impact on the earning for the UAW workers out there.

No.

We pay it annually.

We calculate annually and pay it annually.

Okay, great.

Thank you very much.

Brent Snavely, Detroit Free Press.

Hello, everybody.

You guys have mentioned the market share gains in the US, the biggest gain since the fourth-quarter of 1977.

Do you think you can sustain that?

Or what kind of market share gains do you foresee for the remainder of the year in the US?

And also wondering what your market share outlook is for Europe as scrappage comes to an end but you do have other products in the pipeline?

Sure.

Our guidance is on the US that we would be equal to or improve.

I think we are clearly on track to meet that objective.

And in Europe we had equal the market share for last year; and for the reasons that you said, that with the scrappage program coming to an end, but based on the strength of our products even with the overcapacity we have there, we believe that we are going to be able to hold that market share.

And clearly as you have seen we've even got to the place now where we are the number-one brand in Europe.

So the product -- we have so many new products come.

We're going to have the freshest product line in the showroom of any manufacturer over the next two years.

So I anticipate that we're going to be able to deliver on that guidance on share.

Okay, thank you.

Hey, Katena, I think we have time just for one more question, please.

Jere Downs, Louisville Courier.

Good morning, gentlemen.

With the gains in market share, would that mean that previous comments that perhaps one to three plants in the US are extraneous, can you -- ?

Well, how does that affect your overcapacity in the

We didn't say anything about overcapacity in the US today.

We have clearly been working matching our production and our capability to the real demand.

As we have mentioned, we feel we have a good match right now and we anticipate growing the business going forward as we pointed out in the guidance for this year and also for next year.

Thank you.

You're welcome.

Okay.

Thank you, everyone.

That concludes today's presentation.

We thank you all for joining us here today.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes your presentation.

You may now disconnect.

Good day.