Ford 2013 Annual Report Download - page 41

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Ford Motor Company | 2013 Annual Report 39
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Changes in Automotive gross cash are summarized below (in billions):
2013 2012 2011
Gross cash at end of period $ 24.8 $24.3 $22.9
Gross cash at beginning of period 24.3 22.9 20.5
Change in gross cash $ 0.5 $ 1.4 $ 2.4
Automotive income before income taxes (excluding special items) $ 6.9 $ 6.3 $ 6.3
Capital spending (6.6)(5.5) (4.3)
Depreciation and tooling amortization 4.1 3.7 3.6
Changes in working capital (a) (0.4)(2.3) 0.3
Other/Timing differences (b) 2.1 1.2 (0.3)
Automotive operating-related cash flows 6.1 3.4 5.6
Separation payments (0.3)(0.4) (0.3)
Net receipts from Financial Services sector (c) 0.4 0.7 4.2
Other (d) 0.4 1.1 (0.2)
Cash flow before other actions 6.6 4.8 9.3
Changes in debt 0.7 0.9 (6.0)
Funded pension contributions (5.0)(3.4) (1.1)
Dividends/Other items (1.8)(0.9) 0.2
Change in gross cash $ 0.5 $ 1.4 $ 2.4
_________
(a) Working capital comprised of changes in receivables, inventory, and trade payables.
(b) Primarily expense and payment timing differences for items such as pension and OPEB, compensation, marketing, and warranty, as well as
additional factors, such as the impact of tax payments.
(c) Primarily distributions from Ford Holdings (Ford Credit’s parent) and tax payments received from Ford Credit.
(d) 2012 includes cash and marketable securities resulting from the consolidation of AAI.
With respect to “Changes in working capital,” in general we carry relatively low Automotive sector trade receivables
compared with our trade payables because the majority of our Automotive wholesales are financed (primarily by Ford
Credit) immediately upon sale of vehicles to dealers, which generally occurs at the time the vehicles are gate-released
shortly after being produced. In addition, our inventories are lean because we build to order, not for inventory. In contrast,
our Automotive trade payables are based primarily on industry-standard production supplier payment terms generally
ranging between 30 days to 45 days. As a result, our cash flow tends to improve as wholesale volumes increase, but can
deteriorate significantly when wholesale volumes drop sharply. In addition, these working capital balances generally are
subject to seasonal changes that can impact cash flow. For example, we typically experience cash flow timing differences
associated with inventories and payables due to our annual summer and December shutdown periods, when production,
and therefore inventories and wholesale volumes, are usually at their lowest levels, while payables continue to come due
and be paid. The net impact of this typically results in cash outflows from changes in our working capital balances during
these shutdown periods.
Shown below is a reconciliation between financial statement Net cash provided by/(used in) operating activities and
operating-related cash flows (calculated as shown in the table above), as of the dates shown (in billions):
2013 2012 2011
Net cash provided by/(used in) operating activities $ 7.7 $ 6.3 $ 9.4
Items included in operating-related cash flows
Capital spending (6.6)(5.5) (4.3)
Proceeds from the exercise of stock options 0.3 — 0.1
Net cash flows from non-designated derivatives (0.3)(0.8) 0.1
Items not included in operating-related cash flows
Separation payments 0.3 0.4 0.3
Funded pension contributions 5.0 3.4 1.1
Tax refunds, tax payments, and tax receipts from affiliates (0.3)(0.1) (1.4)
Settlement of outstanding obligation with affiliates — (0.3) —
Other — — 0.3
Operating-related cash flows $ 6.1 $ 3.4 $ 5.6
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