FORD: Even IF Sales Fall; Company Can Survive.

Amy Wilson and Philip Nussel Automotive News February 26, 2009 - 11:49 am ET

Ford Motor Co. today said it has enough cash to survive 2009 without help, even if U.S. industry sales drop to an annual pace of about 9 million light vehicles and stay there for the year.
Ford auditors signed off on the company's annual report to U.S. regulators without issuing a "going concern" statement. Ford finished the year with total cash and securities of $15.7 billion -- down from $33.0 billion at the end of 2007.


Echoing previous public statements, Ford management wrote in today's report that the company should survive the 2009 downturn. General Motors isn't so sure. Its auditors are expected to raise doubts about the automaker's ability to stay alive this year.

Things could get worse -
But Ford cited two scenarios that could change its opinion:


• A further decline in U.S. sales beyond current assumptions of between 10.5 million and 12.5 million total vehicles. That is a new forecast for Ford. The company lowered its assumption from an earlier forecast of 11.5 million to 12.5 million vehicles.
But Ford added that even if U.S. sales fall 20 percent below the midpoint of its assumption -- to 9.2 million vehicles -- it "would not exceed our present available liquidity." The risk that industry sales could decline to volumes below that level "is remote," Ford said.


• The company must spend more money than expected to bail out suppliers and ensure parts deliveries. "It is reasonably possible that our costs to ensure an uninterrupted supply of materials and components could be higher than our present planning assumptions by a material amount," the company said.


But Ford said that even under most of the worsening scenarios, it should have enough cash to survive. The company's report said: "Therefore, we do not believe that these reasonably possible scenarios cause substantial doubt about our ability to continue as a going concern for the next year."


GM will have 'going concern' issue -
Earlier today, GM said it likely will receive a notice from auditors who will assess the risk that the automaker might not be able to continue as a "going concern." GM, which has been kept afloat with emergency loans from the U.S. government since the start of the year, posted a net loss of $30.9 billion for 2008.



That ranked as the second-largest annual loss for the 100-year-old automaker, behind only the $38.7 billion deficit recorded for 2007. Last week, the auditing firm Grant Thornton said such notices may be common as auto companies file their annual reports with the Securities and Exchange Commission.


"It's important for the public, the supply base and all of the parties involved in restructuring the auto industry not to overreact if they start seeing 'going concern' opinions," Kimberly Rodriguez, a principal in Grant Thornton's restructuring practice, said in a statement.

Dave Versical contributed to this report.