There were 11 US Big Motor Vehicle and Parts Corps, with Pretax Income or Loss of more than $100 mil in either the 4Q 2011 or the 4Q 2010, which have released their December 2011 quarterly earnings. There are a couple others that probably will meet this earnings threshold, but they haven't released their 4Q 2011 earnings yet.
How did these US Big Auto Corps do?
Just great, with their Total Pretax Income up a very robust 35% in the 4Q 2011.
Below here are the Pretax Income (PTI) of these 11 Big Motor Vehicle and Parts Corps in the 4Q 2011, along with a comparison with the prior year’s 4Q of 2010:
..............................................4Q............4Q..........Increase...
............................................2011.........2010......(Decrease)...
.............................................PTI.........PTI(L)...Amount.....%
............................................(in millions of dollars).........
Ford(1)...............................1,052........1,173........(121)...-10%
General Motors(2).................993...........830.........163......20%
Paccar...................................473...........239.........234......98%
Chrysler................................275..........(167)........442....265%
Navistar................................275.............56..........219....391%
TRW Automotive...................259...........253.............6.......2%
Autoliv(3)..............................211...........231..........(20)....-9%
Borg Warner..........................185...........146............39.....27%
Lear........................................92............119..........(27)...-23%
Oshkosh..................................50...........143..........(93)...-65%
Goodyear Tire...........................7..........(145).........152....105%
Total all 11..........................3,872........2,878.........994......35%
(1) Ford 2011 PTI excludes Gain on Sale of Russian Operations to a Joint Venture. Its 2010 PTI excludes Debt Reduction Action Charges.
(2) General Motors 2011 PTI excludes Goodwill Impairment Charge and Gain on Debt Extinguishment. Its 2010 PTI excludes Gain on Debt Extinguishment.
(3) Autoliv is a Swedish Corp, but with extensive US operations.
I think one of the most significantly positive developments in the critical US auto industry in the 4Q 2011 was Ford's decision to record $12.4 bil of reduced Income Tax Expense, and thus also in increased After-tax Earnings, which isn't even included in its above Pretax Income numbers. Yeah, that's $12.4 bil.
What in the world is with this massive $12.4 bil increase in Ford's after-tax earnings?
Well, this gets technical, but under US Generally Accepted Accounting Principles, when a company is generating substantial cumulative net operating losses, like Ford had previously, it is not able to record in its after-tax earnings the tax benefit related to these losses unless it is more likely than not that these earnings will ultimately be realized. So, it's all about assessment of Ford's future earnings prospects.
In the 3Q 2006, Ford, with the blessing of its outside auditors, decided to reverse its previous income tax benefits related to its huge cumulative losses. This action only made sense, given the large cumulative losses incurred through the 3Q 2006, coupled with Ford's dismal financial outlook on its future earnings.
In the 4Q 2011, Ford, again with the blessing of its outside auditors, reversed course and reversed this reversal, thereby resulting in $12.4 bil in reduced income tax expense, and thus also in higher after-tax earnings, in the 4Q 2011.
Why this change? To quote Ford's 4Q 2011 Earnings Release ....."Consistent delivery over the past few years of strong improvement in the company’s business results now supports" this $12.4 bil of Income Tax Benefit and resultant increase in After-tax Earnings increase. Whew!
When you look at the above numbers, you just have to ask the following question.....Just how in the world could any rational person vote for a Presidential Candidate who still stubbornly claims that the Obama Administration actions to rescue the Auto Industry, which was clearly going under, was a huge mistake?
=========================================
Late Addition: Feb 29, 2012
..............................................4Q............4Q..........Increase...
............................................2011.........2010......(Decrease)...
.............................................PTI.........PTI(L)...Amount.....%
............................................(in millions of dollars).........
Visteon(1)............................100...........153.........(53)....-35%
(1) Visteon 2011 PTI excludes Asset Impairment Charge. Its 2010 PTI excludes a large Reorganization Net Credit.
