UPDATE 2-Ford balance sheet a priority before dividend

* Solid profits in 2010; ‘continuing improvement’ in 2011

* Dividend reinstatement a future topic

* Strengthening balance sheet is top priority-chairman
(Adds quotes from executives, shareholder voting results,
background and byline)

By David Bailey

WILMINGTON, Del., May 13 (BestGrowthStock) – Ford Motor Co (F.N: )
expects earnings improvement in 2011 after solid profits in
2010 as its turnaround gains traction, executives said at its
annual meeting of shareholders on Thursday.

Ford Chief Executive Alan Mulally said improvement in the
economy globally and a strong new vehicle lineup gave him
confidence in expecting a “continuing improvement” in 2011.

“It’s a slow gradual recovery, especially in the United
States, but very solid fundamentally,” Mulally told reporters
after the meeting.

Ford, which posted a profit in 2009, is focused on reducing
a high debt load, but would make dividend reinstatement a topic
for future discussion after it addresses its balance sheet,
Executive Chairman Bill Ford Jr. said.

“It’s very early days in our recovery …,” Ford said
during the meeting. “The most important thing we can do as a
company is to get our balance sheet strengthened and in
order.”

“At some point in the future if we continue our progress,
and we expect that we will, that will be a topic for
discussions,” Ford said of the dividend.

The automaker’s stock price has quintupled since the end of
2008 leaving stockholders with something to hang onto even
without a timeframe for a dividend. The dividend was eliminated
in 2006 as Ford started its turnaround plan.

In April, Ford said it expects a solid pretax profit in
2010 excluding special items. Its previous forecast was 2011
profit on that basis. The automaker posted losses of $30
billion from 2006 through 2008.

Ford lowered its break-even point in a restructuring that
avoided bankruptcy, while gaining most of the cost cuts that
Detroit-based rivals General Motors Co [GM.UL] and Chrysler
Group LLC achieved in government-supported bankruptcies.

Ford has a far heavier debt load than GM or Chrysler after
taking a more than $23 billion “home improvement loan” in late
2006 and had $31.3 billion of automotive debt after a repayment
in April. It expects debt reduction efforts to accelerate as it
produces positive cash flow and profits.

MULALLY CAN STAY ‘AS LONG AS HE WOULD LIKE’

Executives have credited Mulally with a relentless focus on
executing the turnaround and tying together operations globally
to reduce costs.

Mulally turns 65 this year, his fourth with Ford after
joining from Boeing Co (BA.N: ) in 2006, and the automaker has no
hard policy on executive retirement ages.

“Needless to say, Alan has been absolutely superb for this
company and we would like him to stay as long as he would like
to be here,” Ford said during the meeting.

In April, Ford told Reuters in an interview that Mulally
would be around for a while and that the automaker has a stable
of capable in-house successors when he does retire.

Shareholders approved a plan Ford adopted last September to
preserve tax benefits accrued due to losses over the last
several years by limiting the potential for a technical change
in control that could severely limit their use.

The use of those tax benefits would be severely restricted
if shareholders of more than 5 percent stakes collectively
increased their Ford ownership to more than 50 percentage
points over a rolling three-year period.

There would not be an actual change in control under that
scenario, given the Ford family’s ownership of Class B shares
that confer a 40 percent voting block.

Shareholders rejected a proposal to revisit the two-tier
share structure that give the Ford family control of the
automaker through nearly 71 million Class B shares. Family
members also hold some of the 3.3 billion common shares.

The shareholder proposal had been raised by shareholder
activist Ray Chevedden and a family trust and has been on the
meeting agenda for several years.

Shareholders also rejected a proposal raised by Trillium
Asset Management for greater disclosure of Ford’s political
spending. The automaker spent $7 million for federal lobbying
last year, but Trillium was seeking more information about its
support for trade organizations.

Ford shares were up less than 1 percent at $12.75 Thursday
on the New York Stock Exchange.

Investment

(Reporting by David Bailey; Editing by Derek Caney, Dave
Zimmerman)

UPDATE 2-Ford balance sheet a priority before dividend