Ford 2003 Annual Report Download

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2003 ANNUAL REPORT

Table of contents

  • Page 1
    2003 ANNUAL REPORT

  • Page 2
    ... New Directions: Investing in Our Future Board of Directors and Executives A Global Overview of Our Company Financial Results Shareholder Information Three Things ..."In 40 years of Mustang, Ford has always done three things really well," says Hau Thai-Tang, Ford Mustang chief nameplate engineer...

  • Page 3
    ... a percentage of automotive sales Automotive cash at year end (in billions) Cash, marketable and loaned securities and assets held in short-term VEBA trust a/ Cash net of senior debt b/ Income before taxes excluding special items (in billions) Automotive c/ Financial Services Total Net income /(loss...

  • Page 4
    ... operating results in South America and Asia-Pacific. A return to profitability at our Premier Automotive Group. A record pre-tax profit of $3 billion at Ford Credit. A strong automotive cash position of $25.9 billion. â- â- â- â- Full-year net income of $495 million, or 27 cents per share...

  • Page 5
    ... this year are cars. That includes the 2005 Ford Focus, Five Hundred, Freestyle, GT and Mustang, as well as the Mercury Montego. Adding these new cars to our best-selling lineup of sport utility vehicles and trucks will give us a strong and balanced competitive lineup in our most important market...

  • Page 6
    ... more closely as partners and providing them with many outstanding new cars and trucks to sell we are maximizing their effectiveness. Ford Credit, the best credit company in the world, is another competitive advantage for us. A consistent winner of the top J.D. Power awards for customer satisfaction...

  • Page 7
    ...2004, and benefit from greater discipline in the execution of our premium brand strategy and resource sharing. America and Europe, will account for 65 percent of worldwide automotive revenue growth as customers move up to vehicles with higher prices and larger margins. Ford Motor Company is already...

  • Page 8
    ...looking at a tough, authoritative Ford product; a more upscale and contemporary Mercury; a refined, sophisticated Lincoln; a spirited Mazda; or any luxury offering from our Premier Automotive Group portfolio of Jaguar, Land Rover, Aston Martin and Volvo. "At Ford Motor Company, we have refocused our...

  • Page 9
    EDITORIALpg1_7 3/26/04 9:50 AM Page 7

  • Page 10
    ... driving. You don't change your life when you buy Escape Hybrid; you just improve it." INNOVATIVE " Customers have a choice today when they shop for a vehicle with lower environmental impact," says Corey Holter, Ford Escape Marketing manager. " But a lot of those vehicles look odd, offer little in...

  • Page 11
    EDITORIALpg8_30 3/16.qxd 3/21/04 1:03 PM Page 9 Ford Escape Hybrid 2003 ANNUAL REPORT 9

  • Page 12
    ... and the front passenger seat, and you can put a surfboard in there. Yet you can drive it to the opera - it has that kind of urban, savvy, upscale look. This is a car that is going to attract customers who may not otherwise have considered a sedan." SAVVY Ford Five Hundred 10 FORD MOTOR COMPANY

  • Page 13
    EDITORIALpg8_30 3/16.qxd 3/21/04 1:09 PM Page 11 2003 ANNUAL REPORT 11

  • Page 14
    ...GLOBAL APPEAL 12 " One fascinating thing about Mazda RX-8 is how well the brand translates from market to market," says Masahiro Moro, Global Marketing general manager for Mazda Motor Corporation. " The product sold in America and the preferences of the customers who enjoy it are very much like the...

  • Page 15
    EDITORIALpg8_30 3/16.qxd 3/21/04 1:16 PM Page 13 Mazda RX-8 2003 ANNUAL REPORT 13

  • Page 16
    ... from the Chicago Assembly where my dad worked for 37 years," says Bill Walton, a UAW member and assembly line employee at Ford's Chicago Assembly Plant. " For one, it's fully flexible: We can make eight different body lines, including the Ford Freestyle. That's great for Ford and its customers and...

  • Page 17
    EDITORIALpg8_30 3/16.qxd 3/21/04 1:30 PM Page 15 2003 ANNUAL REPORT 15

  • Page 18
    ..., dealer account manager with Ford Credit's Dallas Branch. "Being a topselling dealership means everything to them, so we won't let them down. That means providing flexible and competitive financing plans and superior customer service. Unlike other finance companies, at Ford Credit a sale of...

  • Page 19
    EDITORIALpg8_30 3/16.qxd 3/26/04 9:56 AM Page 17 Ford F-150 Lariat 2003 ANNUAL REPORT 17

  • Page 20
    ..., premium cars," says Peter Ewerstrand, project director for the Volvo V50. "The new Volvo V50 is a premium but affordable car that is not a traditional wagon but a sportswagon. It looks great, drives great and embodies Volvo's 75-year safety heritage." PREMIER Volvo V50 18 FORD MOTOR COMPANY

  • Page 21
    EDITORIALpg8_30 3/16.qxd 3/23/04 3:45 AM Page 19 2003 ANNUAL REPORT 19

  • Page 22
    ... its European engineering center. Its commitment to deliver 45 new products in five years - already at 41 - also includes the Focus RS, new small and large sedan car ranges, StreetKa roadster, and a new line of commercial vehicles, with much more to come. Ford Focus C-MAX 20 FORD MOTOR COMPANY

  • Page 23
    ... interplay between the horizontal and vertical body lines. Built at Land Rover Solihull Assembly in the English Midlands, Range Rover is exported to markets throughout the world including North America, the premium SUV's largest market. Land Rover Range Rover 2003 ANNUAL REPORT HERITAGE 21

  • Page 24
    ... new car from Aston Martin in less than two and a half years - premiered at the 2004 North American International Auto Show, joining a prestigious lineup of convertibles that stretches back to the DB2 of 1950. Aston Martin sold only 42 cars in 1994, the year that Ford Motor Company became sole owner...

  • Page 25
    ...-wheel drive. It's an SUV that can face a wide range of driving conditions, making it an excellent complement to its markets - just one more example of how Ford, a global automaker, goes the distance to completely satisfy local and regional customers. Ford EcoSport 2003 ANNUAL REPORT VERSATILE 23

  • Page 26
    ...to satisfy the determination that drivers - and any passengers - should always leave a Jaguar feeling better than when they entered. The XJ is the epitome of contemporary luxury, tailored to meet the needs of today's demanding premiumsegment customers. DEFINITIVE Jaguar XJR 24 FORD MOTOR COMPANY

  • Page 27
    .... They are designed to achieve a high level of Mercury product differentiation, attract new customers, and generate fresh excitement for dealers. Designed to be a visually appealing, functional, fuel-efficient and fun to drive SUV, Mariner is tuned for the urban environment with outstanding carlike...

  • Page 28
    ... great current-model vehicles, it's helping to generate great current. For years Ford, like other automakers, has incinerated the fumes drawn from paint booths in order to help protect air quality. But now, in Fumes to Fuel, a pilot program jointly developed by Ford Motor Company and Detroit Edison...

  • Page 29
    ... track A previous VIRTTEX project, concluded in 2003, studied driver distraction and showed that teens are more easily distracted than mature drivers while dialing or answering a cell phone, reading a pager or using similar devices. At the wh eel , in sid eV IRT TE X 2003 ANNUAL REPORT...

  • Page 30
    ...by the introduction of a second car, the Ford Mondeo. In addition, Ford's affiliate, Mazda Motor Corporation, worked with local partners to build and sell more than 80,000 vehicles in China last year, including China's Car of the Year, the Mazda6. Volvo, Jaguar and Land Rover products also are being...

  • Page 31
    ... in 2003, Ford and Mazda Motor Corporation announced that they would invest an additional $550 million in their joint venture, AutoAlliance (Thailand) Co. Ltd. The additional investments, to be made over the next several years, will support new vehicle programs and expand the plant's capacity. The...

  • Page 32
    ... Manufacturing Engineering Francisco N. Codina Customer Service Division Matthew A. DeMars North America Vehicle Operations John Fleming Vice President, Manufacturing, Ford of Europe Bennie W. Fowler Jaguar and Land Rover Operations Barbara L. Gasper Investor Relations Louise K. Goeser Quality...

  • Page 33
    ... and maintenance programs Ford Extended Service Plan (ESP) â-† Major customers include Ford, Lincoln and Mercury vehicle dealers, commercial customers and fleets of Ford Motor Company vehicles Automobile Protection Corporation (APCO) â-† Major customers include Mazda, Volvo, Jaguar, Land Rover and...

  • Page 34
    ... of dollars 2003 net income was $495 million, a $1,475 million improvement from 2002. Despite lower unit sales, 2003 total company sales revenue of $164.2 billion was up 1.2% compared to 2002. Ford ended 2003 with $25.9 billion of automotive gross cash, including marketable and loaned securities...

  • Page 35
    ... 73 102 103 104 Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Sector Statement of Income Consolidated Statement of Income Sector Balance Sheet Consolidated Balance Sheet Sector Statement of Cash Flows...

  • Page 36
    ... or operating lease. The Automotive sector records the estimated costs of marketing incentives, including dealer and retail customer cash payments (e.g., rebates) and costs of special financing and leasing programs, as a reduction to revenue at the later of the date the related vehicle sales are...

  • Page 37
    ... above, we are continuing our efforts to improve quality and our cost structure. Overall, while conditions may slow our rate of improvement in 2004, we believe we are on track to achieve our goal of $7 billion in pre-tax profits, excluding special items, by year-end 2006. 2003 ANNUAL REPORT 35

  • Page 38
    ...Net Pricing U.S. Europe 16.5 million units 17.0 million units Zero 1% 2003 Milestone 17.0 17.0 (0.6)% (1.7)% Results Physicals Automotive Quality Market share Cost performance a/ Capital spending Financial Results Automotive Income before income taxes b/ Operating related cash flow c/ Ford Credit...

  • Page 39
    ... Total * At constant volume, mix and exchange and excluding special items. $ $ 1.6 1.2 1.4 0.4 (0.2) (1.2) 3.2 The $1.6 billion in quality related cost reductions resulted from fewer warranty claims, primarily on 2002 model year vehicles, as well as sharply lower recalls and customers service...

  • Page 40
    ...5:39 PM Page 38 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS AUTOMOTIVE SECTOR RESULTS OF OPERATIONS 2003 COMPARED WITH 2002 Details of Automotive sector income/(loss) before income taxes and income/(loss) before income taxes excluding special items for 2003...

  • Page 41
    ... Excludes market share of our Premier Automotive Group brand vehicles (i.e. Volvo, Jaguar, Land Rover and Aston Martin). AMERICAS AUTOMOTIVE SEGMENT Ford North America - The decrease in income before income taxes for Ford North America included a charge of $1.6 billion related to agreements reached...

  • Page 42
    ... year of sales of the Volvo XC90 and the Land Rover Range Rover models. The increase in revenues reflected stronger European currencies and favorable product mix. Other International - The improvement in Other International profits reflected primarily our share of Mazda's improved operating results...

  • Page 43
    ...21.6% 7.8 8.6 13.8 1.2/2.0 (1.7)pts. 2.1 (0.6) -/0.2 U.S.* Brazil* Europe* Australia* U.S./Europe * Excludes market share of our Premier Automotive Group brand vehicles (i.e. Volvo, Jaguar, Land Rover and Aston Martin). AMERICAS AUTOMOTIVE SEGMENT Ford North America - The improvement in earnings...

  • Page 44
    ... reflected primarily the loss on sale of Kwik-fit and other non-core businesses, offset partially by improved net interest costs. FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS 2003 COMPARED WITH 2002 Details of the full year Financial Services Sector income/(loss) before income taxes for 2003 and...

  • Page 45
    ... receivables sold in off-balance sheet securitizations and whole-loan sale transactions. At December 31, 2003, on-balance sheet retail receivables included $14.3 billion that were sold for legal purposes to Ford Credit-sponsored special purpose entities ("SPE") that sell asset-backed securities to...

  • Page 46
    ... ratios, which equal net credit losses divided by the average amount of net receivables outstanding for the period, are shown for the on-balance sheet and managed portfolios. 2003 2002 Net Credit Losses (in millions) On-Balance Sheet Retail installment and lease Wholesale Other Total on-balance...

  • Page 47
    ... ratios): 2003 2002 Net gain on sales of receivables Servicing fees Interest income from retained securities Excess spread and other Investment and other income related to sales of receivables Less: Whole-loan income Income related to off-balance sheet securitizations Memo: Finance receivables sold...

  • Page 48
    ...retained securities, servicing fees and other receivable sale income is equal to the net financing margin and credit losses that would have been reported had Ford Credit reported the receivables on its balance sheet and funded them through asset-backed financings. The net impact of off-balance sheet...

  • Page 49
    ... exposures. The impact of lower net financing margins was a partial offset. HERTZ The improvement in income before income taxes reflected primarily an improved car rental pricing environment and lower costs. LIQUIDITY AND CAPITAL RESOURCES AUTOMOTIVE SECTOR Our strategy is to ensure we have...

  • Page 50
    ... tax refunds Funded pension plans/long-term VEBA contributions Tax refunds Total operating-related cash flows Capital transactions with Financial Services sector a/ Acquisitions and divestitures Other Dividends paid to shareholders Convertible preferred securities Changes in total Automotive sector...

  • Page 51
    .... FINANCIAL SERVICES SECTOR FORD CREDIT Debt and Cash - Ford Credit's total debt was $149.7 billion at December 31, 2003, up $9.4 billion compared with a year ago, reflecting primarily asset-backed commercial paper that was previously off-balance sheet debt of FCAR. Ford Credit's outstanding...

  • Page 52
    ... in the use of its other funding programs. Funding - Ford Credit requires substantial funding in the normal course of business. Ford Credit's funding requirements are driven mainly by the need to (i) purchase retail installment sale contracts and vehicle leases to support the sale of Ford products...

  • Page 53
    ... pricing for retail, wholesale and lease financing, and assessing its appropriate capital structure. Ford Credit calculates leverage on a financial statement basis and on a managed basis using the following formulas: Financial Statement Leverage Total Debt Equity Securitized Off-balance Sheet...

  • Page 54
    ... lines, as a normal business practice, to fund international needs. Hertz also is active in the domestic medium-term and long-term debt markets. Hertz has an asset-backed securitization program for its domestic car rental fleet to reduce its borrowing costs and enhance its financing resources. As of...

  • Page 55
    ... Benefits (Retiree Health Care and Life Insurance)" below. Debt Ratings - Our short- and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations ("NRSROs") by the Securities and Exchange Commission: • Dominion Bond Rating Service...

  • Page 56
    ... certain planning assumptions, operational metrics and financial milestones for 2004, shown below: Planning Assumptions Industry Volume U.S. Europe Industry Net Pricing U.S. Europe Operational Metrics Quality Market Share Automotive Cost Performance a/ Capital Spending Operating-Related Cash...

  • Page 57
    ...-assumed economic and demographic experience for our postretirement benefit plans (e.g., investment returns, interest rates, health care cost trends, benefit improvements); • currency or commodity price fluctuations; • a market shift from truck sales in the U.S.; • economic difficulties in any...

  • Page 58
    ...experience, the near-term outlook and assumed inflation. The expected return on plan assets assumption reflects asset allocation, investment strategy and the views of investment managers and of other large pension plan sponsors regarding the market. Retirement and mortality rates are based primarily...

  • Page 59
    ...3/21/04 12:48 AM Page 57 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The foregoing indicates that changes in the discount rate and return on assets can have a significant effect on the funded status of our pension plans and Stockholders' Equity. As stated...

  • Page 60
    ... five years, about 60% to 70% of Ford Credit North America's operating lease vehicles have been returned to us. Assumptions and Approach Used - Our accumulated depreciation on operating leases is based on the following assumptions: • Residual value - the market value of the vehicles when we sell...

  • Page 61
    ... or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. These include guarantees, sales of receivables by Ford Credit, and variable interest entities, each of which is...

  • Page 62
    ... the sold receivables for the benefit of securitization investors. Most of the SPEs used in Ford Credit's securitization transactions are classified as qualifying special purpose entities consistent with the requirements of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and...

  • Page 63
    ... OF FINANCIAL CONDITION AND RESULT OF OPERATIONS RISKS TO FUTURE SALES OF RECEIVABLES Some of Ford Credit's securitization programs contain structural features that could prevent further funding if the credit losses or delinquencies on a pool of sold receivables or on Ford Credit's overall managed...

  • Page 64
    ...our Financial Services sector, maintain plans for sources of funding to ensure liquidity through a variety of economic or business cycles. As discussed in greater detail in "Management's Discussion and Analysis of Financial Condition and Results of Operations," our funding sources include commercial...

  • Page 65
    ... We invest our cash in securities of various types and maturities, the value of which are subject to fluctuations in interest rates. These securities are generally classified as Trading or Available for Sale. The Trading portfolio gains and losses (unrealized and realized) are reported in the income...

  • Page 66
    ... of certain exposures in order to manage this risk. Exposures primarily relate to investments in fixed-income instruments and derivative contracts used for managing interest rate, foreign currency exchange rates and commodity price risk. We, together with Ford Credit, establish exposure limits for...

  • Page 67
    ...approximately 85% of its total on-balance sheet finance receivables at December 31, 2003. For its international affiliates, Ford Credit uses a technique commonly referred to as "gap analysis," to measure re-pricing mismatch. This process uses re-pricing schedules, which group assets, debt, and swaps...

  • Page 68
    ... 1) Cost of sales Selling, administrative and other expenses Total costs and expenses Operating income/(loss) Interest income Interest expense Net interest income/(expense) Equity in net income/(loss) of affiliated companies Income/(loss) before income taxes - Automotive FINANCIAL SERVICES Revenues...

  • Page 69
    ... Services revenue Total sales and revenues Automotive interest income Costs and expenses Cost of sales Selling, administrative and other expenses Interest expense Provision for credit and insurance losses Total costs and expenses Automotive equity in net income/(loss) of affiliated companies Income...

  • Page 70
    ... assets of affiliated companies Net property (Note 6) Deferred income taxes Goodwill (Note 7) Other intangible assets (Note 7) Assets of discontinued/held-for-sale operations Other assets Total Automotive assets Financial Services Cash and cash equivalents Investments in securities (Note 4) Finance...

  • Page 71
    ...374 Finance receivables, net Net investment in operating leases Retained interest in sold receivables Inventories Equity in net assets of affiliated companies Net property Deferred income taxes Goodwill Other intangible assets Assets of discontinued/held-for-sale operations Other assets Total assets...

  • Page 72
    ... STATEMENT OF CASH FLOWS FORD MOTOR COMPANY AND SUBSIDIARIES For the Years Ended December 31, 2003, 2002 and 2001 (in millions) 2003 Financial Automotive Services CASH AND CASH EQUIVALENTS AT JANUARY 1 Cash flows from operating activities before securities trading (Note 17) Net sales/(purchases...

  • Page 73
    ... investing activities Cash dividends Net sales/(purchases) of Common Stock Proceeds from mandatorily redeemable convertible preferred securities Preferred Stock - Series B redemption Changes in short-term debt Proceeds from issuance of other debt Principal payments on other debt Other Net cash (used...

  • Page 74
    ... pension liability (net of tax of $3) Net holding loss (net of tax of $74) Comprehensive loss Common Stock issued for employee benefit plans and other ESOP loan and treasury stock Cash dividends Balance at end of year YEAR ENDED DECEMBER 31, 2002 Balance at beginning of year Comprehensive income...

  • Page 75
    ... Automotive marketing incentives, including customer and dealer cash payments and costs for special financing and leasing programs (e.g., interest subsidies paid to the Financial Services sector), are recognized as revenue reductions and are accrued at the later of the date the related vehicle sales...

  • Page 76
    ...NOTES TO FINANCIAL STATEMENTS NOTE 1. Accounting Policies (continued) WARRANTY AND ADDITIONAL SERVICE ACTIONS Estimated expenses related to contractual product warranties and additional service actions are accrued at the time vehicles are sold to dealers. Estimates are established using historical...

  • Page 77
    ... sharing agreement between Automotive and Hertz. Periodically, Ford Credit receives interest supplements and other support cost payments from Automotive for providing special vehicle financing for low-interest-rate marketing programs. Ford Credit records these transactions as revenue over the life...

  • Page 78
    ... at December 31 Deferred tax assets Employee benefit plans Dealer and customer allowances and claims Tax credit carryforwards Other foreign deferred tax assets Allowance for credit losses All other Total deferred tax assets Deferred tax liabilities Leasing transactions Depreciation and amortization...

  • Page 79
    ... assets, less costs to sell them, and their recorded book value. The operating results of the discontinued and held-for-sale Financial Services operations are as follows (in millions): 2003 2002 2001 Revenues Income/(loss) before income taxes Provision for/(benefit from) income taxes Net income...

  • Page 80
    ...as Interest income. Investments in marketable and loaned securities at December 31 were as follows (in millions): 2003 Amortized Cost Unrealized Book/Fair Gains Losses Value Amortized Cost 2002 Unrealized Gains Losses Book/Fair Value Automotive Trading Available-for-sale: Corporate debt Total $ 14...

  • Page 81
    ... Depreciable Life (Years) 2003 2002 Land Buildings and land improvements Machinery, equipment and other Construction in progress Total land, plant and equipment Accumulated depreciation Net land, plant and equipment Special tools, net of amortization Net property Property-related expenses were...

  • Page 82
    ... to Common and Class B Stock after Preferred Stock dividends, as reported Add: amortization, after-tax Pro forma net income/(loss) * $227 million Automotive and $32 million Financial Services. $ (5,453) 259 * $ (5,194) $ $ (3.02) 0.14 (2.88) $ $ (3.02) 0.14 (2.88) 80 FORD MOTOR COMPANY

  • Page 83
    ... to subordinated retained interests, we have credit risk. At December 31, 2003, outstanding sold receivables were as follows (in billions): 2003 Ford Credit - outstanding sold receivables Off-balance sheet securitizations Whole-loan sale transactions Total $ 49.4 7.3 $ 56.7 2003 ANNUAL REPORT 81

  • Page 84
    ... of the Ford Credit-sponsored securitization SPEs that sell asset-backed securities to FCAR to lose their status as qualifying SPEs under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Consequently, the receivables previously sold by us...

  • Page 85
    ... SECTOR (IN MILLIONS) 2003 2002 Accrued Liabilities (Current) Dealer and customer allowances and claims Deferred income taxes Deferred revenue Accrued interest Employee benefit plans Postretirement benefits other than pensions Other Total accrued liabilities $ 16,098 2,996 2,587 1,814 1,732...

  • Page 86
    ...interest rate swaps. b/ Based on quoted market prices or current rates for similar debt with the same remaining maturities. SUBORDINATED INDEBTEDNESS At December 31, 2003, Ford Motor Company Capital Trust, a subsidiary trust ("Trust I"), had outstanding 9% Trust Originated Preferred Securities with...

  • Page 87
    ... upon and strengthens existing accounting guidance concerning when a company should include in its financial statements the assets, liabilities and activities of another entity. A Variable Interest Entity ("VIE") does not share economic risk and rewards through typical equity ownership arrangements...

  • Page 88
    ... operator to become the sole owner of a Ford and/or Lincoln Mercury dealership corporation by purchasing equity from Ford using the operator's share of dealership net profits. We supply and finance the majority of vehicles and parts to these dealerships and the operators have a contract to buy Ford...

  • Page 89
    ... calculated using the following number of shares (in millions): 2003 2002 2001 Diluted Income/(Loss) Income/(loss) from continuing operations Less: Preferred Stock dividends Income/(loss) from continuing operations attributable to Common and Class B Stock Diluted Shares Average shares outstanding...

  • Page 90
    ... fair value of stock options at the time of grant using the Black-Scholes option pricing model was as follows: 2003 2002 2001* Fair value per option Assumptions: Annualized dividend yield Expected volatility Risk-free interest rate Expected option term (in years) * Previously disclosed values...

  • Page 91
    ...fair value on our balance sheet, including embedded derivatives. Our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices and interest rates. The objective of our risk management program is to manage the financial...

  • Page 92
    ... also recorded in Revenues. Net Investment Hedges Ford Credit uses foreign currency forward exchange contracts and options to hedge the net asset of certain foreign entities to offset the translation and economic exposures related to its investment in foreign entities. Changes in the value of these...

  • Page 93
    ...): 2003 Fair Value Assets Fair Value Liabilities Fair Value Assets 2002 Fair Value Liabilities Automotive Total derivative financial instruments Financial Services Foreign currency swaps, forwards and options Interest rate swaps Impact of netting agreements Total derivative financial instruments...

  • Page 94
    ... are as follows: Number of Employees Planned shift pattern changes at our Genk (Belgium) vehicle assembly plant Manufacturing, engineering and staff efficiency actions in Cologne (Germany) and at various locations in the UK (1,170 salaried and 730 hourly) 2,900 1,900 92 FORD MOTOR COMPANY

  • Page 95
    ...) the common stock of Hertz that we did not own, which represented about 18% of the economic interest in Hertz. The excess of the purchase price over the fair market value of net assets acquired was approximately $390 million and was accounted for under the purchase method. 2003 ANNUAL REPORT 93

  • Page 96
    ...notes previously included in plan assets. Pursuant to the agreement, the expense associated with service after June 30, 2000 for Visteon Hourly Employees is charged to Visteon. Postretirement health care and life insurance expense for former salaried Ford employees who transferred to Visteon and met...

  • Page 97
    ... Pension Benefits U.S. Plans Non-U.S. Plans 2002 2001 2003 2002 2001 Health Care and Life Insurance 2003 2002 2001 2003 Service cost Interest cost Expected return on assets Amortization of: Prior service costs (Gains)/losses and other Separation programs Visteon pre-spin liability Allocated costs...

  • Page 98
    ... TO FINANCIAL STATEMENTS NOTE 19. Retirement Benefits (continued) Pension Benefits U.S. Plans Non-U.S. Plans 2003 2002 2003 2002 Health Care and Life Insurance 2003 2002 Amounts Recognized in the Balance Sheet Consist of Assets/(Liabilities) Prepaid assets Accrued liabilities Intangible assets...

  • Page 99
    ... worldwide Company cash outflow in respect of our defined benefit pension plans will total $1.1 billion, consisting of contributions to pension funds and benefit payments for unfunded plans. PLAN ASSET INFORMATION Our investment strategy has a long-term horizon and is tolerant of return volatility...

  • Page 100
    ... that structure. Automotive Sector InterAmericas national Other (in millions) Total Financial Services Sector a/ Ford Elims/ Credit Hertz Other Total Elims/ Other b/ Total 2003 Revenues External customer Intersegment Income Income/(loss) before taxes Provision for/(benefit from) income taxes...

  • Page 101
    ... Sales $ 34,159 Operating income/(loss) 806 Financial Services Revenues 6,656 Income/(loss) before income taxes 678 Total Company Income/(loss) from continuing operations 901 Net income/(loss) 896 Common and Class B per share Basic income/(loss) from continuing operations $ 0.49 Diluted income...

  • Page 102
    ... AND CONTINGENCIES LEASE COMMITMENTS We lease land, buildings and equipment under agreements that expire in various years. Minimum rental commitments under noncancelable operating leases were as follows (in millions): 2004 2005 2006 2007 2008 Thereafter Automotive Financial Services $ 446 400...

  • Page 103
    ...101 NOTES TO FINANCIAL STATEMENTS Product Performance, Warranty - Estimated warranty costs and additional service actions are accrued for at the time the vehicle is sold to a dealer. Included in the warranty cost accruals are costs for basic warranty coverages on vehicles sold. Product recalls and...

  • Page 104
    ... Chief Executive Officer Don R. Leclair Group Vice President and Chief Financial Officer REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholders Ford Motor Company: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of...

  • Page 105
    ... principle Net income/(loss) Cash dividends b/ Common stock price range (NYSE Composite) High Low Average number of shares of Common and Class B stock outstanding (in millions) Total Company Balance Sheet Data at Year-End Assets Automotive sector Financial Services sector Total assets Long-term Debt...

  • Page 106
    ... Operating Sector 2002 Automotive Americas North America South America International Ford Europe Ford Asia Pacific Premier Automotive Group Other International Automotive Financial Services Ford Motor Credit Company The Hertz Corporation Other Financial Services Total Before FIN 46 Employees Added...

  • Page 107
    ... brokerage methods of purchasing, holding and selling Ford Common Stock. Company Information The URL to our online Investor Center is www.shareholder.ford.com. Alternatively, individual investors may contact: Ford Motor Company Telephone: Shareholder Relations Within the U.S. and Canada: (800) 555...

  • Page 108
    CoverMU.qxd 3/26/04 1:05 PM Page 1 WWW.FORD.COM FORD MOTOR COMPANY â- ONE AMERICAN ROAD â- DEARBORN, MICHIGAN 48126