Ford 2003 Annual Report Download - page 42

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40 FORD MOTOR COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
INTERNATIONAL AUTOMOTIVE SEGMENT
Ford Europe — The increased loss before income taxes for Ford Europe included a charge of $513 million in 2003 compared
to a charge of $173 million in 2002 related to restructuring actions. The 2003 charges related to personnel reductions in
Germany and the United Kingdom, a shift removal at our plant in Genk, Belgium, and other manufacturing efficiencies. We
expect to incur additional charges of about $160 million in the first half of 2004 related to these actions and expect most of
the related cash outlay will take place in 2004. We anticipate these actions will result in personnel reductions of about 6,700
and will reduce costs in our Ford Europe business unit by about $450 million in 2004, excluding the expected additional
charges related to the restructuring actions described above, and about $550 million annually thereafter.
In addition to the impact of the restructuring actions, the increased loss for Ford Europe reflected unfavorable net pricing,
a less favorable product mix, unfavorable exchange rates and a larger reduction in dealer stocks, partially offset by cost
reductions and improved results at Ford Otosan, our joint venture in Turkey. The increase in sales reflected primarily
stronger European currencies.
Ford Asia Pacific — The improvement in sales and the loss before income taxes for Ford Asia Pacific reflected primarily
favorable exchange rates, favorable net pricing, higher industry volumes and improved market share.
Premier Automotive Group — The improvement in income before income taxes for Premier Automotive Group reflected
primarily cost reductions and improved product mix, partially offset by unfavorable exchange rates. The improved product mix
reflected the introduction of the Jaguar XJ model in the first quarter of 2003 and a full 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.
OTHER AUTOMOTIVE
The improvement in loss before income taxes for Other Automotive (which in 2003 represents primarily interest income and
expense including realized and unrealized gains and losses on cash and marketable securities) reflected primarily the non-
recurrence of a charge of $570 million in 2002 related to the sale of non-core businesses, primarily Kwik-Fit Holdings Ltd
(“Kwik-Fit”). The improvement was partially offset by the non-recurrence of gains in cash and marketable securities in 2002,
which reflected declining interest rates in 2002.
2002 COMPARED WITH 2001
Details of Automotive sector income/(loss) before income taxes and income/(loss) before income taxes excluding special items
for 2002 and 2001 are shown below (in millions):
Income/(Loss) Before Taxes
Income/(Loss) Before Taxes Excluding Special Items
2002 2002
Over/(Under) Over/(Under)
2002 2001 2001 2002 2001 2001
Americas
- Ford North America $ 2,490 $ (5,278) $ 7,768 $ 2,490 $ (750) $ 3,240
- Ford South America (622) (1,358) 736 (622) (510) (112)
Total Americas 1,868 (6,636) 8,504 1,868 (1,260) 3,128
International
- Ford Europe (722) (306) (416) (549) (306) (243)
- Ford Asia Pacific (176) (351) 175 (176) (351) 175
- Premier Automotive Group (897) 8 (905) (740) 8 (748)
- Other International (15) (606) 591 (15) (111) 96
Total International (1,810) (1,255) (555) (1,480) (760) (720)
Other Automotive (1,211) (966) (245) (641) (835) 194
Total excluding special items (253) (2,855) 2,602
Less: special items (900) (6,002) 5,102
Total Automotive $ (1,153) $ (8,857) $ 7,704 $ (1,153) $ (8,857) $ 7,704
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