Ford 2003 Annual Report Download - page 44

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42 FORD MOTOR COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
INTERNATIONAL AUTOMOTIVE SEGMENT
Ford Europe — The increased loss reflected primarily the charges ($173 million) related to restructuring actions involving
our Ford-brand Europe operations. The reduction in profitability excluding restructuring charges reflected lower vehicle unit
volume, including a reduction in European industry sales volume and the non-recurrence of a 2001 dealer stock build. Cost
reductions and higher net pricing were partial offsets.
Ford Asia Pacific — The year-over-year improvements in 2002 resulted primarily from net pricing improvements and
favorable vehicle mix.
Premier Automotive Group — The loss reflected primarily charges ($157 million) related to restructuring actions involving our
Premier Automotive Group operations, as well as a less favorable vehicle mix primarily at Jaguar, unfavorable net pricing and
lower production to reduce dealer stocks.
Other International — The improvement in 2002 reflected primarily the absence of restructuring charges ($495 million)
incurred in 2001 and improved operating results at Mazda.
OTHER AUTOMOTIVE
The increased loss 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 2002 are shown below
(in millions):
Income/(Loss) Before Income Taxes
2003
Over/Under
2003 2002 2002
Ford Credit $ 3,035 $ 1,965 $ 1,070
Hertz * 228 200 28
Other Financial Services 64 (61) 125
Total Financial Services sector $ 3,327 $ 2,104 $ 1,223
–––––––––––––
* Includes amortization expense related to intangibles recognized upon consolidation of Hertz.
FORD CREDIT
The increase in income before income taxes of $1.1 billion primarily reflected a lower provision for credit losses and the net
favorable market valuation of derivative instruments and associated exposures. The impact of lower average net receivables
was a partial offset.
The provision for credit losses for the full year of 2003 was $2.0 billion, down $1.0 billion from a year ago, reflecting primarily
the non-recurrence of an increase in Ford Credit’s allowance for credit losses in 2002 and lower credit losses.
Ford Credit reviews its business performance from several perspectives, including:
• On-balance sheet basis — includes receivables Ford Credit owns and receivables sold for legal purposes
that remain on Ford Credit’s balance sheet.
• Securitized off-balance sheet basis — includes receivables sold in securitization transactions that are not
reflected on Ford Credit’s balance sheet.
• Managed basis — includes on-balance sheet and securitized off-balance sheet receivables that
Ford Credit continues to service.
• Serviced basis — includes managed receivables and receivables that Ford Credit sold in whole-loan sale transactions where
Ford Credit retains no interest in the sold receivables, but which it continues to service.
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