Ford 2003 Annual Report Download - page 53

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2003 ANNUAL REPORT 51
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
For additional funding and to maintain liquidity, Ford Credit and its majority-owned subsidiaries (including FCE) have
contractually committed credit facilities with financial institutions that totaled approximately $7.7 billion at December 31, 2003.
Approximately $1.0 billion of the total facilities were in use at December 31, 2003. Additionally, at December 31, 2003, banks
provided $18.6 billion of contractually committed liquidity facilities that supported two asset-backed commercial paper programs
established by Ford Credit. Ford Credit also has entered into agreements with several bank-sponsored asset-backed commercial
paper issuers under which such issuers in the aggregate are committed to purchase from Ford Credit, at Ford Credit's option,
up to $12.8 billion of receivables. For further discussion of these facilities and agreements, see Note 12 of the
Notes to Financial Statements.
Leverage — Ford Credit uses leverage, or the debt-to-equity ratio, to make various business decisions, including establishing
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 Total Debt
Statement =
Leverage Equity
Retained
Interest in
Securitized Securitized
Off-balance Off-balance Cash SFAS No. 133
Sheet Sheet and Cash Adjustments
Total Debt + Receivables - Receivables - Equivalents - on Total Debt
Managed =
Leverage Equity + Minority - SFAS No. 133
Interest Adjustment
on Equity
The following table illustrates the calculation of Ford Credit's financial statement leverage (in billions):
December 31,
2003 2002 2001
Total debt $ 149.7 $ 140.3 $ 145.8
Total stockholder’s equity 12.5 13.6 12.0
Debt-to-equity ratio (to 1) 12.0 10.3 12.2
At December 31, 2003, Ford Credit's financial statement leverage was 12.0 to 1, compared with 10.3 to 1 a year ago. This
increase in leverage resulted primarily from the accounting consolidation of FCAR resulting in $9.0 billion of FCAR’s debt
reported on Ford Credit's balance sheet at December 31, 2003.
The following table illustrates the calculation of Ford Credit’s managed leverage (in billions):
December 31,
2003 2002 2001
Total debt $ 149.7 $ 140.3 $ 145.8
Securitized off-balance sheet receivables outstanding 49.4 71.4 58.7
Retained interest in securitized off-balance sheet receivables (13.0) (17.6) (12.5)
Adjustments for cash and cash equivalents (15.7) (6.8) (2.9)
Adjustments for SFAS No. 133 (4.7) (6.2) (2.1)
Total adjusted debt $ 165.7 $ 181.1 $ 187.0
Total stockholder’s equity (including minority interest) $ 12.5 $ 13.6 $ 12.0
Adjustments for SFAS No. 133 0.2 0.5 0.6
Total adjusted equity $ 12.7 $ 14.1 $ 12.6
Managed debt-to-equity ratio (to 1) 13.0 12.8 14.8
FIN33_72 3/21/04 12:48 AM Page 51