Ford 2003 Annual Report Download - page 93

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2003 ANNUAL REPORT 91
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF OCI ACTIVITY
The following table summarizes activity in OCI excluding foreign currency translation adjustments on net investment hedges for
both the Automotive and Financial Services sectors during the years ended December 31, (in millions):
2003 2002
Beginning of year
Net unrealized gain/(loss) on derivative financial instruments $ 313 $ (1,228)
Increase/(decrease) in fair value of derivatives 1,072 847
Gains/(losses) reclassified from OCI (83) 694
End of year
Net unrealized gain/(loss) on derivative financial instruments $ 1,302 $ 313
We expect to reclassify for Automotive and Financial Services sectors, existing net gains of $748 million from OCI to net income
during the next twelve months as the hedged transaction is recognized in earnings. The effects of related underlying transactions
will offset future reclassifications.
FAIR VALUE OF DERIVATIVE INSTRUMENTS
The fair value of derivatives reflects the price that a third party would be willing to pay or receive in arm’s length transactions and
includes mark-to-market adjustments to reflect the effects of changes in the related index. The following tables summarize the
estimated fair value of our derivative financial instruments, taking into consideration the effects of legally enforceable netting
agreements, at December 31 (in billions):
2003 2002
Fair Value Fair Value Fair Value Fair Value
Assets Liabilities Assets Liabilities
Automotive
Total derivative financial instruments $ 2.3 $ 0.6 $ 1.4 $ 0.8
Financial Services
Foreign currency swaps, forwards and options $ 6.3 $ 1.1 $ 3.7 $ 0.8
Interest rate swaps 3.9 0.2 5.1 0.4
Impact of netting agreements (0.3) (0.3) (0.4) (0.4)
Total derivative financial instruments $ 9.9 $ 1.0 $ 8.4 $ 0.8
FIN73_104 3/21/04 1:07 AM Page 91