Ford 2004 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2004 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

3 5
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND 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):
Ford Credit
The increase in income before income taxes primarily reflected improved credit loss performance and the net favorable market
valuation of derivative instruments and associated exposures, offset partially by the impact of lower average net receivables.
Hertz
The improvement in earnings primarily reflected an improved car rental pricing environment and lower costs.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Sector
Our strategy is to ensure we have sufficient funding available with a high degree of certainty throughout the business cycle. The
key elements of this strategy include maintaining large gross cash balances, generating cash from operating-related activities,
having a long-dated debt maturity profile, maintaining committed credit facilities and funding long-term liabilities over time.
Gross Cash. Automotive gross cash includes cash and cash equivalents, marketable and loaned securities and assets
contained in a short-term Voluntary Employee Beneficiary Association trust (“VEBA”) (see below). Gross cash as of
December 31, 2004, 2003 and 2002 is detailed below (in billions):
Income/(Loss)
Before Income Taxes
2003 2002
2003
Over/(Under)
2002
Ford Credit $ 2,956 $ 1,979 $ 977
Hertz * 228 200 28
Other Financial Services 63 (61) 124
Total Financial Services sector $ 3,247 $ 2,118 $ 1,129
* Includes amortization expense related to intangibles recognized upon consolidation of Hertz.
December 31,
2004 2003 2002
Cash and cash equivalents $ 10.1 $ 6.9 $ 6.2
Marketable securities 8.3 9.3 16.4
Loaned securities* 1.1 5.7 -
Total cash, marketable securities and loaned securities 19.5 21.9 22.6
Short-term VEBA assets 4.1 4.0 2.7
Gross cash $ 23.6 $ 25.9 $ 25.3
* As part of our investment strategy, we engage in securities lending to improve the returns on our cash portfolios.
See Note 5 of the Notes to the Financial Statements for additional discussion on securities lending.