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Ford Motor Company 2005 Annual Report
Driving Innovation
Ford.com
Driving Innovation
Ford Motor Company
One American Road, Dearborn, Michigan 48126
Ford Motor Company Driving Innovation 2005 Annual Report
CYAN MAGENTA YELLOW BLACK 021 CLGRY_
FORD MOTOR - 2005 ANNUAL REPORT

Table of contents

  • Page 1
    Ford Motor Company 2005 Annual Report Driving Innovation

  • Page 2
    ..., Volvo, Jaguar, Land Rover and Aston Martin. Its automotive financing business is Ford Motor Credit Company. Contents Operating Highlights 1 A Message from the Chairman 2 Technological Innovation 6 Safety Innovation 10 Design Innovation 14 Product Innovation 18 Board of Directors and Executives 19...

  • Page 3
    ... Stock $ Cash and Spending Automotive capital expenditures Amount (in billions) As a percentage of automotive sales Automotive cash at year end (in billions) Cash, marketable and loaned securities and assets held in short-term VEBA trust (a) Cash net of debt (b) Shareholder Value Dividends per share...

  • Page 4
    ...been profitable every year since 2003, including a net income of $2 billion in 2005. Today our automotive operations in Europe, Asia and South America are all profitable, and our global brands are thriving. Mazda is enjoying its best performance ever. Aston Martin is expanding. Land Rover's largest...

  • Page 5
    ...Tier Analysis (ETA) system, one of several innovative Web tools to make it easier for dealers to do business with Ford Motor Credit. ETA, which was piloted in 2005, enables dealers to evaluate and restructure loan offerings more quickly and at any time. Ford Motor Company Annual Report 2005 3 China...

  • Page 6
    ... the end of the first quarter. - Material cost reductions, excluding special items, of at least $6 billion by 2010.* - A new low-cost manufacturing site is planned for the future. *At constant volume, mix and exchange, and net of new product content and regulatory changes. Ford Motor Company Annual...

  • Page 7
    ... reward them. This is what it is going to be like at Ford: far-sighted, customer-focused and innovative. The Way Forward has already begun, and the proof is in our products. In 2005, for the first time since 1993, we gained car market share in the U.S. That gain was due to strong sales of a number...

  • Page 8
    Technological Innovation Mercury Mariner Hybrid Ford Motor Company Annual Report 2005 6

  • Page 9
    ... of technological innovation, helping drivers in stop-and-go city traffic maximize fuel economy and minimize emissions. The San Francisco Bay area is among the top-selling markets for Ford Escape Hybrid and Mercury Mariner Hybrid sport utility vehicles. Ford Motor Company Annual Report 2005 7

  • Page 10
    .... Carol developed computer strategies and methodologies for the VSC; Shunsuke's team then took over for testing. "Our team's strength is in taking the big ideas and then using creative thinking and innovation to really get those ideas to work," she says. 8 Ford Motor Company Annual Report 2005

  • Page 11
    ... to pull ahead Mariner Hybrid production by a full year. We not only are dedicated to technological solutions, we also are determined to bring them to customers sooner. Mariner Hybrid operates on a four-cylinder gasoline engine and a pair of alternating current (AC) motors, powered by a battery pack...

  • Page 12
    Safety Innovation Volvo C70 Ford Motor Company Annual Report 2005 10

  • Page 13
    ...Stability Control). Our Ford Five Hundred and Mercury Montego are the only full-size cars to earn the Insurance Institute for Highway Safety "Top Safety Pick-Gold" award in 2005. The vehicles tested were equipped with side air bags, as included in an optional safety package. Ford and Volvo engineers...

  • Page 14
    ... features, available to other manufacturers and suppliers. We know that the two most important ways to help prevent injuries are getting people to buckle up and preventing accidents in the first place. We'll keep driving innovation to advance the cause. Ford Motor Company Annual Report 2005 12

  • Page 15
    ...," says Bélec. "Our customers' attitudes are complex. Their lives are made up of concerns for safety and the environment, but also emotional enjoyment and reward. We embrace that 'completeness' in both our vehicles and our efforts to reach the customer." Ford Motor Company Annual Report 2005 13

  • Page 16
    Design Innovation Ford iosis Ford Motor Company Annual Report 2005 14

  • Page 17
    ... designers have been able to visually capture the energy of vehicles in motion. As one of the most emotional purchases many people ever make, we understand that our vehicles must be compelling, expressing emotions and values while transcending diverse cultures. Ford Motor Company Annual Report 2005...

  • Page 18
    ... qualities of the vehicle even when standing still," says Smith, shown above with iosis. "In iosis, we brought together all of the elements of a new design language," he says. "This vehicle represents not so much a new chapter, but a new book for Ford Europe." Ford Motor Company Annual Report 2005...

  • Page 19
    ... room for up to seven passengers. The design revolution for Ford Motor Company continues unfolding around the globe, as we distill the DNA of our eight unique brands into compelling designs aimed at winning the hearts and minds of customers the world over. Ford Motor Company Annual Report 2005 17

  • Page 20
    ... embodies the combination of style and substance that characterize modern Land Rover vehicles. As the brand's first entry into the performance sport utility market, it delivers a dynamic driving experience on-road and true Land Rover capability off-road. Ford Motor Company Annual Report 2005 18

  • Page 21
    ...Daniel Chief Operating Officer, Ford Asia Pacific and Africa Felicia J. Fields Human Resources Bennie W. Fowler Corporate Quality and Advanced Manufacturing Engineering Al J. Giombetti Ford and Lincoln Mercury Marketing and Sales Louise K. Goeser President and Chief Executive Officer, Ford of Mexico...

  • Page 22
    ... market share of 18.2%, including our Premier Automotive Group brands. 20.5% 18.2% 2003 2004 2005 2003 2004 10.9% 2005 10.8% European Market Share Ford's market share in Europe was 10.8% in 2005, down from 10.9% in 2004. 10.7% 2003 2004 2005 Ford Motor Company Annual Report 2005 20

  • Page 23
    ... Statements 60 Report of Independent Registered Public Accounting Firm 99 Selected Financial Data 101 Employment Data 102 Management's Report on Internal Control Over Financial Reporting 103 New York Stock Exchange and Pacific Exchange Required Disclosures 103 Ford Motor Company Annual Report 2005...

  • Page 24
    ...leasing programs that it sponsors. Ford Credit records these payments as revenue, and the Automotive sector makes the related cash payments, over the term of the related finance receivable or operating lease. The Automotive sector records the estimated costs of marketing incentives, including dealer...

  • Page 25
    ... margin pressure on auto manufacturers that have U.S. dollar revenue with foreign currency cost. Because we produce vehicles in Europe (e.g., Jaguar, Land Rover and Volvo models) for sale in the United States and produce components in Europe (e.g., engines) for use in some of our North American...

  • Page 26
    ... bringing sticker prices in line with actual transaction prices by reducing rebates over time as we introduce new models into the marketplace. Our customers will benefit from a simpler purchase experience and improved residual values and cost of ownership. Ford Motor Company Annual Report 2005 24

  • Page 27
    ... about $400 million annually. The related cash savings will grow over time. In December 2005, we reached an agreement with the UAW that would increase retiree health care cost sharing. As part of the agreement, an independent defined contribution Voluntary Employee Benefit Association trust would be...

  • Page 28
    ... improve our assembly capacity utilization rate. RESULTS OF OPERATIONS We have reclassified certain prior year amounts to conform to current year presentation. FULL-YEAR 2005 RESULTS OF OPERATIONS Our worldwide net income was $2.0 billion or $1.05 per share of Common and Class B stock in 2005, down...

  • Page 29
    ... Analysis of Financial Condition and Results of Operations AUTOMOTIVE SECTOR RESULTS OF OPERATIONS 2005 Compared with 2004 Details by Automotive business unit of Income/(loss) before income taxes are shown below (in millions): Income/(Loss) Before Income Taxes 2005 The Americas - Ford North America...

  • Page 30
    ... South America business unit, Other Automotive, and Ford Asia Pacific and Africa/Mazda segment. The table below details our 2005 cost performance (in billions): 2005 Costs* Better/(Worse) than 2004 $ (1.0) (0.8) (0.4) (0.3) 0.3 0.9 $ (1.3) Net product costs Pension and health care Quality-related...

  • Page 31
    Managementʼs Discussion and Analysis of Financial Condition and Results of Operations Ford Europe and PAG Segment Ford Europe. The decline in results primarily reflected higher charges for personnel-reduction programs, negative net pricing, and adverse product and market mix, offset partially by ...

  • Page 32
    Management's Discussion and Analysis of Financial Condition and Results of Operations Details of Automotive sector sales and vehicle unit sales by Automotive business unit for 2004 and 2003 are shown below: Sales (in billions) 2003 2004 The Americas - Ford North America ...$ 83.0 $ 83.6 $ (0.6) ...

  • Page 33
    ... Ford Motor Company Capital Trust II. FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS 2005 Compared with 2004 Details of the full year Financial Services sector Income/(loss) before income taxes for 2005 and 2004 are shown below (in millions): Income/(Loss) Before Income Taxes 2005 2004 Ford Credit...

  • Page 34
    .... Total securitized off-balance sheet receivables declined primarily reflecting the accounting consolidation discussed above. Managed and serviced receivables decreased from year-end 2004 primarily reflecting lower retail contract placement volumes. Ford Motor Company Annual Report 2005 32

  • Page 35
    ...-to-receivables ratios, which equal charge-offs divided by the average amount of receivables outstanding for the period, are shown below for Ford Credit's on-balance sheet and managed portfolios. 2005 $ $ $ Charge-offs (in millions) On-Balance Sheet Retail installment and lease ...Wholesale...Other...

  • Page 36
    ... 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. Ford Motor Company Annual Report 2005 34

  • Page 37
    ... dividends received from Ford Credit, excluding proceeds from Financial Services sector divestitures paid to the Automotive sector. (d) In 2005, primarily proceeds from the sale of Hertz and the final payment for the Land Rover acquisition. (e) See Note 17 of the Notes to the Financial Statements...

  • Page 38
    ...flow Capital expenditures...(7.1) (6.3) (7.3) Net transactions between Automotive and Financial Services sectors (a)...(0.4) 1.3 1.2 Net sales/(purchases) of trading securities...0.6 (5.6) (1.6) Other (b) ...(2.6) (0.1) 1.8 Items not included in operating-related cash flow Pension and long-term VEBA...

  • Page 39
    ...-balance sheet, net of retained interests) as a percent of total managed receivables was as follows at the end of each of the last three years: 2005 - 38%, 2004 - 26%, 2003 - 25%. Ford Credit issues unsecured commercial paper in the United States, Europe and other international markets, with sales...

  • Page 40
    ...pricing for retail, wholesale and lease financing and assessing its capital structure. Ford Credit calculates leverage on a financial statement basis and on a managed basis using the following formulas: Financial Statement Leverage = Total Debt Equity Securitized Off-Balance Sheet Receivables Equity...

  • Page 41
    ... regarding our automotive cash flow and profitability, declining market share, excess industry capacity, industry pricing pressure and rising health care costs. Ford. In December 2005, Fitch lowered Ford's long-term rating to BB+ from BBB-, lowered our short-term rating to B from F2 and maintained...

  • Page 42
    ... trucks) U.S...Europe ... Planning Assumptions 17.0 million units 17.3 million units Industry Net Pricing U.S...Europe ... Slightly negative Slightly negative Operation Metrics Quality...Market share ...Automotive cost performance*...Capital spending..._____ * At constant volume, mix and exchange...

  • Page 43
    ...-than-expected credit losses; Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles; Changes in interest rates; Collection and servicing problems related to finance receivables and net investment in operating leases; Lower-than...

  • Page 44
    ... balances are then compared with present spending rates to ensure that the accruals are adequate to meet expected future obligations. See Note 27 of the Notes to the Financial Statements for more information regarding costs and assumptions for warranties and additional service actions. Pensions...

  • Page 45
    ... changes in discount rates or investment returns and, therefore, cannot reasonably estimate whether adjustments to our stockholders' equity for minimum pension liability in subsequent years will be significant. Other Postretirement Employee Benefits (Retiree Health Care and Life Insurance) Nature of...

  • Page 46
    ... of time relative to the average number of contracts outstanding. Changes in our assumptions affect the Provision for credit losses on our income statement and the allowance for credit losses contained within Finance receivables, net on our balance sheet. Ford Motor Company Annual Report 2005 44

  • Page 47
    ...accumulated depreciation on retail operating leases will be reflected on our balance sheet in Net investment in operating leases and on our income statement in Depreciation, in each case under the Financial Services sector. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED In May 2005, the FASB issued...

  • Page 48
    ... the credit rating agencies that rate them and are sold to securitization investors at cost-effective pricing. Ford Credit's typical U.S. retail securitization is a two-step transaction. Ford Credit sells a pool of its retail installment sale contracts to a wholly owned, bankruptcy-remote special...

  • Page 49
    Managementʼs Discussion and Analysis of Financial Condition and Results of Operations At December 31, 2005 and 2004, the total outstanding principal amount of receivables sold by Ford Credit in off-balance sheet securitizations was $18.0 billion and $35.6 billion, respectively. At December 31, 2005...

  • Page 50
    ...2011 and Thereafter $ 28,391 90 492 384 $ 29,357 _____ * 1,521 852 $ 48,114 Principal obligations only. For additional information to our long-term debt and operating lease obligations, see Notes 16 and 27, respectively, of the Notes to the Financial Statements. Ford Motor Company Annual Report...

  • Page 51
    ... assets, liabilities, investments in foreign operations, and firm commitments denominated in foreign currencies. In our hedging actions, we use primarily instruments commonly used by corporations to reduce foreign exchange risk (e.g., forward contracts and options). Ford Motor Company Annual Report...

  • Page 52
    ... a monthly basis. Substantially all of our counterparty exposures are with counterparties that are rated single-A or better. Our guidelines for counterparty minimum long-term ratings is BBB-. Exceptions to these guidelines require prior approval by management. Ford Motor Company Annual Report 2005...

  • Page 53
    ... and floating-rate wholesale receivables. Fixed-rate retail installment sale and lease contracts are originated principally with maturities ranging between two and six years and generally require customers to make equal monthly payments over the life of the contract. Ford Creditʼs funding sources...

  • Page 54
    ... 80% of its total on-balance sheet finance receivables at December 31, 2005. For its other international affiliates, Ford Credit uses a technique commonly referred to as "gap analysis," to measure re-pricing mismatch. This process uses re-pricing schedules, which group assets, debt and swaps into...

  • Page 55
    ... Statement of Income Ford Motor Company and Subsidiaries For the Years Ended December 31, 2005, 2004 and 2003 (in millions, except per share amounts) Sales and revenues Automotive sales ...$ Financial Services revenues ...Total sales and revenues ...Costs and expenses Cost of sales...Selling...

  • Page 56
    ... Statement of Income Ford Motor Company and Subsidiaries For the Years Ended December 31, 2005, 2004 and 2003 (in millions, except per share amounts) AUTOMOTIVE Sales ...$ Costs and expenses Cost of sales...Selling, administrative and other expenses...Total costs and expenses...Operating income...

  • Page 57
    Consolidated Balance Sheet Ford Motor Company and Subsidiaries (in millions) December 31, 2005 ASSETS Cash and cash equivalents...$ Marketable securities (Note 5) ...Loaned securities (Note 5) ...Finance receivables, net ...Other receivables, net ...Net investment in operating leases (Note 12) ......

  • Page 58
    ...)...Deferred income taxes...Other liabilities and deferred income...Liabilities of discontinued/held-for-sale operations ...Total Financial Services liabilities ...Minority Interests ...Stockholdersʼ equity Capital stock (Note 18) Common Stock, par value $0.01 per share (1,837 million shares issued...

  • Page 59
    ... financing activities of continuing operations Cash dividends ...Net sales/(purchases) of Common Stock ...Changes in short-term debt ...Proceeds from issuance of other debt ...Principal payments on other debt...Other...Net cash (used in)/provided by financing activities ...Effect of exchange rate...

  • Page 60
    ... with Financial Services ...Cash paid for acquisitions ...Cash recognized on initial consolidation of joint ventures...Other...Net cash (used in)/provided by investing activities...Cash flows from financing activities of continuing operations Cash dividends ...Net sales/(purchases) of Common Stock...

  • Page 61
    ......Minimum pension liability (net of tax of $210)...Net holding gain/(loss) (net of tax of $29)...Comprehensive income/(loss)...Common Stock issued for employee benefit plans and other...ESOP loan and treasury stock ...Cash dividends...Balance at end of year ...$ 19 Capital Stock Retained Earnings...

  • Page 62
    ... in Accrued liabilities and deferred revenue approximately $3.0 billion for interest supplements and approximately $800 million for residual-value supplements in the United States and Canada to be paid to Ford Credit over the term of the finance contracts. Ford Motor Company Annual Report 2005 60

  • Page 63
    ... are generally recorded when products are shipped, and the risks and rewards of ownership are transferred to our customers (generally dealers). We also sell vehicles to daily rental car companies that are subject to guaranteed repurchase options. These vehicles are accounted for as operating leases...

  • Page 64
    ... years for buildings and land improvements. Special tools placed in service beginning in 1999 are amortized using the units-of-production method over the expected vehicle model cycle life. Maintenance, repairs, and rearrangement costs are expensed as incurred. Ford Motor Company Annual Report 2005...

  • Page 65
    ...general, we avoid price changes in consideration of future business; however when these occur, our policy is to defer the financial statement impact of any such price change given explicitly in consideration of future business where guaranteed volumes are specified. Ford Motor Company Annual Report...

  • Page 66
    ......Depreciation and amortization (excluding leasing transactions) ...Finance receivables...All other...Total deferred tax liabilities...Net deferred tax assets/(liabilities)...$ 7,736 5,130 2,839 6,528 22,233 606 $ 7,913 5,554 2,826 6,195 22,488 (501) Ford Motor Company Annual Report 2005 64

  • Page 67
    ... 31, 2005 and 2004, there were no significant assets or liabilities remaining on our balance sheet related to discontinued operations. Held-for-Sale Operations. In 2004, management committed to sell certain consolidated dealerships in the Asia Pacific and Africa/Mazda segment as the sale of the...

  • Page 68
    ... Land Rover sport utility vehicle business from the BMW Group. As part of the acquisition, we agreed to pay two-thirds of the purchase price at closing with the remainder being paid in 2005. During 2005, we made the final payment of approximately $1.3 billion. Ford Motor Company Annual Report 2005...

  • Page 69
    ...' affiliated finance companies. During 2005, we completed the sale of this business and recognized a pre-tax loss of approximately $16 million. In 2004, we completed the sale of AMI Leasing and Fleet Management Services, our operation in the United States that offered full service car and truck...

  • Page 70
    ... to the Financial Statements NOTE 4. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND ACQUISITIONS (Continued) At December 31, 2005, there were no assets or liabilities on our balance sheet related to held-for-sale operations. The assets and liabilities of Hertz classified...

  • Page 71
    ...527 524 - Equity securities...- $ 2,304 Total ...$ 2,319 Financial Services Held-to-Maturity Available-for-Sale Fair Amortized Fair Amortized Value Cost Value Cost $ 14 $ 14 $ 1 $ 1 180 178 3 3 60 59 - - 80 82 1 1 282 279 1 1 - - 102 65 $ 6 $ 6 $ 714 $ 681 Ford Motor Company Annual Report 2005 69

  • Page 72
    ... in marketable securities at December 31, 2005 in a Voluntary Employees Beneficiary Association trust ("VEBA"), which assets are used to fund certain employee benefit obligations in the near term. These investments are recorded at fair value and included in Other assets on our balance sheet. At...

  • Page 73
    ... net income/(loss) of affiliated companies was income of $83 million, $48 million and $39 million for the years ended December 31, 2005, 2004 and 2003, respectively. Balance sheet information for Blue Diamond Parts is insignificant to our consolidated balance sheet. Ford Motor Company Annual Report...

  • Page 74
    ... PAG Americas $ 188 $ 5,248 55 - (34) - (342) (7) $ 4,906 $ 202 Financial Services Sector Beginning balance, December 31, 2004...Goodwill acquired ...Goodwill impairment ...Exchange translation/other ...Ending balance, December 31, 2005 ... Ford Credit $ 20 - - (3) $ 17 Ford Motor Company Annual...

  • Page 75
    ... calculated by discounting future cash flows using an estimated discount rate that reflects the current credit, interest rate and prepayments risks associated with similar types of instruments. For receivables with short maturities, the book value approximates fair value. Ford Motor Company Annual...

  • Page 76
    ... prices at lease termination and the number of vehicles that are expected to be returned. Operating lease depreciation expense (which includes gains and losses on disposal of assets) was $5.7 billion in 2005, $6.4 billion in 2004, and $8.5 billion in 2003. Ford Motor Company Annual Report 2005...

  • Page 77
    ... related to off-balance sheet sales of receivables reported in Revenues for the years ended December 31 (in millions): Net gain on sales of receivables...$ Income on interest in sold wholesale receivables and retained securities...Servicing fees ...Income on residual interest and other ...Investment...

  • Page 78
    ... credit losses related to outstanding securitized retail receivables were 1.55% at December 31, 2005. To calculate the static pool credit losses, actual and projected future credit losses are added together and divided by the original balance of each pool of assets. Ford Motor Company Annual Report...

  • Page 79
    ...the SPEs, but for financial statement reporting purposes is reported as debt on our balance sheet. NOTE 14. ALLOWANCE FOR CREDIT LOSSES - FINANCIAL SERVICES SECTOR The allowance for credit losses is our estimate of the credit losses related to impaired receivables and operating leases at the date of...

  • Page 80
    ...employee benefits...Dealer and customer allowances and claims...Pension liability ...Deferred revenue...Employee benefit plans...Other ...Total Automotive non-current ...Total Automotive Sector ...Financial Services Sector ...Total ...$ 2005...,334 5.1% 4.4% Ford Motor Company Annual Report 2005 78

  • Page 81
    ... Additionally, at December 31, 2005, banks provided $18.7 billion of contractually committed liquidity facilities exclusively to support Ford Credit's two on-balance sheet, asset-backed commercial paper programs; $18.2 billion supported Ford Credit's retail Ford Motor Company Annual Report 2005 79

  • Page 82
    ... corporation by purchasing equity from us using the operator's share of dealership net profits. We supply and finance the majority of vehicles and parts to these dealerships and the operators have a contract to buy our equity interest over a period of time. Ford Motor Company Annual Report 2005...

  • Page 83
    ...in operating leases and the related vehicles, which reduce the commitment of these SPEs to purchase finance receivables. At December 31, 2005, approximately $5.6 billion of finance receivables and notes were held by these SPEs. NOTE 18. CAPITAL STOCK AND AMOUNTS PER SHARE All general voting power is...

  • Page 84
    Notes to the Financial Statements NOTE 18. CAPITAL STOCK AND AMOUNTS PER SHARE (Continued) Amounts Per Share of Common and Class B Stock The calculation of diluted income per share of Common Stock and Class B Stock takes into account the effect of obligations, such as stock options and convertible ...

  • Page 85
    ... option-pricing model was as follows: 2005 Fair value per option ...$ 4.44 Assumptions: Annualized dividend yield ...3.2% 41.9% Expected volatility ...Risk-free interest rate...4.4% Expected option term (in years)...7 $ 2004 4.71 3.0% 42.2% 3.4% 7 $ 2003 2.07 5.1% 39.3% 3.7% 7 Ford Motor Company...

  • Page 86
    ...are recorded at fair value on our balance sheet. Our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices and interest rates. The objective of our risk management program is to manage the financial and operational...

  • Page 87
    ... was also recorded in Revenues. Net Investment Hedges. Ford Credit uses foreign currency forward exchange contracts and options to hedge the net assets of certain foreign entities to offset the translation and economic exposures related to its investment in foreign entities. Changes in the value of...

  • Page 88
    ... of intangibles ...Net losses/(earnings) from equity investments in excess of dividends received ...Provision for credit/insurance losses ...Foreign currency adjustments...(Gain)/loss on sale of business ...Stock option expense ...Cash changes in operating assets and liabilities was as follows...

  • Page 89
    ... and Africa business unit initiated hourly and salaried employee separation actions resulting in pre-tax charges of approximately $32 million. See Note 23 for employee separation costs related to pension, postretirement health care and life insurance benefits. Ford Motor Company Annual Report 2005...

  • Page 90
    ... health care and life insurance benefits). NOTE 23. RETIREMENT BENEFITS Employee Retirement and Savings Plans We have two principal qualified defined benefit retirement plans in the United States. The Ford-UAW Retirement Plan covers hourly employees represented by the UAW, and the General Retirement...

  • Page 91
    ...company-paid life insurance benefits). These benefit changes resulted in a decrease in the year-end 2005 other postretirement employee benefit ("OPEB") obligation of about $3 billion. In December 2005, we reached an agreement with the UAW that would increase retiree health care cost sharing. As part...

  • Page 92
    ... benefit plans is December 31. Our expense for defined benefit pension, postretirement health care and life insurance benefits was as follows (in millions): Pension Benefits U.S. Plans 2005 2004 2003 Service cost ...$ 734 $ 636 $ 600 Interest cost ...2,398 2,445 2,442 Expected return on assets...

  • Page 93
    ...31 Discount rate ...Expected return on assets...Average rate of increase in compensation...Initial health care cost trend rate...Ultimate health care cost trend rate ...Year ultimate trend rate is reached ...Assumptions Used to Determine Net Benefit Cost for the Year Ending December 31 Discount rate...

  • Page 94
    ... separately reflect a liquidation strategy that has been in place for several years. Other assets include cash held for near-term benefit funding; cash held by investment managers for liquidity purposes is included in the appropriate asset class balance. Ford Motor Company Annual Report 2005 92

  • Page 95
    ...(i.e., Volvo, Jaguar, Land Rover and Aston Martin) and related service parts throughout the world (including North America and South America); in each case, together with the associated costs to design, develop, manufacture and service these vehicles and parts. Ford Motor Company Annual Report 2005...

  • Page 96
    ...product engineering. The Financial Services sector included two segments, Ford Credit and Hertz (sold December 2005). Ford Credit provides vehicle-related financing, leasing, and insurance. Automotive Sector Ford Asia Ford Pacific & Europe Africa/ Other Mazda and PAG 2005 Revenues External customer...

  • Page 97
    Notes to the Financial Statements NOTE 24. SEGMENT INFORMATION (Continued) Ford Credit Financial Services Sector (a) Total Company 2005 Revenues External customer...$ 16,047 Intersegment ...597 Income 3,861 Income/(loss) before income taxes ...Other disclosures Depreciation and amortization...4,...

  • Page 98
    ...): 2006 2007 2008 2009 2010 Automotive Sector ...$ 483 $ 411 $ 257 $ 202 $ 127 Financial Services Sector ...113 98 86 63 50 Thereafter $ 278 106 Total $ 1,758 516 Rental expense was $1.5 billion in 2005, $1.5 billion in 2004 and $1.4 billion in 2003. Ford Motor Company Annual Report 2005 96

  • Page 99
    ... in the warranty cost accruals are costs for basic warranty coverages on vehicles sold. Additional service actions such as product recalls and other customer service actions are not included in the warranty reconciliation below, but are also accrued for at Ford Motor Company Annual Report 2005 97

  • Page 100
    ... safety, emissions and fuel economy; financial services; employment-related matters; dealer, supplier and other contractual relationships; intellectual property rights; product warranties; environmental matters; shareholder or investor matters; and financial reporting matters. Certain of the pending...

  • Page 101
    ... quarter of 2005, the Company adopted Financial Accounting Standards Board Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143." Internal control over financial reporting Also, in our opinion, managementʼs assessment, included...

  • Page 102
    ... controlled and managed by Ford, whose total assets and total revenues represent less than 1% of the corresponding consolidated financial statement amounts as of and for the year ended December 31, 2005. PricewaterhouseCoopers LLP Detroit, Michigan March 1, 2006 Ford Motor Company Annual Report...

  • Page 103
    ... salaried workers leased to ACH. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview and Notes 4 and 23 of the Notes to the Financial Statements for additional discussion relating to the Visteon transaction and ACH. Ford Motor Company Annual Report...

  • Page 104
    ... salaried workers leased to ACH. See Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview and Notes 4 and 23 of the Notes to the Financial Statements for additional discussion relating to the Visteon transaction and ACH. Ford Motor Company Annual Report...

  • Page 105
    ...controlled and managed by Ford, whose total assets and total revenues represent less than 1% of the corresponding consolidated financial statement amounts as of and for the year ended December 31, 2005. Based on this assessment, management concluded that our internal control over financial reporting...

  • Page 106
    ... of the Annual Meeting, a Proxy Statement and voting card will be mailed to shareholders in advance of the meeting. Annual Report Credits The Ford Motor Company Annual Report is designed, written and produced each year by a cross-functional Ford team. The 2005 team members are: Project Manager: Ana...

  • Page 107
    ... Mercury, Aston available only at Ford and Lincoln Martin, Jaguar, Land Rover, Mazda Mercury dealerships - designed and Volvo dealers and customers to deliver customer satisfaction - One of the world's largest and repeat purchase intent automotive finance companies. - Parts engineered to Ford Motor...

  • Page 108
    Ford.com Driving Innovation Ford Motor Company One American Road, Dearborn, Michigan 48126