Ford 2006 Annual Report Download - page 27

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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25
The decrease in Ford Credit's allowance for credit losses primarily reflected improved charge-off performance, and
changes in its assumptions and modeling techniques ($81 million) described above that affected the allowance.
Other Financial Services
The improvement in results primarily reflected the non-recurrence of the 2005 write-off of aircraft leases related to the
bankruptcy of Delta Air Lines, and, in 2006, higher property sales.
2005 Compared with 2004
Details of the full-year Financial Services sector Income/(loss) before income taxes for 2005 and 2004 are shown
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__________
(a) Includes amortization expense related to intangibles recognized upon consolidation of Hertz.
(b) The segment presentation of the gain on sale of Hertz in Note 24 of the Notes to the Financial Statements is $1,006 million in the Hertz segment and
$89 million in Other Financial Services.
Ford Credit
Ford Credit's income before income taxes was down $787 million, which includes $405 million for reduced market
valuations primarily related to non-designated derivatives. The remaining decrease in earnings primarily reflected higher
borrowing costs and the impact of lower retail receivable levels, offset partially by improved credit loss performance.
Hertz
The increase in Hertz operating results primarily reflected the cessation of depreciation on long-lived assets from the
point Hertz was held for sale (i.e., September 2005) until it was sold, higher car and equipment rental volumes and
improved pricing for equipment rental.
Other Financial Services
The decline in results primarily reflected the non-recurrence of a 2004 property clean-up settlement, and, in 2005,
lower property sales and the write-off of aircraft leases related to the bankruptcy of Delta Air Lines.