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PROGRESS AND PRIORITIES
Ford Motor Company / 2007 Annual Report

Table of contents

  • Page 1
    PROGRESS AND PRIORITIES Ford Motor Company / 2007 Annual Report

  • Page 2
    ... income investments and can be used within 18 months to pay for benefits ("short-term VEBA assets"). As a result of our agreement with the UAW regarding retiree health care obligations, we do not expect to have significant short-term VEBA assets in 2008 and beyond (b) Change in value of Ford stock...

  • Page 3
    ... Mazda. Its automotive financing business is Ford Motor Credit Company. The company operates as a globally integrated worldwide team with four key priorities: aggressively restructuring to operate profitably at the current demand and changing mix, accelerating development of new products customers...

  • Page 4
    ..., innovative and fuel-efficient smaller cars. The 2008 Ford Fusion (top left) stands apart in the highly competitive midsize car segment in North America with a distinctive design and segmentleading quality, safety and affordability. With a new 2 Ford Motor Company | 2007 Annual Report look and...

  • Page 5
    ... in their vehicle and is on track to reach one million sales by early 2009. 3. Alan Mulally congratulates Kansas City Assembly Plant employee Patricia France at the launch of the 2008 Ford Escape and Mercury Mariner. 4 4. UAW Vice President Bob King (left) and Ford Vice President Marty Mulloy...

  • Page 6
    ... product plans. In the near term, we are introducing EcoBoost, an affordable engine technology that will give our customers substantial fuel economy improvements at a competitive price. Longer term, we are investing in a variety of 4 Ford Motor Company | 2007 Annual Report alternative fuel...

  • Page 7
    ... competitiveness going forward. This landmark agreement will enable us to invest in the new products that are a key element of our global plan. ONE YEAR Last year in this report I introduced you to the principles, practices and priorities Ford Motor Company began operating under after I joined the...

  • Page 8
    ... Euro NCAP Top 10 list, giving Ford Europe the highest number of vehicles in the top 10 for adult occupant protection. • Ford South America sales were up 19 percent year-over-year. • Ford China, where sales were up 26 percent, launched operations at our new assembly plant in Nanjing to produce...

  • Page 9
    ... half a million Ford, Lincoln and Mercury vehicles annually in North America during the next five years. For the longer term, we are exploring the potential of plug-in hybrids, fuel cells, hydrogen internal combustion engines and other advanced technologies in laboratories and test fleets around the...

  • Page 10
    ... Officer, Ford of Mexico Robert J. Graziano Executive Vice President, Mazda Motor Corporation Paul A. Mascarenas North America Engineering Martin J. Mulloy Labor Affairs Stephen T. Odell Marketing, Sales and Service, Ford of Europe Geoff P. Polites Chief Executive Officer, Jaguar and Land Rover...

  • Page 11
    ... Public Accounting Firm Selected Financial Data Employment Data Management's Report on Internal Control Over Financial Reporting New York Stock Exchange Required Disclosures Stock Performance Graph * Financial information contained herein (pages 10-123) is excerpted from the Ford Motor Company...

  • Page 12
    ...costs of marketing incentives, including dealer and retail customer cash payments (e.g., rebates) and costs of special-rate financing and leasing programs, as a reduction to revenue. These reductions to revenue are accrued at the later of the date the related vehicle sales to the dealer are recorded...

  • Page 13
    ... programs, competitive sourcing, and employee cost sharing) and an assessment of likely long-term trends. They do not include the impact of the recent Memorandum of Understanding with the UAW relating to retiree health care, discussed in detail in this Overview. Commodity and Energy Price Increases...

  • Page 14
    ... markets, we have been focusing and continue to focus on the following four key priorities Aggressively restructure to operate profitably at the current demand and changing model mix; Accelerate development of new products our customers want and value; Finance our plan and improve our balance sheet...

  • Page 15
    ...Agreements will enable us to increase our competitiveness in the United States through reduced retiree health care costs, more competitive wages and benefits, and improved operational flexibility. Following are some of the significant terms of the Agreements. Ford Motor Company | 2007 Annual Report...

  • Page 16
    ... for providing retiree health care benefits for current and former UAW-represented employees (measured at $20.2 billion on our December 31, 2007 balance sheet) from the Company to a new retiree plan funded by a new independent Voluntary Employee Benefit Association Trust ("New VEBA"). The...

  • Page 17
    ... into a unified and integrated global organization that reports directly to our Chief Executive Officer, and we are developing a truly global product plan that takes full advantage of our global product development assets, technologies and people. Ford Motor Company | 2007 Annual Report 15

  • Page 18
    ...in the 2008 and 2009 time period: • Sales volume and mix of products stabilizing in North America, with U.S. market share for 2008 at the low-end of the 14% to 15% range for Ford, Lincoln and Mercury brands. Cumulative reduction in annual operating costs for our Ford North America segment of about...

  • Page 19
    ... Notes to the Financial Statements for disclosure regarding 2007 effective tax rate. (b) Primarily related to Ford Europe's consolidated 41%-owned affiliate, Ford Otosan; the increase in 2007 primarily reflected the non-recurrence of the impact on deferred tax balances of tax law changes in Turkey...

  • Page 20
    ... 2007, 2006, and 2005 special items by segment or business unit (in millions): _____ (a) Represents a one-time, non-cash charge related to a change in our business practice for offering and announcing retail variable marketing incentives to our dealers. Generally, we accrue incentives for vehicles...

  • Page 21
    ...sold in China and Malaysia by certain unconsolidated affiliates totaling about 205,000 and 159,000 units in 2007 and 2006, respectively. "Sales" above does not include revenue from these units. (c) Reflects sales of Mazda6 by our consolidated subsidiary, AAI. Ford Motor Company | 2007 Annual Report...

  • Page 22
    ... with 2006 was achieved despite the variable marketing charge related to a business practice change. The table below details our 2007 cost changes at constant volume, mix, and exchange, excluding special items and discontinued operations (in billions): 20 Ford Motor Company | 2007 Annual Report

  • Page 23
    ... for Jobs Bank Benefits and personnel-reduction programs, lower pension curtailment charges, the non-recurrence of 2006 impairment charges related to our long-lived assets, higher net pricing, and retiree health care curtailment gains related to our hourly separation programs. Ford South America...

  • Page 24
    ... generally are reported on a where-sold basis, and include all Ford-badged units and units manufactured by Ford that are sold to other manufacturers, as well as units distributed for other manufacturers. Vehicles sold to daily rental car companies that are subject to a guaranteed repurchase option...

  • Page 25
    ...partially by unfavorable changes in currency exchange rates. The favorable cost changes primarily reflected lower overhead costs, warranty-related costs, net product costs, and manufacturing and engineering costs, offset partially by higher pension costs. Ford Motor Company | 2007 Annual Report 23

  • Page 26
    ... charges for long-lived assets of the Jaguar and Land Rover operations. These adverse factors were offset partially by lower manufacturing and engineering costs, improved volume and mix (mainly improved product and market mix, offset partially by lower market share primarily at Volvo and Jaguar and...

  • Page 27
    ... securitized assets are available only for payment of the debt or other obligations issued or arising in the securitization transactions; they are not available to pay Ford Credit's other obligations or the claims of Ford Credit's other creditors. Ford Motor Company | 2007 Annual Report 25

  • Page 28
    ... U.S. retail installment and lease portfolio, primarily reflected higher loss severity consistent with an increase in amount financed for vehicles repossessed in its portfolio, a higher mix of 72-month contracts and deterioration in used-vehicle prices. 26 Ford Motor Company | 2007 Annual Report

  • Page 29
    ... operating costs (about $100 million). 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. Ford Motor Company | 2007 Annual Report...

  • Page 30
    ... employees and retirees. We have included in Automotive gross cash those VEBA assets that are invested in shorter-duration fixed income investments and can be used within 18 months to pay for benefits ("short-term VEBA assets"). As a result of our agreement with the UAW regarding retiree health care...

  • Page 31
    ... securities with an aggregate principal amount of $567 million for shares of Ford Common Stock. At December 31, 2007, our Automotive sector had net cash (defined as gross cash less total debt) of $7.9 billion, compared with $4.1 billion at the end of 2006. Ford Motor Company | 2007 Annual Report...

  • Page 32
    ... Brazil for retail financing and FCE Bank plc's ("FCE") partnering with various financial institutions in Europe for full service leasing and retail financing). Ford Credit is continuing to pursue and execute such alternative business arrangements. _____ 30 Ford Motor Company | 2007 Annual Report

  • Page 33
    ...net of retained interests), as a percent of total managed receivables, was as follows at the end of each of the last three years: 2007 - 51%, 2006 - 48%, 2005 - 38%. Ford Credit obtains short-term unsecured funding from the sale of floating rate demand notes under its Ford Interest Advantage program...

  • Page 34
    ... net of unearned income. (b) Investment in operating leases net of accumulated depreciation. (c) Includes cash, cash equivalents and marketable securities (excludes marketable securities related to insurance activities). Ford Credit's balance sheet is inherently liquid because of the short-term...

  • Page 35
    ...109 ("FIN 48"), offset partially by 2007 net losses. See the Consolidated Statement of Stockholders' Equity in our Financial Statements for details of Comprehensive income/(loss), and Note 19 of the Notes to the Financial Statements for details of FIN 48. Ford Motor Company | 2007 Annual Report 33

  • Page 36
    Management's Discussion and Analysis of Financial Condition and Results of Operations Credit Ratings. Our short- and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations ("NRSROs") by the SEC Dominion Bond Rating Service Limited...

  • Page 37
    ... to date, and provide additional detail regarding our plan to reduce North America Automotive operating costs by about $3 billion during 2008 in keeping with this goal (all at constant mix, volume, and exchange, and excluding special items) (in billions): Ford Motor Company | 2007 Annual Report 35

  • Page 38
    ..., Ford Credit plans to increase its managed leverage to about 11.5 to 1 by the end of 2008, up from 9.8 to 1 at year-end 2007, and pay dividend distributions beginning in 2008. These distributions will reflect Ford Credit's 2008 net income plus a return of capital reflecting the planned increase in...

  • Page 39
    ... for our postretirement benefit plans (e.g., discount rates, investment returns, and health care cost trends); The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs; Increased safety, emissions (e.g., CO2), fuel economy, or other...

  • Page 40
    ... significant changes in other inputs. • Salary growth. The salary growth assumption reflects our long-term actual experience, outlook and assumed inflation. • Inflation. Our inflation assumption is based on an evaluation of external market indicators. 38 Ford Motor Company | 2007 Annual Report

  • Page 41
    ... 24 of the Notes to the Financial Statements for more information regarding costs and assumptions for employee retirement benefits. Sensitivity Analysis. The December 31, 2007 pension funded status and 2008 expense are affected by year-end 2007 assumptions. These sensitivities may be asymmetric and...

  • Page 42
    ... future years of service (approximately 14 years). See Note 24 of the Notes to the Financial Statements for more information regarding costs and assumptions for employee retirement benefits. Sensitivity Analysis. The December 31, 2007 OPEB funded status and 2008 expense are affected by year-end 2007...

  • Page 43
    ... is one of the other primary methods used for estimating fair value of a reporting unit, asset, or asset group. This assumption relies on the market value (market capitalization) of companies that are engaged in the same or similar line of business. Ford Motor Company | 2007 Annual Report 41

  • Page 44
    ...and operating loss and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid. Statement of Financial Accounting Standards ("SFAS...

  • Page 45
    ... that our net investment in operating leases (equal to our acquisition value of the vehicles less accumulated depreciation) will be adjusted to reflect our revised estimate of the expected residual value at the end of the lease term. Such adjustments to Ford Motor Company | 2007 Annual Report 43

  • Page 46
    ... are recorded prospectively on a straight-line basis. For retail leases, each lease customer has the option to buy the leased vehicle at the end of the lease or to return the vehicle to the dealer. If the customer returns the vehicle to the dealer, the dealer may buy the vehicle from Ford Credit or...

  • Page 47
    ... the Provision for credit and insurance losses on our income statement and the allowance for credit losses contained within Finance receivables, net and Net investment in operating leases on our balance sheet, in each case under the Financial Services sector. ACCOUNTING STANDARDS ISSUED BUT NOT...

  • Page 48
    ... as location of the obligor, contract term, payment schedule, interest rate, financing program, the type of financed vehicle, and whether the contracts are active and in good standing (e.g., when the obligor is not more than 30-days delinquent or bankrupt). Generally, Ford Credit selects the assets...

  • Page 49
    ...Securitization. If the payment rates on wholesale receivables are lower than specified levels, or if there are significant dealer defaults, Ford Credit will be unable to obtain additional funding and any existing funding would begin to amortize. • • Ford Motor Company | 2007 Annual Report 47

  • Page 50
    ..., the timing of which cannot be reasonably estimated. For additional information regarding long-term debt, operating lease obligations, and pension and OPEB obligations, see Notes 16, 5 and 24, respectively, of the Notes to the Financial Statements. 48 Ford Motor Company | 2007 Annual Report

  • Page 51
    ... following: purchases and sales of finished vehicles and production parts, debt and other payables, subsidiary dividends, and investments in foreign operations. These expenditures and receipts create exposures to changes in exchange rates. We also are exposed to changes in prices of commodities used...

  • Page 52
    ... the Consolidated Statement of Stockholders' Equity in Accumulated other comprehensive income/(loss). The investment strategy is based on clearly defined risk and liquidity guidelines to maintain liquidity, minimize risk, and earn a reasonable return on the short-term investment. At any time, a rise...

  • Page 53
    .... These derivatives convert substantially all of its foreign currency debt obligations to the local country currency of the receivables. As a result, Ford Credit's market risk exposure relating to currency exchange rates is believed to be insignificant. Ford Motor Company | 2007 Annual Report 51

  • Page 54
    ...two and six years and generally require customers to make equal monthly payments over the life of the contract. Wholesale receivables are originated to finance new and used vehicles held in dealers' inventory and generally require dealers to pay a floating rate. Ford Credit's funding sources consist...

  • Page 55
    ... of December 31, 2007 was $1.4 billion compared with $1.5 billion at December 31, 2006. For additional information on Ford Credit derivatives, please refer to the "Financial Services Sector" discussion in Note 23 of the Notes to the Financial Statements. Ford Motor Company | 2007 Annual Report 53

  • Page 56
    ... 31, 2007, 2006, and 2005 CONSOLIDATED STATEMENT OF INCOME the Years Ended December 31, 2007, 2006 and 2005 (in millions, except per share For amounts) (in millions, except per share amounts) The accompanying notes are part of the financial statements. 54 Ford Motor Company | 2007 Annual Report

  • Page 57
    ... OF INCOME For the Years Ended 31, 2007, 2006 and 2005 For the Years Ended December 31, 2007, 2006, andDecember 2005 (in millions, except per share amounts) (in millions, except per share amounts) The accompanying notes are part of the financial statements. Ford Motor Company | 2007 Annual Report...

  • Page 58
    Consolidated Balance Sheet Ford Motor Company and Subsidiaries (in millions) (in millions) The accompanying notes are part of the financial statements. 56 Ford Motor Company | 2007 Annual Report

  • Page 59
    Sector Balance Sheet FORD MOTOR COMPANY AND SUBSIDIARIES Ford Motor Company and Subsidiaries SECTOR BALANCE SHEET (in millions) (in millions) The accompanying notes are part of the financial statements. Ford Motor Company | 2007 Annual Report 57

  • Page 60
    ... and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS For the Years Ended December 31, 2007, 2006 and 2005 For the Years Ended December 31, 2007, 2006, and 2005 (in millions) (in millions) The accompanying notes are part of the financial statements. 58 Ford Motor Company | 2007 Annual Report

  • Page 61
    ... Motor Company and Subsidiaries SECTOR STATEMENT OF CASH FLOWS For the Years Ended December 31, 2007, 2006 and 2005 For the Years Ended December 31, 2007, 2006, and 2005 (in millions) (in millions) The accompanying notes are part of the financial statements. Ford Motor Company | 2007 Annual Report...

  • Page 62
    ... OF STOCKHOLDERS EQUITY Ford Motor Company and Subsidiaries For the Years Ended December 31, 2007, 2006 and 2005 For the Years Ended December 31, 2007, 2006, and (in 2005 millions) (in millions) The accompanying notes are part of the financial statements. 60 Ford Motor Company | 2007 Annual Report

  • Page 63
    ...interest supplements at December 31, 2007 and 2006, respectively, and about $900 million for residual-value supplements in the United States and Canada to be paid to Ford Credit over the term of the related finance contracts at December 31, 2007 and 2006. Ford Motor Company | 2007 Annual Report 61

  • Page 64
    ... when the vehicle is sold to the ultimate customer. We also sell vehicles to daily rental car companies subject to guaranteed repurchase options. These vehicles are accounted for as operating leases. At the time of transfer, the proceeds are recorded as deferred revenue in Accrued liabilities and...

  • Page 65
    ... development costs are included in Automotive cost of sales; advertising costs are included in Selling, administrative and other expenses. Engineering, research and development, and advertising costs are expensed as incurred and were as follows (in billions): Ford Motor Company | 2007 Annual Report...

  • Page 66
    ... condition of the borrower or lessee, the value of the collateral, recourse to guarantors and other factors. Recoveries on finance receivables and lease investments previously charged off as uncollectible are credited to the allowance for credit losses. 64 Ford Motor Company | 2007 Annual Report

  • Page 67
    ...activity-based method (units-of-production) to a time-based method. The time-based method amortizes the cost of special tools over their expected useful lives using a straight-line method or, if the production volumes for major product programs associated Ford Motor Company | 2007 Annual Report 65

  • Page 68
    ... our disclosure of contingent assets and liabilities at the date of the financial statements, and our revenue and expenses during the periods reported. Estimates are used when accounting for certain items such as marketing accruals, warranty costs, employee benefit programs, etc. Estimates are based...

  • Page 69
    ...-for-sale securities were as follows (in millions): The amortized cost and fair value of investments in available-for-sale and held-to-maturity securities by contractual maturity for our sectors at December 31, 2007 were as follows (in millions): Ford Motor Company | 2007 Annual Report 67

  • Page 70
    ... discount rate that reflects the current credit, interest rate, and prepayment risks associated with similar types of instruments. For finance receivables with short maturities (generally three months or less), the book value approximates fair value. 68 Ford Motor Company | 2007 Annual Report

  • Page 71
    ... in Net investment in operating leases for the Automotive sector are vehicles sold to daily rental car companies subject to guaranteed repurchase options. Assets subject to operating leases are depreciated on the straightline method over the projected service life of the lease to reduce the asset to...

  • Page 72
    ...Servicing Portfolio Ford Credit retains servicing rights for receivables sold in off-balance sheet securitization and whole-loan sale transactions. The servicing portfolio is summarized in the following table for the years ended December 31 (in millions): 70 Ford Motor Company | 2007 Annual Report

  • Page 73
    ...the transaction discount rates. Investment and Other Income The following table summarizes the activity related to off-balance sheet sales of receivables reported in Financial Services revenues for the years ended December 31 (in millions): For the year ended December 31, 2007, Ford Credit utilized...

  • Page 74
    ... programs. This transaction was primarily non-cash and increased receivables by $17.9 billion and debt by $15.8 billion upon consolidation. Ford Credit repurchased $36 million, $36 million, and $43 million of receivables in 2007, 2006, and 2005, respectively, relating to off-balance sheet sales...

  • Page 75
    ...the Financial Statements NOTE 7. SALES OF RECEIVABLES - FINANCIAL SERVICES SECTOR (Continued) Outstanding delinquencies over 30 days related to the off-balance sheet securitized portfolio were $180 million and $208 million at December 31, 2007 and 2006, respectively. Credit losses, net of recoveries...

  • Page 76
    ...of goodwill included in Automotive equity in net assets of affiliated companies at December 31, 2007 and 2006. Dividends received from Mazda were $36 million, $20 million and $11 million for the years ended December 31, 2007, 2006, and 2005, respectively. 74 Ford Motor Company | 2007 Annual Report

  • Page 77
    ... Diamonds Parts' financial statements at December 31, 2007, 2006, and 2005 is as follows (in millions): Included in our Automotive equity in net income/(loss) of affiliated companies was the following income for the years ended December 31 (in millions): Ford Motor Company | 2007 Annual Report 75

  • Page 78
    ..., we tested the long-lived assets of this operating unit for recoverability and recorded a pre-tax impairment charge of $1.3 billion in Automotive cost of sales, representing the amount by which the carrying value of these assets exceeded the fair value. 76 Ford Motor Company | 2007 Annual Report

  • Page 79
    Notes to the Financial Statements NOTE 13. GOODWILL AND OTHER NET INTANGIBLES Goodwill Changes in the carrying amount of goodwill are as follows (in millions): Ford Motor Company | 2007 Annual Report 77

  • Page 80
    ... related to securitizations included $4.6 billion and $3.7 billion in cash and cash equivalents, and $77.8 billion and $65.8 billion of receivables and beneficial interests in net investment in operating leases at December 31, 2007 and 2006, respectively. 78 Ford Motor Company | 2007 Annual Report

  • Page 81
    ...of a Ford and/or Lincoln Mercury dealership 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...

  • Page 82
    ... its equity investments and, where applicable, receivables due from the VIEs. Ford Credit also sells finance receivables to bank-sponsored asset-backed commercial paper issuers that are SPEs of the sponsor bank. These SPEs are not consolidated by Ford Credit. All of these sales constitute sales for...

  • Page 83
    Notes to the Financial Statements NOTE 16. DEBT AND COMMITMENTS Debt at December 31 was as follows (in millions, except percentages): _____ Debt maturities at December 31, 2007 were as follows (in millions): Ford Motor Company | 2007 Annual Report 81

  • Page 84
    ... Common Stock into which each Trust Preferred Security was convertible pursuant to its conversion terms. As a result of the exchange, we recorded a pre-tax loss of $632 million in Automotive interest income and other non-operating income/(expense), net. 82 Ford Motor Company | 2007 Annual Report

  • Page 85
    ...with the Credit Agreement (the "Borrowing Base value"). The following table provides detail of Borrowing Base values for various categories of collateral, which reflects our Jaguar and Land Rover operations (in billions, except percentages): _____ _____ Ford Motor Company | 2007 Annual Report 83

  • Page 86
    ... into agreements with a number of bank-sponsored asset-backed commercial paper conduits ("conduits") and other financial institutions, whereby such parties are contractually committed, at Ford Credit's option, to purchase from Ford Credit's eligible retail or wholesale assets or to purchase or make...

  • Page 87
    ..., 2007, Ford Credit had $3.9 billion of outstanding funding in this program. NOTE 17. SHARE-BASED COMPENSATION At December 31, 2007, a variety of Ford stock-based compensation grants or awards were outstanding for employees (including officers) and members of the Board of Directors. All stock-based...

  • Page 88
    ...there was about $30 million in unrealized compensation cost related to non-vested stock options. This expense will be recognized over a weighted average period of 1.3 years. A summary of the status of our non-vested shares and changes during 2007 follows: 86 Ford Motor Company | 2007 Annual Report

  • Page 89
    ... for these awards is not recognized until it is probable and estimable. Expense is then recognized over the performance and restriction periods based on the fair market value of Ford stock at grant date. RSU-stock activity during 2007 was as follows: Ford Motor Company | 2007 Annual Report 87

  • Page 90
    ... in September 2007. The new 2007 collective bargaining agreement continues a job security program, pursuant to which we are required to pay idled employees who meet certain conditions a portion of their wages and benefits for a specified period of time. 88 Ford Motor Company | 2007 Annual Report

  • Page 91
    ... on our employment rolls until they reach retirement eligibility. The reserve for these employees will be released over the period through the end of 2009. The remaining balance of the reserve reflects costs associated with employee tuition programs. Ford Motor Company | 2007 Annual Report 89

  • Page 92
    ... of automotive financial services of Ford, Jaguar, Land Rover and Mazda vehicles. The plan included the consolidation of branches into district offices and reduced ongoing costs. We recognized pre-tax charges of $30 million in 2006. In 2007, we released $12 million of the reserve related to lower...

  • Page 93
    ...to the Financial Statements NOTE 19. INCOME TAXES Components of income taxes, excluding discontinued operations, cumulative effects of changes in accounting principles and equity in net results of affiliated companies accounted for after-tax, are as follows: No provision for deferred taxes has been...

  • Page 94
    ... 30, 2006, the balance of deferred taxes primarily at our U.S., Jaguar, and Land Rover entities has changed from a net deferred tax liability position to a net deferred tax asset position. Due to the cumulative losses we have incurred at these operations and their near-term financial outlook, we...

  • Page 95
    ... equity fund managed by Stone Point Capital LLC, purchased APCO from us. This transaction was the result of our ongoing strategic review of our operations. As a result of the transaction, we realized a pre-tax gain of $51 million (net of transaction costs and working capital adjustments), reported...

  • Page 96
    ... its long-lived assets. The assets and liabilities of Jaguar and Land Rover classified as held-for-sale operations are summarized as follows (in millions): Aston Martin. In 2007, Ford Motor Company and its subsidiary, Jaguar Cars Limited, completed the sale of our 100% interest in Aston Martin. As...

  • Page 97
    ...costs and liabilities assumed, reported in Automotive interest income and other nonoperating income/(expense), net. The Converca assets sold in 2007 that were classified as a held-for-sale operation at December 31, 2006 are summarized as follows (in millions): El Jarudo Plant. In 2007, we completed...

  • Page 98
    ... the businesses and their primary products: Each of these sales is conditional on a successful negotiation by the buyer of labor terms with the UAW, which had not been completed by year-end. Therefore, none was classified as held for sale at December 31, 2007. 96 Ford Motor Company | 2007 Annual...

  • Page 99
    ...labor terms with the UAW. Land Rover. In June 2000, we purchased the 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...

  • Page 100
    ... account the effect of obligations, such as RSU-stock awards, stock options, and convertible notes and securities, considered to be potentially dilutive. Basic and diluted income/(loss) per share were calculated using the following (in millions): _____ 98 Ford Motor Company | 2007 Annual Report

  • Page 101
    Notes to the Financial Statements NOTE 22. OPERATING CASH FLOWS The reconciliation of Net income/(loss) to cash flows from operating activities of continuing operations is as follows (in millions): Ford Motor Company | 2007 Annual Report 99

  • Page 102
    ...gains and losses on derivatives used to hedge them. We document our hedging objectives, practices, procedures, and accounting treatment. In addition, we review our hedging program and our derivative positions, as well as our strategy, on a regular basis. 100 Ford Motor Company | 2007 Annual Report

  • Page 103
    ... currency derivatives and changes in fair value of commodity derivatives and warrants. The exchange of cash associated with these derivative transactions is recorded in Net cash (used in)/provided by investing activities in our statements of cash flows. Ford Motor Company | 2007 Annual Report 101

  • Page 104
    ...at December 31, 2007, 2006, and 2005, respectively. We report the exchange of cash related to all of Ford Credit's derivative transactions, regardless of designation, in Net cash (used in)/provided by investing activities in our statements of cash flows. 102 Ford Motor Company | 2007 Annual Report

  • Page 105
    ...Statement Effect of Derivative Instruments The following table summarizes the estimated pre-tax gains/(losses) for each type of hedge designation described above for the Automotive and Financial Services sectors, for the years ended December 31 (in millions): _____ Ford Motor Company | 2007 Annual...

  • Page 106
    ... benefit pension plans provide benefits that are not based on salary (e.g., U.S. Ford-UAW Retirement Plan, noncontributory portion of the U.S. General Retirement Plan, and Canada Ford-UAW Retirement Plan). The salary growth assumption is not applicable to these benefits. 104 Ford Motor Company...

  • Page 107
    ... of the final settlement agreement relating to the MOU and SEC pre-clearance of the accounting treatment of the New VEBA and our retiree health care obligation. In 2005, we entered into an agreement with the UAW ("Agreement") to increase retiree health care cost sharing as part of our overall...

  • Page 108
    ... $8 million related to stock appreciation rights in 2006. An additional $25 million was expensed in 2007, recorded in Automotive cost of sales. As part of the Agreement, UAW members also agreed to divert to the UAW Benefit Trust payments of a previouslynegotiated 2006 wage increase and a portion...

  • Page 109
    ... for the benefits of the Visteon salaried employees. The measurement date for substantially all of our worldwide postretirement benefit plans is December 31. Our expense for defined benefit pension and OPEB was as follows (in millions): _____ Ford Motor Company | 2007 Annual Report 107

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    Notes to the Financial Statements NOTE 24. RETIREMENT BENEFITS (Continued) The year-end status of these plans was as follows (dollar amounts in millions): _____ 108 Ford Motor Company | 2007 Annual Report

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    ... defined benefit plans to recognize the over-funded or under-funded status of a defined benefit postretirement plan as an asset or liability in its balance sheet, and to recognize changes in that funded status in the year in which the changes occur. Unrecognized prior service credits/costs and net...

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    ... to U.S. pension liabilities, we revised our investment strategy to reduce the proportion of equity investments and increase the proportion of assets in fixed income and alternative investments. Specifically, we disclosed a revised target asset allocation for year-end 2007 of about 50% public equity...

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    ... costs to design, develop, manufacture, and service vehicles and parts. Ford North America segment includes primarily the sale of Ford, Lincoln and Mercury brand vehicles and related service parts in North America (the United States, Canada and Mexico). Ford Motor Company | 2007 Annual Report...

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    ...-brand vehicles (i.e., Volvo, Jaguar, and Land Rover) and related service parts throughout the world (including North America, South America, Europe, Asia Pacific and Africa). Ford Asia Pacific and Africa/Mazda segment includes primarily the sale of Ford-brand vehicles and related service parts in...

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    Notes to the Financial Statements NOTE 25. SEGMENT INFORMATION (Continued) Ford Motor Company | 2007 Annual Report 113

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    Notes to the Financial Statements NOTE 25. SEGMENT INFORMATION (Continued) _____ ( 114 Ford Motor Company | 2007 Annual Report

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    Notes to the Financial Statements NOTE 26. GEOGRAPHIC INFORMATION (in millions) NOTE 27. SUMMARY QUARTERLY FINANCIAL DATA (unaudited) Ford Motor Company | 2007 Annual Report 115

  • Page 118
    ... outstanding associated with a subsidiary trust, Ford Motor Company Capital Trust II. On August 3, 2007, we completed a conversion offer related to our Trust Preferred Securities. For further discussion of our Trust Preferred Securities, see Notes 16 and 21. 116 Ford Motor Company | 2007 Annual...

  • Page 119
    ... to 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...

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    ...-tax charge of $251 million shown in Cumulative effects of changes in accounting principles at December 31, 2005. The liability for conditional asset retirement obligations was $390 million and $399 million at December 31, 2007 and 2006, respectively. 118 Ford Motor Company | 2007 Annual Report

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    Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders Ford Motor Company: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of stockholders' equity and of cash flows present fairly, in all ...

  • Page 122
    ... with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of...

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    Selected Financial Data The following table sets forth selected financial data for each of the last five years (dollar amounts in millions, except per share amounts). Ford Motor Company | 2007 Annual Report 121

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    ... on September 14, 2011. Our agreement with the CAW expires on September 16, 2008. Historically, negotiation of new collective bargaining agreements with the UAW and CAW typically resulted in increases in wages and benefits, including retirement benefits. 122 Ford Motor Company | 2007 Annual Report

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    ... 31, 2007. The effectiveness of the Company's internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein. Ford Motor Company | 2007 Annual Report 123

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    ... the Securities and Exchange Commission, as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2007, our Chief Executive Officer's and Chief Financial Officer's certifications required by Section 302 of the Sarbanes-Oxley Act of 2002. 124 Ford Motor Company | 2007 Annual...

  • Page 127
    ...of dividends) Indexed Returns Base Period Dec. 2002 100 100 100 Years Ending Dec. 2003 179 129 153 Dec. 2004 168 143 120 Dec. 2005 92 150 62 Dec. 2006 93 173 102 Dec. 2007 83 183 86 Company / Index FORD MOTOR COMPANY S&P 500 INDEX GENERAL MOTORS CORPORATION Ford Motor Company | 2007 Annual Report...

  • Page 128
    ... Security analysts and institutional investors may contact: Ford Motor Company Investor Relations One American Road Dearborn, MI 48126 Telephone: (313) 390-4563 Fax: (313) 845-6073 E-mail: [email protected] [email protected] STOCK EXCHANGES Ford Common Stock is listed and traded on the New York Stock...

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    ...contact us" Financial Services Customer Services Operations - Provides automotive financing for Ford, Lincoln, Mercury, Jaguar, Land Rover, Volvo and Mazda dealers and customers - One of the world's largest automotive finance companies, with managed receivables of $147 billion at year-end 2007...

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    Ford Motor Company One American Road Dearborn, Michigan 48126 www.ford.com