Ford 2009 Annual Report Download - page 33

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2009 Annual Report 31
Mazda Segment. In the fourth quarter of 2008, we sold a significant portion of our investment in Mazda. Our remaining
ownership interest is treated as marketable securities, with mark-to-market adjustments reported in Other Automotive.
Jaguar Land Rover and Aston Martin Segment. During the second quarter of 2008, we sold our Jaguar Land Rover
operations. During the second quarter of 2007, we sold our Aston Martin operations.
FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS
2009 Compared with 2008
Details of the full-year Financial Services sector Revenues and Income/(Loss) before income taxes for 2009 and 2008
are shown below:
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Ford Credit
The improvement in pre-tax results primarily reflected the non-recurrence of the 2008 impairment charge to Ford
Credit's North America operations operating lease portfolio for contracts terminating beginning third quarter of 2008
($2.1 billion), lower depreciation expense for leased vehicles and lower residual losses on returned vehicles due to higher
auction values ($1.9 billion), and a lower provision for credit losses primarily related to non-recurrence of higher severity
offset partially by higher repossessions (about $800 million). Other factors that explain the improvement in pre-tax results
included the non-recurrence of net losses related to market valuation adjustments to derivatives, shown as unallocated risk
management in the table below ($367 million), net gains related to unhedged currency exposure primarily from cross-
border intercompany lending (about $300 million), lower net operating costs (about $200 million), and higher financing
margin primarily attributable to lower borrowing costs (about $100 million). These factors were offset partially by lower
volume primarily reflecting lower industry volumes, lower dealer stocks, the impact of divestitures and alternative business
arrangements, and changes in currency exchange rates (about $1 billion); the non-recurrence of the gain related to the
sale of approximately half of Ford Credit's ownership interest in its Nordic operation (about $100 million), and a valuation
allowance for Australian finance receivables sold in 2009 (about $50 million).
Results of Ford Credit's operations and unallocated risk management for 2009 and 2008 are shown below:
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The improvement in Ford Credit's North America operations pre-tax results primarily reflected non-recurrence of the
impairment charge for operating leases, lower depreciation expense for leased vehicles and lower residual losses on
returned vehicles due to higher auction values, a lower provision for credit losses, net gains related to unhedged currency
exposure from cross-border intercompany lending, higher financing margin, and lower operating costs. These factors were
offset partially by lower volume. The decrease in Ford Credit's International operations pre-tax earnings primarily reflected
lower volume, a higher provision for credit losses primarily reflecting losses in Spain and Germany, lower financing margin
primarily in Mexico, non-recurrence of a gain related to the sale of approximately half of Ford Credit's ownership interest in
its Nordic operations, and a valuation allowance for Australian finance receivables sold in 2009. These factors were offset