Ford 2002 Annual Report Download - page 42

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38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In 2001, approximately 1.6 million new cars and trucks were sold in Brazil, compared with 1.5 million in 2000. Our share of
those unit sales was 8.2% in 2001, down 1.4 percentage points compared with 2000. The decline in market share reflected
new and existing manufacturers who are aggressively competing for market share.
Automotive sector losses from continuing operations outside North America, Europe, and South America (“Rest of World”)
were $159 million in 2001, compared with earnings of $106 million in 2000. The earnings deterioration reflected Ford's share
of a non-cash charge relating to Mazda’s pension expenses and other restructuring actions at Mazda.
New car and truck sales in Australia, our largest market in Rest of World, were approximately 773,000 units in 2001, down about
14,000 units from a year ago. In 2001, our combined car and truck market share in Australia was 15.1%, down 0.6 percentage
points from 2000, reflecting primarily share deterioration in the full-size car segment due to continued aggressive competition.
FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS
Our Financial Services sector consists primarily of two segments, Ford Credit and Hertz. Details of our Financial Services sector
earnings from continuing operations for 2002, 2001, and 2000 are shown below (in millions):
Income/(Loss)from
Continuing Operations
2002 2001 2000
Ford Credit $ 1,235 $ 831 $ 1,542
Hertz 127 23 358
Minority interests and other (91) (48) (108)
Total Financial Services sector $ 1,271 $ 806 $ 1,792
2002 COMPARED WITH 2001
Ford Credit's consolidated income from continuing operations was $1,235 million, up $404 million from 2001. Apart from the
non-recurrence of last year’s Revitalization Plan charges, the improvement in earnings reflected primarily a lower provision for
credit losses, offset partially by the net unfavorable impact of receivable sales and lower net financing margins.
Revenue from the sale of finance receivables includes the gain on sales of finance receivables through securitizations and
whole-loan sale transactions and servicing fee income from sold receivables that Ford Credit continues to service. Gains or
losses on sales of receivables are recognized in the period in which they are sold. In addition, the sale of finance receivables
through securitization transactions provides revenue from the interest earned on securities sold by the securitization entity that
Ford Credit retains, our undivided interest in wholesale receivables, and other income related to interest-only assets. Interest-
only assets, also referred to as excess spread, represent Ford Credit's right to receive collections on sold receivables that are
in excess of the amount needed to pay principal and interest payments to investors and servicing fees.
As shown below, total revenue related to receivables sales was $2,610 million in 2002, compared with $1,433 million and
$557 million in 2001 and 2000, respectively. The increase in 2002 resulted from the growth in Ford Credit's outstanding sold
receivables balances over the last two years. Gains on sales of receivables in 2002 were about the same as those in 2001,
reflecting lower gains per dollar of retail receivables sold (about 1.9% in 2002, compared with 2.2% in 2001).
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