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8 1
NOTES TO THE FINANCIAL STATEMENTS
Other Derivative Instruments. As previously stated, some derivatives do not qualify for hedge accounting treatment or Ford
Credit elects not to apply hedge accounting (non-designated hedges). For non-designated hedges we recorded gains of
$289 million and $58 million in 2004 and 2003, respectively, related to unrealized gains and losses resulting from the effect
of changes in interest rates. In addition, net interest settlements and accruals related to derivatives that were non-designated
resulted in income of $52 million and $105 million in 2004 and 2003, respectively. These net interest settlement and accrual
amounts were included in evaluating Ford Credit’s overall risk management objective. Unrealized and realized gains and
losses related to certain non-designated foreign currency derivatives resulted in favorable adjustments totaling $0.4 billion
in 2004 and $1.9 billion in 2003. The adjustments related to foreign currency derivatives reported above were offset by
revaluation impacts on the related debt denominated in a currency other than the location’s functional currency. Both the
unrealized and realized gains and losses on non-designated derivatives were recorded in Revenues.
Total Company
Summary of OCI Activity. The following table summarizes activity in OCI excluding foreign currency translation adjustments on net
investment hedges for both the Automotive and Financial Services sectors during the years ended December 31, (in millions):
We expect to reclassify for Automotive and Financial Services sectors, existing net gains of $786 million from OCI to net
income during the next twelve months as the underlying exposures are realized.
Fair Value of Derivative Instruments. The fair value of derivatives reflects the price that a third party would be willing to pay or
receive in arm’s length transactions and includes mark-to-market adjustments to reflect the effects of changes in the related index.
The following tables summarize the estimated fair value of our derivative financial instruments, taking into consideration the
effects of legally enforceable netting agreements, at December 31 (in billions):
The Automotive and Financial Services sectors held derivative instruments with notional values of $71 billion and $166 billion,
respectively, at December 31, 2004.
2004 2003
Beginning of year
Net unrealized gain/(loss) on derivative financial instruments $ 1,302 $ 313
Increase/(decrease) in fair value of derivatives 961 1,072
(Gains)/losses reclassified from OCI (1,023) (83)
End of year
Net unrealized gain/(loss) on derivative financial instruments $ 1,240 $ 1,302
2004 2003
Fair Value
Assets Fair Value
Liabilities Fair Value
Assets Fair Value
Liabilities
Automotive sector
Total derivative financial instruments $ 3.1 $ 0.9 $ 2.3 $ 0.6
Financial Services sector
Foreign currency swaps, forwards and options $ 4.2 $ 1.1 $ 6.3 $ 1.5
Interest rate swaps 3.1 0.2 3.9 0.2
Impact of netting agreements (0.3) (0.3) (0.3) (0.3)
Total derivative financial instruments $ 7.0 $ 1.0 $ 9.9 $ 1.4