1、2003ANNUAL REPORTWWW.FORD.COMFORD MOTOR COMPANYGONE AMERICAN ROADGDEARBORN,MICHIGAN 48126CoverMU.qxd 3/26/04 1:05 PM Page 1FAST AND FUNCONTENTS1Operating Highlights2Products and Progress:A Message From the Chairman6Drawing Raves:Our Attention on Design8Product Portfolio:Our World-Class Products26Ach
2、ievements:Building a Better World28New Directions:Investing in Our Future30Board of Directors and Executives31A Global Overview of Our Company33Financial Results105Shareholder InformationThree Things“In 40 years of Mustang,Ford has always done three things really well,”says Hau Thai-Tang,Ford Mustan
3、g chief nameplate engineer.“Wevealways been fast,always been fun,always been affordable.Mustang is the quintessentially classic American sports car.The 2005 model lives up to that legendary reputation,and then some.Nothing else is like it.”(Above:2005 Ford Mustang GT and 1968 Ford Mustang GT)On the
4、Cover2005 Ford Mustang GT Coupe(18 wheels shown not available in 2005)About the ReportThis 2003 annual report focuses on Ford Motor Companys exciting products and recognizes a few of the thousands of people who design,engineer,manufacture and sell our vehicles worldwide.SHAREHOLDER INFORMATIONShareh
5、older ServicesFord Shareholder Services GroupTelephone:EquiServe Trust Company,N.A.Within the U.S.and Canada:(800)279-1237P.O.Box 43087Outside the U.S.and Canada:(781)575-2692Providence,Rhode Island 02940-3087E-mail:EquiServe Trust Company N.A.offers the DirectSERVICE Investment and Stock Purchase P
6、rogram.This shareholder-paid program provides a low-cost alternative to traditional retail brokerage methods of purchasing,holding and selling Ford Common Stock.Company InformationThe URL to our online Investor Center is .Alternatively,individual investors may contact:Ford Motor CompanyTelephone:Sha
7、reholder RelationsWithin the U.S.and Canada:(800)555-5259One American RoadOutside the U.S.and Canada:(313)845-8540Dearborn,Michigan 48126-2798Fax:(313)845-6073E-mail:Security analysts and institutional investors may contact:Ford Motor CompanyTelephone:(313)323-8221 or(313)390-4563Investor RelationsF
8、ax:(313)845-6073One American RoadDearborn,Michigan 48126-2798E-mail:To view the Ford Motor Company Fund and the Ford Corporate Citizenship annual reports,go to .Stock ExchangesFord Common Stock is listed and traded on the New York and Pacific Coast stock exchanges in the United States and on stock e
9、xchanges in Belgium,France,Switzerland,and the United Kingdom.Depository shares representing the Convertible Trust Preferred Securities of Ford Motor Company Capital Trust II are listed and traded on the New York Stock Exchange(NYSE)only.The NYSE trading symbols are as follows:FCommon StockF.PrS6.5%
10、Convertible Trust Preferred Securities of Ford Motor Company Capital Trust IIAnnual MeetingThe 2004 Annual Meeting of Shareholders will be held in Louisville,Kentucky on May 13,2004.Notice of the AnnualMeeting,a Proxy Statement and voting card will be mailed to shareholders in advance of the meeting
11、.Annual Report CreditsThe Ford Motor Company Annual Report is designed,written and produced each year by a cross-functional Ford team.The 2003 team members are:Editor:Frank Sopata,Manager,Shareholder RelationsEditorial Services:Kim Boscan,Terry Herron,Steve Hirschman,Tom Morrisey and Chuck SnearlyPh
12、oto Coordinator:Ana Holland KrawecArt Direction and Design:Pat BarneyGraphic Artist:Mackenzie SandCover and Principal Photography:Tom WojnowskiAdditional Photography:Blue Fish Productions,Todd Buchanan,Dave Earp and Torbjorn LundgrenDigital imaging technology has been used for retouching and to prod
13、uce some composite photos in this report.The report was printed by St Ives Inc Case-Hoyt,Rochester,New York.The report was designed by The Quintek Group,Inc.,Warren,Michigan.This report is printed on recycled and recyclable paper using soy ink rather than petroleum-based ink.CoverMU.qxd 3/26/04 1:34
14、 PM Page 22003 ANNUAL REPORT1a/Voluntary Employee Beneficiary Association trust,in which$4.0 billion of financial assets were held at the end of 2003 and$2.7 billion at the end of 2002 to fund certain future employee benefit obligations in the near term.b/Automotive cash,marketable and loaned securi
15、ties and assets held in a short-term VEBA trust less Automotive senior debt.c/Including special items$2.0 billion loss and$1.2 billion loss for 2003 and 2002,respectively.See page 37 for reconciliation to U.S.GAAP.d/From Bloomberg Total Return Analysis assuming dividends are reinvested in Ford stock
16、.Prior period has been reclassified for discontinued/held-for-sale operations.OPERATING HIGHLIGHTSFinancial Results20032002Worldwide vehicle unit sales of cars and trucksby Automotive segment(in thousands)Americas4,0204,341International2,7002,632Total6,7206,973Sales and revenues(in billions)Automoti
17、ve$138.4$134.3Financial Services25.828.0Total$164.2$162.3Automotive capital expendituresAmount(in billions)$7.4$6.8As a percentage of automotive sales5.3%5.0%Automotive cash at year end(in billions)Cash,marketable and loaned securities and assets held in short-term VEBA trust a/$25.9$25.3Cash net of
18、 senior debt b/10.911.1Income before taxes excluding special items(in billions)Automotive c/$0.1$(0.3)Financial Services3.32.1Total$3.4$1.8Net income/(loss)(in billions)$0.5$(1.0)Basic net income/(loss)per share of Common and Class B stock$0.27$(0.55)Shareholder ValueDividends per share$0.40$0.40Tot
19、al shareholder returns d/79%(39)%EDITORIALpg1_7 3/21/04 5:31 PM Page 1A MESSAGE FROM THE CHAIRMANPRODUCTS AND PROGRESS2FORD MOTOR COMPANYTwo years ago Ford Motor Company began adetermined journey toward renewed competi-tiveness and profitability.We drew importantlessons from our past,focused on our
20、coreautomotive and automotive finance businesses,and set out to build our future.In 2002 we made solid progress and beganmoving in the right direction.Last year theprogress continued with a growing number ofsuccesses and the startof a massive wave of newproducts.Our 2003 accomplishments include:GFul
21、l-year net income of$495 million,or 27 cents per share,compared to a net loss of 55 cents per share in 2002.GExcluding special items,full-year incomefrom continuing operations more than doubled to$1.14 per share.*GAn improved business structure,includingcapacity reductions that made us more efficien
22、t and aligned to the market.GCost reductions of$3.2 billion.*GA year-over-year increase in per unit revenuein North America of$724,which helped itachieve pre-tax profits of$1.8 billion,excluding special items.*GNumerous successful vehicle launches,including Ford Focus C-MAX in Europe;Jaguar XJ and V
23、olvo S40 worldwide;andFord F-150,Ford Freestar and MercuryMonterey in North America.GThe biggest quality improvement of any of the five major automakers,with recallvolumes reduced dramatically and warrantyspending down 18 percent from 2002.Werenot where we want to be yet,but in the lasttwo years our
24、 quality has improved by morethan 16 percent.GAgreements with the United Auto Workersand Visteon Corporation that allow greateroperating flexibility.GImproved operating results in South Americaand Asia-Pacific.GA return to profitability at our PremierAutomotive Group.GA record pre-tax profit of$3 bi
25、llion at Ford Credit.GA strong automotive cash position of$25.9 billion.Since our efforts began we have consistentlydelivered on our financial commitments.Weexceeded earnings estimates in every quarter of the past two years and our profit targets for2002 and 2003.Excluding special items,ouroverall f
26、inancial results have improved by about$5 billion in two years,which is ahead of plan.In 2003 we were disappointed with our businessresults in Europe and our market share in NorthAmerica.There continued to be overcapacityworldwide among all manufacturers and,asa result,incentives remained high.But o
27、verallwe dramatically improved our profitability andmoved closer to achieving our mid-decade goals.By continuing to focus on improving our corebusinesses and leveraging Fords uniquestrengths,we intend to grow our business profitably over time.Our plans begin with great products,which havealways been
28、 the foundation of success in ourbusiness.This year we are introducing 40 newproducts worldwide.By mid-decade we will havelaunched more than 150 new products,by farthe most of any similar time period in our history.*Special items totaling$2.1 billion on a pre-tax basis were primarily related to rest
29、ructuring charges at Ford Europe($513 million)and charges at Ford North America resulting from our agreement with Visteon($1.6 billion).*At constant volume,mix and currency exchange rates;excluding special items.Ford Explorer NBXMercury MontereyEDITORIALpg1_7 3/21/04 12:48 PM Page 22003 ANNUAL REPOR
30、T3We are calling 2004 the“Year of the Car”becausemost of the new products we are introducing inNorth America this year are cars.That includesthe 2005 Ford Focus,Five Hundred,Freestyle,GT and Mustang,as well as the Mercury Montego.Adding these new cars to our best-selling lineupof sport utility vehic
31、les and trucks will give us astrong and balanced competitive lineup in ourmost important market.Great products by themselves are not enoughto ensure success in todays fiercely competitiveautomotive market.A business structure andprocesses that maximize operational quality andefficiency are essential
32、.From the beginning ourplans have focused on making fundamental andfar-reaching improvements in these areas.Aswith our new products,we have begun to seesolid results from our efforts.Consumer Driven 6-Sigma,our quality improvementand waste elimination methodology,has had anincreasingly dramatic impa
33、ct on our operations.Since its inception weve completed more than9,500 projects that have saved us$1.7 billionworldwide,including$731 million in 2003.Inaddition,we attribute about half of our current-model quality improvement to Consumer Driven6-Sigma projects.Team Value Management(TVM),a process th
34、atbrings together cross-functional teams to improvevalue and quality,was implemented in NorthAmerica and across all our business units during2003.Working collaboratively with our supplybase,we assessed the gaps between actual and industry benchmark costs and,withsupplier support,achieved record tota
35、lmaterial cost reductions.The transformation of our assembly plantsinto lean and flexible centers of manufacturingexcellence also is gaining momentum.Our newnext-generation flexible manufacturing systemstandardizes operations,allows multiple modelsto be built on the same assembly line and enablesFor
36、d Chairman and CEO Bill Ford introduces the 2005 Mustang to the media at the 2004 North American International Auto Show in Detroit.EDITORIALpg1_7 3/26/04 9:45 AM Page 3PRODUCTS AND PROGRESS4FORD MOTOR COMPANYfaster product changeovers.Three more plants in the United States will begin using the news
37、ystem this year.By the end of the decade all of our European and 75 percent of our NorthAmerican assembly plants will have flexiblesystems in place.A key enabler for flexible manufacturing ishaving common vehicle architectures,so wealso are planning a 25 percent reduction in thenumber of architectur
38、es we use by the end ofthe decade.The end result will be improvedquality,faster speed to market and billions ofdollars in cost reductions.The savings in timeand resources also will allow us to offer morenew models overall.As we continue to improve our operationalexcellence,we also are beginning to m
39、orefully leverage our unique strengths.I believe our dealer body in North Americais the best in the industry.By working more closely as partners and providing them withmany outstanding new cars and trucks tosell we are maximizing their effectiveness.Ford Credit,the best credit company in theworld,is
40、 another competitive advantage for us.A consistent winner of the top J.D.Power awardsfor customer satisfaction,it is now concentratingefforts on supporting our automotive business.The loyalty that people have to our companyis another asset we want to fully leverage.In thelatest R.L.Polk consumer loy
41、alty study of newvehicles in North America we won 10 of 16 possible awards,including the Highest Overall Loyalty to Make award,which went to Ford Division.Last years centennial celebration dramaticallydemonstrated the strong emotional ties that havehelped us build this large and loyal customerbase.M
42、ore than 225,000 people came to ourheadquarters to join our extended family inmarking this historic milestone.For those andmillions of other Ford fans around the world ourheritage and family connections create a specialbond.As we improve our business operations,we also plan to build on those family
43、feelings and distinguish ourselves as a different kind of company.Being a family company,and not a facelesscorporation,creates high expectations.We mustdeliver distinct products that offer quality,safetyand value.We must treat our customers withhonesty and respect.We have to be goodneighbors in the
44、communities where we dobusiness.And I strongly believe we also must be outstanding citizens of the world,takingleadership on social and environmental issuesrelated to the automotive industry.An area that will be critical to the success ofthese efforts is the environmental performanceof our products.
45、Later this year we will introduceFord Escape Hybrid,a mainstream SUV with afull hybrid-electric powertrain.Escape Hybrid isdesigned to be the cleanest and most fuel-efficientSUV in the world.It is expected to achieve morethan 35 miles per gallon in city driving,by far thebest for any SUV,without com
46、promising versatilityor performance.We also will begin selling a fuelcell-powered version of the Ford Focus to commercial fleets later this year.These products are part of an overall commitmentto improve fuel economy and reduce greenhouseBill Ford and his father,William Clay Ford,Sr.,share a moment
47、at the 2003 Annual Meeting of Shareholders during Fords Centennial Celebration.EDITORIALpg1_7 3/21/04 12:54 PM Page 42003 ANNUAL REPORT5A MESSAGE FROM THE CHAIRMANgases and other emissions across our entire rangeof vehicles.Addressing air pollution and climatechange issues effectively and transparen
48、tly is akey element of our product development plans.Looking ahead,we expect to have continuedimprovement in our business operations aroundthe world in 2004.GOur North American operations will benefitfrom an improving economy and the manynew products we will introduce in the fall.GWe anticipate impr
49、ovements in the overallmarket in South America,and an increase in our market share.GIn Asia,we project that our profits andshare will improve with the help of major new investments in the region.GWe anticipate a dramatic improvement inEurope in 2004,due to business restructuringand new products.GOur
50、 Premier Automotive Group will introduce14 new or revised models in 2004,and benefitfrom greater discipline in the execution of ourpremium brand strategy and resource sharing.Longer term,I believe our outlook is excellent ifwe continue to focus on operational excellenceand concern for our customers
51、and their world.Emerging markets,led by Asian countries,willexperience 90 percent of the growth in automotivesales volumes in the next 10 years.I visited ourAsia-Pacific operations last October and cameaway more impressed than ever by the potentialfor major growth there.We have plans in place tobe m
52、uch more aggressive in driving that growth,including expansions of our manufacturingcapacity in China,Thailand and the Philippinesthat will strengthen our presence throughout the region.In the so-called“mature”markets dramatic growthwill not be found in sales volumes,but in revenue.In the next 10 ye
53、ars these markets,primarily NorthAmerica and Europe,will account for 65 percentof worldwide automotive revenue growth as customers move up to vehicles with higherprices and larger margins.Ford Motor Companyis already the leading seller of luxury vehicles in North America.As increasingly prosperous c
54、onsumers seek more features,functionalityand luxury,we will be ready for them with anexceptional selection of premium vehicles.There are still many challenges ahead of us aswe begin our next 100 years.Competition in theautomotive industry is intensifying,with moremarket segments and more new product
55、s thanever before.At the same time,new technology isdriving rapid change in products and processes.And leadership in operational excellence is amoving target as companies continue toimprove in all areas.But we have many advantages to build on aswe face these challenges:the strongest portfolioof bran
56、ds in the world;an exceptional heritagethat has given us a special connection to ourcustomers;an experienced and stable managementteam;and a dedicated and talented extendedfamily of employees,suppliers and dealers.Weare uniquely positioned to do great things andbecome an even greater company.Our goa
57、l is to be the best automotive company in the world.Thank you for your support of our efforts.William Clay Ford,Jr.Chairman and CEOMarch 11,2004Ford FocusLincoln LSFord GTEDITORIALpg1_7 3/26/04 9:46 AM Page 5Simply put,Ford Motor Company has the strongest lineup of brands in the world.Keeping this p
58、ortfolio in top form is both a heftyresponsibility and a tremendous opportunity.We take this seriously.Thats why weve been working hard to ensure that each customersvehicle is well-executed whether its a stylish European StreetKa,the rugged all-new Ford F-150 or the luxurious Aston Martin DB9.Were p
59、aying fanatical attention to detail on every product eachof our eight brands has to offer,inside and out.On the receiving end of this dedicated effort are the savviestcustomers our industry has ever known.They have unprece-dented access to information and well-defined expectationsfor every vehicle a
60、t every price point.What they want or,really,demand is great product.Were delivering,whether customers are looking at a tough,authoritative Ford product;a more upscaleand contemporary Mercury;a refined,sophisticatedLincoln;a spirited Mazda;or any luxury offeringfrom our Premier Automotive Group port
61、folio ofJaguar,Land Rover,Aston Martin and Volvo.At Ford Motor Company,we have refocusedour attention on design.Now,more thanever,our design philosophy is even morethoughtful,more strategic and ourexecution is even more precise.Design is the new battleground in ourindustry.And the victors poised to
62、winmost from our redoubled efforts are ourcustomers,shareholders and dealers.”J MaysGroup Vice President,DesignDRAWING RAVES“EDITORIALpg1_7 3/21/04 3:22 PM Page 6EDITORIALpg1_7 3/26/04 9:50 AM Page 7INNOVATIVE8FORD MOTOR COMPANYWe leveraged some of thecompanys brightest scientists,researchers and en
63、gineers to transform their technicalinnovations into the FordEscape Hybrid the worldsfirst hybrid-electric SUV,”saysMary Ann Wright,Ford EscapeHybrid chief engineer.“EscapeHybrid was engineered to bebuilt on the same line as thegas-only Escape,and servicedat a regular Ford dealership.It is available
64、 in both front-and four-wheel drive and hasall the attributes,functionalperformance and passengeraccommodation of the baseEscape.plus you get to feel good about what youredriving.You dont changeyour life when you buy EscapeHybrid;you just improve it.”Customers have a choice todaywhen they shop for a
65、 vehiclewith lower environmentalimpact,”says Corey Holter,Ford Escape Marketingmanager.“But a lot of thosevehicles look odd,offer littlein the way of room,or limityou as to where or whenyou refuel.Escape Hybridis a roomy SUV that runson gasoline,that youdont have to plug inat the end of the day.When
66、 the electricmotor assists the four-cylinder engine,it feels similar to a V-6.And its a full hybrid,which means that,often,when youre driving through neighborhoods or in stop-and-go traffic,youre using zero fuel.Now,howcool is that?”Worlds firsthybrid-electric SUV“We leveraged some of thecompanys br
67、ightest scientists,researchers and engineers to transform their technicalinnovations into the FordEscape Hybrid the worldsfirst hybrid-electric SUV,”saysMary Ann Wright,Ford EscapeHybrid chief engineer.“EscapeHybrid was engineered to bebuilt on the same line as thegas-only Escape,and servicedat a re
68、gular Ford dealership.It is available in both front-and four-wheel drive and hasall the attributes,functionalperformance and passengeraccommodation of the baseEscape.plus you get to feel good about what youredriving.You dont changeyour life when you buy EscapeHybrid;you just improve it.”“We leverage
69、d some of thecompanys brightest scientists,researchers and engineers to transform their technicalinnovations into the FordEscape Hybrid the worldsfirst hybrid-electric SUV,”saysMary Ann Wright,Ford EscapeHybrid chief engineer.“EscapeHybrid was engineered to bebuilt on the same line as thegas-only Es
70、cape,and servicedat a regular Ford dealership.It is available in both front-and four-wheel drive and hasall the attributes,functionalperformance and passengeraccommodation of the baseEscape.plus you get to feel good about what youredriving.You dont changeyour life when you buy EscapeHybrid;you just
71、improve it.”“EDITORIALpg8_30 3/16.qxd 3/21/04 1:00 PM Page 82003 ANNUAL REPORT9Ford Escape HybridEDITORIALpg8_30 3/16.qxd 3/21/04 1:03 PM Page 9Ford Five HundredSAVVY10FORD MOTOR COMPANYFord Five Hundred is amidsize sedan that is justpacked with features,”says George Bucher,Ford Five Hundred chiefde
72、signer.“You can folddown the back seatsand the front passengerseat,and you can put a surfboard in there.Yet you can drive it to the opera it has thatkind of urban,savvy,upscale look.This is a car that is going toattract customers whomay not otherwise haveconsidered a sedan.”“EDITORIALpg8_30 3/16.qxd
73、 3/22/04 6:11 PM Page 102003 ANNUAL REPORT11EDITORIALpg8_30 3/16.qxd 3/21/04 1:09 PM Page 11GLOBAL APPEAL12FORD MOTOR COMPANYOne fascinating thingabout Mazda RX-8 is howwell the brand translatesfrom market to market,”says Masahiro Moro,Global Marketing generalmanager for Mazda MotorCorporation.“The
74、productsold in America and the preferences of the customers who enjoy itare very much like theproducts and preferencesin Japan,in Europe,inAustralia and in othermajor markets around the world.Customers find it easy to zero in onthe essence of Mazda,and its clear that theylike what they see.”“EDITORI
75、ALpg8_30 3/16.qxd 3/21/04 1:13 PM Page 122003 ANNUAL REPORT13Mazda RX-8EDITORIALpg8_30 3/16.qxd 3/21/04 1:16 PM Page 13Ford FreestyleFLEXIBLE14FORD MOTOR COMPANYChicago Assembly today is very different from theChicago Assembly wheremy dad worked for 37 years,”says Bill Walton,a UAWmember and assembl
76、y lineemployee at Fords ChicagoAssembly Plant.“For one,its fully flexible:We can makeeight different body lines,including the Ford Freestyle.Thats great for Ford andits customers and veryreassuring to the peoplewho depend on this plantfor their livelihood.Foranother,we have a supplierpark just down
77、the street.We can spend our timedoing what we do best building great,outstanding,quality products.”“EDITORIALpg8_30 3/16.qxd 3/21/04 1:18 PM Page 142003 ANNUAL REPORT15EDITORIALpg8_30 3/16.qxd 3/21/04 1:30 PM Page 15TEAMWORK16FORD MOTOR COMPANYI work with a Texas dealership that is oneof the biggest
78、 sellers ofFord F-Series trucks,”says Cathy Loccisano,dealer account managerwith Ford Credits DallasBranch.“Being a top-selling dealership meanseverything to them,so wewont let them down.Thatmeans providing flexibleand competitive financingplans and superior customerservice.Unlike other financecompa
79、nies,at Ford Credita sale of an F-Series truckis a win for the dealer,thecustomer and Ford Credit.”“EDITORIALpg8_30 3/16.qxd 3/26/04 9:54 AM Page 162003 ANNUAL REPORT17Ford F-150 LariatEDITORIALpg8_30 3/16.qxd 3/26/04 9:56 AM Page 17PREMIER18FORD MOTOR COMPANYIf I were talking to theone person in th
80、e worldwho didnt know whatVolvo was,I think I wouldsum it up as a companythat makes safe,stylish,premium cars,”says Peter Ewerstrand,project director for theVolvo V50.“The newVolvo V50 is a premiumbut affordable car that isnot a traditional wagonbut a sportswagon.Itlooks great,drives greatand embodi
81、es Volvos75-year safety heritage.”Volvo V50“EDITORIALpg8_30 3/16.qxd 3/21/04 1:32 PM Page 182003 ANNUAL REPORT19EDITORIALpg8_30 3/16.qxd 3/23/04 3:45 AM Page 19WORLD WINNER20FORD MOTOR COMPANYAfter five years,the Ford Focus remainsone of Europes best-selling and mostpraised cars,a benchmark for desi
82、gn,dependability and driving quality.Thethree-millionth Focus rolled off theSaarlouis assembly line in Germanyearly this year,bringing total worldwideproduction to more than four million.The latest addition to the EuropeanFocus family is the Focus C-MAX,Fordsfirst entrant in the growing segment ofme
83、dium-sized people mover vehicles.The Focus C-MAX is another contributor to Fords reputation for delivering productexcellence from its European engineeringcenter.Its commitment to deliver 45 newproducts in five years already at 41also includes the Focus RS,new small and large sedan car ranges,StreetK
84、aroadster,and a new line of commercialvehicles,with much more to come.Ford Focus C-MAXEDITORIALpg8_30 3/16.qxd 3/21/04 1:45 PM Page 202003 ANNUAL REPORT21HERITAGELand Rover Range RoverLand Rovers Range Rover has been the recipient of numerous internationalawards.The third generation of theworlds pre
85、-eminent luxury SUV,RangeRover retains such heritage features as a practical horizontally split tailgate,thebold upright front with its simple grille,thecommand driving position,the“floating”roof,a clamshell hood and the almost rectangular interplay between the horizontal and vertical body lines.Bui
86、lt at Land Rover Solihull Assembly in the English Midlands,Range Rover is exported to markets throughout theworld including North America,the premium SUVs largest market.EDITORIALpg8_30 3/16.qxd 3/23/04 3:18 AM Page 21NEW ERA22FORD MOTOR COMPANYThe elegant Aston Martin DB9 Volante the sixth new car
87、from Aston Martin in lessthan two and a half years premiered atthe 2004 North American InternationalAuto Show,joining a prestigious lineup of convertibles that stretches back to theDB2 of 1950.Aston Martin sold only 42cars in 1994,the year that Ford MotorCompany became sole owner.The newDB9s project
88、ed volume is 2,000 units,and the first years production is alreadysold out.The V-12 DB9,the first car to behandmade at Aston Martins new state-of-the-art facility in Gaydon,Warwickshire,UK,features a radical new aluminum-bonded body frame,making it one ofthe most sophisticated and technicallyadvance
89、d sports cars in the world.Aston Martin DB9 VolanteEDITORIALpg8_30 3/16.qxd 3/21/04 1:50 PM Page 222003 ANNUAL REPORT23Ford EcoSportVERSATILEDeveloped and built by Ford Brazil,theFord EcoSport SUV was launched in theBrazilian market in the first quarter of 2003.It is exported to Mexico,Argentina,Chi
90、le,Venezuela,Colombia and other SouthAmerican markets.The EcoSport is built at Fords Northeast Industrial Complexin Bahia,an ultramodern site in which Fords production facilities and those of key suppliers are housed under a single roof.This eliminates componenttransportation logistics and brings ju
91、st-in-time parts delivery to a new level.Ford EcoSport features a robust drivetrain,off-road capability and available four-wheel drive.Its an SUV that can face a wide range of driving conditions,making it an excellent complement to its markets just onemore example of how Ford,a globalautomaker,goes
92、the distance to completely satisfy local and regional customers.EDITORIALpg8_30 3/16.qxd 3/26/04 10:04 AM Page 23DEFINITIVE24FORD MOTOR COMPANYThe seventh generation of the car recognized as the definitive Jaguar sedan,the new 2004 XJ,also available as asupercharged XJR,is the most advancedproductio
93、n Jaguar ever.Taller and widerthan its predecessor,the new XJs aluminumbody is 60 percent stiffer,yet 40 percentlighter than the steel body it replaces.And the car offers more interior room inevery direction.The interior of the XJ isdesigned to satisfy the determinationthatdrivers and any passengers
94、 shouldalways leave a Jaguar feeling better thanwhen they entered.The XJ is the epitomeof contemporary luxury,tailored to meetthe needs of todays demanding premium-segment customers.Jaguar XJR EDITORIALpg8_30 3/16.qxd 3/21/04 2:05 PM Page 242003 ANNUAL REPORT25MERCURY RISINGMercury Mariner debuts th
95、is year as thethird of four all-new nameplates beingadded to the Mercury lineup.Mariner joinsMercury Mountaineer,Lincoln Aviator andLincoln Navigator as the newest additionto Lincoln Mercurys all-star selection ofSUVs.Mercurys four new productsinclude the Monterey minivan introducedlast fall,Mariner
96、,the Montego sedan coming this fall and a new midsize sedanarriving in 2005.They are designed toachieve a high level of Mercury productdifferentiation,attract new customers,andgenerate fresh excitement for dealers.Designed to be a visually appealing,functional,fuel-efficient and fun to drive SUV,Mar
97、iner is tuned for the urban environment with outstandingcarlike handling.Mercury MarinerEDITORIALpg8_30 3/16.qxd 3/21/04 2:07 PM Page 25Fumes to FuelThe paint shop at the renovated Ford Rouge Center inDearborn,Michigan,not only is helping to generate great current-model vehicles,its helping to gener
98、ate great current.For years Ford,like other automakers,has incinerated thefumes drawn from paint booths in order to help protect airquality.But now,in Fumes to Fuel,a pilot program jointlydeveloped by Ford Motor Company and Detroit Edison,usable electric energy is being generated by what was formerl
99、ya worthless waste product.The system captures the volatileorganic compounds found in paint fumes and concentratesthem into a rich mixture of hydrocarbons that are then convertedto a hydrogen-rich gas.The gas is fed into a stack of solidoxide fuel cells,where a chemical reaction between hydrogenand
100、oxygen molecules is used to create electricity.The onlyemissions from the fuel cells are water vapor and an insignificant amount of carbon dioxide.Patent pending in the United States and internationally,the system is capable of generating about5,000 watts of electricity enough to power an average ho
101、me.Ford and Detroit Edison are exploringlarger fuel cells and additional energy generators with a larger system planned for later in 2004.ACHIEVEMENTSFumes to Fuelfuel cellWhite House Honors“When I first learned that I was being summoned to the White House to receive the National Medal of Technology
102、,it was unbelievable,absolutely fantastic,”recalls Dr.Haren Gandhi,Ford Technical Fellow.“And then when I realized that this wasthe first time someone in the auto industry had been so honored,I was awestruck and humbled.I had just assumed that,in an industry as mature as this,someone would have rece
103、ived it before me.”Dr.Gandhi,who was recognized for his work developing automotive exhaust catalyst technology,isamong a select group of individuals to have received the highest honor bestowed on Americas leading innovators by the President of the United States.Previous award recipients include Micr
104、osofts Bill Gates and Apple Computers Steve Wozniak.Dr.Gandhi has received several awards,including five Henry Ford Technology Awards,for his pioneering work.But he says that his greatest pleasure comes from the nature of the work itself.“Most automotive research benefits vehicle owners and drivers,
105、”Dr.Gandhi says.“But cleaner air helps everyone every single person on Earth.Im very pleased with the direction my life has taken.”Dr.Haren Gandhi receives the National Medal of Technologyfrom President George W.BushEDITORIALpg8_30 3/16.qxd 3/21/04 2:09 PM Page 26Safer Teen DriversFord Motor Company
106、 and the Governors HighwaySafety Association are sponsoring a campaign to make teens more competent drivers.Real World Driver:Driving Skills for Life focuses on four key driving skills that safety experts believe havethe most promise of preventing crashes.Through aninteractive online experience,a vi
107、deo designed forclassroom use,and a curriculum that includes hands-onsafe driving demonstrations,teens learn to recognizeand anticipate road hazards,handle different vehiclescompetently,maintain safe spacing with other traffic,and drive at speeds that are right for conditions.For more information on
108、 the campaign,.From left:Real World Drivers Jeff Lemke,Lee Scott Jr.,Beth Jenkins,Tony Bucko and Ashli SmithAsleep at the WheelWhats the best way to study driver fatigue?How about putting tired drivers behind thewheel and having them drive a dark countryroad until they fall asleep?Sound dangerous?It
109、 isnt with VIRTTEX(VIRtual Test Track EXperiment).The only full-motion-based driving simulator owned and operated by a North American automaker,VIRTTEX uses an actual vehicle currentlya Volvo S80 bolted to a computer-controlled,hydraulically operated platform that pitches andyaws to create extremely
110、 realistic feedback.Exterior scenes play out on 360-degree videoscreens,completing the illusion of driving.For the driver-fatigue study,a high-resolutioncamera on the vehicles console monitors eyemovement.The goal is to create technologiesthat can prevent accidents when drivers arefalling asleep and
111、 veering out of their lane.A previous VIRTTEX project,concluded in 2003,studied driverdistraction and showed that teens are more easily distractedthan mature drivers while dialing or answering a cell phone,reading a pager or using similar devices.2003 ANNUAL REPORT27VIRTTEX an indoor,crash-proof tes
112、t trackAt the wheel,inside VIRTTEXEDITORIALpg8_30 3/16.qxd 3/21/04 2:12 PM Page 27NEW DIRECTIONS28FORD MOTOR COMPANYInvesting in ChinaIn October,Ford Motor Company announced,along with its partners in China,that they wouldinvest more than$1 billion over the next severalyears to expand manufacturing
113、capacity,introducenew models and expand distribution channels in the rapidly growing Chinese market.FordChairman and CEO Bill Ford then joinedChongqing government officials and seniorChangan Automobile Group leaders to breakground at the Changan Ford joint venture,initiatingexpansions that will take
114、 the plant from its presentcapacity of 50,000 units to 150,000 units a year.Ford recently announced plans for a secondcar plant through the joint venture.These andother actions in the future will enable Ford toparticipate successfully in a market that maywell become the worlds largest within the nex
115、t generation.In January 2003,Changan Ford began productionof the Ford Fiesta Fords first domesticallyproduced car for the Chinese market.That wasfollowed in May 2003 by the introduction of asecond car,the Ford Mondeo.In addition,Fords affiliate,Mazda Motor Corporation,worked with localpartners to bu
116、ild and sell more than 80,000 vehicles in China last year,including Chinas Car of the Year,the Mazda6.Volvo,Jaguar and LandRover products also are being imported to China as fully built vehicles,as are selected Ford-brand products.Jiangling Motors Corporation,approximately 30 percent Ford owned,whic
117、h produces several Transit models along with its own brand oflight commercial vehicles,had a record year in 2003 in bothabsolute volume of vehicles and profitability.Ford also has been working closely with Chinese suppliers to helpdevelop high-quality local sources of components,not only tohelp supp
118、ort the companys Chinese operations,but to helpChinese workers become viable customers for Ford products.During his trip to the Peoples Republic of China,Bill Ford met with state leaders and senior government officials,discussing the global auto industry,Ford Motor Companys business in China,and For
119、ds commitment to the future of Chinas dynamic automotive industry.Groundbreaking at Changan Ford,Chongqing,ChinaFord MondeoProduced at Changan Ford,ChinaEDITORIALpg8_30 3/16.qxd 3/22/04 7:15 AM Page 282003 ANNUAL REPORT29Rouge Tours ReturnA tradition is renewed on May 3,2004,as the public once again
120、has the opportunity to take the Ford Rouge Factory Tour.FordsRouge Center complex,the site of continuous Ford Motor Companyoperations since 1917,has undergone extensive renovation inrecent years,incorporating suchinnovative technologies as aliving roof to collect and filterrainfall,renewing degraded
121、 soil through the use of selectedplants and controlling energycosts by bringing fresh air and sunlight into plant buildings.Ford Rouge FactoryTour participants will enjoy a bus tour of the complex,viewhistoric footage and experience a virtual reality theater,see the living roof froman observation de
122、ck,and take a walking tourof Fords flexible Dearborn Truck Plant.Toursare conducted by The Henry Ford,whichalso operates Greenfield Village and theHenry Ford Museum.For tour information,visit www.thehenryford.org.Left:Sarah Kinder,a Michigan State University Crop and Soil Sciences student,assists in
123、 a soilrestoration project at Fords historic Rouge Center.Asian Market ExpansionLate in 2003,Ford and Mazda Motor Corporation announced thatthey would invest an additional$550 million in their joint venture,AutoAlliance(Thailand)Co.Ltd.The additional investments,to bemade over the next several years
124、,will support new vehicle programsand expand the plants capacity.The Ford Ranger produced in Thailand is exported to 100 marketsworldwide and won the J.D.Power and Associates Best Pickup in Initial Quality award for 2001 and 2002.To date,AutoAlliance(Thailand)has produced more than 300,000 Ford Rang
125、er and MazdaFighter pickups.In 2003,the plant became the first to produce theseven-seat Ford Everest SUV.Ford Motor Companys presence in Thailand is part of the companysexpansion in the Asia-Pacific market,which is expected to provide60 percent of the worlds automotive growth over the rest of thisde
126、cade.Ford also has made additional investment in its Santa Rosa,Philippines,manufacturing facility as part of plans to use that countryas a regional export hub for its ASEAN(Association of South EastAsian Nations)operations.Ford RangerProduced at AutoAlliance,ThailandPublic WelcomeFord Rouge Factory
127、 TourVehicle DisplayFord RougeFactory TourEDITORIALpg8_30 3/16.qxd 3/22/04 7:19 AM Page 29BOARD AND EXECUTIVES30FORD MOTOR COMPANYJohn R.H.Bond(2,3,5)Stephen G.Butler(1,4,5)Kimberly A.Casiano(3,4,5)Edsel B.Ford II(3,4)William Clay Ford(4)William Clay Ford,Jr.(3,4)Irvine O.Hockaday,Jr.(1,5)Marie-Jose
128、 Kravis(2,5)Richard A.Manoogian(2,5)Ellen R.Marram(1,3,5)Dr.Homer A.Neal(3,4,5)Jorma Ollila(1,3,5)Carl E.Reichardt(4)Robert E.Rubin(2,4,5)Nicholas V.ScheeleJohn L.Thornton(4,5)Committee Memberships:(1)Audit(2)Compensation(3)Environmental and Public Policy(4)Finance(5)Nominating and Governance EXECUT
129、IVE OFFICERS GROUP(as of April 1,2004)William Clay Ford,Jr.Chairman of the Board and Chief Executive OfficerNicholas V.ScheelePresident and Chief Operating OfficerAllan D.GilmourVice ChairmanJames J.PadillaExecutive Vice President and President,The AmericasDavid W.ThursfieldExecutive Vice President,
130、International Operations and Global Purchasing,Chairman and Chief Executive Officer,Ford of EuropeBruce L.BlytheChief Strategy OfficerLewis W.K.BoothGroup Vice President,President and Chief Operating Officer,Ford of EuropeMark FieldsGroup Vice President,Premier Automotive GroupRoman J.KrygierGroup V
131、ice President,Manufacturing and QualityJoe W.LaymonGroup Vice President,Corporate Human ResourcesDonat R.LeclairGroup Vice President and Chief Financial OfficerPhilip R.MartensGroup Vice President,Product CreationJ C.MaysGroup Vice President,DesignJames G.OConnorGroup Vice President,North America Ma
132、rketing,Sales and ServiceZiad S.OjakliGroup Vice President,Corporate AffairsRichard Parry-JonesGroup Vice President,Product Development andChief Technical OfficerMark A.SchulzGroup Vice President,Asia PacificGreg C.SmithGroup Vice President,Chairman and Chief Executive Officer,Ford Motor Credit Comp
133、anyAnne StevensGroup Vice President,Canada,Mexico and South AmericaDennis E.RossVice President and General CounselJames C.GouinVice President and ControllerBOARD OF DIRECTORS(as of April 1,2004)OTHER VICE PRESIDENTS(as of April 1,2004)Marvin W.AdamsChief Information OfficerMichael E.BannisterPreside
134、nt and COO,Ford MotorCredit CompanyWilliam W.Boddie Jr.North America EngineeringThomas K.BrownGlobal PurchasingMei Wei ChengPresident,Ford Motor(China)Ltd.Dennis J.CirbesLabor AffairsSusan M.CischkeEnvironmental and SafetyEngineeringFrancisco N.CodinaCustomer Service DivisionMatthew A.DeMarsNorth Am
135、erica Vehicle OperationsJohn FlemingVice President,Manufacturing,Ford of EuropeBennie W.FowlerJaguar and Land Rover OperationsBarbara L.GasperInvestor RelationsLouise K.GoeserQualityJoseph GreenwellChairman and CEO,Jaguar and Land RoverLloyd E.HansenRevenue ManagementDarryl B.HazelPresident,Lincoln
136、MercuryEarl J.HesterbergVice President,Marketing,Salesand Service,Ford of EuropeDerrick M.KuzakVice President,ProductDevelopment,Ford of EuropeStephen G.LyonsPresident,Ford DivisionMalcolm S.MacdonaldFinance and TreasurerTimothy J.OBrienCorporate RelationsHans-Olov OlssonPresident,Volvo CarsJohn G.P
137、arkerVice PresidentGerhard SchmidtResearch and AdvancedEngineeringDavid T.SzczupakPowertrain OperationsChris P.TheodoreAdvanced Product CreationJames G.VellaChief of Staff and Vice President,Public AffairsAlex P.VerAdvanced ManufacturingEngineeringEDITORIALpg8_30 3/16.qxd 3/22/04 4:58 PM Page 302003
138、 ANNUAL REPORT31A GLOBAL OVERVIEWN10,651 dealersN141markets N2,016 dealers N36 markets N5,830 dealers N143 markets N104 dealers N26 markets N814 dealers N66 markets N1,544 dealers N34 markets DEALERSANDMARKETSN2,277 dealers N105 markets N1,524 dealers N118 markets NA total service experience forFord
139、,Lincoln and Mercuryowners available only at Fordand Lincoln Mercury dealerships designed to deliver customersatisfaction and repeatpurchase intentNParts engineered to Ford Motor CompanyspecificationsNTechnicians trained andcertified specifically on Ford,Lincoln and MercuryvehiclesMotorcraft PartsND
140、esigned,engineeredand recommended byFord Motor Companyand available in Ford,Lincoln and Mercuryfranchised dealerships,Ford authorizeddistributors and selectmajor retail accountsGenuine Ford Accessories NWide range of customeraccessories designed toaccent Ford,Lincoln andMercury vehiclesNOperations i
141、n 36 countriesNNearly 300locations worldwideN12,500dealershipsworldwide useFord Credit financingESP&APCONMarketing and sales ofcomprehensive vehicle servicecontract and maintenance programsFord Extended Service Plan(ESP)NMajor customers include Ford,Lincoln and Mercury vehicle dealers,commercial cus
142、tomers and fleets of Ford Motor Company vehiclesAutomobile Protection Corporation(APCO)NMajor customers include Mazda,Volvo,Jaguar,Land Rover andcompetitive make vehicle dealersNHertz and its affiliates,associates andindependent licenseesrepresent what thecompany believes is thelargest worldwide gen
143、eraluse car rental brand andone of the largest industrialand construction equipmentrental businesses in NorthAmericaNOperations in more than150 countries andjurisdictionsNApproximately 7,000locations worldwideN5,460,935NSales Mix:60%N.America27%Europe6%Asia-Pacific4%S.America3%Rest-of-worldNBest-eve
144、r levels of customersatisfaction and record profits in 2003NBest on-time parts distributionlogistics with Daily PartsAdvantage implementationNTechnician training andsupport excellence withservice information processand technician hotlineMotorcraft PartsNNew product lines,electricfuel pumps,chassis p
145、arts,wiring pigtails and superduty brake padsGenuine Ford AccessoriesNGrowing lineup of excitingnew products:KeylessEntry Keypads,Mobile-Ease,5 Chrome Running BoardsNNearly$182 billion in assetsmanagedNMore than 3.4million vehiclefinancing contractsNExpanded to more than 1,000 suburbanlocations in t
146、he U.S.NExpanded its PrestigeCollection to more than 35 markets in N.America and more than 20 markets in Europe NIntroduced upgradedNeverLost SystemESP&APCONSales of over 2 million vehicleservice contractsNESP launched a new 45,000 mileRentalCare program for leasecustomersNAPCO introduced the Warran
147、tyAdvantage Limited Warrantyproviding dealers a unique vehiclemarketing and sales programRETAIL VEHICLESALES AND SALES MIXAUTOMOTIVE CORE AND AFFILIATE BRANDSPREMIER AUTOMOTIVE GROUPFINANCIAL SERVICESCUSTOMER SERVICESOPERATIONS2003 HIGHLIGHTSCUSTOMERASSISTANCECUSTOMERASSISTANCE+44 1908 E-mail form a
148、t:E-mail form at:Ford/Mercury1.800.392.3673LMotorcraft P1.800.392.3673Genuine Ford AESPFord1.800.392.3673Lincoln and Mercury1.800.521.4140APCO1.800.458.7070N169,262NSales Mix:99%N.America1%Rest-of-worldN209,072NSales Mix:98%N.America2%Rest-of-worldN1,113,219*NSales Mix:46%Asia-Pacific29%N.America21%
149、Europe2%Rest-of-world2%S.AmericaN1,514NSales Mix:33%N.America24%Europe35%UK8%Rest-of-worldN120,570NSales Mix:48%N.America42%Europe8%Asia-Pacific2%Rest-of-worldN415,046NSales Mix:53%Europe36%N.America7%Asia-Pacific4%Rest-of-worldN165,163NSales Mix:60%Europe25%N.America8%Asia-Pacific6%Rest-of-world1%S
150、.AmericaWORLDWIDE*As an unconsolidated subsidiary,Mazda sales are not consolidated into Ford Motor Company vehicle unit sales.Only vehicles built by Ford for Mazda are included in total Ford unit sales summaries.EDITORIALpg31 3/22/04 7:22 AM Page 3132FORD MOTOR COMPANY200120022003$(5,453)$(980)$4952
151、00120022003$160.5$162.3$164.2200120022003$17.7$25.3$25.92001200220037,0086,9736,72020012002200322.8%21.1%20.5%2001200220030210.7%10.9%10.7%Net Incomein millions of dollars2003 net income was$495 million,a$1,475 million improvement from 2002.Total Sales and Revenuesin billions of dollarsDespite lower
152、 unit sales,2003 totalcompany sales revenue of$164.2 billionwas up 1.2%compared to 2002.Automotive Cashin billions of dollarsFord ended 2003 with$25.9 billion of automotive gross cash,includingmarketable and loaned securities andassets held in a short-term VEBA trust.Worldwide Vehicle Unit Salesin t
153、housandsWorldwide vehicle unit sales in 2003were down 253,000 units from 2002.U.S.Market ShareFord ranks second in the U.S.marketwith a combined car and truck marketshare of 20.5%,including our PremierAutomotive Group brands.European Market ShareFord garnered 10.7%of the Europeanmarket including our
154、 PremierAutomotive Group brands,in 2003,compared to 10.9%in 2002.GRAPHSpg32 3/21/04 2:30 PM Page 322003 ANNUAL REPORT33FINANCIAL CONTENTS34Managements Discussion and Analysis of FinancialCondition and Results of Operations62Quantitative and Qualitative Disclosures About Market Risk66Sector Statement
155、 of Income67Consolidated Statement of Income68Sector Balance Sheet69Consolidated Balance Sheet70Sector Statement of Cash Flows71Consolidated Statement of Cash Flows72Consolidated Statement of Stockholders Equity73Notes to Financial Statements102Managements Financial Responsibility and Report ofIndep
156、endent Auditors103Selected Financial Data104Employment DataFIN33_72 3/21/04 12:48 AM Page 3334FORD MOTOR COMPANYManagements Discussion and Analysis of Financial Condition and Results of OperationsOVERVIEWGENERATION OF REVENUE,INCOME AND CASH Our Automotive sectors revenue,income and cash are generat
157、ed primarily from sales of vehicles to our dealers and distributors(i.e.,our customers).Vehicles we produce generally are subject to firm orders from our customers and generally are deemed sold(with the proceeds from such sale recognized in revenue)immediately after they are produced and shipped to
158、our customers.This is not the case,however,with respect to vehicles produced for sale to daily rental car companies that are subject to aguaranteed repurchase option or vehicles produced for use in our own fleet(including management evaluation vehicles).Vehiclessold to daily rental car companies tha
159、t are subject to a guaranteed repurchase option are accounted for as operating leases,withlease revenue and profits recognized over the term of the lease.When we sell the vehicle at auction,we recognize a gain or losson the difference,if any,between actual auction value and the projected auction val
160、ue.Therefore,except for the impact of thedaily rental units sold subject to a guaranteed repurchase option and those units placed into our own fleet,vehicle production is closely linked with unit sales and revenue from such sales.Our Financial Services sectors revenue is generated primarily from int
161、erest on finance receivables,including interest,net ofcertain deferred loan origination costs that are included as a reduction of financing revenue,and such revenue is recognized over the term of the receivable using the interest method.Also,revenue from operating leases,net of certain deferred orig
162、inationcosts,is recognized on a straight-line basis over the term of the lease.Income is generated to the extent revenues exceedexpenses,most of which are interest and operating expenses.Transactions between the Automotive and Financial Services sectors occur in the ordinary course of business.For e
163、xample,Ford Credit receives interest supplements and other support cost payments from the Automotive sector in connection withspecial vehicle financing and leasing programs that it sponsors.Ford Credit records these payments as revenue over the term of the related finance receivable or operating lea
164、se.The Automotive sector records the estimated costs of marketing incentives,including dealer and retail customer cash payments(e.g.,rebates)and costs of special financing and leasing programs,as areduction to revenue at the later of the date the related vehicle sales are recorded or at the date the
165、 incentive program is bothapproved and communicated.KEY ECONOMIC FACTORS AND TRENDS AFFECTING AUTOMOTIVE INDUSTRYExcess Capacity According to CSM Worldwide,an automotive research firm,in 2003,the automotive industrys estimatedglobal production capacity for light vehicles(about 65 million units)signi
166、ficantly exceeded global production of cars and trucks(about 53 million units).In North America and Europe,the two regions where the majority of revenue and profits are earned inthe industry,excess capacity was an estimated 14%and 17%,respectively,in 2003.We expect that this condition will continuef
167、or many years.Pricing Pressure Excess capacity coupled with a proliferation of new products being introduced in key segments by theindustry will keep pressure on manufacturers ability to increase prices on their products.In addition,in recent years,Korean-based manufacturers have been increasing the
168、 number of vehicles they export for sale in the United States and other keymarkets,and this has contributed,and is expected to continue to contribute,to pricing pressure.In the United States,thereduction of real prices for similarly contented vehicles accelerated in recent years,and we expect that a
169、 challenging pricingenvironment will continue for some time to come.In Europe,the automotive industry has experienced intense pricing pressurefor several years;in 2003,net pricing declined more in Europe than in the United States.Net pricing is a measure of thecombined effect of changes in wholesale
170、 prices for vehicles sold and marketing incentives incurred on those vehicles,whileexcluding the effects of changes in unit sales volume and foreign currency exchange rates.Consumer Spending Trends We expect,however,that a decline in,or the inability to increase,vehicle prices could be offsetby the
171、spending habits of consumers and their propensity to purchase over time higher-end,more expensive vehicles and/orvehicles with more features.Over the next decade,in the United States,we expect that growth in spending on vehicle mix andcontent will generally track the increase in real GDP per capita.
172、The benefits of this to revenue growth in the automotive industryare significant.In the United States,for example,consumers in the highest income bracket are buying more often and morefrequently buying upscale.We believe the share of the premium brand segment in the U.S.automotive industry will appr
173、oach13%by the end of this decade,compared with about 10%to 11%presently.With our luxury brands(i.e.,Lincoln,Volvo,Jaguar,Land Rover and Aston Martin),we believe we are positioned well to take advantage of this trend.FIN33_72 3/21/04 12:48 AM Page 342003 ANNUAL REPORT35MANAGEMENTS DISCUSSION AND ANAL
174、YSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSAlthough growth in vehicle unit sales(i.e.,volume)will be greatest in emerging markets in the next decade,we expect that the mature automotive markets(e.g.,North America,Western Europe and Japan)will continue to be the source of a substantialmajori
175、ty of global industry revenues over the next decade.We also expect that the North American market will continue as thesingle largest source of revenue for the automotive industry in the world in the next decade.Health Care Expenses In the United States,the average annual percentage increase in healt
176、h care prices we haveexperienced in the last few years has been in the double digits.In 2003,our health care expenses for United States employeesand retirees were$3.2 billion,with about$2.2 billion attributable to retirees and the balance attributable to active employees.Prescription drug costs is t
177、he fastest growing segment of our health care expenses and accounted for about one-third of ourtotal United States health care expenses in 2003.Although we have taken measures to have employees and retirees bear a higher portion of the costs of their health care benefits,we expect our health care co
178、sts to continue to increase.For 2004,our trend assumptions for U.S.health care expenses includean initial trend rate of 9%and a steady state trend rate of 5%reached in 2010.These assumptions include the effect of actionswe are taking and expect to take to offset health care inflation,including furth
179、er employee cost sharing,administrativeimprovements and other efficiencies.TRENDS AND STRATEGIES Revenue Management To address the pricing pressure that exists in the automotive industry,we have employed acustomer-focused revenue management strategy to maximize per unit revenue.This strategy is focu
180、sed on a disciplinedapproach to utilizing customer demand data available from many sources,including internet hits,transaction data,customer leads,and research to help us develop and sell vehicles that more closely match customer desires.We believe our revenue management strategy has contributed sig
181、nificantly to increases in our revenue per vehicle sold for ourFord North America business unit of$724 and$284 for 2003 and 2002,respectively.(These amounts exclude the incrementaleffect on revenue from the consolidation of certain dealerships in 2003 related to FIN 46,discussed in Note 13 of the No
182、tes toFinancial Statements).Cost Reduction Given the difficult economic and operating environment described herein,we continue to focus on reducingour cost structure.During 2003,we reduced our costs by over$3 billion(at constant volume,mix and exchange and excludingspecial items).Cost reductions wer
183、e realized in quality-related costs resulting from fewer warranty claims,recalls and customerservice actions,as well as reduced manufacturing,engineering and overhead costs.Lower product costs(which are comprisedof material and component costs for our vehicles)on carryover vehicles partially offset
184、higher product costs for newly introducedvehicles.Further cost efficiencies will be realized as we continue to implement our Revitalization Plan.Shared Technologies One of the strategies we are employing to realize efficiencies in manufacturing,engineering andproduct costs for new vehicles is the sh
185、aring of vehicle platforms and components among various models and the re-use of those platforms and components from one generation of a vehicle model to the next.REVITALIZATION PLAN PROGRESSIn January 2002,we announced that through the implementation of our Revitalization Plan,we expected to improv
186、e our pre-taxprofit excluding special items to$7 billion by mid-decade,which we have defined as 2006.We do not expect a linearprogression to the target of$7 billion of pre-tax profit excluding special items.In 2004,we expect that the rate of profit improvement will be less than what we have experien
187、ced over the past couple of years.We are still about a year away from introducing new products that are designed in a manner such that the cost to produce themis appropriate in the current pricing environment,and we are about two years away from having those products in significantvolume.In addition
188、,as indicated above,rising health care costs remain a concern for us.We expect,however,to make progress in 2004,as we will focus on significantly improving the performance of our Ford Europebusiness unit,and filling our global product pipeline with new product introductions,particularly in the passe
189、nger car area.Further,as indicated above,we are continuing our efforts to improve quality and our cost structure.Overall,while conditions mayslow our rate of improvement in 2004,we believe we are on track to achieve our goal of$7 billion in pre-tax profits,excludingspecial items,by year-end 2006.FIN
190、33_72 3/21/04 12:48 AM Page 3536FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSFULL-YEAR 2003 RESULTS OF OPERATIONSThe results of our continuing operations below exclude the results of discontinued and held-for-sale operations,which aredescribed
191、in Note 3 of the Notes to Financial Statements.Our worldwide net income was$495 million or$0.27 per share of Common and Class B stock in 2003,up$1.5 billion from aloss of$980 million or$0.55 per share in 2002.Results by business sector for 2003,2002,and 2001 are shown below(in millions)200320022001I
192、ncome/(loss)before income taxesAutomotive sector$(1,957)$(1,153)$(8,857)Financial Services sector3,3272,1041,438Total Company1,370951(7,419)Provision for/(benefit from)income taxes135301(2,096)Minority interests in net income/(loss)of subsidiaries31436724Income/(loss)from continuing operations921283
193、(5,347)Income/(loss)from discontinued/held-for-sale operations(8)(62)(106)Loss on disposal of discontinued/held-for-sale operations(154)(199)-Cumulative effect of change in accounting principle*(264)(1,002)-Net income/(loss)$495$(980)$(5,453)*Related to adoption of FIN 46 in 2003 and the adoption of
194、 Statement of Financial Accounting Standards No.142 in 2002(see Notes 13 and 7,respectively,of the Notes to Financial Statements).We established and communicated milestones for 2003.Our results against these milestones are listed below:Planning AssumptionsActualIndustry VolumeU.S.16.5 million units1
195、7.0Europe17.0 million units17.0Net PricingU.S.Zero(0.6)%Europe1%(1.7)%2003 MilestoneResultsPhysicalsAutomotiveQualityImprove in all regionsImprovedMarket shareImprove in all regionsMixedCost performance a/Improve by at least$500 million$3.2 Bils.Capital spending$8 billion$7.4 Bils.Financial ResultsA
196、utomotiveIncome before income taxes b/Breakeven$0.1 Bils.Operating related cash flow c/Breakeven$0.1 Bils.Ford CreditCash contribution to parentImproveUp$3.3 Bils.Managed leverage d/Maintain in low end of 13-14 to 1 range13.0 to 1a/Calculated at constant volume,mix and exchange,excluding special ite
197、ms(see chart below for additional information on cost performance).b/Excluding special items(see GAAP equivalent measure and reconciliation below).c/We have redefined this milestone to exclude pension and long-term VEBA contributions in addition to the exclusion of tax refunds.For the calculation of
198、 this non-GAAP measure and reconciliation to its GAAP equivalent(Automotive cash flows from operating activities before securities trading of$1.3 billion)see“Liquidity and Capital Resources Gross Cash.”d/See“Liquidity and Capital Resources,Financial Services Sector,Ford Credit Leverage”for the calcu
199、lation and reconciliation of this non-GAAP measure.FIN33_72 3/21/04 5:39 PM Page 362003 ANNUAL REPORT37MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSIn the previous table,we disclose our Automotive income before income taxes excluding special items,which is not a
200、 financialmeasure calculated and presented in accordance with generally accepted accounting principles in the United States(“GAAP”).We believe,however,that this measure is useful to our investors because it excludes elements that we do not consider to beindicative of our ongoing Automotive operating
201、 activities.This income before income taxes excluding special items measure isone of the metrics by which our management evaluates the business and it provides investors with a more relevant measure ofthe results generated by our ongoing operations.The following table reconciles Automotive income be
202、fore income taxes excluding special items to Automotive Income/(loss)before income taxes(which includes special items),the most directly comparable financial measure presented in accordancewith GAAP(in millions):200320022001Automotive SectorIncome/(loss)before income taxes excluding special items$10
203、4$(253)$(2,855)Special items*:Revitalization Plan and other charges-(5,593)European restructuring(513)(173)-Premier Automotive Group restructuring-(157)-Mazda restructuring actions-(114)Visteon agreement(1,597)-Disposition of non-core businesses49(570)(295)Total special items(2,061)(900)(6,002)Incom
204、e/(loss)before income taxes$(1,957)$(1,153)$(8,857)*See Automotive Sector Results from Operations 2003 Compared with 2002 for a discussion of special itemsThe table below shows how we were able to significantly exceed our 2003 cost performance milestone(in billions):Costs*2003Better/(Worse)2002Quali
205、ty related$1.6Manufacturing and engineering1.2Overhead1.4Net product costs0.4Depreciation and amortization(0.2)Pension and healthcare(1.2)Total$3.2*At constant volume,mix and exchange and excluding special items.The$1.6 billion in quality related cost reductions resulted from fewer warranty claims,p
206、rimarily on 2002 model year vehicles,aswell as sharply lower recalls and customers service actions.The$1.2 billion reduction in manufacturing and engineering reflectedongoing efficiencies and an intense effort to identify and eliminate waste.The$1.4 billion reduction in overhead resulted fromintensi
207、ve cost cutting and elimination of waste in areas such as advertising and sales promotion,personnel costs,consulting,travel and office supplies.Net product costs,which improved by$400 million,include the net impact of higher costs on newlyintroduced vehicles and the effect of ongoing cost reductions
208、 on carryover vehicles.FIN33_72 3/21/04 12:48 AM Page 3738FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSAUTOMOTIVE SECTOR RESULTS OF OPERATIONS2003 COMPARED WITH 2002Details of Automotive sector income/(loss)before income taxes and income/(loss)
209、before income taxes excluding special itemsfor 2003 and 2002 are shown below(in millions):Income/(Loss)Before TaxesIncome/(Loss)Before TaxesExcluding Special Items20032003Over/(Under)Over/(Under)200320022002200320022002Americas-Ford North America$165$2,490$(2,325)$1,762$2,490$(728)-Ford South Americ
210、a(130)(622)492(130)(622)492Total Americas351,868(1,833)1,6321,868(236)International-Ford Europe(1,626)(722)(904)(1,113)(549)(564)-Ford Asia Pacific(25)(176)151(25)(176)151-Premier Automotive Group164(897)1,061164(740)904-Other International69(15)8469(15)84Total International(1,418)(1,810)392(905)(1,
211、480)575Other Automotive(574)(1,211)637(623)(641)18Total excluding special items104(253)357Less:special items(2,061)(900)(1,161)Total Automotive$(1,957)$(1,153)$(804)$(1,957)$(1,153)$(804)Details of Automotive sector sales and vehicle unit sales for 2003 and 2002 are shown below:SalesVehicle Unit Sal
212、es*(in billions)(in thousands)20032003Over/(Under)Over/(Under)200320022002200320022002Americas-Ford North America$83.6$87.1$(3.5)(4)%3,8114,146(335)(8)%-Ford South America1.91.50.427209195147Total Americas85.588.6(3.1)(3)4,0204,341(321)(7)International-Ford Europe22.218.93.3171,5951,561342-Ford Asia
213、 Pacific 5.84.41.4323533005318-Premier Automotive Group24.921.33.617752771(19)(2)-Other International-Total International52.944.68.3192,7002,632683Other Automotive-1.1(1.1)-Total Automotive$138.4$134.3$4.13%6,7206,973(253)(4)%*Includes rental repurchase and Company vehicles sold at auction and exclu
214、des new and used vehicle sales by our consolidated dealerships(consolidated beginning third quarter of 2003).FIN33_72 3/21/04 5:39 PM Page 382003 ANNUAL REPORT39MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSDetails of Automotive sector market share for selected m
215、arkets for 2003 and 2002 are shown below:2003Over/(Under)200320022002MarketAmericas-Ford North America19.2%19.9%(0.7)pts.U.S.*-Ford South America11.59.91.6Brazil*International-Ford Europe8.68.6-Europe*-Ford Asia Pacific 13.913.20.7Australia*-Premier Automotive Group1.3/2.21.2/2.20.1/-U.S./Europe*Exc
216、ludes market share of our Premier Automotive Group brand vehicles(i.e.Volvo,Jaguar,Land Rover and Aston Martin).AMERICAS AUTOMOTIVE SEGMENTFord North America The decrease in income before income taxes for Ford North America included a charge of$1.6 billion related to agreements reached with Visteon
217、Corporation(“Visteon”)in the fourth quarter of 2003.Visteon is our largest supplier and is the primary supplier of many critical components for several of our vehicle lines.The agreementsprimarily address pricing and sourcing arrangements between Ford and Visteon,as well as costs related to approxim
218、ately20,000 UAW-represented Ford employees assigned to Visteon.The principal terms of these agreements include:Our assumption of approximately$1.65 billion of Visteons responsibility for the postretirement health care and lifeinsurance benefit obligations for our UAW-represented employees assigned t
219、o Visteon.*Extending the term for Visteon to complete pre-funding of its remaining hourly and salaried postretirement health care and life insurance liabilities to 2049,rather than 2020 as was agreed at the time of our spin-off of Visteon.*Visteons agreement to pay us$150 million in lieu of further
220、price reductions for 2003 business in North America.Inaddition,Visteon has committed to a schedule of annual price reductions over the next four years for North Americanbusiness.All new Ford business sourced to Visteon will be at competitive prices and terms and we are generally obligated tosource t
221、o Visteon in North America when it is competitive.In addition,we will subsidize part of Visteons costs of payinghigher wages to our UAW-represented employees assigned to Visteon,assuming industry-competitive manning levels,beginning with any new Ford business sourced to Visteon.We and Visteon will s
222、hare equally up to$200 million in costs to upgrade Visteons information technology systems as it completes its separation from our information technology systems.*See Note 19 of the Notes to Financial Statements for more information regarding this aspect of the agreement with Visteon.In addition to
223、the impact of the Visteon agreements,the reduction in income reflected lower vehicle unit sales,unfavorable netpricing and unfavorable exchange rates partially offset by cost reductions and favorable product mix.Lower vehicle unit salesreflected the absence of a dealer stock change in 2003 compared
224、with a dealer stock build in 2002 and lower market share.Lower market share reflected the discontinuation of low-margin models(Mercury Cougar,Ford Escort,Mercury Villager,Lincoln Continental and Ford Explorer Sport)and a planned reduction in sales to daily rental car companies.Ford South America The
225、 improvement in earnings reflected the non-recurrence of the adverse effects of currencydevaluation in Brazil and Argentina,increased market share primarily due to market acceptance of two new models,the Ford Fiesta and EcoSport,and continuing improvement in the business structure.FIN33_72 3/21/04 5
226、:39 PM Page 3940FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSINTERNATIONAL AUTOMOTIVE SEGMENTFord Europe The increased loss before income taxes for Ford Europe included a charge of$513 million in 2003 comparedto a charge of$173 million in 2002
227、related to restructuring actions.The 2003 charges related to personnel reductions inGermany and the United Kingdom,a shift removal at our plant in Genk,Belgium,and other manufacturing efficiencies.Weexpect to incur additional charges of about$160 million in the first half of 2004 related to these ac
228、tions and expect most ofthe related cash outlay will take place in 2004.We anticipate these actions will result in personnel reductions of about 6,700and will reduce costs in our Ford Europe business unit by about$450 million in 2004,excluding the expected additionalcharges related to the restructur
229、ing actions described above,and about$550 million annually thereafter.In addition to the impact of the restructuring actions,the increased loss for Ford Europe reflected unfavorable net pricing,a less favorable product mix,unfavorable exchange rates and a larger reduction in dealer stocks,partially
230、offset by costreductions and improved results at Ford Otosan,our joint venture in Turkey.The increase in sales reflected primarily stronger European currencies.Ford Asia Pacific The improvement in sales and the loss before income taxes for Ford Asia Pacific reflected primarilyfavorable exchange rate
231、s,favorable net pricing,higher industry volumes and improved market share.Premier Automotive Group The improvement in income before income taxes for Premier Automotive Group reflectedprimarily cost reductions and improved product mix,partially offset by unfavorable exchange rates.The improved produc
232、t mixreflected the introduction of the Jaguar XJ model in the first quarter of 2003 and a full year of sales of the Volvo XC90 and theLand Rover Range Rover models.The increase in revenues reflected stronger European currencies and favorable product mix.Other International The improvement in Other I
233、nternational profits reflected primarily our share of Mazdas improvedoperating results.OTHER AUTOMOTIVEThe improvement in loss before income taxes for Other Automotive(which in 2003 represents primarily interest income andexpense including realized and unrealized gains and losses on cash and marketa
234、ble securities)reflected primarily the non-recurrence of a charge of$570 million in 2002 related to the sale of non-core businesses,primarily Kwik-Fit Holdings Ltd(“Kwik-Fit”).The improvement was partially offset by the non-recurrence of gains in cash and marketable securities in 2002,which reflecte
235、d declining interest rates in 2002.2002 COMPARED WITH 2001Details of Automotive sector income/(loss)before income taxes and income/(loss)before income taxes excluding special itemsfor 2002 and 2001 are shown below(in millions):Income/(Loss)Before TaxesIncome/(Loss)Before TaxesExcluding Special Items
236、20022002Over/(Under)Over/(Under)200220012001200220012001Americas-Ford North America$2,490$(5,278)$7,768$2,490$(750)$3,240-Ford South America(622)(1,358)736(622)(510)(112)Total Americas1,868(6,636)8,5041,868(1,260)3,128International-Ford Europe(722)(306)(416)(549)(306)(243)-Ford Asia Pacific(176)(351
237、)175(176)(351)175-Premier Automotive Group(897)8(905)(740)8(748)-Other International(15)(606)591(15)(111)96Total International(1,810)(1,255)(555)(1,480)(760)(720)Other Automotive(1,211)(966)(245)(641)(835)194Total excluding special items(253)(2,855)2,602Less:special items(900)(6,002)5,102Total Autom
238、otive$(1,153)$(8,857)$7,704$(1,153)$(8,857)$7,704FIN33_72 3/21/04 12:48 AM Page 402003 ANNUAL REPORT41MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSDetails of Automotive sector sales and vehicle unit sales for 2002 and 2001 are shown below:SalesVehicle Unit Sales
239、*(in billions)(in thousands)20022002Over/(Under)Over/(Under)200220012001200220012001Americas-Ford North America$87.1$83.9$3.24%4,1464,051952%-Ford South America1.52.1(0.6)(29)195195-Total Americas88.686.02.634,3414,246952International-Ford Europe18.919.4(0.5)(3)1,5611,698(137)(8)-Ford Asia Pacific 4
240、.43.80.616300274269-Premier Automotive Group21.320.40.94771790(19)(2)-Other International-Total International44.643.61.022,6322,762(130)(5)Other Automotive1.11.1-Total Automotive$134.3$130.7$3.63%6,9737,008(35)-%*Includes rental repurchase and Company vehicles sold at auction.Details of Automotive s
241、ector market share for selected markets for 2002 and 2001 are shown below:2002Over/(Under)200220012001MarketAmericas-Ford North America19.9%21.6%(1.7)pts.U.S.*-Ford South America9.97.82.1Brazil*International-Ford Europe8.68.6-Europe*-Ford Asia Pacific 13.213.8(0.6)Australia*-Premier Automotive Group
242、1.2/2.21.2/2.0-/0.2U.S./Europe*Excludes market share of our Premier Automotive Group brand vehicles(i.e.Volvo,Jaguar,Land Rover and Aston Martin).AMERICAS AUTOMOTIVE SEGMENTFord North America The improvement in earnings reflected primarily the non-recurrence of the 2001 asset impairmentsand other ch
243、arges($4.5 billion)largely related to our Revitalization Plan,as well as the non-recurrence of costs related to our 2001 Firestone tire replacement action(about$2 billion).Additionally,profits improved due to achievement of our 2002milestone to reduce non-product costs by$2 billion and the replenish
244、ment of dealer stocks in the United States,which were unusually low at year-end 2001.These improvements were partially offset by increased product-related costs and lower market share.The decline in market share reflected a number of factors,including an increase in the number of new competitive pro
245、duct offerings and our discontinuation of four vehicle lines(Mercury Cougar,Mercury Villager,Lincoln Continental and most models of the Ford Escort)in the second half of 2002.Ford South America The reduced loss reflected primarily the non-recurrence of the 2001 asset impairments and otherone-time ch
246、arges($848 million)largely related to our Revitalization Plan.The results also reflected the adverse effects ofcurrency devaluation,partially offset by continuing improvement in operating costs.The increase in our market share in Brazil reflected market acceptance of our new Ford Fiesta model and st
247、rong sales performance.FIN33_72 3/21/04 5:40 PM Page 4142FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSINTERNATIONAL AUTOMOTIVE SEGMENTFord Europe The increased loss reflected primarily the charges($173 million)related to restructuring actions i
248、nvolving our Ford-brand Europe operations.The reduction in profitability excluding restructuring charges reflected lower vehicle unitvolume,including a reduction in European industry sales volume and the non-recurrence of a 2001 dealer stock build.Costreductions and higher net pricing were partial o
249、ffsets.Ford Asia Pacific The year-over-year improvements in 2002 resulted primarily from net pricing improvements andfavorable vehicle mix.Premier Automotive Group The loss reflected primarily charges($157 million)related to restructuring actions involving ourPremier Automotive Group operations,as w
250、ell as a less favorable vehicle mix primarily at Jaguar,unfavorable net pricing andlower production to reduce dealer stocks.Other International The improvement in 2002 reflected primarily the absence of restructuring charges($495 million)incurred in 2001 and improved operating results at Mazda.OTHER
251、 AUTOMOTIVEThe increased loss reflected primarily the loss on sale of Kwik-fit and other non-core businesses,offset partially by improved net interest costs.FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS2003 COMPARED WITH 2002Details of the full year Financial Services Sector income/(loss)before in
252、come taxes for 2003 and 2002 are shown below(in millions):Income/(Loss)Before Income Taxes2003Over/Under200320022002Ford Credit$3,035$1,965$1,070Hertz*22820028Other Financial Services64(61)125Total Financial Services sector$3,327$2,104$1,223*Includes amortization expense related to intangibles recog
253、nized upon consolidation of Hertz.FORD CREDITThe increase in income before income taxes of$1.1 billion primarily reflected a lower provision for credit losses and the netfavorable market valuation of derivative instruments and associated exposures.The impact of lower average net receivables was a pa
254、rtial offset.The provision for credit losses for the full year of 2003 was$2.0 billion,down$1.0 billion from a year ago,reflecting primarily the non-recurrence of an increase in Ford Credits allowance for credit losses in 2002 and lower credit losses.Ford Credit reviews its business performance from
255、 several perspectives,including:On-balance sheet basis includes receivables Ford Credit owns and receivables sold for legal purposes that remain on Ford Credits balance sheet.Securitized off-balance sheet basis includes receivables sold in securitization transactions that are not reflected on Ford C
256、redits balance sheet.Managed basis includes on-balance sheet and securitized off-balance sheet receivables that Ford Credit continues to service.Serviced basis includes managed receivables and receivables that Ford Credit sold in whole-loan sale transactions whereFord Credit retains no interest in t
257、he sold receivables,but which it continues to service.FIN33_72 3/22/04 11:02 PM Page 422003 ANNUAL REPORT43MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSFord Credit analyzes its financial performance primarily on an on-balance sheet and managed basis.It retains i
258、nterests inreceivables sold in off-balance sheet securitization transactions,and with respect to subordinated retained interests,has credit risk.As a result,it evaluates credit losses,receivables and leverage on a managed,as well as an on-balance sheet basis.In contrast,Ford Credit does not have the
259、 same financial interest in the performance of receivables sold through whole-loan sale transactions because it retains no interests in those receivables and,therefore,has no credit risk with respect to them.Accordingly,Ford Credit generally reviews the performance of its serviced portfolio only to
260、evaluate the effectiveness of itsorigination and collection activities.Ford Credits finance receivables,net of allowance for credit losses,and net investment in operating leases for our on-balancesheet,securitized off-balance sheet,managed and serviced portfolios are shown below(in billions):Decembe
261、r 31,20032002On-Balance Sheet (including on-balance sheet securitizations)Finance receivablesRetail installment$77.8$68.4Wholesale22.516.4Other 8.69.8Total finance receivables,net108.994.6Net investment in operating leases23.231.3Total on-balance sheet$132.1$125.9Memo:Allowance for credit losses inc
262、luded above$3.0$3.2Securitized Off-Balance SheetFinance receivablesRetail installment$29.1$48.9Wholesale20.322.5Other-Total finance receivables,net49.471.4Net investment in operating leases-Total securitized off-balance sheet$49.4$71.4Managed Finance receivablesRetail installment$106.9$117.3Wholesal
263、e42.838.9Other8.69.8Total finance receivables,net158.3166.0Net investment in operating leases23.231.3Total managed*$181.5$197.3Serviced$188.8$202.3*At December 31,2003 and 2002,Ford Credits retained interests in sold receivables were$13.0 billion and$17.6 billion,respectively.For more information re
264、garding these retained interests,see“Liquidity and Capital Resources Financial Services Sector.”On-Balance Sheet Receivables On-balance sheet finance receivables and net investment in operating leases,net ofallowance for credit losses,increased$6.2 billion or 5%from a year ago.The increase primarily
265、 reflected the receivables thatwere recorded on our balance sheet(“reacquired receivables”)as a result of the accounting consolidation of FCAR Owner Trust(“FCAR”)in May 2003(discussed in Note 8 of the Notes to Financial Statements)and the impact related to changes in currencyexchange rates.The incre
266、ase was offset partially by the impact of lower lease and retail placement volumes and receivables soldin off-balance sheet securitizations and whole-loan sale transactions.At December 31,2003,on-balance sheet retail receivables included$14.3 billion that were sold for legal purposes to Ford Credit-
267、sponsored special purpose entities(“SPE”)that sell asset-backed securities to FCAR and are available only forrepayment of asset-backed commercial paper issued by FCAR,other securitization investors and other participants.Thesereceivables are not available to pay the obligations of Ford Credit or the
268、 claims of Ford Credits creditors.Securitized Off-Balance Sheet Receivables Total securitized off-balance sheet receivables decreased$22 billion or 31%from a year ago.This decrease primarily reflected the reacquired receivables resulting from the consolidation of FCAR,nowreported on our balance shee
269、t,the slower pace of securitizations and the increased use of whole-loan sale transactions.FIN33_72 3/21/04 12:48 AM Page 4344FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSManaged Receivables Total managed receivables decreased$15.8 billion or 8
270、%from a year ago,the decrease primarilyreflected lower retail installment finance receivables resulting from lower placement volumes,lower net investment in operatingleases,and the sale of U.S.retail finance receivables in whole-loan sale transactions.Net investment in operating leases waslower,refl
271、ecting a de-emphasis of leasing in Fords marketing programs.The following table shows actual credit losses net of recoveries,which are referred to as net credit losses,for Ford Creditsworldwide on-balance sheet,reacquired,securitized off-balance sheet and managed receivables,for the various categori
272、es of financing during the periods indicated.The loss-to-receivables ratios,which equal net credit losses divided by the averageamount of net receivables outstanding for the period,are shown for the on-balance sheet and managed portfolios.20032002Net Credit Losses(in millions)On-Balance SheetRetail
273、installment and lease$1,871$2,292Wholesale14840Other2530Total on-balance sheet(excluding reacquired receivables)2,0442,362Reacquired Receivables(retail)92-Total on-balance Sheet(including reacquired receivables)$2,136$2,362Securitized Off-Balance SheetRetail installment and lease$677$448Wholesale-6O
274、ther-Total securitized off-balance sheet$677$454ManagedRetail installment and lease$2,640$2,740Wholesale14846Other2530Total managed$2,813$2,816Loss-to-Receivables RatiosOn-Balance Sheet(including reacquired receivables)*Retail installment and lease1.97%2.05%Wholesale0.790.25Total including other1.67
275、%1.72%Memo:On-Balance Sheet(excluding reacquired receivables)1.60%1.72%ManagedRetail installment and lease1.91%1.73%Wholesale0.370.13Total including other1.50%1.39%*Ford Credit believes that the use of the on-balance sheet loss-to-receivables ratio that includes the net credit losses on reacquired r
276、eceivables is useful to investors because it provides a more complete presentation of Ford Credits on-balance sheet credit loss performance.The decrease in net credit losses for our on-balance sheet portfolio primarily reflected improved performance in our U.S.commercial receivables and lower on-bal
277、ance sheet receivables at Ford Credits subsidiaries Triad Financial Corporation and Fairlane Credit,LLC.These declines were offset partially by a charge-off of accounts delinquent for over 120 days,whichresulted in recognition of$106 million of credit losses,primarily in our European wholesale recei
278、vables portfolio.The charge offwas a result of our European operations adopting the practice of our North American operations of charging off all accountsmore than 120 days delinquent.The on-balance sheet loss-to-receivables ratio of 1.67%was down from 1.72%.Theimprovement in the loss-to-receivables
279、 ratio reflected lower credit losses and the retention of securitized receivables on Ford Credits balance sheet.FIN33_72 3/21/04 5:40 PM Page 442003 ANNUAL REPORT45MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSShown below is an analysis of Ford Credits allowance
280、for credit losses related to finance receivables and operating leases forthe years ended December 31(dollar amounts in billions):20032002Allowance for Credit LossesBalance,beginning of year$3.2$2.8Provision charged to operations2.03.0DeductionsLosses2.52.9Recoveries(0.5)(0.5)Net losses2.02.4Other ch
281、anges,principally amounts relating to financereceivables sold and translation adjustments0.20.2Net deductions2.22.6Balance,end of year$3.0$3.2Allowance for credit losses as a percentage of end-of-period net receivables*2.28%2.52%*Includes net investment in operating leases.The decrease in the allowa
282、nce for credit losses of$200 million reflected primarily the charge-off of$106 million for accountsdelinquent over 120 days primarily in our European wholesale receivables portfolio and lower losses in the commercial andliquidating Fairlane Credit portfolios.The following table summarizes the activi
283、ty related to off-balance sheet sales of receivables reported as revenues for the periods indicated(in millions except for ratios):20032002Net gain on sales of receivables$436$529Servicing fees677700Interest income from retained securities679606Excess spread and other973775Investment and other incom
284、e related to sales of receivables2,7652,610Less:Whole-loan income(234)(79)Income related to off-balance sheet securitizations$2,531$2,531Memo:Finance receivables sold$21,321$40,712Servicing portfolio as of period-end56,70576,346Pre-tax gain per dollar of retail receivables sold2.0%1.4%The increase i
285、n investment and other income related to sales of receivables of$155 million or 6%compared with 2002,reflected higher excess spread and other income offset partially by lower net gains.Higher excess spread and other incomeresulted from higher levels of outstanding securitized receivables in 2002.Low
286、er gains in 2003 resulted from lower amounts of finance receivables sold,down about$19 billion compared with 2002,reflecting lower funding requirements.Excluding theeffects of the whole-loan sale transactions,which totaled$10.4 billion in the 2002-2003 period,off-balance sheet securitizationincome w
287、as unchanged compared with 2002.Sales of finance receivables through off-balance sheet securitizations have the impact on earnings of recalendarizing andreclassifying net financing margin(i.e.,financing revenue less interest expense)and credit losses related to the sold receivables,compared with how
288、 they would have been reported if Ford Credit continued to report the sold receivables on-balance sheet and funded them through asset-backed financings.Recalendarization effects occur initially when the gain or loss on sales ofreceivables is recognized in the period the receivables are sold.Over the
289、 life of the securitization transaction,Ford Creditrecognizes excess spread,interest income from retained securities,servicing fees and other receivable sale income.In addition,credit losses related to the off-balance sheet securitized receivables are included in the initial and ongoing valuationof
290、Ford Credits interest-only strip asset(see“Off-balance Sheet Arrangements Sales of Receivables by Ford Credit”fordefinition)and do not impact the Provision for credit and insurance losses on the income statement and they do not influence the assessment of the adequacy of the Allowance for credit los
291、ses for Ford Credits on-balance sheet receivables.FIN33_72 3/21/04 12:48 AM Page 4546FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSTherefore,over the life of each off-balance sheet securitization transaction,the gain or loss on sale of receivabl
292、es,excessspread,interest income from retained securities,servicing fees and other receivable sale income is equal to the net financingmargin and credit losses that would have been reported had Ford Credit reported the receivables on its balance sheet andfunded them through asset-backed financings.Th
293、e net impact of off-balance sheet securitizations on Ford Credits earnings in a given period will vary depending on the amountand type of receivables sold and the timing of the transactions in the current period and the preceding two to three year period,as well as the interest rate environment at t
294、he time the finance receivables were originated and securitized.The following table shows,on an analytical basis,the earnings impact of receivables sold in off-balance sheet securitizations had Ford Credit reported them as on-balance sheet and funded them through asset-backed financing for the perio
295、ds indicated(in millions):20032002Financing revenueRetail revenue$3,580$4,040Wholesale revenue1,0801,101Total financing revenue4,6605,141Borrowing cost(1,491)(2,205)Net financing margin3,1692,936Credit losses(677)(454)Income before income taxes$2,492$2,482Memo:Income related to off-balance sheet sec
296、uritizations$2,531$2,531Recalendarization impact of off-balance sheet securitizations 3949In 2003,the impact on earnings of reporting the sold receivables as off-balance sheet securitizations was$39 million higher thanhad these transactions been structured as on-balance sheet securitizations.This di
297、fference results from recalendarization effectscaused by gain-on-sale accounting requirements,as discussed above.This effect will fluctuate as the amount of receivables sold in Ford Credits off-balance sheet securitizations increases ordecreases over time.In a steady state of securitization activity
298、,the difference between reporting securtitizations on-or off-balance sheet in a particular year approaches zero.While the difference in earnings impact between on-or off-balance sheetsecuritizations is minimal,this funding source has provided us with significant borrowing cost savings compared with
299、unsecureddebt and funding flexibility in a difficult economic environment.HERTZThe improvement of$28 million in income before income taxes reflected strong cost performance and improved leisure vehiclerental demand,partially offset by lower pricing.OTHER FINANCIAL SERVICESThe improvement of$125 mill
300、ion in income before income taxes reflected primarily the non-recurrence of a charge incurred in2002 related to the write-down of our investment in several airplane and telecommunications equipment leases.2002 COMPARED WITH 2001Details of the full year Financial Services Sector income/(loss)before i
301、ncome taxes for 2002 and 2001 are shown below(in millions):Income/(Loss)Before Income Taxes2002Over/(Under)200220012001Ford Credit$1,965$1,494$471Hertz*2003197Other Financial Services(61)(59)(2)Total Financial Services sector$2,104$1,438$666*Includes amortization expense related to intangibles recog
302、nized upon consolidation of Hertz.FIN33_72 3/21/04 5:40 PM Page 462003 ANNUAL REPORT47MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSFORD CREDITThe increase in income before income taxes of$471 million reflected primarily a lower provision for credit losses and th
303、edecrease in the net unfavorable market valuation of derivative instruments and associated exposures.The impact of lower net financing margins was a partial offset.HERTZThe improvement in income before income taxes reflected primarily an improved car rental pricing environment and lower costs.LIQUID
304、ITY AND CAPITAL RESOURCESAUTOMOTIVE SECTOROur strategy is to ensure we have sufficient funding available with a high degree of certainty throughout the business cycle.The key elements of this strategy include maintaining large gross cash balances,generating cash from operating-relatedactivities,havi
305、ng a long-dated debt maturity profile,and maintaining committed credit facilities.Gross Cash Automotive gross cash includes cash and cash equivalents,marketable and loaned securities and assetscontained in a short-term Voluntary Employee Beneficiary Association trust(“VEBA”)(see below).Gross cash as
306、 of December 31,2003,2002 and 2001 is detailed below(in billions):December 31,200320022001Cash and cash equivalents$5.4$5.2$4.1Marketable securities10.817.410.9Loaned securities*5.7-Total cash,marketable securities andloaned securities21.922.615.0Short-term VEBA assets4.0 2.72.7Gross cash$25.9$25.3$
307、17.7*As part of our investment strategy,we engage in securities lending to improve the returns on our cash portfolios.See Note 4 of the Notes to Financial Statements for additional discussion on securities lending.In managing our business,we classify changes in gross cash into four categories:operat
308、ing-related(both including andexcluding pension/long-term VEBA contributions and tax refunds),capital transactions with the Financial Services sector,acquisitions and divestitures and other(primarily financing related).Our key metric for operating-related cash flow is cashflow before pension and lon
309、g-term VEBA contributions and tax refunds.This metric best represents the ability of ourAutomotive operations to generate cash.We believe the cash flow analysis reflected in the table below,which differs from a cash flow statement presented in accordance with GAAP,is useful to investors because it i
310、ncludes cash flow elementsthat we consider to be related to our operating activities(e.g.,capital spending)that are not included in Cash flows fromoperating activities before securities trading,the most directly comparable GAAP financial measure.Changes in Automotivegross cash for the last three yea
311、rs are summarized as follows(in billions):FIN33_72 3/21/04 5:41 PM Page 4748FORD MOTOR COMPANYMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS200320022001Gross cash at end of period$25.9$25.3$17.7Gross cash at beginning of period25.317.720.2Total change in gross ca
312、sh$0.6$7.6$(2.5)Operating-related cash flowsAutomotive income/(loss)before income taxesexcluding special items$0.1$(0.3)$(2.9)Capital expenditures(7.4)(6.8)(6.3)Depreciation and special tools amortization5.54.95.0Changes in receivables,inventory and trade payables(1.0)(1.8)4.4Other2.94.31.1Total ope
313、rating-related cash flows beforepension/long-term VEBA contributions and tax refunds0.10.31.3Funded pension plans/long-term VEBA contributions(4.8)(0.5)(0.3)Tax refunds1.72.6-Total operating-related cash flows(3.0)2.41.0Capital transactions with Financial Services sector a/3.60.40.4Acquisitions and
314、divestitures0.50.6(2.3)OtherDividends paid to shareholders(0.7)(0.7)(1.9)Convertible preferred securities-4.9-Changes in total Automotive sector debt(0.1)(0.1)1.7Cash from FIN 46 consolidations b/0.3-Other Primarily net issuance/(purchase)of stock-0.1(1.4)Total change in gross cash$0.6$7.6$(2.5)a/Pr
315、imarily dividends,capital contributions,loans,and loan repayments.b/See Note 13 of the Notes to Financial Statements for a discussion of the adoption of FIN 46.Total 2003 operating-related cash flows before funded pension plan and long-term VEBA contributions and tax refunds was$100 million positive
316、 reflecting profits and other operating-related changes,offset partially by increased net capital spendingand growth in year-end inventory.The$600 million increase in capital expenditures in 2003 from 2002,reflected primarilyincreased spending on new products consistent with our product-led revitali
317、zation plan.Other operating-related changes,primarily cash tax payments and timing differences between expense or revenue recognition and the corresponding cashpayments for costs such as health care,pension,marketing,and warranty,improved our cash flows by$2.9 billion in 2003.Including funded pensio
318、n plan and long-term VEBA contributions and tax refunds,operating-related cash flows were an outflow of$3.0 billion.Contributions to our worldwide funded pension plans totaled$2.8 billion in 2003,compared toapproximately$500 million in 2002.In 2003,we also contributed$2 billion to a long-term VEBA t
319、rust used to pre-fund aportion of Fords other postretirement benefits liability.This contribution is in addition to the$4 billion contributed to ourshort-term VEBA,which we include in gross cash.These are assets invested similar to our cash portfolio and are availableto fund certain employee benefit
320、 obligations in the near term.The$2 billion of long-term VEBA assets are invested similar to our pension fund assets.The assets of the long-term VEBA are not included in our gross cash,but are dedicated to pay longer-term healthcare obligations.Capital transactions with the Financial Services sector
321、 of$3.6 billion in 2003 reflected primarily higher dividends paid byFord Credit,which in turn reflected improved profitability and asset reductions at Ford Credit.In addition,dividends of$204 million from the Financial Services sector in 2003 are reflected in the table above as divestitures because
322、they resulted from the sale by Ford Credit of its Axus vehicle fleet leasing unit.FIN33_72 3/21/04 5:41 PM Page 482003 ANNUAL REPORT49MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONSShown in the table below is a reconciliation between financial statement Cash flows
323、 from operating activities beforesecurities trading and operating-related cash flows,(calculated as shown in the table above),for the last three years(in billions):200320022001Cash flows from operating activities before securities trading a/$1.3$9.5$7.4Items included in operating-related cash flowCa
324、pital expenditures(7.4)(6.8)(6.3)Net transactions between Automotive andFinancial Services sectors b/1.2(0.1)0.6Other,primarily exclusion of cash flow fromshort-term VEBA contribution/(draw-down)1.9(0.2)(0.7)Operating-related cash flows$(3.0)$2.4$1.0a/As shown in our Sector Statement of Cash Flows f
325、or the Automotive sector.b/Primarily payables and receivables between the sectors in the normal course of business,as shown in our Sector Statement of Cash Flows for the Automotive sector.Debt and Net Cash At December 31,2003,our Automotive sector had total senior debt of$15.0 billion compared with$
326、14.2 billion a year ago.The debt increase primarily reflects the adoption of Financial Accounting Standards Board(“FASB”)Interpretation No.46(“FIN 46”),which requires the consolidation of certain entities.For a discussion of the adoption of FIN 46,see Note 13 of the Notes to Financial Statements.At
327、December 31,2003,our Automotive sector had net cash(defined as gross cash less total senior debt)of$10.9 billion,compared with$11.1 billion and$3.9 billion at the end of 2002 and 2001,respectively.In 2003,we retired about$900 million of relatively high-cost debt through open-market repurchases and t
328、hrough redemptions.We expect to repurchase a similar amount in 2004.At December 31,2003,Ford Motor Company Capital Trust I and Ford Motor Company Capital Trust II(the“Trusts”)together hadoutstanding an aggregate$5.7 billion of trust preferred securities.The dividend and liquidation preferences on th
329、ese securitiesare paid from interest and principal payments on our junior subordinated debentures held by the Trusts in an aggregate principalamount of$5.8 billion.Effective July 1,2003,the junior subordinated debentures are classified as Subordinated debt on ourbalance sheet as the result of the ad
330、option of FIN 46.This reclassification did not impact the status of the holders of our seniordebt relative to holders of the subordinated debentures or the trust preferred securities.For additional discussions related to theTrusts,see Notes 12 and 15 of the Notes to Financial Statements.On January 2
331、,2004,we redeemed our outstanding junior subordinated debentures held by Trust I.This had the effect ofreducing total Automotive subordinated debt by$688 million.The debt is classified as Debt payable within one year on ourbalance sheet as of December 31,2003.The weighted average maturity of our tot
332、al long-term debt(including subordinated debt),substantially all of which is fixed-ratedebt,is approximately 26 years with about$2.7 billion maturing by December 31,2008.The weighted average maturity of totaldebt(long-term and short-term including subordinated debt)is approximately 25 years.For addi
333、tional information on debt,seeNote 12 of the Notes to Financial Statements.Credit Facilities At December 31,2003,the Automotive sector had$7.0 billion of contractually committed credit agreementswith various banks,of which$6.9 billion were available for use.For further discussion of our committed credit facilities,see Note 12 of the Notes to Financial Statements.FINANCIAL SERVICES SECTOR FORD CRED
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