1、Ford Motor Company 2005 Annual ReportDriving InnovationFDriving InnovationFord Motor CompanyOne American Road,Dearborn,Michigan 48126 Ford Motor Company Driving Innovation 2005 Annual ReportCYANMAGENTAYELLOWBLACK021CLGRY_FORD MOTOR-2005 ANNUAL REPORT ContentsOperating Highlights 1A Message from the
2、Chairman 2Technological Innovation 6Safety Innovation 10Design Innovation 14Product Innovation 18Board of Directors and Executives 19Financial Contents 21Shareholder Information 104Global Overview 105 About this reportInnovation is Ford Motor Companys legacy.Innovation is Fords future.We established
3、 much of our American innovation design language with Ford Fusion,shown on the cover,our new midsize sedan with an attitude.With its distinct,authoritative three-bar grille setting the design tone and driving dynamics that are nothing short of engaging,Fusion embodies the bold,American design and in
4、novation of our vehicles going forward.And this sedan is poised to help us win customers and market share in the highly competitive midsize-car segment.This report is a visual journey highlighting how Ford is unleashing the spirit of innovation.The company is knocking down the walls of“business as u
5、sual”to uncover bold initiatives that are inspiring technological,safety and design innovations throughout the company.About this companyFord Motor Company,a global automotive industry leader based in Dearborn,Michigan,manufactures and distributes automobiles in 200 markets across six continents.Wit
6、h approximately 300,000 employees and 108 plants worldwide,the companys core and affiliated automotive brands include Ford,Lincoln,Mercury,Mazda,Volvo,Jaguar,Land Rover and Aston Martin.Its automotive financing business is Ford Motor Credit Company.Global OverviewFord Motor Company Annual Report 200
7、5105Automotive Core and Affiliate Brands 10,134 dealers 1,422 dealers 1,971 dealers 5,594 dealers 125 dealers 880 dealers 2,400 dealers 1,400 dealers 105 markets 32 markets 26 markets 141 markets 29 markets 68 markets 100 markets 100 markets 5,572,143 132,496 203,794 1,224,631*4,400 89,802 443,963 1
8、85,120 Sales Mix:Sales Mix:Sales Mix:Sales Mix:Sales Mix:Sales Mix:Sales Mix:Sales Mix:55%N.America 99%N.America 97%N.America 45%Asia Pacific 60%Europe 53%Europe 57%Europe 60%Europe 27%Europe 1%Rest-of-3%Rest-of-27%N.America 35%N.America 36%N.America 31%N.America 26%N.America 7%Asia Pacific world wo
9、rld 23%Europe 5%Rest-of-7%Asia Pacific 7%Asia Pacific 7%Asia Pacific 6%S.America 3%Rest-of-world 4%Rest-of-5%Rest-of-5%Rest-of-5%Rest-of-world world world world world 2%S.America 2%S.America 1.800.392.3673 1.800.521.4140 1.800.392.3673 1.800.222.5500+44.1908 610620 1.800.452.4827 1.800.458.1552 1.80
10、0.637.6837 Click on“contact us”Click on“contact us”Click on“contact us”customerassistance enquiry jaguarowner customercare CustomerAssistanceRetail Vehicle Sales and Sales MixDealers and Markets*As an unconsolidated subsidiary,all of Mazda sales are not consolidated into Ford Motor Company vehicle u
11、nit sales.Only vehicles built or distributed by Ford for Mazda are included in total Ford unit sales summaries.Financial ServicesCustomer Services Operations in 36 countries Provides automotive financing for Ford,Lincoln,Mercury,Aston Martin,Jaguar,Land Rover,Mazda and Volvo dealers and customers On
12、e of the worlds largest automotive finance companies.If Ford Motor Credit were a bank,it would be the 13th largest in the U.S.From 1986-2005,provided 39 percent of Ford Motor Companys pretax profits and$20 billion in dividends Has been profitable every year since its 1959 founding Recorded net incom
13、e of$2.5 billion Paid Ford Motor Company dividends totaling$2.75 billion Managed$150 billion in receivables Placed approximately 2.7 million vehicle financing A total service experience for Ford,Lincoln and Mercury owners available only at Ford and Lincoln Mercury dealerships designed to deliver cus
14、tomer satisfaction and repeat purchase intent Parts engineered to Ford Motor Company specifications Technicians trained and certified specifically on Ford,Lincoln and Mercury vehicles For the second consecutive year,Lincoln was the“#1 nameplate in Customer Satisfaction with Dealer Service”according
15、to the J.D.Power and Associates 2005 Customer Service Index Study.Lincoln is the only domestic nameplate to win 2 consecutive years Record service satisfaction performance as measured by Ford Motor Companys Customer Viewpoint service experience survey Daily Parts Advantage continues to provide Ford,
16、Lincoln and Mercury dealers with record parts availability and on-time daily deliveryFord/Mercury 1.800.392.3673L Click on“contact us”Motorcraft Parts New and remanufactured parts designed,engineered and recommended by Ford Motor Company and available in Ford,Lincoln and Mercury franchised dealershi
17、ps,Ford authorized distributors and thousands of major retail and repair locationsGenuine Ford Accessories Wide variety of customer accessories designed to personalize Ford,Lincoln and Mercury vehiclesMotorcraft Parts The Motorcraft Web site has been updated to include cataloging,product details,tec
18、hnical resources,training and information on where consumers can purchase products Genuine Ford Accessories Growing portfolio of products to enhance Ford Motor Company vehicles including:exciting new 20”wheels,new Sport Liner(bedliner product),and chrome packages(grille,wheel,running board,bug shiel
19、d)Motorcraft PGenuine Ford AExtended Service Business Providing comprehensive vehicle service contract and maintenance programsFord Extended Service Plan(ESP)Major customers include Ford,Lincoln and Mercury vehicle dealers,commercial customers and fleets of Ford Motor Company vehiclesAutomobile Prot
20、ection Corporation(APCO)Major customers include Mazda,Volvo,Jaguar and Land Rover vehicle dealersExtended Service Business Industry-leading sales of 1.8 million contracts in North AmericaESP Managing more than 6.9 million active contractsAPCO Managing more than 1.4 million active contractsESPAPCOCus
21、tomer Assistance2005 HighlightsOperationsFORD MOTOR-2005 ANNUAL REPORT Ford Motor Company Annual Report 20051Ford Motor Company Annual Report 2005iiOperating HighlightsSales and Revenues 2005 2004Worldwide vehicle unit sales of cars andtrucks by automotive business unit(in thousands)The Americas 3,7
22、79 3,915Ford Europe and PAG 2,542 2,476Ford Asia Pacific and Africa/Mazda 497 407Total 6,818 6,798Sales and revenues(in billions)Automotive$153.5$147.1 Financial Services 23.6 24.5 Total$177.1$171.6 Financial ResultsIncome/(loss)before taxes(in billions)Automotive$(3.9)$(0.2)Financial Services 5.9 5
23、.0 Total$2.0$4.8 Net income(in billions)$2.0$3.5 Diluted net income per share of Common and Class B Stock$1.05$1.73Cash and SpendingAutomotive capital expendituresAmount(in billions)$7.1$6.3As a percentage of automotive sales 4.6%4.3%Automotive cash at year end(in billions)Cash,marketable and loaned
24、 securitiesand assets held in short-term VEBA trust(a)$25.1$23.6 Cash net of debt(b)7.2 5.2Shareholder ValueDividends per share$0.40$0.40 Total shareholder returns%(c)(45)%(6)%(a)Short-term Voluntary Employee Beneficiary Association(VEBA)trust,in which$1.4 billion of financial assets were held at th
25、e end of 2005 and$4.1 billion at the end of 2004 to fund certain future employee benefit obligations in the near term.(b)Automotive cash,marketable and loaned securities and assets held in a short-term VEBA trust less Automotive debt.(c)Change in value of Ford stock assuming dividends are reinvested
26、 in Ford stock.(Source:Bloomberg)Ford Motor Company Annual Report 20053Ford Motor Company Annual Report 20052Ford Motor Company Annual Report 20053Ford Motor Company Annual Report 20052A Message from the ChairmanWilliam Clay Ford,Jr.Chairman and Chief Executive OfficerDriving Innovation:The Way Forw
27、ardFord Motor Company was solidly profitable and growing around the world in 2005.The major exception was our automotive operations in North America,where short-and long-term challenges continued to slow our progress.The next chapter in our history will be defined by our renewed commitment to innova
28、tion and our bold plan to address those challenges.We have recommitted ourselves to sustainable and profitable growth,to a renewed focus on our customers,and to boundless innovation in everything we do:from design,to safety,to fuel-efficiency,to efficiency on our factory floors.We are going to use o
29、ur size to accelerate change,and build a culture that encourages fresh new thinking and breakthrough ideas.When I took over as CEO at the end of 2001,Ford Motor Company was unprofitable,losing more than$5 billion that year.In 2002,we launched a major effort to revitalize our company.We concentrated
30、on improving our core automotive business.We divested several non-core companies,lowered our costs,refocused our financial operations on supporting our automotive business and launched the biggest wave of new products in our history.As a result,we have been profitable every year since 2003,including
31、 a net income of$2 billion in 2005.Today our automotive operations in Europe,Asia and South America are all profitable,and our global brands are thriving.Mazda is enjoying its best performance ever.Aston Martin is expanding.Land Rovers largest-ever introduction of new products is winning in the mark
32、etplace.Jaguar is addressing its unique cost structure issues and bringing out groundbreaking new cars.And Volvo is entering its most aggressive product period ever,with five new models in 18 months.In parts of the world where the car market is growing sharply,so are we.We are doing especially well
33、in Russia,Turkey and Hungary.Last October I traveled to India to help introduce Ford Fiesta,our most important new product there in years.Ford sales in China,the fastest growing market in the world,were up 46 percent in 2005.We are proud of our success around the world.But in our North American auto
34、motive operations,we lost money in 2005.Commodity prices,including oil and steel,rose sharply;competition from around the world intensified;and rising fuel prices caused demand for SUVs to drop sooner and faster than we had anticipated.We took a number of important steps in 2005 to address these iss
35、ues.To strengthen our balance sheet and cut costs,we sold The Hertz Corporation and restructured our agreement with Visteon,our parts supplier spin-off.We reached an agreement with the UAW that will help us reduce health care costs in a reasonable way.We began a major rationalization of our supply b
36、ase,identifying key suppliers to form partnerships that will provide for more stable relationships.But the conditions we confronted represented a turning point in our industry unlike anything weve experienced in the last 50 years.The automotive business had shifted,completely and permanently,to full
37、-scale global competition.The days of unlimited,inexpensive gasoline are gone forever.It is time for a bold new approach that goes beyond anything we have done in the past.Ford Motor Company Annual Report 20053Ford Motor Company Annual Report 20052Ford Motor Company Annual Report 20053Ford Motor Com
38、pany Annual Report 2005201031 Bill FordChairman and CEO Bill Ford,against the backdrop of the living roof of the Dearborn Truck Plant in the Ford Rouge Center.2 Ford Motor CreditFord Motor Credit Companys Beth Stasko(left)demonstrates to Dean Adams and Rebecca Rodriguez of Tom Holzer Ford in Farming
39、ton Hills,Michigan,the new Electronic Tier Analysis(ETA)system,one of several innovative Web tools to make it easier for dealers to do business with Ford Motor Credit.ETA,which was piloted in 2005,enables dealers to evaluate and restructure loan offerings more quickly and at any time.35243 ChinaChan
40、gan Ford Automobile Co.Ltd.President and CEO Phil Spender(left)and Executive Vice President Zou Wenchao present the first made-in-China Ford Focus on Sept.12,2005,in Chongqing.Focus is the fourth Ford vehicle produced locally for the China market,following Transit,Fiesta and Mondeo.Ford sales in Chi
41、na were up 46 percent in 2005.4 Ford Volunteer CorpsFord materials expediter Craig Glover works with many Detroit-area children in challenging circumstances as a volunteer for the Motor City Striders amateur track club.Ford volunteers in 2005 contributed to myriad causes,including a multimillion-dol
42、lar relief and recovery effort following Hurricanes Katrina and Rita,mentoring programs and environmental initiatives.The Ford Volunteer Corps recently celebrated its first anniversary.5 IndiaRathinasabapathy Pushpalatha(center),a paint shop employee at Fords assembly plant near Chennai,India,listen
43、s with other employees at a town hall meeting with Chairman and CEO Bill Ford in October 2005.During his visit to India,Ford also hosted the launch of a new Ford Fiesta developed specifically for that market by the companys global engineering team.1Ford Motor Company Annual Report 20055Ford Motor Co
44、mpany Annual Report 20054Ford Motor Company Annual Report 20055Ford Motor Company Annual Report 20054So,in January 2006,we launched the most fundamental restructuring in our history,which we call the“Way Forward”plan.Developed by senior executives Mark Fields and Anne Stevens and their team,Way Forw
45、ard is a comprehensive plan for restructuring and reinvigorating our automotive business in North America.It touches every piece of our North American business to make it more customer-focused,product-driven and efficient,including:A renewed commitment to bold design,improved safety and technologica
46、l innovation to differentiate Ford Motor Company and its products in the marketplace.New product investments using Fords global architectures and scale to deliver more new products faster,including more crossovers,hybrid vehicles and new small cars,as well as increased spending to strengthen Fords t
47、ruck leadership and launch products in new segments to reach more customers.More clarity for the Ford,Lincoln and Mercury brands,with a sharper focus on the customer and a clear point of view that will appeal to more buyers.Pricing that is clear,credible and simple,which will further improve residua
48、l values.North American capacity will be realigned to match demand with 14 manufacturing facilities to be idled resulting in significant cost savings and reduced employment of 25,000-30,000.Capacity will be reduced by 1.2 million units,or 26 percent,by 2008,which represents the majority of actions w
49、ithin the plans 2006-2012 period.Salary-related costs cut 10 percent in North America,with the reduction of the equivalent of 4,000 salaried positions by the end of the first quarter 2006.In addition,the companys officer ranks are being reduced 12 percent by the end of the first quarter.Material cos
50、t reductions,excluding special items,of at least$6 billion by 2010.*A new low-cost manufacturing site is planned for the future.This plan will restore our North American automotive operations to profitability by 2008.It reflects lessons from our successes around the world including Mazda,where Mark
51、led a remarkable turnaround by telling his team:“Change or die.”The Way Forward has similar strong medicine for our North American business.But it also contains the vision and strategic focus to rebuild the business,because we know we cant just cut our way to success.Along with our substantial cost
52、restructuring,we are changing the business model thats existed for many decades at Ford.How will we do this?First,we are taking a more far-sighted approach to creating shareholder value.Because of the tremendous volatility of market conditions,we will no longer issue quarterly or annual earnings gui
53、dance.We still have extremely rigorous targets for costs,capacity utilization and other traditional metrics.But we want to underscore an important point inside the company and out:We cannot succeed in the long run if were focused only on the short term.Instead,we are guided by our long-term goals of
54、 building brand,satisfying customers,developing strong products and accelerating innovation.We also will be managing to allow our employees more freedom,to take smart risks and to demonstrate their creativity.Over time,we believe this approach will lead to sustainable profitability.Youll be able to
55、judge our results as we report our progress.Second,were going to sharpen our focus on the people who determine our success our customers.Were going to go way beyond what weve ever done before at Ford to find out whats on their minds.Our business decisions will originate from our knowledge of what ou
56、r customers want,both today and tomorrow.Were going to figure out what they want before they even know it,and were going to give it to them.In the past,our product decisions were sometimes driven by plant capacity concerns.From now on,our products will be designed and built to satisfy customers,not
57、just fill factories.This is going to require change number three:We are unleashing our spirit of American innovation.To me,innovation is seeing what others cant see,and using that vision to build what others have never built.Innovation resolves contradictions and flattens old barriers.Its the heart
58、of all progress.We have a proud history of innovation at Ford.It is what built our company and made it great.Innovation helped us create the first affordable car and put the world on wheels.We are going to reclaim this legacy to build a distinct competitive advantage.We will use innovation to drive
59、the bold American designs of our cars and trucks,giving them the uniquely American look and feel that reflect our countrys spirit,ingenuity and sense of adventure.F-150 In 2005,Ford F-Series recorded its 24th straight year as Americas best-selling vehicle with models such as the F-150 pickup.For 200
60、6,Ford is offering an ethanol-capable F-150,as well as Ford Crown Victoria,Mercury Grand Marquis and Lincoln Town Car with an option to run on a mixture of clean,renewable ethanol and gasoline.*At constant volume,mix and exchange,and net of new product content and regulatory changes.Ford Motor Compa
61、ny Annual Report 20055Ford Motor Company Annual Report 20054Ford Motor Company Annual Report 20055Ford Motor Company Annual Report 20054We also will use innovation to drive breakthrough advances in safety.Ford and Volvo engineers are exemplifying that by working together on safety features such as a
62、 new collision-avoidance system,night-enhanced vision and the next-generation air bag.The 2006 Ford Five Hundred and Mercury Montego with optional side air bags,were the worlds only large sedans to earn the Insurance Institute for Highway Safetys highest“Top Safety Pick-Gold”rating.The chassis of th
63、ese vehicles was co-designed by Ford and Volvo engineers.Finally,American innovation will drive our new advances in fuel-efficiency,to offset high gas prices and reduce our impact on the environment and dependence on foreign oil.Currently,we are offering four new flexible-fuel vehicles for 2006 that
64、 run on a mixture of gasoline and ethanol,a renewable resource,including the Ford F-150 pickup truck.By 2010,more than half our Ford,Lincoln and Mercury products will have hybrid capability.We will have the capacity to produce up to a quarter of a million hybrids a year,and scale up as the market de
65、mands.A good example of innovation in action is Ford Escape Hybrid.Escape was the first hybrid ever designed,engineered and built by an American automaker.It generated more than a hundred patents as well as new design techniques that we are using now to develop other products.The Ford Rouge Center i
66、n Michigan is another example of where innovation will take us.Despite cynicism and institutional barriers,we built the most progressive assembly plant in the world at the Rouge.It marries lean,flexible and environmentally responsible manufacturing to produce Americas best-selling vehicle,the F-Seri
67、es truck.Over time,the Rouge will save us many millions of dollars,not just because of its plant-covered roof,but in energy costs for heating,cooling and lighting.Projects like these are going to be the rule at Ford,not the exception.We are moving from a culture that discourages innovation back to a
68、 company that celebrates it.As part of that effort,we recently sent out a mailing to 120,000 U.S.dealers,employees and retirees asking for ideas.We also launched an innovation Web site in November to solicit ideas from employees.In its first month,we received more than 1,000 ideas,and we are followi
69、ng up on some very promising ones.We also are going to design compensation plans that reward new thinking.This company was founded by an innovator;we want to make sure that today the company is overflowing with innovators.We will find them,encourage them and reward them.This is what it is going to b
70、e like at Ford:far-sighted,customer-focused and innovative.The Way Forward has already begun,and the proof is in our products.In 2005,for the first time since 1993,we gained car market share in the U.S.That gain was due to strong sales of a number of great new products such as Ford Mustang,Five Hund
71、red and Fusion;Mercury Montego and Milan;and Lincoln Zephyr.We also had the best-selling crossover utility vehicle(CUV)in the U.S.,Ford Escape,and increased our total CUV sales by 28 percent.Ford F-Series was the best-selling truck in the U.S.for the 29th year in a row,selling more than 900,000 unit
72、s for the second straight year.We have more great products on the way.We have a comprehensive and realistic plan to move us forward.And we have the dedicated and talented people of Ford Motor Company determined to deliver outstanding results.All of which gives me great confidence in our future.Addre
73、ssing the challenges we face,particularly in North America,is going to be difficult and at times painful.Winning will require sacrifices by the people of Ford,and there will be fewer of us in the future than there are today.We take these tough actions with a sense of compassion and gratitude for tho
74、se who have served us with all their hearts.But we are pressing ahead rapidly for the good of all of our stakeholders.We are embarked on a journey that will be seen as a turning point in our history.We are determined to seize our heritage of innovation and emerge stronger than weve ever been.Thank y
75、ou for your support.William Clay Ford,Jr.Chairman and CEOMarch 9,2006Ford Motor Company Annual Report 2005PBFord Motor Company Annual Report 20056Technological Innovation Mercury Mariner HybridFord Motor Company Annual Report 20057Ford Motor Company Annual Report 2005PBSustainable MobilityThe Ford M
76、odel T wasnt the first car.However,with the moving assembly line and other technological innovations,it became the first widely available and affordable car.The stage was set for a stream of innovations in the following years the flathead V-8,factory-installed safety belts and fuel cell vehicles,to
77、name a few.Today,the same spirit of innovation thrives at Ford as we blaze new technological trails to reduce our environmental footprint and further improve our vehicles,our plants and our processes.The 2006 Mercury Mariner Hybrid,seen here overlooking the city of San Francisco,is a marvel of techn
78、ological innovation,helping drivers in stop-and-go city traffic maximize fuel economy and minimize emissions.The San Francisco Bay area is among the top-selling markets for Ford Escape Hybrid and Mercury Mariner Hybrid sport utility vehicles.Ford Motor Company Annual Report 20059Ford Motor Company A
79、nnual Report 20058Ford Motor Company Annual Report 20059Ford Motor Company Annual Report 20058Shunsuke Okubo,Hybrid Calibration EngineerCarol Okubo,Hybrid Controls EngineerCarol and Shunsuke Okubo are proud to be on a Ford team that reflects their personal philosophy.The couple,members of the Hybrid
80、 Electric Vehicle team that developed the groundbreaking Vehicle System Controller(VSC)in the Mercury Mariner Hybrid,are shown above with the vehicle in San Francisco.The VSC parent system is critical for ensuring that the vehicles controllers and subsystems work together to produce the desired attr
81、ibutes for fuel economy,performance and drive.“In our home and in our lives,we try to minimize our impact on the environment.We recycle,we compost,we have a garden,”Shunsuke says.“One of the things that attracted us to the hybrid program is that it lets us be directly involved in reducing the strain
82、 on oil,one of the planets limited resources,”Carol adds.In developing the VSC,Shunsuke estimates he drove more than 45,000 miles in Mariner Hybrid vehicles,experimenting with different inputs and their effects on vehicle systems.Carol developed computer strategies and methodologies for the VSC;Shun
83、sukes team then took over for testing.“Our teams strength is in taking the big ideas and then using creative thinking and innovation to really get those ideas to work,”she says.Ford Motor Company Annual Report 20059Ford Motor Company Annual Report 20058Ford Motor Company Annual Report 20059Ford Moto
84、r Company Annual Report 20058Technological Innovation Mercury Mariner HybridOur Mercury Mariner Hybrid is technological innovation in motion.This companion to the Ford Escape Hybrid is the second of our hybrids.Ford plans to bring 250,000 hybrids to market annually by 2010.To advance the development
85、 of gasoline-electric hybrid technology,we boosted the size of our Sustainable Mobility Technical Team.This enabled us to accelerate engineering and validation testing and to pull ahead Mariner Hybrid production by a full year.We not only are dedicated to technological solutions,we also are determin
86、ed to bring them to customers sooner.Mariner Hybrid operates on a four-cylinder gasoline engine and a pair of alternating current(AC)motors,powered by a battery pack that is recharged with energy captured every time the driver brakes.The major components of this powertrain were orchestrated to work
87、seamlessly together to dramatically increase driving efficiency and lower emissions while maintaining full functionality and performance.In fact,Ford Motor Company has earned more than 40 patents,and has another 70 pending,for technologies related to this system.For years,we have been developing a r
88、ange of alternative technologies that will put highly advanced vehicles on the road.Ford is pouring resources and research into the leading technologies hybrid-electric,clean diesel,hydrogen internal combustion,hydrogen fuel cells and ethanol aimed at improving upon the performance of the convention
89、al internal combustion engine.In the United States,we are offering four new flexible-fuel vehicles for 2006 that run on a mixture of gasoline and ethanol including the Ford F-150 pickup truck.We will continue to step up ethanol a renewable resource as an alternative to gasoline.Because we understand
90、 that the importance of technological advances transcends our company,we also have invested with other automakers and the U.S.government in research into lightweight materials and advanced battery technologies.We are partnering in the growth of the alternative fuel infrastructure.We have transformed
91、 our historic Rouge manufacturing facility,where the Ford F-150 is built,into one of the most technologically and environmentally advanced in the world.We are converting many facilities into highly efficient and productive flexible operations to maximize capability.Around the world,we are using sola
92、r power,geothermal cooling,hydroelectricity,wind,landfill gases and even paint fumes to power our plants in clean,sustainable ways.Seventeen of our facilities are wildlife habitat sites.Since 2000,our facilities worldwide have cut their energy use by more than 18 percent and reduced CO2 emissions by
93、 more than 15 percent.As with our facilities,we want to make all of our vehicles around the world more sustainable and environmentally responsible.Ford Motor Company Annual Report 2005PBFord Motor Company Annual Report 200510Safety Innovation Volvo C70Ford Motor Company Annual Report 200511Ford Moto
94、r Company Annual Report 2005PBCommitment to Leadership Safety for the driver,for the passengers,for the family in the other vehicle and for our employees is paramount for Ford.We brought laminated glass windshields to market in 1927.We began factory installing safety belts in 1956.In 1999,we introdu
95、ced BeltMinder,which has significantly increased safety-belt usage.We were first to offer head and chest side air bags,standard emergency trunk releases and AdvanceTrac with RSC(Roll Stability Control).Our Ford Five Hundred and Mercury Montego are the only full-size cars to earn the Insurance Instit
96、ute for Highway Safety“Top Safety Pick-Gold”award in 2005.The vehicles tested were equipped with side air bags,as included in an optional safety package.Ford and Volvo engineers continue working together to develop new safety innovations.We consider safety innovation a responsibility to our company,
97、our customers and our world.The Volvo C70,pictured above in the Nevada desert,features an all-new innovative air-bag system and other advances that help enhance safety for our customers.Ford Motor Company Annual Report 200513Ford Motor Company Annual Report 200512Ford Motor Company Annual Report 200
98、513Ford Motor Company Annual Report 200512Safety Innovation Volvo C70 Beauty and innovation are far more than skin deep for the all-new Volvo C70.It marks our debut of the door-mounted inflatable curtain,specially created for this convertible.Appealing,functional vehicles are only part of our equati
99、on for success.At Ford,safety is paramount at every stage of development.A vehicle without a fixed roof structure requires innovation to provide new levels of safety.In developing the door-mounted inflatable curtain(DMIC)on C70,we forged a method to provide passengers with uniquely tailored air-bag
100、protection.Vehicle air-bag curtains typically are mounted in the roof beams and inflate downward to help protect occupants in an accident.In C70,engineers found a way to anchor the curtains in the doors.In an accident,the C70 curtains inflate upward.To further compensate for top-down driving,the doo
101、r-mounted curtains have an extra-stiff structure composed of overlapping rows of cells that stay upright and help protect the head.They also deflate more slowly to help provide added protection in the event of a rollover accident.Door-mounted curtains arent the only unique solution we developed to a
102、ddress the safety challenges posed by a convertible.From the rounded fenders to the engine location,C70 has been engineered for safety,as was the first C70 launched in 1996:Engineers cordoned C70 into zones with different types of steel to help control damage and absorb and divert crash energy.C70s
103、windscreen pillars withstand more than twice the cars weight.C70s engine is positioned to reduce the chance of it entering the passenger compartment in a crash.Rounded shapes and smooth surfaces help reduce the risk of injury to pedestrians,cyclists or others.C70s Intelligent Driver Information Syst
104、em monitors steering wheel movement,accelerator position,braking and other functions,processes the information and,if necessary,automatically delays phone calling or other activity that is not crucial to safety.As a responsible leader in safety innovation,Ford shares lifesaving technologies without
105、hesitation.Ford is making the BeltMinder safety-belt reminder system and RSC(Roll Stability Control),one of the worlds most advanced vehicle stability features,available to other manufacturers and suppliers.We know that the two most important ways to help prevent injuries are getting people to buckl
106、e up and preventing accidents in the first place.Well keep driving innovation to advance the cause.Ford Motor Company Annual Report 200513Ford Motor Company Annual Report 200512Ford Motor Company Annual Report 200513Ford Motor Company Annual Report 200512Anne Blec,President and CEO,Volvo Cars North
107、AmericaWith its three-piece retractable hardtop and dramatic good looks,it would be only natural to market Volvos new C70 as a wind-in-your-hair adventurer.But Anne Blec knows the truly innovative way to go is to look beyond that to the safety within.C70 embodies the notion that a safe vehicle can b
108、e beautiful,and vice versa.“We are thoughtful in developing our vehicles in terms of the environment,reusable materials,safety and reliability,”says Blec,shown above with a new C70 in Nevada.“But that doesnt mean we arent also giving our customers beautiful vehicles,and C70 is an excellent example.”
109、C70s appealing profile belies the safety advances underneath the door-mounted inflatable curtain air bag,strategic use of several grades of steel for maximum protection and other reassuring touches.“Like our vehicle development,marketing for C70 and our other vehicles is holistic,”says Blec.“Our cus
110、tomers attitudes are complex.Their lives are made up of concerns for safety and the environment,but also emotional enjoyment and reward.We embrace that completeness in both our vehicles and our efforts to reach the customer.”Ford Motor Company Annual Report 2005PBFord Motor Company Annual Report 200
111、514Design Innovation Ford iosisFord Motor Company Annual Report 200515Ford Motor Company Annual Report 2005PBMore Emotion in the MetalFord is a leader in innovative technologies and solutions that make our vehicles functional,safe,reliable and fun to drive.We also extend innovation to the realm of d
112、esign,distilling emotion and themes of national identity into sheet metal befitting each of our eight brands.For Ford in North America,we launched our bold,American design direction in 2005 with the Ford Fusion midsize sedan.Fusions distinctive chrome three-bar grille establishes the new face of For
113、d in America and its low,wide,sloping hood,steeply raked windshield and strong character line sweeping from front to rear hint at the performance this all-new sedan delivers.An ocean away,the Ford iosis concept car,shown above in the mountains of southern France,signals a new design direction descri
114、bed as“kinetic design”for Ford customers in Europe.The concept car,which also debuted in 2005,shows how designers have been able to visually capture the energy of vehicles in motion.As one of the most emotional purchases many people ever make,we understand that our vehicles must be compelling,expres
115、sing emotions and values while transcending diverse cultures.Ford Motor Company Annual Report 200517Ford Motor Company Annual Report 200516Ford Motor Company Annual Report 200517Ford Motor Company Annual Report 200516Martin Smith,Executive Design Director,Ford EuropeTo Martin Smith,design should cle
116、arly communicate a brands character.“Design is not an arbitrary process,”he says.“Each line should serve a purpose and each surface fulfill a visual function.”“Kinetic design,”as Smith describes it,is the vision driving the design of his Ford iosis,the concept car that will influence all Ford Europe
117、an vehicle designs going forward.“Kinetic design expresses energy and movement,and visualizes the dynamic driving qualities of the vehicle even when standing still,”says Smith,shown above with iosis.“In iosis,we brought together all of the elements of a new design language,”he says.“This vehicle rep
118、resents not so much a new chapter,but a new book for Ford Europe.”Ford Motor Company Annual Report 200517Ford Motor Company Annual Report 200516Ford Motor Company Annual Report 200517Ford Motor Company Annual Report 200516Design Innovation Ford iosisFord is undergoing a worldwide design revolution.I
119、n the United States,for example,designers are distilling the“American-ness”running through the Ford F-150 and Mustang,becoming more consistent and innovative in applying what we know about the extroverted optimism of the American culture.A more overt form language and bold designs,such as those deve
120、loped for the Ford Fusion,are expressive and right for American customers.The Blue Oval design revolution also is unfolding in Europe,with designs that have been purposely developed to appeal to a cross section of customers from Scandinavia to the Mediterranean.We pulled the wraps off the Ford iosis
121、 concept at the 2005 Frankfurt Auto Show.Ford iosis represents the vision of Ford Europes future design language described as“kinetic design.”This new design DNA is defined by strong proportions,married to a form language defined by dynamic lines and spanned by full surfaces.On iosis,for example,the
122、 strong shoulder is supported by an undercut line,imparting a dynamic quality from front fender to taillight.Another important element that will help distinguish the face of Ford in Europe is the inverted trapezoid below the grille,as seen on iosis,which also features dramatic double-pivoting doors
123、that open to reveal an interior with a futuristic mix of color,materials and textures woven to complete the design vision.Sweeping shapes and forms,echoing and flowing in harmony through the interior and exterior,are the future of Ford Europe.They represent kinetic design energy in motion.Elements o
124、f the Ford DNA visualized through iosis,an exciting blend of a four-seat sedan configuration encapsulated within a muscular coupe profile,will make their production debut this year in the new European S-MAX a sport activity vehicle with room for up to seven passengers.The design revolution for Ford
125、Motor Company continues unfolding around the globe,as we distill the DNA of our eight unique brands into compelling designs aimed at winning the hearts and minds of customers the world over.Ford Motor Company Annual Report 200519Ford Motor Company Annual Report 200518Ford Motor Company Annual Report
126、 200519Ford Motor Company Annual Report 2005181 Mazda CX-7“Practical”rarely feels as sporty as it does in Mazdas new CX-7 crossover sport utility vehicle due out in 2006.Designed specifically for the pivotal North American market,the five-passenger CX-7 grew out of the 2005 MX-Crossport concept that
127、 brings together functionality and Mazdas“soul of a sports car”signature.2 Aston Martin V8 Vantage In 2005,Aston Martin launched the highly anticipated production version of its V8 Vantage,first shown as a concept in 2003.It is the third model in the Aston Martin range that also includes the Vanquis
128、h S and DB9.The agile V8 Vantage helps advance a strategy to reinvigorate and attract younger customers to the brand.3 Lincoln MKX Lincoln is enthusiastically embracing modern designs and innovations.For instance,when the Lincoln MKX goes on sale later in 2006,this five-passenger crossover utility v
129、ehicle aims to appeal to a new generation of luxury buyers who reward their successes in more understated,self-confident ways.4 Jaguar XK Theres new excitement in the world of Jaguar,thanks in large part to the new Jaguar XK.In design and engineering,XK reinforces the marques reputation for turning
130、out vehicles that are as rewarding to drive as they are hot to look at.With XK,Jaguar further establishes its position as a world leader in lightweight vehicle technology.5 Ford Shelby GT500 The 2007 Ford Shelby GT500,the most powerful production Mustang ever,cranks out 475 horsepower.Its the produc
131、t of a rekindled relationship with Carroll Shelby,one of the legendary innovators of racing.Ford took the modern Mustang muscle car and classic Shelby performance cues,mixed thoroughly and fashioned a modern successor to the famous Shelby GT500 of the 1960s.It goes on sale later in 2006.6 Land Rover
132、 Range Rover Sport The Range Rover Sport launched to great acclaim in 2006,completing a product renaissance for Land Rover.The Range Rover Sport embodies the combination of style and substance that characterize modern Land Rover vehicles.As the brands first entry into the performance sport utility m
133、arket,it delivers a dynamic driving experience on-road and true Land Rover capability off-road.Product Innovation364125Ford Motor Company Annual Report 200519Ford Motor Company Annual Report 200518Ford Motor Company Annual Report 200519Ford Motor Company Annual Report 200518Board of Directors and Ex
134、ecutives Board of Directors As of April 1,2006John R.H.Bond(2,4,5)Stephen G.Butler(1,5)Kimberly A.Casiano(3,4,5)Edsel B.Ford II(3,4)William Clay Ford,Jr.(3,4)Irvine O.Hockaday,Jr.(1,5)Marie-Jose 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)James J.
135、PadillaCarl E.Reichardt(4)Robert E.Rubin(2,4,5)John L.Thornton(4,5)Committee Memberships(1)Audit(2)Compensation(3)Environmental and Public Policy(4)Finance(5)Nominating and GovernanceExecutive Officers Group As of April 1,2006William Clay Ford,Jr.Chairman of the Board and Chief Executive Officer Jam
136、es J.PadillaPresident and Chief Operating OfficerLewis W.K.BoothExecutive Vice President,Ford Europe and Premier Automotive Group,and Chairman,Ford Europe,Jaguar and Land Rover Mark FieldsExecutive Vice President and President,The Americas Donat R.Leclair,Jr.Executive Vice President and Chief Financ
137、ial OfficerMark A.SchulzExecutive Vice President and President,International Operations Anne L.StevensExecutive Vice President and Chief Operating Officer,The AmericasMichael E.BannisterGroup Vice President,Chairman and Chief Executive Officer,Ford Motor Credit CompanyFrancisco N.CodinaGroup Vice Pr
138、esident,North America Marketing,Sales and ServiceJohn FlemingGroup Vice President,President and Chief Executive Officer,Ford EuropeDerrick M.KuzakGroup Vice President,Product Development,The AmericasJoe W.LaymonGroup Vice President,Corporate Human Resources and Labor AffairsJ MaysGroup Vice Presiden
139、t,Design,and Chief Creative OfficerZiad S.OjakliGroup Vice President,Corporate AffairsRichard Parry-JonesGroup Vice President,Global Product Development and Chief Technical OfficerDavid T.SzczupakGroup Vice President,Manufacturing,The AmericasDavid G.LeitchSenior Vice President and General CounselJa
140、mes C.GouinVice President and ControllerOther Vice Presidents As of April 1,2006Marvin W.AdamsSenior Vice President,Corporate Strategy and Chief Information OfficerThomas K.BrownSenior Vice President,Global PurchasingDarryl B.HazelSenior Vice President and President,Ford Customer Service DivisionHan
141、s-Olov OlssonSenior Vice President and Chief Marketing Officer (Non-Executive Chairman,Volvo Cars)Fredrik ArpPresident and Chief Executive Officer,Volvo CarsJoseph BakajProduct Development,Ford EuropeStephen E.BiegunInternational Governmental AffairsMei Wei ChengPresident,Ford Motor(China)Ltd.Susan
142、M.CischkeEnvironmental and Safety EngineeringPeter J.DanielChief Operating Officer,Ford Asia Pacific and AfricaFelicia J.FieldsHuman ResourcesBennie W.FowlerCorporate Quality and Advanced Manufacturing EngineeringAl J.GiombettiFord and Lincoln Mercury Marketing and SalesLouise K.GoeserPresident and
143、Chief Executive Officer,Ford of MexicoSteven K.HampChief of StaffJoseph R.HinrichsNorth America Vehicle OperationsCharles B.HolleranChief Communications OfficerAntonio MacielPresident,South AmericaPaul A.MascarenasNorth American EngineeringMartin J.MulloyLabor AffairsStephen T.OdellMarketing,Sales a
144、nd Service,Ford EuropeJohn G.ParkerVice PresidentAnn Marie PetachTreasurerGeoff P.PolitesChief Executive Officer,Jaguar and Land RoverBarb J.Samardzich Powertrain OperationsGerhard SchmidtResearch and Advanced EngineeringRobert L.ShanksController,The AmericasJames P.TetreaultManufacturing,Ford Europ
145、eAlex P.VerChief Executive Officer and Chief Operating Officer,Automotive Component HoldingsA.J.WagnerPresident,Ford Motor Credit Company North AmericaFord Motor Company Annual Report 2005PBFord Motor Company Annual Report 200520Total Sales and RevenuesIn billions of dollarsTotal sales and revenues
146、were$177.1 billion in 2005,up$5.5 billion from 2004.200320042005$25.1Net Income In billions of dollars2005 net income was$2.0 billion,down from$3.5billion in 2004.European Market ShareFords market share in Europe was 10.8%in 2005,down from 10.9%in 2004.Automotive CashIn billions of dollarsFord ended
147、 2005 with$25.1 billion of automotive gross cash,including marketable and loaned securities and assets held in a short-term VEBA trust.U.S.Market ShareFord ranks second in the U.S.market with a total market share of 18.2%,including our Premier Automotive Group brands.Worldwide Vehicle Unit SalesIn t
148、housandsWorldwide vehicle unit sales were 6,818,000 in 2005,up 20,000 from 2004.$25.9$23.62003$0.52004$3.52005$2.02003200420056,7366,7986,818200310.7%200410.9%200510.8%200320.5%200419.3%200518.2%200320042005$164.3$171.6$177.1Financial ContentsManagements Discussion and Analysis of Financial Conditio
149、n and Results of Operations 22Quantitative and Qualitative Disclosures About Market Risk 49Consolidated Statement of Income 53Sector Statement of Income 54Consolidated Balance Sheet 55Sector Balance Sheet 56Consolidated Statement of Cash Flows 57Sector Statement of Cash Flows 58Consolidated Statemen
150、t of Stockholders Equity 59Notes to the Financial Statements 60Report of Independent Registered Public Accounting Firm 99Selected Financial Data 101Employment Data 102Managements Report on Internal Control Over Financial Reporting 103New York Stock Exchange and Pacific Exchange Required Disclosures
151、10321Ford Motor Company Annual Report 2005Managements Discussion and Analysis of Financial Condition and Results of OperationsOVERVIEWGeneration of Revenue,Income and Cash Our Automotive sectors revenue,income and cash are generated primarily from sales of vehicles to our dealers and distributors(i.
152、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 our customers.This is not the case,however,with respect to vehicles pr
153、oduced for sale to daily rental car companies that are subject to a guaranteedrepurchase option or vehicles produced for use in our own fleet(including management evaluation vehicles).Vehicles sold to dailyrental car companies that are subject to a guaranteed repurchase option are accounted for as o
154、perating leases,with lease revenue and profits recognized over the term of the lease.When we sell the vehicle at auction,we recognize a gain or loss on the difference,if any,between actual auction value and the projected auction value.Therefore,except for the impact of the daily rental units sold su
155、bject 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.Most of the vehicles sold by us to our dealers and distributors are financed at wholesale by Ford Credit.Upon Ford Credit originating the
156、 wholesale receivable related to a dealers purchase of a vehicle,Ford Credit pays cash to the relevant legal entity in our Automotive sector in payment of the dealers obligation for the purchase price of the vehicle.The dealer then pays off the wholesalefinance receivable when it sells the vehicle t
157、o a retail customer.Our Financial Services sectors revenue is generated primarily from interest on finance receivables,net of certain deferred 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 met
158、hod.Also,revenue from operating leases,net of certain deferred origination costs,is recognized on a straight-line basis over the term of the lease.Income is generated to the extent revenues exceed expenses,most of which are interest andoperating expenses.Transactions between the Automotive and Finan
159、cial Services sectors occur in the ordinary course of business.For example,FordCredit receives interest supplements and other support cost payments from the Automotive sector in connection with special vehiclefinancing and leasing programs that it sponsors.Ford Credit records these payments as reven
160、ue,and the Automotive sector makes the related cash payments,over the term of the related finance receivable or operating lease.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
161、 leasing programs,as a reduction to revenue at the later of the date the related vehicle sales are recorded or at the date the incentive program is both approved and communicated.See Note 1 of the Notes to Financial Statements for a more detailed discussion of transactions and payments between the A
162、utomotive and Financial Services sectors.Key Economic Factors and Trends Affecting the Automotive Industry Excess Capacity.According to CSM Worldwide,an automotive research firm,in 2005 the estimated automotive industry global production capacity for light vehicles(about 77 million units)significant
163、ly exceeded global production of cars and trucks(about 62 million units).In North America and Europe,the two regions where the majority of revenue and profits are earned in the industry,excess capacity was an estimated 17%and 14%,respectively.According to production capacity data projected by CSM Wo
164、rldwide,excess capacity conditions in North America could continue for several more years,but would be mitigated by the capacity reductions announced by us and General Motors Corporation when these planned reductions are completed.Pricing Pressure.Excess capacity,coupled with a proliferation of new
165、products being introduced in key segments by the industry,will keep pressure on manufacturers ability to increase prices on their products.In addition,the incremental new U.S.manufacturing capacity of foreign manufacturers(so-called transplants)in recent years has contributed,and is likely to contin
166、ue to contribute,to the severe pricing pressure in that market.For example,in 2006,Toyota Motor Corporation is expected to complete construction of an assembly plant in Texas that reportedly will be capable of producing at least 200,000 full-size pick-up trucks per year.Thereduction of real prices f
167、or similarly contented vehicles in the United States has become more pronounced since the late 1990s,and we expect that a challenging pricing environment will continue for some time to come.In Europe,the automotive industry also hasexperienced intense pricing pressure for several years for the same
168、reasons discussed above,exacerbated in recent years by the Block Exemption Regulation.Ford Motor Company Annual Report 200522Ford Motor Company Annual Report 200523Ford Motor Company Annual Report 200522Ford Motor Company Annual Report 200523Managements Discussion and Analysis of Financial Condition
169、 and Results of OperationsConsumer Spending Trends.We expect,however,that a decline in or the inability to increase vehicle prices could be offset by the spending habits of consumers and their propensity to purchase over time higher-end,more expensive vehicles and/or vehicles withmore features.Over
170、the next decade,in the United States and other mature markets,we expect that growth in spending on vehicle mix and content will change generally in line with GDP.The benefits of this to revenue growth in the automotive industry are significant.In the United States,for example,consumers in the highes
171、t income bracket are buying more often and are more frequently buyingupscale.Although growth in vehicle unit sales(i.e.,volume)will be greatest in emerging markets in the next decade,we expect that themature automotive markets(e.g.,North America,Western Europe,and Japan)will continue to be the sourc
172、e of a majority of globalindustry revenues.We also expect that the North American market will continue as the single largest source of revenue for theautomotive industry in the world.Health Care Expenses.In 2005,our health care expenses for U.S.employees,retirees,and their dependents were$3.5 billio
173、n,with about$2.4 billion for postretirement health care and the balance for active employee health care.In 2005,prescription drugs continued to represent approximately one-third of our total health care expense.Although we have taken measures to have employees and retirees bear a higher portion of t
174、he costs of their health care benefits,we expect our health care costs to continue to increase.For 2006,our trend assumptions for U.S.health care costs include an initial trend rate of 7%,gradually declining to a steady state trend rate of 5%reached in 2011.These assumptions include the effect of ac
175、tions we are taking and expect to take to offset health care inflation,including eligibility management,employee education and wellness programs,competitive sourcing,and appropriate employee cost sharing.Commodity and Energy Price Increases.Commodity price increases,particularly for steel and resins
176、(which are our two largest commodity exposures and among the most difficult to hedge),have occurred recently and are continuing during a period of strongglobal demand for these materials.In addition,energy prices increased significantly in 2005.In particular,gasoline prices in the United States incr
177、eased in volatility and rose to levels well over$2.00 per gallon in 2005,and have remained at levels significantly higher than 2004.This has had an adverse effect on the demand for full-and medium-sized sport utility vehicles in the United States.Currency Exchange Rate Volatility.The U.S.dollar has
178、depreciated against most major currencies since 2002.This created downward margin pressure on auto manufacturers that have U.S.dollar revenue with foreign currency cost.Because we produce vehicles in Europe(e.g.,Jaguar,Land Rover and Volvo models)for sale in the United States and produce components
179、in Europe(e.g.,engines)for use in some of our North American vehicles,we experienced margin pressure.Although this pressure was offset partiallyby gains on foreign exchange derivatives,this offset reduces over time due to the expiration of favorable hedges previously put in place.We,like many other
180、automotive manufacturers with sales in the United States,are not always able to price for depreciation of the U.S.dollar due to the extremely competitive pricing environment in the United States.Managements Discussion and Analysis of Financial Condition and Results of OperationsTrends and Strategies
181、 the Way Forward Plan The global automotive marketplace has become increasingly fragmented and crowded,and we anticipate that this trend will accelerate into the future.Anticipating little growth in the overall volume of vehicles sold in North America for the foreseeablefuture,we expect more manufac
182、turers to offer an increasing number of products.Presently,there are about 255 different nameplatesbeing offered in the United States,compared with 215 in 2002 and a projected 300 or more by 2010.In order to stabilize and grow our U.S.market share in this increasingly competitive environment and gen
183、erally improve our business,we are implementing a business improvement plan for our North American automotive operations that we refer to as our Way Forward plan.This plan focuses on the following key areas:renewed customer focus and brand differentiation,commitment to innovation,clear pricing,and c
184、ost reductions.Customer Focus and Brand Differentiation To compete more effectively in todays global marketplace,a sharpened customer focus is essential.Toward that end,we have developed a new customer segmentation model using a proprietary large-scale quantitative survey to better understand the va
185、lues and attitudes in the U.S.marketplace.This model focuses on values and attitudes that drive purchase behaviors and that cross traditional demographic lines of age,lifestage,gender and cultural identity.Using this new segmentation model,we selected target customer segments for our Ford,Lincoln,an
186、d Mercury brands.These target customer segments will provide a sharper focus for our business,and we will use this focus to ensure all aspects of our business will be aligned to satisfy our customers current needs and anticipate their future needs.To effectively leverage our global resources,we must
187、 focus on differentiating our brand identities,especially within the crowded North American marketplace.Going forward,we intend to have clear and distinct identities for our brands.Our Ford brand in the United States stands for bold American design that exudes strength and progress;a number of our p
188、roducts already reflect that design philosophy,including our award-winning Mustang,F-Series,and Fusion models.We plan to continue this brand philosophy in futureFord-brand models,such as the new Ford Edge crossover vehicle.Mercury appeals to consumers with different values and attitudes,and brings c
189、onquest purchasers to us.Our strategy for the Mercury brand is to create vehicles that offer modern,expressive design for the American consumer,while maintaining common product functionality with the Ford brand.The Mercury Mariner and Mercury Milan are examples of products delivering the intended br
190、and identity and product functionality.Our strategy for Lincoln is to appeal to self-made American consumers who are achieving their dreams,by offering these consumers refined and dynamic vehicle design,smooth power on demand,and a personalized environment.The Lincoln Zephyr and Lincoln Navigator ar
191、e examples of products delivering this brand identity today,and this brand philosophy will be continued in future products,such as the new Lincoln MKX crossover vehicle.Innovation Initiative To continue delivering the cutting-edge technology consumers desire,we also are rededicating ourselves to dri
192、ving innovation through our entire business,beginning with the way we analyze the marketplace,develop and produce products,and continuing through the sales and service channels.Our innovation initiative demands creative and original thinking,implemented through adisciplined process,throughout our gl
193、obal operations,which we can then maximize through global synergies in order to create morenew products and features,more flexible plants,more common processes and economies of scale to deliver more new product faster to all of our markets and for all of our brands.Our strategy is to differentiate o
194、urselves in the marketplace through design innovation,safety innovation,and new environmentally-friendly technologies.Clear Pricing We began introducing clear,simple pricing two years ago with the introduction of the new Mustang,and have continued this strategy with new models such as the Ford Fusio
195、n,Mercury Milan and Lincoln Zephyr.These vehicles are proving that well pricedproducts with great appeal can reduce our reliance on incentives.Our plan is to extend this strategy to all of our vehicles over time.This is a key component of communicating our brand philosophy to our customers through b
196、old styling and clear,simple pricing.Ford will continue this approach of bringing sticker prices in line with actual transaction prices by reducing rebates over time as we introduce new models into the marketplace.Our customers will benefit from a simpler purchase experience and improved residualval
197、ues and cost of ownership.Ford Motor Company Annual Report 200524Ford Motor Company Annual Report 200525Ford Motor Company Annual Report 200524Ford Motor Company Annual Report 200525Managements Discussion and Analysis of Financial Condition and Results of OperationsCost Savings To improve our busine
198、ss and profitability,we plan to reduce our costs through material cost actions,health care cost reductions,and capacity and personnel reductions.Material Cost Actions.During 2005,we announced an initiative to enter into new long-term agreements with select strategic suppliers globally in order to st
199、rengthen collaboration and develop a sustainable business model to drive mutual profitability andtechnology development.This new Aligned Business Framework is expected to establish closer relationships with a smaller numberof suppliers,reducing by approximately 50 percent the number of suppliers to
200、whom we source new business for 20 high-impact component systems.These systems,including seats,wiring,restraint systems,and instrument and trim panels,represent about half of our annual production purchases globally.In addition,we have established cross-functional component systems teams with common
201、objectives and processes to establish component systems business plans with the goal of further reducing material costs.With these actions,we are targeting net material cost reductions excluding special items of at least$6 billion by 2010 at constant volume,mix and exchange,net of new product conten
202、t and regulatory changes.As disclosed in our Current Report on Form 8-K dated October 1,2005,we also finalized an agreement with Visteon Corporation(Visteon),our largest supplier,in which we assumed control of 17 plants and six other facilities in the United States and Mexico.These assets were trans
203、ferred to Automotive Components Holdings,LLC(ACH),a temporary business controlled and managed by us,to protect the flow of critical parts and components in the near-term and,over time,to improve our sourcing flexibility and cost competitiveness.ACHs mission is to prepare most of the acquired busines
204、ses for sale to companies with the capital and expertise to supply us with high-quality components and systems at competitive prices.As we prepare these businesses for sale,we also aretaking actions to reduce hourly employment at ACH by approximately 5,000 positions,primarily through buyouts.Health
205、Care Cost Reductions.Effective January 1,2007 for U.S.salaried employees hired before June 1,2001,we established a company contribution limit set at 2006 levels for retiree health care benefits(U.S.salaried employees hired on or after June 1,2001 participate in a defined contribution retiree health
206、care plan).In addition,for U.S.salaried employees hired before January 1,2004 who retire on or after June 1,2006,company-paid retiree life insurance benefits are limited to$50,000(employees hired on or after January 1,2004 do not receive company-paid retiree life insurance benefits).These benefit ch
207、anges resulted in a decrease in the year-end 2005 other postretirement employee benefit(OPEB)obligation of about$3 billion and a reduction in 2006 and ongoing expenseof about$400 million annually.The related cash savings will grow over time.In December 2005,we reached an agreement with the UAW that
208、would increase retiree health care cost sharing.As part of the agreement,an independent defined contribution Voluntary Employee Benefit Association trust would be established for the purpose of mitigating the financial impact of increased cost sharing to retirees.This trust would be funded primarily
209、 through(i)wage diversions from active hourly employees,(ii)specified cash contributions aggregating$108 million to be made by us over several years,and(iii)potential cash contributions to be made by us based on any price appreciation above$8.145 per share of a notional amount of 8,750,000 shares of
210、 Ford Common Stock.The agreement is subject to court approval of a proposed settlement of a purported classaction challenging our decision to modify the retiree health care plan;additional retirees have expressed their objection to the agreement by moving to intervene in the pending lawsuit and fili
211、ng a follow-on suit of their own.If the settlement of the purported class action receives court approval,the agreement is expected to reduce our OPEB obligation by about$5 billion,with projectedaverage annual cost savings of about$650 million and reduced average annual cash outlays of about$200 mill
212、ion.Capacity and Personnel Reductions.Our North American operations presently have the capacity to support a U.S.market share significantly in excess of the 17%share our Ford,Lincoln,and Mercury brands achieved in 2005.As a result,our plant utilization rate in North America has been about 75%,which
213、is not sustainable.Given the continued proliferation of new model offerings bycurrent and potential participants in the U.S.automotive market,we recognize the need to match our North American production capacity to realistic volume and market share expectations.Accordingly,we plan to idle and cease
214、operations at 14 manufacturing facilities in North America by 2012,including seven vehicle assembly plants.Associated with these plant idlings,we intend to reduce our manufacturing employment by 25,000 to 30,000 people during the same period.These personnel reductions do not include actions at ACH,a
215、nd are in addition to the previously announced reduction of the equivalent of 4,000 salaried positions by the end of the first quarter of 2006,as well as a reduction in our officer ranks by 12 percent by the end of the first quarter of 2006.Managements Discussion and Analysis of FinancialCondition a
216、nd Results of OperationsThe first facility to be idled pursuant to the Way Forward plan will be our St.Louis Assembly Plant,which is targeted to ceaseproduction by the end of the first quarter of 2006.Further,we have announced plans to idle the following facilities through 2008:Atlanta Assembly Plan
217、t,Wixom Assembly Plant,Batavia Transmission Plant,Windsor Casting Plant,and two additional assemblyplants to be determined later this year.In addition,production at our St.Thomas Assembly Plant will be reduced to one shift.Theseactions should reduce our North American assembly capacity by 1.2 millio
218、n units or 26%and help improve our assembly capacityutilization rate.RESULTS OF OPERATIONSWe have reclassified certain prior year amounts to conform to current year presentation.FULL-YEAR 2005 RESULTS OF OPERATIONSOur worldwide net income was$2.0 billion or$1.05 per share of Common and Class B stock
219、 in 2005,down$1.5 billion from aprofit of$3.5 billion or$1.73 per share in 2004.Results by business sector for 2005,2004 and 2003 are shown below(in millions):200520042003Income/(loss)before income taxesAutomotive sector.$(3,895)$(155)$(1,908)Financial Services sector.5,8915,0083,247Total Company.1,
220、9964,8531,339Provision for/(benefit from)income taxes(a).(512)938123Minority interests in net income/(loss)of subsidiaries(b).280282314Income/(loss)from continuing operations.2,2283,633902Income/(loss)from discontinued operations.47(146)(143)Cumulative effect of change in accounting principle(c).(25
221、1)(264)Net income/(loss).$2,024$3,487$495_(a)See Note 3 of the Notes to the Financial Statements for disclosure regarding 2005 effective tax rate.(b)Primarily related to Ford Europes consolidated less-than-100%-owned affiliates.(c)See Notes 17 and 27 of the Notes to the Financial Statements.Included
222、 in Income/(loss)before income taxes are items we do not consider indicative of our ongoing operating activities(specialitems).The following table details the 2005,2004,and 2003 special items by business unit(in millions):200520042003Automotive SectorFord North AmericaVisteon-related charges*.$(468)
223、$(600)$(1,597)Personnel-reduction programs.(401)Fuel-cell technology charges.(116)(182)Changes in state non-income tax law.85Divestiture of non-core business(Beanstalk Group,LLC).(59)Ford EuropePersonnel-reduction programs.(510)(49)(513)Premier Automotive Group(PAG)Jaguar/Land Rover impairment.(1,30
224、0)Personnel-reduction programs.(245)(110)Ford Asia Pacific and AfricaDivestiture of non-core business(certain Australia dealerships).14(81)Personnel-reduction programs.(33)Other AutomotiveDivestiture of non-core businesses(primarily related to Kwik-Fit Group Limited).1521749Total Automotive sector.(
225、2,881)(1,005)(2,061)Financial Services SectorDivestiture of non-core business(The Hertz Corporation(Hertz).1,499Property clean-up settlement.45Total.$(1,382)$(960)$(2,061)_*See Notes 4 and 23 of the Notes to the Financial Statements for discussion of Visteon-related charges.Ford Motor Company Annual
226、 Report 200526Ford Motor Company Annual Report 200527Ford Motor Company Annual Report 200526Ford Motor Company Annual Report 200527Managements Discussion and Analysis of FinancialCondition and Results of OperationsAUTOMOTIVE SECTOR RESULTS OF OPERATIONS2005 Compared with 2004Details by Automotive bu
227、siness unit of Income/(loss)before income taxes are shown below(in millions):Income/(Loss)BeforeIncome Taxes200520042005Over/(Under)2004The Americas Ford North America.$(2,500)$684$(3,184)Ford South America.389140249Total The Americas.(2,111)824(2,935)Ford Europe and PAG Ford Europe.(381)65(446)PAG.
228、(1,645)(850)(795)Total Ford Europe and PAG.(2,026)(785)(1,241)Ford Asia Pacific and Africa/Mazda Ford Asia Pacific and Africa.42(36)78 Mazda and Associated Operations.255118137Total Ford Asia Pacific and Africa/Mazda.29782215Other Automotive.(55)(276)221Total Automotive sector.$(3,895)$(155)$(3,740)
229、Details of Automotive sector sales and vehicle unit sales by Automotive business unit for 2005 and 2004 are shown below:Sales(in billions)Vehicle Unit Sales(a)(in thousands)200520042005Over/(Under)2004200520042005Over/(Under)2004The Americas Ford North America.$80.6$83.0$(2.4)(3)%3,4433,623(180)(5)%
230、Ford South America.4.33.01.3433362924415Total The Americas.84.986.0(1.1)(1)3,7793,915(136)(3)Ford Europe and PAG Ford Europe.30.026.53.5131,7851,705805 PAG.30.327.62.710757771(14)(2)Total Ford Europe and PAG.60.354.16.2112,5422,476663Ford Asia Pacific and Africa/Mazda Ford Asia Pacific and Africa(b)
231、.7.77.00.7104654075814 Mazda and Associated Operations(c).0.60.63232Total Ford Asia Pacific and Africa/Mazda.8.37.01.3194974079022Total Automotive sector.$153.5$147.1$6.446,8186,79820_(a)Vehicle unit sales generally are reported on a where-sold basis,and include sales of all Ford-badged units and un
232、its manufactured by Ford and sold to othermanufacturers,as well as units distributed for other manufacturers.Vehicles sold to daily rental car companies that are returned to us pursuant to a guaranteedrepurchase option and vehicles used in our own fleet(including management evaluation vehicles)are i
233、ncluded in vehicle unit sales at the time they are disposedof by us through used car channels.2005 vehicle unit sales include about 50,000 units transferred to Hertz which were still being used in Hertz operations as ofthe date we sold Hertz;sales above does not include revenue from these units.(b)I
234、ncluded in vehicle unit sales of Ford Asia Pacific and Africa are Ford-badged vehicles sold in China and Malaysia by certain unconsolidated affiliates totalingabout 87,000 and 66,000 units in 2005 and 2004,respectively.Sales above does not include revenue from these units.(c)Reflects sales of Mazda6
235、 by our consolidated subsidiary,AutoAlliance International,Inc.(AAI),beginning with the consolidation of AAI in the third quarterof 2005.See Note 17 of the Notes to the Financial Statements.Managements Discussion and Analysis of Financial Condition and Results of OperationsDetails of Automotive sect
236、or market share for selected markets for 2005 and 2004 are shown below:Dealer-Owned Stocks(a)Market Share(in thousands)Market 200520042005Over/(Under)2004200520042005Over/(Under)2004 U.S.(b).17.0%18.0%(1.0)pts.733 794 (61)Brazil(b).12.4 11.8 0.6 18 19 (1)Europe(b)(c).8.5 8.6 (0.1)342 356 (14)PAG-U.S
237、./Europe(c).1.2/2.3 1.3/2.3 (0.1)/0 45/69 41/68 4/1 Australia(b).13.1 14.2 (1.1)18 19 (1)_(a)Dealer-owned stocks represent our estimate of vehicles shipped to our customers(dealers)and not yet sold by the dealers to their retail customers,as well as some vehicles reflected in our inventory.(b)Includ
238、es only Ford and,in the United States,Lincoln and Mercury brands.(c)European market share is based,in part,on estimated 2005 vehicle registrations for our 19 major European markets.Overall Automotive Sector The decline in results reflected losses at our Ford North America business unit,an impairment
239、 charge for long-lived assets of Jaguar/Land Rover operations,and higher charges for personnel reduction programs,offset partially by more favorable market performance at Land Rover and improved results of our Ford South America business unit,Other Automotive,and Ford Asia Pacificand Africa/Mazda se
240、gment.The table below details our 2005 cost performance(in billions):Explanation of Cost Performance 2005 Costs*Better/(Worse)than 2004 Net product costs New product and commodities-related cost increases,offset partially by pricing reductions from our suppliers and design cost reductions on existin
241、g products.$(1.0)Pension and health care Primarily the effect of lower discount rates.(0.8)Quality-related Warranty performance on prior model-year vehicles,offset partially by cost recoveries from suppliers (including Bridgestone-Firestone North American Tire,LLC).(0.4)Depreciation and amortization
242、 Primarily related to investments for new vehicles and acceleration of depreciation in a number of our operations.(0.3)Overhead Primarily reductions in salaried personnel.0.3 Manufacturing and engineering Primarily hourly and salaried personnel reductions and ongoing efficiencies in our plants.0.9 T
243、otal.$(1.3)_*At constant volume,mix and exchange and excluding special items and discontinued operations.The Americas SegmentFord North America.The decline in results primarily reflected unfavorable cost performance,lower U.S.market share,lower dealer stock levels,charges for personnel-reduction pro
244、grams,and unfavorable currency exchange.Unfavorable cost performanceprimarily reflected higher warranty and material costs.Ford South America.The increase in earnings primarily reflected favorable net pricing in excess of higher commodity costs,higher vehicle unit sales and favorable currency exchan
245、ge.Ford Motor Company Annual Report 200528Ford Motor Company Annual Report 200529Ford Motor Company Annual Report 200528Ford Motor Company Annual Report 200529Managements Discussion and Analysis of Financial Condition and Results of OperationsFord Europe and PAG SegmentFord Europe.The decline in res
246、ults primarily reflected higher charges for personnel-reduction programs,negative net pricing,and adverse product and market mix,offset partially by favorable cost performance and exchange.PAG.The decline in results primarily reflected an impairment charge for long-lived assets of the Jaguar/Land Ro
247、ver operations,unfavorable currency exchange,and higher charges for personnel-reduction programs,offset partially by favorable net pricing,improved product mix primarily reflecting the impact of new Land Rover products,and favorable cost performance.For additionaldiscussion of the impairment charge,
248、see Note 9 of the Notes to the Financial Statements.Ford Asia Pacific and Africa/Mazda SegmentFord Asia Pacific and Africa.The improvement in earnings primarily reflected the non-recurrence of 2004 charges related to the disposition of certain dealerships,favorable changes in exchange rates,and a ga
249、in on the disposal of our investment in Mahindra&Mahindra Ltd.,offset partially by unfavorable product mix,higher costs associated with new products and facilities in China and charges for personnel-reduction programs.Mazda and Associated Operations.The increase in earnings primarily reflected gains
250、 on our investment in Mazda convertible bonds and improved Mazda operating results.In the second half of 2005,we converted to equity about 82.5%of our Mazda convertible bonds,and,therefore,expect diminished income effects in future periods from mark-to-market adjustments for thesebonds.Other Automot
251、ive The improvement primarily reflected higher returns on invested cash and a gain on the sale of non-core businesses,offset partiallyby lower interest on tax refunds from prior-year federal and state tax matters(about$450 million in 2005 compared with$600 million in 2004).2004 Compared with 2003 De
252、tails by Automotive business unit of Income/(loss)before income taxes are shown below(in millions):Income/(Loss)Before Income Taxes 200420032004Over/(Under)2003The Americas Ford North America.$684$196$488 Ford South America.140 (129)269Total The Americas.824 67 757 Ford Europe and PAG Ford Europe.65
253、 (1,620)1,685 PAG.(850)171 (1,021)Total Ford Europe and PAG.(785)(1,449)664 Ford Asia Pacific and Africa/Mazda Ford Asia Pacific and Africa.(36)(23)(13)Mazda and Associated Operations.118 69 49Total Ford Asia Pacific and Africa/Mazda.82 46 36 Other Automotive.(276)(572)296Total Automotive sector.$(1
254、55)$(1,908)$1,753Managements Discussion and Analysis of FinancialCondition and Results of OperationsDetails of Automotive sector sales and vehicle unit sales by Automotive business unit for 2004 and 2003 are shown below:Sales(in billions)Vehicle Unit Sales(a)(in thousands)200420032004Over/(Under)200
255、3200420032004Over/(Under)2003The Americas Ford North America.$83.0$83.6$(0.6)(1)%3,6233,810(187)(5)%Ford South America.3.01.91.1582922108239Total The Americas.86.085.50.513,9154,020(105)(3)Ford Europe and PAG Ford Europe.26.522.24.3191,7051,609966 PAG.27.624.82.811771754172Total Ford Europe and PAG.
256、54.147.07.1152,4762,3631135Ford Asia Pacific and Africa/Mazda Ford Asia Pacific and Africa(b).7.05.81.2214073535415 Mazda and Associated Operations.Total Ford Asia Pacific and Africa/Mazda.7.05.81.2214073535415Other Automotive.Total Automotive sector.$147.1$138.3$8.866,7986,736621_(a)Vehicle unit sa
257、les generally are reported on a where-sold basis,and include sales of all Ford-badged units and units manufactured by Ford and sold to othermanufacturers,as well as units distributed for other manufacturers.Vehicles sold to daily rental car companies that are returned to us pursuant to a guaranteedr
258、epurchase option and vehicles used in our own fleet(including management evaluation vehicles)are included in vehicle unit sales at the time they are disposedof by us through used car channels.(b)Included in vehicle unit sales of Ford Asia Pacific and Africa are Ford-badged vehicles sold in China and
259、 Malaysia by certain unconsolidated affiliates totalingabout 66,000 and 34,000 units in 2004 and 2003,respectively.Sales above does not include revenue from these units.Details of Automotive sector market share for selected markets for 2004 and 2003 are shown below:Dealer-Owned Stocks(a)Market Share
260、(in thousands)Market200420032004Over/(Under)2003200420032004Over/(Under)2003U.S.(b).18.0%19.2%(1.2)pts.7947913Brazil(b).11.811.50.319127Europe(b)(c).8.78.60.1356403(47)PAG U.S./Europe(c).1.3/2.31.3/2.10/0.241/6847/59(6)/9Australia(b).14.213.90.319181_(a)Dealer-owned stocks represent our estimate of
261、vehicles shipped to our customers(dealers)and not yet sold by the dealers to their retail customers,as well assome vehicles reflected in our inventory.(b)Includes only Ford and,in the United States,Lincoln and Mercury brands.(c)European market share is based on vehicle registrations for our 19 major
262、 European markets.Overall Automotive SectorThe improvement in Income/(loss)before income taxes primarily reflected lower Visteon-related charges,higher net pricing,favorable cost performance and the favorable effect of tax-related interest on refunds and settlements of prior-year federal and stateau
263、dits,offset partially by lower vehicle unit sales and unfavorable changes in currency exchange rates.The Americas SegmentFord North America.The improvement in earnings primarily reflected the non-recurrence of$1.6 billion of charges in 2003related to Visteon,offset by a charge of$600 million to esta
264、blish an allowance against a receivable from Visteon in 2004.In addition,the improvement in earnings reflected positive net pricing and favorable cost performance,offset partially by lowervehicle unit sales,unfavorable changes in currency exchange rates(primarily weakening of the U.S.dollar compared
265、 with the Euroand the Canadian dollar)and a charge of$182 million related to our investment in Ballard Power Systems Inc.,a provider of fuel-celltechnology.Ford Motor Company Annual Report 200530Ford Motor Company Annual Report 200531Ford Motor Company Annual Report 200530Ford Motor Company Annual R
266、eport 200531Managements Discussion and Analysis of Financial Condition and Results of OperationsFord South America.The improvement in earnings primarily reflected positive net pricing and higher vehicle unit sales,offset partially by higher commodity costs.Ford Europe and PAG SegmentFord Europe.The
267、improvement in earnings primarily reflected favorable cost performance,lower charges related to the Ford Europe Improvement Plan(primarily employee separation charges)and higher profits at our Ford Otosan joint venture in Turkey.PAG.The increased loss primarily reflected unfavorable changes in curre
268、ncy exchange rates,as well as vehicle production reductions and employee separation charges at Jaguar related to the implementation of the PAG Improvement Plan and higher costsfor launching new vehicles,offset partially by positive net pricing.Ford Asia Pacific and Africa/Mazda SegmentFord Asia Paci
269、fic and Africa.The decline in earnings reflected a charge related to the disposition of certain dealerships,offset partially by favorable changes in exchange rates and higher vehicle unit sales.Mazda and Associated Operations.The change primarily reflected improvements in our Mazda-related investmen
270、ts.Other AutomotiveThe improvement in results primarily reflected higher tax-related interest on refund claims and the favorable effect on interestexpense of the settlements in 2004 of prior-year federal and state tax audits and 2004 debt repurchases.This was offset partially by the reclassification
271、 of interest expense on our 6.50%Junior Subordinated Debentures due 2032 held by a subsidiary trust,Ford Motor Company Capital Trust II.FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS2005 Compared with 2004 Details of the full year Financial Services sector Income/(loss)before income taxes for 2005
272、and 2004 are shown below(in millions):Income/(Loss)Before Income Taxes 200520042005Over/(Under)2004Ford Credit.$3,861$4,431$(570)Hertz operating results(a).974 493 481 Other Financial Services operating results.(39)84 (123)Gain on sale of Hertz(b).1,095 1,095Total Financial Services sector.$5,891$5,
273、008$883_(a)Includes amortization expense related to intangibles recognized upon consolidation of Hertz.(b)The segment presentation of the gain on sale of Hertz in Note 24 of the Notes to the Financial Statements is$1,006 million in the Hertz segment and$89 million in Other Financial Services.Ford Cr
274、edit Ford Credits income before income taxes was down$570 million.The decrease in earnings primarily reflected higher borrowing costs and the impact of lower retail receivable levels,offset partially by improved credit loss performance.Ford Credit reviews its business performance from several perspe
275、ctives,including:On-balance sheet basis.Includes the receivables Ford Credit owns and receivables sold for legal purposes that remain on Ford Credits balance sheet;Managements Discussion and Analysis of Financial Condition and Results of OperationsSecuritized off-balance sheet basis.Includes receiva
276、bles sold in securitization transactions that are not reflected on Ford Credits balance sheet;Managed basis.Includes on-balance sheet and securitized off-balance sheet receivables that Ford Credit continues to service;andServiced basis.Includes managed receivables and receivables sold in whole-loan
277、sale transactions where Ford Credit retains no interest in the sold receivables,but which it continues to service.Ford Credit analyzes its financial performance primarily on an on-balance sheet and managed basis.It retains interests in receivables sold in off-balance sheet securitizations and,with r
278、espect to subordinated retained interests,has credit risk.As a result,it evaluates credit losses,receivables and leverage on a managed basis as well as on an on-balance sheet basis.In contrast,Ford Credit does not have the same financial interest in the performance of receivables sold in whole-loan
279、sale transactions,and as a result,Ford Credit generally reviews the performance of its serviced portfolio only to evaluate the effectiveness of its origination and collection activities.To evaluate the performance of these activities,Ford Credit monitors a number of measures,such as repossession sta
280、tistics,losses on repossessions and the number of bankruptcy filings.Ford Credits operating results are impacted significantly by the level of its receivables,which are shown below(in billions):December 31,20052004On-Balance Sheet(including on-balance sheet securitizations)Finance receivables Retail
281、 installment.$65.7$81.7 Wholesale.39.6 23.8 Other.4.6 5.3Total finance receivables,net.109.9 110.8 Net investment in operating leases.22.2 21.9Total on-balance sheet*.$132.1$132.7Memo:Allowance for credit losses included above.$1.6$2.4 Securitized Off-Balance Sheet Finance receivables Retail install
282、ment.$18.0$16.7 Wholesale.18.9 Other.Total finance receivables.18.0 35.6 Net investment in operating leases.Total securitized off-balance sheet.$18.0$35.6Managed Finance receivables Retail installment.$83.7$98.4 Wholesale.39.6 42.7 Other.4.6 5.3Total finance receivables,net.127.9 146.4 Net investmen
283、t in operating leases.22.2 21.9Total managed.$150.1$168.3Serviced.$153.0$172.3 _*At December 31,2005 and December 31,2004,finance receivables of$44.7 billion and$16.9 billion,respectively,have been sold for legal purposes to consolidated securitization special purpose entities(SPEs).In addition,at D
284、ecember 31,2005,and December 31,2004,interests in operating leases and the related vehicles of$6.5 billion and$2.5 billion,respectively,have been transferred for legal purposes to consolidated securitization SPEs.These receivables and interests in operating leases and the related vehicles are availa
285、ble only for repayment of debt issued by those entities,and to pay other securitization investors and other participants;they are not available to pay Ford Credits other obligations or the claims of Ford Credits other creditors.On-Balance Sheet Receivables.On-balance sheet receivables decreased from
286、 year-end 2004 primarily reflecting lower retail contract placement volumes.The decrease was largely offset by the accounting consolidation of Ford Credits off-balance sheetwholesale securitization program as a result of certain changes made to the program in the fourth quarter of 2005,which caused
287、the receivables previously sold by Ford Credit to this program to be reported on-balance sheet.Securitized Off-Balance Sheet Receivables.Total securitized off-balance sheet receivables declined primarily reflecting the accounting consolidation discussed above.Managed and serviced receivables decreas
288、ed from year-end 2004 primarily reflecting lower retail contract placement volumes.Ford Motor Company Annual Report 200532Ford Motor Company Annual Report 200533Ford Motor Company Annual Report 200532Ford Motor Company Annual Report 200533Managements Discussion and Analysis of Financial Condition an
289、d Results of OperationsThe following table shows worldwide credit losses net of recoveries(charge-offs)for Ford Credit for the various categories of financing during the periods indicated.The loss-to-receivables ratios,which equal charge-offs divided by the average amount of receivables outstanding
290、for the period,are shown below for Ford Credits on-balance sheet and managed portfolios.200520042005Over/(Under)2004Charge-offs(in millions)On-Balance Sheet Retail installment and lease.$681$1,281$(600)Wholesale.23 43 (20)Other.2 3 (1)Total on-balance sheet.$706$1,327$(621)Reacquired Receivables(ret
291、ail)*.$22$74$(52)Securitized Off-Balance Sheet Retail installment and lease.$127$244$(117)Wholesale.Other.Total securitized off-balance sheet.$127$244$(117)Managed Retail installment and lease.$830$1,599$(769)Wholesale.23 43 (20)Other.2 3 (1)Total managed.$855$1,645$(790)Loss-to-Receivables Ratios O
292、n-Balance Sheet Retail installment and lease.0.72%1.25%(0.53)pts.Wholesale.0.09 0.20 (0.11)Total including other.0.57%1.02%(0.45)pts.Managed Retail installment and lease.0.73%1.29%(0.56)pts.Wholesale.0.06 0.10 (0.04)Total including other.0.54%0.96%(0.42)pts._*Reacquired receivables reflect the amoun
293、t of receivables that resulted from the accounting consolidation of Ford Credits FCAR Owner Trust retail securitization program(FCAR)in the second quarter of 2003.Charge-offs and loss-to-receivable ratios for Ford Credits on-balance sheet,securitized off-balance sheet and managed portfolios declined
294、 from a year ago,primarily reflecting fewer repossessions and a lower average loss per repossession.These improvementsresulted from a higher-quality retail installment and lease portfolio,higher used vehicle prices and enhancements to Ford Creditscollection practices.Lower levels of retail installme
295、nt receivables also contributed to reduced charge-offs.Shown below is an analysis of Ford Credits allowance for credit losses related to finance receivables and operating leases for the years ended December 31(dollar amounts in billions):20052004Allowance for Credit Losses Balance,beginning of year.
296、$2.4$2.9 Provision for credit losses.0.2 0.9 DeductionsCharge-offs.1.2 1.8 Recoveries.(0.5)(0.5)Net charge-offs.0.7 1.3 Other changes,principally amounts related to finance receivables sold and translation adjustments.0.3 0.1Net deductions.1.0 1.4Balance,end of year.$1.6$2.4Allowance for credit loss
297、es as a percentage of end-of-period net receivables.1.19%1.80%The allowance for credit losses decreased about$800 million from year-end 2004,primarily reflecting improved charge-off performance and the effect of lower retail receivable levels.Managements Discussion and Analysis of Financial Conditio
298、n and Results of OperationsHertz Operating Results The improvement in Hertz operating results primarily reflected the cessation of depreciation on long-lived assets from the pointHertz was held for sale(i.e.,September 2005)until it was sold,higher car and equipment rental volumes and improved pricin
299、g for equipment rental.Other Financial Services Operating Results The decrease in earnings primarily reflected the non-recurrence of a 2004 property clean-up settlement,and,in 2005,lower property sales and the write-off of aircraft leases related to the bankruptcy of Delta Air Lines.2004 Compared wi
300、th 2003 Details of the full-year Financial Services sector Income/(loss)before income taxes for 2004 and 2003 are shown below(in millions):Income/(Loss)Before Income Taxes 200420032004Over/(Under)2003Ford Credit.$4,431$2,956$1,475 Hertz*.493 228 265 Other Financial Services.84 63 21Total Financial S
301、ervices sector.$5,008$3,247$1,761_*Includes amortization expense related to intangibles recognized upon consolidation of Hertz.Ford Credit The increase in income before income taxes primarily reflected improved credit loss performance and improved leasing results.The improved credit loss performance
302、 primarily resulted from fewer repossessions and a lower average loss per repossession.Theimprovement in leasing results primarily reflected higher used vehicle prices and a reduction in the percentage of vehicles returned to Ford Credit at lease termination.HertzThe improvement in earnings primaril
303、y reflected higher vehicle and equipment rental volumes,lower fleet costs and higher proceeds received in excess of book value on the disposal of used vehicle and equipment,offset partially by lower pricing.LIQUIDITY AND CAPITAL RESOURCES Automotive Sector Our strategy is to ensure we have sufficien
304、t 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-related activities,having a long-dated debt maturity profile,maintaining committed credit facilities and fu
305、nding long-term liabilities over time.Ford Motor Company Annual Report 200534Ford Motor Company Annual Report 200535Ford Motor Company Annual Report 200534Ford Motor Company Annual Report 200535Managements Discussion and Analysis of Financial Condition and Results of OperationsGross Cash.Automotive
306、gross cash includes cash and cash equivalents,marketable and loaned securities and assets contained in a short-term Voluntary Employee Beneficiary Association trust(VEBA),a trust which may be used to pre-fund certain types of company paid benefits for U.S.employees and retirees.Gross cash as of Dece
307、mber 31,2005,2004 and 2003 is detailed below(inbillions):December 31,200520042003Cash and cash equivalents.$13.4$10.1$6.9 Marketable securities.6.9 8.3 9.3 Loaned securities*.3.4 1.1 5.7Total cash,marketable securities and loaned securities.23.7 19.5 21.9 Short-term VEBA assets.1.4 4.1 4.0Gross cash
308、.$25.1$23.6$25.9_*As part of our investment strategy,we engage in securities lending to improve the returns on our cash portfolios.See Note 5 of the Notes to the Financial Statements for additional discussion on securities lending.In managing our business,we classify changes in Automotive gross cash
309、 into two categories:operating-related and other(whichprimarily includes pension and long-term VEBA contributions,tax refunds,capital transactions with the Financial Services sector,and acquisitions and divestitures).Our key metric is operating-related cash flow,which best represents the ability of
310、our Automotive 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 generally accepted accounting principles in the United States(U.S.GAAP),is useful to investorsbecause it includes cash flow
311、elements that we consider to be related to our operating activities(e.g.,capital spending)that are not included in Net cash flows from operating activities,the most directly comparable U.S.GAAP financial measure.Changes in Automotive gross cash for the last three years are summarized below(in billio
312、ns):200520042003Gross cash at end of period.$25.1$23.6$25.9 Gross cash at beginning of period.23.6 25.9 25.3Total change in gross cash.$1.5$(2.3)$0.6 Operating-related cash flow Automotive income/(loss)before income taxes.$(3.9)$(0.2)$(1.9)Non-cash portion of special items.1.2 1.1 2.0 Capital expend
313、itures.(7.1)(6.3)(7.4)Depreciation and special tools amortization.8.1 6.4 5.5 Changes in receivables,inventory and trade payables(a).1.3 (0.4)(1.0)Other(b).(1.3)0.4 2.9Total operating-related cash flows.(1.7)1.0 0.1 Other changes in cash Funded pension plans/long-term VEBA contributions.(2.7)(5.0)(4
314、.8)Tax refunds.0.3 0.3 1.7 Capital transactions with Financial Services sector(c).2.3 4.2 3.6 Acquisitions and divestitures(d).5.3 0.4 0.5 Dividends paid to shareholders.(0.7)(0.7)(0.7)Changes in total Automotive sector debt.(0.5)(2.4)(0.1)Cash from Variable Interest Entity(VIE)consolidations(e).0.3
315、 Other(f).(0.8)(0.1)Total change in gross cash.$1.5$(2.3)$0.6_(a)In 2005,we took measures to improve our working capital,including reducing inventory(both production materials and finished vehicles)and changing the way our European affiliates pay suppliers.(b)Primarily expense and payment timing dif
316、ferences for items such as marketing,warranty,pension and OPEB.(c)Primarily dividends received from Ford Credit,excluding proceeds from Financial Services sector divestitures paid to the Automotive sector.(d)In 2005,primarily proceeds from the sale of Hertz and the final payment for the Land Rover a
317、cquisition.(e)See Note 17 of the Notes to the Financial Statements for a discussion of VIEs.(f)In 2005,primarily cash flow associated with the acquisition of ACH from Visteon(an outflow of about$700 million),dividends to minority shareholders of consolidated subsidiaries(an outflow of about$200 mill
318、ion),and the net issuance of Ford Common stock under employee savings plans(an inflow of about$200 million).Managements Discussion and Analysis of Financial Condition and Results of OperationsShown in the table below is a reconciliation between financial statement Net cash flows from operating activ
319、ities and operating-related cash flows(calculated as shown in the table above),for the last three years(in billions):200520042003Net cash flows from operating activities.$5.4$7.0$2.9 Items included in operating-related cash flow Capital expenditures.(7.1)(6.3)(7.3)Net transactions between Automotive
320、 and Financial Services sectors(a).(0.4)1.3 1.2 Net sales/(purchases)of trading securities.0.6 (5.6)(1.6)Other(b).(2.6)(0.1)1.8 Items not included in operating-related cash flow Pension and long-term VEBA contributions.2.7 5.0 4.8 Tax refunds.(0.3)(0.3)(1.7)Operating-related cash flows.$(1.7)$1.0$0.
321、1_(a)Primarily payables and receivables between the sectors in the normal course of business,as shown in our Condensed Sector Statement of Cash Flows for the Automotive sector.(b)Primarily the exclusion of cash flow from short-term VEBA contribution/(drawdown).Debt and Net Cash.At December 31,2005,o
322、ur Automotive sector had total debt of$17.9 billion,compared with$18.4 billion a year ago.Total senior debt at December 31,2005 was$12.7 billion,compared with$13.1 billion at December 31,2004.The decrease in senior debt primarily reflected repurchases of debt securities in the open market.Ford Motor
323、 Company Capital Trust II had outstanding$5.0 billion of trust preferred securities at December 31,2005 and 2004.At December 31,2005,our Automotive sector had net cash(defined as gross cash less total senior and subordinated debt)of$7.2 billion,compared with$5.2 billion at the end of 2004.The weight
324、ed-average maturity of our total long-term debt(including subordinated debt),substantially all of which is fixed-ratedebt,is approximately 25 years with$4.3 billion maturing by December 31,2025.The weighted-average maturity of total debt(long-term and short-term including subordinated debt)is approx
325、imately 25 years.For additional information on debt,see Note 16 of the Notes to the Financial Statements.Seasonal Working Capital Funding.In July 2005,we raised$2.0 billion of seasonal working capital funding to reduce the cash volatility that results from our summer plant shutdown period.The fundin
326、g was in the form of 60-day bank loans which were repaidin early September.Credit Facilities.At December 31,2005,the Automotive sector had$7.1 billion of contractually committed credit facilities with financial institutions,of which$6.9 billion were available for use.For further discussion of our co
327、mmitted credit facilities,see Note 16 of the Notes to the Financial Statements.Pension Plan Contributions.In 2005,U.S.pension funding reform proposals were passed in both the House of Representatives and the Senate.Although a final bill has not yet been completed,it is likely that a final bill will
328、be passed and signed into law in 2006.It is anticipated that this law would institute more stringent funding requirements for U.S.defined benefit pension plans beginning in 2007.U.K.pension reform was passed in November 2004,and could affect funding requirements beginning in 2007.For a discussion of
329、 pension plan contributions we have made in 2005 and expect to make in 2006,see Note 23 of the Notes to the Financial Statements.Financial Services Sector Ford CreditFord Credits funding strategy is to maintain liquidity and access to diverse funding sources that are cost effective.As a result of lo
330、wer credit ratings,Ford Credits unsecured borrowing costs have increased,its access to the unsecured debt market has become more restricted,and its outstanding short-and long-term unsecured debt balances have declined.In response,Ford Credit has increased its use of securitization and other asset-re
331、lated sources of liquidity,and will continue to expand and diversify its asset-backed funding by asset class,region and channel.In addition,Ford Credit will continue to participate in the whole-loan market and access theunsecured term-debt market opportunistically.Over time,Ford Credit may also need
332、 to reduce further the amount of receivables it purchases.A significant reduction in the amount of purchased receivables would significantly reduce Ford Credits ongoing profits,and could adversely affect its ability to support the sale of our vehicles.Debt and Cash.Ford Credits total debt was$134.5
333、billion at December 31,2005,down$9.8 billion compared with a year ago,primarily reflecting repayment of maturing debt and lower funding requirements due to lower asset levels.Ford Credits outstanding Ford Motor Company Annual Report 200536Ford Motor Company Annual Report 200537Ford Motor Company Annual Report 200536Ford Motor Company Annual Report 200537Managements Discussion and Analysis of Finan
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