Ford 2003 Annual Report Download - page 46

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44 FORD MOTOR COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
Managed Receivables —Total managed receivables decreased $15.8 billion or 8% from a year ago, the decrease primarily
reflected lower retail installment finance receivables resulting from lower placement volumes, lower net investment in operating
leases, and the sale of U.S. retail finance receivables in whole-loan sale transactions. Net investment in operating leases was
lower, reflecting a de-emphasis of leasing in Ford’s marketing programs.
The following table shows actual credit losses net of recoveries, which are referred to as net credit losses, for Ford Credit’s
worldwide on-balance sheet, reacquired, securitized off-balance sheet and managed receivables, for the various categories
of financing during the periods indicated. The loss-to-receivables ratios, which equal net credit losses divided by the average
amount of net receivables outstanding for the period, are shown for the on-balance sheet and managed portfolios.
2003 2002
Net Credit Losses (in millions)
On-Balance Sheet
Retail installment and lease $ 1,871 $ 2,292
Wholesale 148 40
Other 25 30
Total on-balance sheet (excluding reacquired receivables) 2,044 2,362
Reacquired Receivables (retail) 92 -
Total on-balance Sheet (including reacquired receivables) $ 2,136 $ 2,362
Securitized Off-Balance Sheet
Retail installment and lease $ 677 $ 448
Wholesale -6
Other --
Total securitized off-balance sheet $ 677 $ 454
Managed
Retail installment and lease $ 2,640 $ 2,740
Wholesale 148 46
Other 25 30
Total managed $ 2,813 $ 2,816
Loss-to-Receivables Ratios
On-Balance Sheet (including reacquired receivables)*
Retail installment and lease 1.97% 2.05%
Wholesale 0.79 0.25
Total including other 1.67% 1.72%
Memo: On-Balance Sheet (excluding reacquired receivables) 1.60% 1.72%
Managed
Retail installment and lease 1.91% 1.73%
Wholesale 0.37 0.13
Total including other 1.50% 1.39%
–––––––––––––
* Ford Credit believes that the use of the on-balance sheet loss-to-receivables ratio that includes the net credit losses on reacquired receivables
is useful to investors because it provides a more complete presentation of Ford Credit’s on-balance sheet credit loss performance.
The decrease in net credit losses for our on-balance sheet portfolio primarily reflected improved performance in our U.S.
commercial receivables and lower on-balance sheet receivables at Ford Credit’s subsidiaries Triad Financial Corporation
and Fairlane Credit, LLC. These declines were offset partially by a charge-off of accounts delinquent for over 120 days, which
resulted in recognition of $106 million of credit losses, primarily in our European wholesale receivables portfolio. The charge off
was a result of our European operations adopting the practice of our North American operations of charging off all accounts
more than 120 days delinquent. The on-balance sheet loss-to-receivables ratio of 1.67% was down from 1.72%. The
improvement in the loss-to-receivables ratio reflected lower credit losses and the retention of securitized receivables
on Ford Credit’s balance sheet.
FIN33_72 3/21/04 5:40 PM Page 44