Ford 2003 Annual Report Download - page 63

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2003 ANNUAL REPORT 61
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
RISKS TO FUTURE SALES OF RECEIVABLES
Some of Ford Credit’s securitization programs contain structural features that could prevent further funding if the credit
losses or delinquencies on a pool of sold receivables or on Ford Credit’s overall managed portfolio exceed specified levels or
if payment rates on or amounts of wholesale receivables are lower than specified levels. Ford Credit does not expect that any
of these features will have a material adverse impact on its ability to securitize receivables. In addition, Ford Credit’s ability to
sell its receivables may be affected by the following factors: the amount and credit quality of receivables available to sell, the
performance of receivables sold in previous transactions, general demand for the type of receivables Ford Credit offers, market
capacity for Ford Credit-sponsored investments, accounting and regulatory changes, Ford Credit’s debt ratings and Ford Credit’s
ability to maintain back-up liquidity facilities for certain securitization programs. If as a result of any of these or other factors, the
cost of securitized funding significantly increased or securitized funding were no longer available to Ford Credit, Ford Credit’s
operations, financial condition and liquidity would be adversely impacted.
VARIABLE INTEREST ENTITIES
AUTOMOTIVE
The Automotive Sector has several investments in other joint ventures deemed to be VIEs where we are not the primary
beneficiary. The risks and rewards associated with our interests in these entities are based primarily on ownership percentages.
Our maximum exposure to any potential losses, should they occur, associated with these VIEs is limited to our equity
investments and, where applicable, receivables due from the VIEs (approximately $104 million).
FINANCIAL SERVICES
Ford Credit has investments in certain joint ventures deemed to be VIEs where Ford Credit is not the primary beneficiary.
The risks and rewards associated with Ford Credit’s interest in these entities are based primarily on ownership percentages.
Ford Credit's maximum exposure to any potential losses, should they occur, associated with these VIEs is limited to
Ford Credit’s equity investments, which at December 31, 2003 totaled approximately $125 million.
AGGREGATE CONTRACTUAL OBLIGATIONS
We are party to many contractual obligations involving commitments to make payments to third parties. Most of these are
debt obligations incurred by our Financial Services sector. In addition, as part of our normal business practices, we enter into
contracts with suppliers for purchases of certain raw materials, components and services. These arrangements may contain
fixed or minimum quantity purchase requirements. We enter into such arrangements to facilitate adequate supply of these
materials and services. “Purchase obligations” are defined as off-balance sheet agreements to purchase goods or services
that are enforceable and legally binding on the company and that specify all significant terms.
The “Other long-term liabilities” category includes only liabilities on our balance sheet that have a definite pay-out scheme
or are not contingent on a subsequent event. Other long-term liabilities at December 31, 2003 represent a payment
obligation related to a prior acquisition.
The table below summarizes our contractual obligations as of December 31, 2003 (in millions):
Payments Due by Period
Less More
Financial Than 1-3 3-5 Than 5
Obligations Automotive Services Total 1 Year Years Years Years
On-balance sheet:
Long-term debt $ 20,185 $131,245 $ 151,430 $ 31,679 $ 52,367 $ 18,698 $ 48,686
Capital lease 328 2 330 37 70 52 171
Other long-term
liabilities 1,202 - 1,202 - 1,202 - -
Off-balance sheet:
Purchase 9,220 - 9,220 4,577 2,232 1,368 1,043
Operating lease 1,809 1,835 3,644 846 1,200 754 844
Total $ 32,744 $ 133,082 $ 165,826 $ 37,139 $ 57,071 $ 20,872 $ 50,744
For additional information to our long-term debt and operating lease obligations, see Notes 12 and 23 in the Notes to
Financial Statements.
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