Ford 2004 Annual Report Download - page 68

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NOTES TO THE FINANCIAL STATEMENTS
Discontinued Operations. The Automotive sector completed the disposition of several of its non-core businesses initiated in
2002 and 2003, including our former automotive recycling businesses in the United States and Canada, our electric vehicle
business in Norway, and our insurance-related products and services business in the U.K. Associated with the disposition of
the entities, we recorded pre-tax charges of $9 million, $105 million, and $168 million in 2004, 2003, and 2002 respectively,
reflected in gain/(loss) on discontinued operations.
In 2004, management committed to sell our Formula One racing operations, as these operations were not consistent with our
Premier Automotive Group (“PAG”) Improvement Plan nor our goals to build on the basics and focus on our core business. We
recorded a pre-tax charge of $69 million related to the anticipated loss on the sale of the net assets and a pre-tax impairment
of goodwill of $204 million. We reclassified $45 million of pre-tax operating losses for the first nine months of 2004 and
recorded a pre-tax charge of $23 million related to the write-down of inventory to Operating income/(loss) from discontinued
operations. During the fourth quarter of 2004, we completed the sale of our Formula One racing operations and recorded
additional pre-tax losses of $8 million.
The results of all discontinued Automotive sector operations are as follows (in millions):
As of December 31, 2004, there are no significant assets or liabilities remaining on our balance sheet related to
discontinued operations.
Financial Services Sector
Discontinued Operations. Consistent with our strategy to focus on our core business, we expect to either complete the sale
during 2005 or have already completed the disposition of the operations referenced below.
During 2003, we completed the sale of Axus, our all-makes vehicle fleet leasing operations in Europe, New Zealand and
Australia. In 2002, we recognized a pre-tax charge of $31 million, reflected in loss on discontinued operations. This amount
represented the difference between the selling price of these assets, less costs to sell them, and their recorded book value.
During 2004, we completed the sale of AMI Leasing and Fleet Management Services, our operation in the United States
that offered full service car and truck leasing. In 2003, we recognized a pre-tax charge of $50 million, reflected in loss on
discontinued operations. This amount represented the difference between the selling price of these assets, less costs to sell them,
and their recorded book value.
During the fourth quarter of 2004, management committed to a plan to sell Triad Financial Corporation, our operation in
the U.S. that specializes in automobile retail installment sales contracts with borrowers who generally would not be expected
to qualify, based on their credit worthiness, for traditional financing sources such as those provided by commercial banks or
automobile manufacturers’ affiliated finance companies. We expect to complete the sale of this business during 2005 for an
amount approximately equal to book value.
The results of all discontinued Financial Services sector discontinued operations are as follows (in millions):
At December 31, 2004 and December 31, 2003, assets of our discontinued operations totaled approximately $2.2 billion
and $1.8 billion, respectively, and consisted primarily of net finance receivables of about $1.7 billion and $850 million,
respectively; net investment in operating leases of about $300 million at December 31, 2003; and retained interest in
securitized assets of about $350 million and $450 million, respectively.
NOTE 4. Discontinued and Held-for-Sale Operations (Continued)
2004 2003 2002
Sales $ 186 $ 396 $ 665
Operating income/(loss) from discontinued operations $ (185) $ (64) $ (247)
Gain/(loss) on discontinued operations (165) (105) (168)
(Provision for)/benefit from income taxes 122 29 89
Income/(loss) from discontinued operations $ (228) $ (140) $ (326)
2004 2003 2002
Revenues $ 395 $ 446 $ 665
Operating income/(loss) from discontinued operations $ 138 $ 83 $ 27
Gain/(loss) on discontinued operations - (50) (31)
(Provision for)/benefit from income taxes (57) (36) (3)
Income/(loss) from discontinued operations $ 81 $ (3) $ (7)