Ford 2002 Annual Report Download - page 40

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36
We established and communicated the financial milestones for 2002. Our results against these milestones, excluding the
unusual items described above, are listed below.
2002 Milestone Achieved
Restructuring Priorities
Communicate/implement plans Report on progress Yes
Quality (U.S.) Improve J.D. Power Initial Quality Survey Yes
Capacity utilization (North America) Improve by 10% Yes
Non-product-related cost Reduce by $2 billion Yes
Divest non-core operations $1 billion cash realization Yes*
Financial Results
Corporate
Pre-tax earnings Positive Yes
Capital spending $7 billion Yes
Europe Improve results No
South America Improve results No
*In 2002, we received about $930 million in cash proceeds and entered into commitments from third parties to receive the balance in 2003.
AUTOMOTIVE SECTOR RESULTS OF OPERATIONS
Details of our Automotive sector geographic earnings from continuing operations for 2002, 2001, and 2000 are shown
below (in millions):
Income/(Loss) from Continuing Operations
2002 2001 2000
North American Automotive $ (278) $ (5,488) $ 4,909
Automotive Outside North America
Europe (725) 268 (1,115)
South America (295) (776) (236)
Rest of World 311 (159) 106
Total Automotive Outside North America (709) (667) (1,245)
Total Automotive sector $ (987) $ (6,155) $ 3,664
2002 COMPARED WITH 2001
Worldwide losses from continuing operations for our Automotive sector were $987 million in 2002 on sales of $134.4 billion,
compared with losses of $6,155 million in 2001 on sales of $130.8 billion.
Our automotive sector losses from continuing operations in North America were $278 million in 2002 on sales of $94.1 billion,
compared with losses of $5,488 million in 2001 on sales of $90.8 billion. The improvement in earnings reflected primarily the
non-recurrence of the 2001 asset impairments and other one-time charges largely related to our Revitalization Plan, as well as
the non-recurrence of costs related to our 2001 Firestone tire replacement action (about $2 billion). Additionally, profits improved
due to achievement of our 2002 milestone to reduce non-product costs by $2 billion and the replenishment of dealer inventories
in the U.S., which were unusually low at year-end 2001. These improvements were partially offset by increased product-related
costs and lower market share. Net pricing (per vehicle, at constant mix) was about the same as 2001 levels, with pricing
improvements being offset by higher variable marketing costs.
In 2002, approximately 17.1 million new cars and trucks were sold in the United States, down from 17.5 million units in 2001.
Our share of those unit sales was 21.1% in 2002, down 1.7 percentage points from a year ago. The decline in market share
reflected a number of factors, including an increase in the number of new competitive product offerings and our discontinuation
of four vehicle lines (Mercury Cougar, Mercury Villager, Lincoln Continental and most models of the Ford Escort). Marketing costs
for our Ford, Lincoln and Mercury brands increased to 15.8% of sales of those brands, up from 14.7% a year ago, reflecting
continuing competitive pressures in the United States.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS