Ford 2003 Annual Report Download - page 50

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48 FORD MOTOR COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
2003 2002 2001
Gross cash at end of period $ 25.9 $ 25.3 $ 17.7
Gross cash at beginning of period 25.3 17.7 20.2
Total change in gross cash $ 0.6 $ 7.6 $ (2.5)
Operating-related cash flows
Automotive income/(loss) before income taxes
excluding special items $ 0.1 $ (0.3) $ (2.9)
Capital expenditures (7.4) (6.8) (6.3)
Depreciation and special tools amortization 5.5 4.9 5.0
Changes in receivables, inventory and trade payables (1.0) (1.8) 4.4
Other 2.9 4.3 1.1
Total operating-related cash flows before
pension/long-term VEBA contributions and tax refunds 0.1 0.3 1.3
Funded pension plans/long-term VEBA contributions (4.8) (0.5) (0.3)
Tax refunds 1.7 2.6 -
Total operating-related cash flows (3.0) 2.4 1.0
Capital transactions with Financial Services sector a/ 3.6 0.4 0.4
Acquisitions and divestitures 0.5 0.6 (2.3)
Other
Dividends paid to shareholders (0.7) (0.7) (1.9)
Convertible preferred securities -4.9 -
Changes in total Automotive sector debt (0.1) (0.1) 1.7
Cash from FIN 46 consolidations b/ 0.3 --
Other — Primarily net issuance/(purchase) of stock -0.1 (1.4)
Total change in gross cash $ 0.6 $ 7.6 $ (2.5)
–––––––––––––
a/ Primarily dividends, capital contributions, loans, and loan repayments.
b/ See Note 13 of the Notes to Financial Statements for a discussion of the adoption of FIN 46.
Total 2003 operating-related cash flows before funded pension plan and long-term VEBA contributions and tax refunds was
$100 million positive reflecting profits and other operating-related changes, offset partially by increased net capital spending
and growth in year-end inventory. The $600 million increase in capital expenditures in 2003 from 2002, reflected primarily
increased spending on new products consistent with our product-led revitalization plan. Other operating-related changes,
primarily cash tax payments and timing differences between expense or revenue recognition and the corresponding cash
payments for costs such as health care, pension, marketing, and warranty, improved our cash flows by $2.9 billion in 2003.
Including funded pension plan and long-term VEBA contributions and tax refunds, operating-related cash flows were
an outflow of $3.0 billion. Contributions to our worldwide funded pension plans totaled $2.8 billion in 2003, compared to
approximately $500 million in 2002. In 2003, we also contributed $2 billion to a long-term VEBA trust used to pre-fund a
portion of Ford’s other postretirement benefits liability. This contribution is in addition to the $4 billion contributed to our
short-term VEBA, which we include in gross cash. These are assets invested similar to our cash portfolio and are available
to fund certain employee benefit obligations in the near term. The $2 billion of long-term VEBA assets are invested similar
to our pension fund assets. The assets of the long-term VEBA are not included in our gross cash, but are dedicated to
pay longer-term healthcare obligations.
Capital transactions with the Financial Services sector of $3.6 billion in 2003 reflected primarily higher dividends paid by
Ford Credit, which in turn reflected improved profitability and asset reductions at Ford Credit. In addition, dividends of
$204 million from the Financial Services sector in 2003 are reflected in the table above as divestitures because they
resulted from the sale by Ford Credit of its Axus vehicle fleet leasing unit.
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