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80 FORD MOTOR COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 7. GOODWILL AND OTHER INTANGIBLES
Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets, which eliminates amortization of
goodwill and certain other intangible assets and requires annual testing for impairment (comparison of estimated fair value to
carrying value). In 2002, after-tax, non-cash transition charges were taken of $708 million in the Automotive sector, primarily
relating to the impairment of goodwill in Kwik-fit, our former all-makes European vehicle repair business, and $294 million in the
Financial Services sector, related to the impairment of goodwill in Hertz’ industrial and construction equipment rental business.
We perform annual testing in the second quarter to determine if any impairment has occurred. No impairment resulted from our
annual test in the second quarter of 2003.
Changes in the carrying amount of goodwill are as follows (in millions):
Automotive Sector Financial Services Sector
Americas International Ford Credit Hertz
Beginning balance, December 31, 2002 $ 168 $ 4,551 $ 126 $ 623
Exchange translation/other 6 653 3 17
Ending balance, December 31, 2003 $ 174 $ 5,204 $ 129 $ 640
In addition, included within Equity in net assets of affiliated companies was goodwill of $390 million at December 31, 2003.
The components of identifiable intangible assets are as follows as of December 31, 2003 (in millions):
Automotive Sector Financial Services Sector
Amortizable Non-amortizable Amortizable Non-amortizable
Gross carrying amount $ 529 $ 449 $ 92 $ 189
Less: accumulated amortization (102) - (42) -
Net intangible assets $ 427 $ 449 $ 50 $ 189
Pre-tax amortization expense related to these intangible assets for the years ended December 31, 2003 and 2002 was
$35 million and $40 million, respectively. Intangible asset amortization is forecasted to range from $25 to $35 million per
year for the next five years.
If SFAS No. 142 had been in effect for the year ended December 31, 2001, our earnings would have been improved due to
reduced amortization, as described below (in millions):
Net Basic Diluted
Income/ Amounts Amounts
(Loss) Per Share Per Share
Income/(loss) attributable to Common and Class B
Stock after Preferred Stock dividends, as reported $ (5,453) $ (3.02) $ (3.02)
Add: amortization, after-tax 259 * 0.14 0.14
Pro forma net income/(loss) $ (5,194) $ (2.88) $ (2.88)
* $227 million Automotive and $32 million Financial Services.
FIN73_104 3/21/04 1:07 AM Page 80