Ford 2003 Annual Report Download - page 85

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2003 ANNUAL REPORT 83
NOTES TO FINANCIAL STATEMENTS
NOTE 10. ALLOWANCE FOR CREDIT LOSSES — FINANCIAL SERVICES SECTOR
The allowance for credit losses is our estimate of probable credit losses related to impaired receivables and operating leases as
of the date of the financial statements. This allowance is based on factors including historical credit loss trends, the credit quality
of our present portfolio, trends in historical and projected used vehicle values and general economic measures. Additions to the
allowance for credit losses are made by recording charges to the provision for credit losses on our income statement. In general,
finance receivables and lease investments are charged to the allowance for credit losses at the earlier of when an account is
deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the
borrower or lessee, the value of the collateral, recourse to guarantors and other factors. Recoveries on finance receivables and
lease investments previously charged off as uncollectible are credited to the allowance for credit losses.
Changes in the allowance for credit losses for finance receivables, investment in direct financing leases and investment in
operating leases were as follows (in millions):
2003 2002 2001
Beginning balance $ 3,228 $ 2,806 $ 1,684
Provision for credit losses 2,038 3,000 3,397
Total charge-offs and recoveries:
Charge-offs (2,581) (2,878) (2,524)
Recoveries 494 486 375
Net losses (2,087) (2,392) (2,149)
Other changes, principally amounts related to finance
receivables sold and translation adjustment (119) (186) (126)
Ending balance $ 3,060 $ 3,228 $ 2,806
NOTE 11. LIABILITIES — AUTOMOTIVE SECTOR (IN MILLIONS)
2003 2002
Accrued Liabilities (Current)
Dealer and customer allowances and claims $ 16,098 $ 14,165
Deferred income taxes 2,996 2,614
Deferred revenue 2,587 2,423
Accrued interest 1,814 1,705
Employee benefit plans 1,732 1,360
Postretirement benefits other than pensions 1,397 1,302
Other 5,547 4,046
Total accrued liabilities $ 32,171 $ 27,615
Other Liabilities (Non-current)
Postretirement benefits other than pensions $ 17,136 $ 16,344
Unfunded pension obligation 9,579 12,818
Dealer and customer allowances and claims 9,097 9,125
Employee benefit plans 5,189 4,137
Other 4,103 4,463
Total other liabilities $ 45,104 $ 46,887
FIN73_104 3/21/04 1:07 AM Page 83