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Ford Motor Company Annual Report 2005 28 Ford Motor Company Annual Report 2005 29
Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations
Ford Europe and PAG Segment
Ford Europe. The decline in results primarily reflected higher charges for personnel-reduction programs, negative net pricing, and
adverse product and market mix, offset partially by favorable cost performance and exchange.
PAG. The decline in results primarily reflected an impairment charge for long-lived assets of the Jaguar/Land Rover operations,
unfavorable currency exchange, and higher charges for personnel-reduction programs, offset partially by favorable net pricing,
improved product mix primarily reflecting the impact of new Land Rover products, and favorable cost performance. For additional
discussion of the impairment charge, see Note 9 of the Notes to the Financial Statements.
Ford Asia Pacific and Africa/Mazda Segment
Ford Asia Pacific and Africa. The improvement in earnings primarily reflected the non-recurrence of 2004 charges related to the
disposition of certain dealerships, favorable changes in exchange rates, and a gain on the disposal of our investment in Mahindra &
Mahindra Ltd., offset partially by unfavorable product mix, higher costs associated with new products and facilities in China and
charges for personnel-reduction programs.
Mazda and Associated Operations. The increase in earnings primarily reflected gains on our investment in Mazda convertible
bonds and improved Mazda operating results. In the second half of 2005, we converted to equity about 82.5% of our Mazda
convertible bonds, and, therefore, expect diminished income effects in future periods from mark-to-market adjustments for these
bonds.
Other Automotive
The improvement primarily reflected higher returns on invested cash and a gain on the sale of non-core businesses, offset partially
by lower interest on tax refunds from prior-year federal and state tax matters (about $450 million in 2005 compared with $600 million
in 2004).
2004 Compared with 2003
Details by Automotive business unit of Income/(loss) before income taxes are shown below (in millions):
Income/(Loss) Before
Income Taxes
2004 2003
2004
Over/(Under)
2003
The Americas
— Ford North America ........................................................................................................................................................ $ 684 $ 196 $ 488
— Ford South America ........................................................................................................................................................ 140 (129) 269
Total The Americas............................................................................................................................................................. 824 67 757
Ford Europe and PAG
— Ford Europe ..................................................................................................................................................................... 65 (1,620) 1,685
— PAG ................................................................................................................................................................................. (850) 171 (1,021)
Total Ford Europe and PAG ............................................................................................................................................... (785) (1,449) 664
Ford Asia Pacific and Africa/Mazda
— Ford Asia Pacific and Africa........................................................................................................................................... (36) (23) (13)
— Mazda and Associated Operations .................................................................................................................................. 118 69 49
Total Ford Asia Pacific and Africa/Mazda ......................................................................................................................... 82 46 36
Other Automotive............................................................................................................................................................... (276) (572) 296
Total Automotive sector..................................................................................................................................................... $ (155) $ (1,908) $ 1,753