Ford 2009 Annual Report Download - page 57

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2009 Annual Report 55
As reported, we have achieved significant structural cost reductions over the past four years; in 2010, we expect
Automotive structural costs to be somewhat higher as we increase production to meet demand.
We expect that full-year 2010 Automotive operating-related cash flow will be positive, though less than the run rate
implied by our strong second half 2009 cash flow. Our recent performance was heavily influenced by seasonal factors,
including normal year-end inventory reductions, and significant non-recurring factors such as tax refunds and higher
production to rebuild depleted dealer stocks.
Capital spending in 2010 is expected to be in the range of $4.5 billion to $5 billion as we continue to focus on our
product plan. This planning assumption for capital spending excludes Volvo and joint ventures that are being
deconsolidated under the new accounting standard effective January 1, 2010. On a comparable basis, planned 2010
capital spending is about $1 billion higher than our actual 2009 spending.
We have excluded Volvo from our 2010 planning assumptions based on its held-for-sale status. As announced, we
have settled on substantive terms for the sale of Volvo to Zhejiang Geely Group Holding Co. Ltd. While some work still
remains relating to final documentation, financing and government approvals, we expect to reach a definitive sales
agreement in the first quarter of 2010, with closing of the sale likely to occur in the second quarter of 2010.
While deconsolidation of joint ventures pursuant to the new accounting standard will have no effect on Net
income/(loss) attributable to Ford Motor Company and is not expected to have a substantial impact on total cash flow, we
estimate that the accounting change will reduce our full-year 2010 pre-tax operating results by $350 million to $400 million.
Additionally, deconsolidation will reduce Automotive gross cash by about $550 million, and decrease Automotive debt by
about $800 million (of which about $500 million is to mature during 2010) compared with December 31, 2009 levels.
Ford Credit expects to be profitable in 2010, but at a reduced level compared with 2009, reflecting lower average
receivables and the non-recurrence of certain favorable factors experienced during 2009. At year-end 2010, Ford Credit
anticipates managed receivables to be in the range of $80 billion to $90 billion. The projected decline in managed
receivables primarily reflects lower industry and financing volumes in 2009 and 2010 compared with prior years, and the
effect of transitioning Jaguar, Land Rover, Mazda and some Volvo financing to other providers. Ford Credit expects to pay
distributions of about $1.5 billion in 2010. Ford Credit will continue to assess its ability to make future distributions based
on its available liquidity and managed leverage objectives.
Based on our planning assumptions, which include continued improvement in U.S. and global industry sales volume
during 2010 and beyond, for full-year 2010 we plan to be profitable on a pre-tax basis excluding special items for Ford
North America, total Automotive and total company, with positive Automotive operating-related cash flow. We remain on
track for full-year 2011 to be solidly profitable on a pre-tax basis excluding special items, with positive Automotive
operating-related cash flow.