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28 Ford Motor Company | 2012 Annual Report
Management's Discussion and Analysis of Financial Condition and Results of Operations
Total costs and expenses for our Automotive sector for 2011 and 2010 was $122.4 billion and $113.5 billion,
respectively, a difference of $8.9 billion. An explanation of the change as reconciled to our income statement is shown
below (in billions):
2011
Better/(Worse)
2010
Explanation of change:
Volume and mix, exchange, and other $ (11.4)
Contribution costs (a)
Commodity costs (incl. hedging) (2.3)
Material costs excluding commodity costs (1.2)
Warranty/Freight (0.7)
Other costs (a)
Structural costs (1.4)
Other 0.1
Special items (b) 8.0
Total $ (8.9)
_________
(a) Our key cost change elements are measured primarily at present-year exchange; in addition, costs that vary directly with volume, such as material,
freight and warranty costs, are measured at present-year volume and mix. Excludes special items.
(b) Special items primarily reflect the non-recurrence of Volvo costs and expenses in 2011.
Results by Automotive Segment. Details by segment of Income before income taxes are shown below for 2011.
Total Automotive pre-tax operating profit of $6.3 billion was led by a $6.2 billion profit from Ford North America. Ford
South America earned a solid profit, while Ford Europe was about breakeven, incurring a small loss driven by the
economic uncertainty in the region. Ford Asia Pacific Africa incurred a loss as well, more than explained by the impact of
the Japan and Thailand natural disasters. The loss in Other Automotive was $601 million, reflecting higher interest
expense net of interest income and unfavorable fair market valuation adjustments, mainly for our investment in Mazda.