福特汽車 (F) 2001 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your Ford Motor (Company: Ford Motor Company ; Ticker: F ; URL: http://www.ford.com/) fixed income conference call. At this time, all participants are in a listen-only mode.

Later we will conduct a question-and-answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touch-tone telephone.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. David Moore, Manager of Fixed Income Investor Relations. Mr. Moore you may begin.

Thank you,

.

Good morning everyone and thank you for joining the call. Just real quickly, the call will last until 10:45.

We'll go through the presentation and still have time for Q&A. If you have not received the slides, you can download them at www.shareholder.ford.com.

Joining us today from the Ford and Ford Credit Executive Management team in New York are Beth Acton, our Vice-President and Treasurer who will be leading the call, Ann Marie Petach, the Assistant Treasurer of Ford,

Bibi Boerio, the Executive Vice-President and CFO of Ford Credit, and Don Leclair, Vice-President and Controller will be joining us in progress.

From Dearborn, we have Dave Cosper, our Assistant Treasurer and Donna Inch, Controller of Marketing and Sales.

I'd like to remind that today's, the results and comparisons shown on an ongoing operating basis and exclude the effects of unusual items and FAS 133.

With that I will now turn the conference over to Beth Acton.

Good morning and thank you for joining us today. I will cover a number of things today, including financial results, highlights from Ford, and also the revitalization plan that was announced on January 11th.

Then I'll provide an update on our credit ratings and liquidity actions and Bibi Boerio, the Ford Credit CFO will take you through Ford Credit's results, and finally I'll review our funding strategy, and as David said, take questions at the end.

On the next slide, as many of you have probably seen already this information. It was presented in the highlights in the conference call with Martin Inglis, our CFO. I'm not going to review all of the numbers with you, except to say, obviously, it's been a challenging year.

And for, with the Fixed Income focus in mind, I would like to highlight, a notable highlight of cash, which was up 2.5 billion in the fourth quarter on a gross basis and 800 million on a net basis. We can talk about that further.

But I'd also like to call your attention to some important non-financial highlights. We feel very positive about Ford remaining the best selling brand of cars and trucks for 15 straight years. The F Series has been the best selling truck for the past 25 years and the Focus is the best selling car nameplate in the world,

and Jaguar and Volvo has set all-time global sales records. So these highlights clearly demonstrate we have a strong product line up that will continue to be augmented under our recently announced revitalization plan.

The key elements I just wanted to hit a few high points from the Ford revitalization plan, as I said, which was announced on January 11th. Certainly a couple of key ones related to North America in terms of new product actions, major capacities rationalizations from 5.9 million units to 4.8 million units,

and many other cost reduction initiatives. And we can take the success, frankly, we've had in turning around a big loss in the, in 2000 in Europe to a much more positive situation. So we've done a lot of the tough actions in Europe and feel that's a template for what we're planning to do in North America,

and we have more to build on in Europe obviously, to complete our transformation strategy. We also plan to increase our proportion of PAG profits, which is an important element of our strategy, and Ford Credit will refocus on improving returns in its business in support,

very much more focused on Ford brands and moderate the asset growth. We will sell additional

assets. We have also further reduced the dividend by 33 percent to 46 a share, obviously in addition to the 50 percent cut we took last October.

We plan to raise equity link financing, and if you hadn't seen this morning, in fact we have put out a press release that we will begin the road show on that transaction starting tomorrow, and would hope to price the security next week. So that is underway.

And one other thing I wanted to mention is that total, the plan delivers nine billion of profit improvements of pre-tax, by the middle of the decade and in fact in 2002, we'll realize two billion of that improvement from this plan.

On the next slide are our ratings. As I, they have changed since our last call, which has been disappointing to us, given our strong liquidity position. Each of the rating agencies published releases associated with our revitalization plan,

downgraded our long-term rating from A minus to triple B plus and left the outlook negative.

just last evening, downgraded Ford's long-term rating to B double A one and Ford Credit's to

with a

commercial paper rating for Ford Credit. And S&P affirms the rating of triple B plus and changed the outlook from stable to negative.

And I'd also like to call your attention that

continues to assign a different rating to both, to Ford and Ford Credit, and the differentiation recognizes there are unique aspects in the underlying nature, the assets of each of the business,

and we believe that the differences between the financial service businesses and the automotive warrants a more independent rating and risk evaluation.

The next slide focuses on liquidity, and clearly I think you saw some of that in the cash improvement actions in 2001, and it remains a top priority for us this year.

If I look on the left-hand side of the slide, first for Ford, we reduced the dividend by 50 percent.

This was, I'm sorry, these were actions taken last year, from $1.20 to 60 cents, that saves about a billion one annually. We suspended in May this year, repurchase program with 2.8 billion that we had not spent of the $5 billion program.

We continue to focus on working capital and the number that's on your slide, the 2.5 billion, were the results through the first nine months of last year. Those numbers are in excess of $4 billion for the full year.

And we maintained a strong cash balance as we announced earlier today.

For Ford Credit, a big reduction in commercial paper from 41 billion to 16, and we increased the capacity of F Car, that's Ford Credit's Asset Back Commercial Paper Vehicle, was increased from a billion to $12.5 billion with 12 billion outstanding.

We enhanced our securitization capabilities, evidenced by the wholesale transaction we did last year.

And we added two dealers to our direct issuance commercial paper program and finally, we suspended the fourth quarter dividends to Ford Credit to manage the appropriate leverage.

One thing I didn't mentioned under the Ford, which is not shown under the slide is, and was mentioned in our conference earlier, is that our pension fund in the U.S. remains over funded by 600 million. While that's down from a year ago levels, it's still a positive situation.

On the right hand side of the slide are the actions we're planning for this year. One we've already taken reducing the dividends from 60 cents to 40 cents. That's an incremental 400 million. So the dividend action we've taken over the last several months is worth $1.5 billion annually in terms of cash savings.

We are also launching today, as I mentioned, tomorrow with a road show, targeting of $3 billion offering of trust-preferred convertible securities. We continue to focus on working capital improvements as we very much are targeting, maintaining sufficient liquidity to support the business.

In terms of Ford Credit, to manage, leverage targets, we've been having over the last couple of years, Ford made a contribution to Ford Credit in January, that is already happened, capital infusion of 700 million.

We continue to manage lower, manage, maintain, sorry, lower commercial paper balances and we're going to talk about that in a later slide. We want to maximize the F Car program and we're exploring opportunities for additional funding sources.

And a key element as we'd indicated in these calls before is we need a diverse set in our kit bag, a variety of funding instruments. That's very important to us.

Now I'll turn it over to Bibi to review Ford Credit's results.

Thanks Beth.

Slide chip six shows the operating results for some key data for Ford Credit for the fourth quarter and the full year of 2001, and compare that to the year of 2000.

In the fourth quarter, if I look at the top line, Ford Credit recorded charges that totaled about $200 million for some unusual actions in Brazil, in Argentina and the voluntary separation program in the United States.

As Martin indicated earlier this morning, these charges were included in Ford's revitalization charges and announced on January 11th. And with respect to Argentina, Ford Credit accounted for about two-thirds of Ford's charge for the fourth quarter.

In the fourth quarter of 2001, excluding these unusual items and the effect of FAS 133, Ford Credit earned an operating profit of about six million compared with earnings of 410 million in the same period a year ago.

The reduction in earnings was more than accounted for by a higher provision for credit losses, and we took this division in the fourth quarter, as we indicated in early December, in response to what we saw as a significant weakening in economic conditions.

For the full year, the operating profit was $1.2 billion. That was 336 million lower than for the full year 2000. The return on equity, excluding the unusual items was 9.5 percent, and that was down compared to the prior year's levels of 13 percent.

Lower earnings in 2001 were largely due to the higher credit loss provisions. There was some offset by favorable volumes and margins and also from higher investment and other income, which reflects primarily the substantially higher level of securitization that we had in the full year 2001.

For year 2001 end of period receivables, on a managed basis, were $208 billion. That was up $18 billion from the prior year-end. On the financial statement, excluding the impact, including the impact of securitizations,

the end-of-period assets were $149 billion or down 12 billion, and that decline was more than accounted for in the wholesale product line, reflecting wholesale securitizations.

And as Beth indicated on January 11th, Ford provided a capital contribution of 700 million to Ford Credit to achieve our target debt back read a ratio of 14 to one.

On the next slide, we show some trend data for Ford Credit's loss ratios, and also for the U.S. delinquency for our U.S. retail and lease portfolio over 60 days.

The top lines show the loss ratio for both the credit, the U.S. managed portfolio for our retail and lease business and then the worldwide loss ratio for all of our portfolio.

And this looks at credit losses expressed as a percent of average net receivables. Delinquency ratios indicate the percent of accounts past due by more than 60 days, and was indicated in our earlier conference call, these include bankruptcy levels.

As of the, these include accounts that are more than 60 days due, delinquent due to bankruptcies, as of the fourth quarter, 2001 credit losses were up from 2000, primarily because of the weakening economic conditions,

which as we indicated in mid-December, we saw really a sharply accelerating rate of unemployment, a loss in consumer confidence and then throughout the year, and also continuing at high levels in the fourth quarter, increases in bankruptcies.

We saw in the fourth quarter some increases in our frequency. We had increases in repossessions and also in delinquencies. The repossessions in the fourth quarter were up, the rate was up about 19 percent.

We also experienced higher losses per unit, or what we would call severity, reflecting in part used car values and also an increase in the number of accounts that were charged off as no-vehicle recovery.

Over the last 12 to 18 months, as we started to see some weakening on the economic side, we began tightening our purchase standards, and I call that refining our purchase standards, and our exposure to higher risk contracts.

We reduced the magnitude of the number of long-term contracts that we've been purchasing and in some cases, we've raised loan-to-value standards on some of those contracts.

And on the up-front process, we've also been trying to improve our bankruptcy predictors, as we've seen that rise to become a much more substantial part of the credit situation.

On the collections side, we continue to increase the service center staffing, and we've stepped up efforts to improve the fast response time between the branches and the service centers to provide feedback mechanisms as a result of the information that we're seeing in the service centers.

We're seeing that the service center transformation represents a tremendous opportunity for us to take and leverage the tools and the collection activities, improve our segmentations and then feed that information back on a very timely basis to the, to the folks in the branches who are making the credit decisions.

I think it's important for us at this point to recognize that a key element of Ford Credit's value to Ford and to Ford dealers is providing a broad range of support over a wide economic cycle,

and that means that we've got to be able to buy contracts from our dealers for customers who both have the ability and the intention to pay, and also we have to be able to collect it and we have to be paid for that risk.

And so we've been putting in place those actions and discussed in the revitalization program, those will reflect the back-to-the-basics element for Ford financial.

What we've shown on the next slide is a longer-term trend. It looks back over the last 10 years of loss ratios for both the managed U.S. retail and lease portfolio and the total managed portfolio around the world.

You can see that we are in 2001 at a rate of about 131, down on the U.S. side from the high levels of 150 we experienced in the early 1990's. And we're also down on the worldwide portfolio compared to our results in 2001.

Now Beth will turn over and take up the discussion of Ford Credit funding strategy.

We have on the slide nine, the summary of our global short-term funding strategy, and there we're rated in three columns, one is to show our global unsecured commercial paper,

the box in the middle are asset back commercial paper program, which we call F

, and a bit of our strategy, which I'll talk about.

We've decreased, as I mentioned earlier, our global commercial paper balance from 41 billion at the end of 2000 to 16 billion at the end of last year. And that actually, on a net of over-borrowing was about 14 billion commercial paper.

At the same time we've increased our F

program, as I said, which is in the middle box from $1 billion to 12 billion as of year-end.

And we have, as you can see a very sound short-term funding situation with very adequate backup lines of credit, more than covering the commercial paper.

Our strategy for this year includes, obviously, continued management of the global commercial paper balances to 15 billion or less, and we monitor this closely. We're exploring the expansion of F

beyond the 12 billion level.

We're utilizing bank sponsored conduit capacity as a flexible funding source and we continue to insure wide distribution of our paper and F

program.

On the next slide, that, so we covered the short-term. Now to talk a little about the long-term debt and term securitization plan. We have, we're forecasting requirements this year for Ford Credit, 35 to 45 billion, which is down from 60 billion last year.

The, it's primarily driven by further diversification of our funding sources, less need to reduce our commercial paper as we had in 2001, and we are moderating asset growth, which obviously, has an impact of funding needs.

So that's the plan for this year. And as we go through each of the quarterly calls, we will be updating that plan and showing you the actual against the plan.

So in summary, we have had very much a focused and early before, some of the issues developed in 2001, on liquidity to insure continued support of the business with no disruptions.

And despite rating downgrades, we still have substantial access to the capital markets, whether you saw it in October with the large global transaction we did and also the well received asset securitization that we did last week.

We also, a hallmark of what we try to do is continued diversification of our investor base, and lastly, we begun a process last year with improved communication via these conference calls and also we're trying to further improve our transparencies and our plan is to have more transparencies in the 10-K disclosures for Ford credit,

particularly around securitization and discussion of managed receivables, not just on balance sheet. So we would in fact be targeting to have a conference call once the Ford Credit 10-K is out to then discuss in more detail about Ford Credit and particularly in the securitization rule.

So with that, I'd like to turn it open to, let me make one other point before we turn it over to Q&A that if there are questions ongoing, you should contact David Moore who is, his phone number is 313-621-0881.

Happen to have e-mail to us at

and we post all these presentations and other things on our Web site.

So with that, I'd like to open it up for questions.

Thank you. Ladies and gentlemen, if you have a question at this time, please press the one key on your touch-tone telephone. If your question has been answered, or you wish to remove yourself from the queue, please press the pound key.

Our first question comes from Bob Decker of Harris Investments. You may proceed.

Hello Beth. I got several questions, but maybe I'll just take the biggest one first. I was looking through your cash flow statement, both Ford Motor and Ford Motor Credit in the press release,

and was having trouble, you know, reconciling, where you came up with, you know, 10 billion at the automotive and 13.7 billion from financial services from cash flow from operations. Wonder if you could kind of walk us through some big parts of those?

I guess I don't understand your question, because I can

directly.

OK, well, you know, if you take cash flow from operations at 10.1 billion for the full year, and you take net income

, your pre-tax charge working capital, you know, I come up with, you know, a pretty,

you know, a couple $3 billion gap there that must be other, and I was wondering that might be in terms of reconciling it to the detail of what the cash flow components were.

Well, you, I have to tell you that I haven't, the way the, when I think of cash flow, we think of it, I guess in different buckets. Are you looking at full-year cash flow?

Yes.

It's, if I think about it, the way I think about the buckets are, and this is the way the accounting fraternity does it, but I think of profit after tax payments, I think of net spending, meaning spending net of depreciation,

I think of working capital improvements, and then I think of other outflows, dividend payments, the payments we made for Volvo, the final payment there, and the Hertz purchase of remaining shares.

So, and I guess we could get all through those to explain those, although it's difficult to do that in this kind of forum. I guess what I would say is a big element of our cash situation for this year, if I look at a year-over-year variance,

if I look at cash, including VEBA, which is how we look at it, we ended 2000 with cash plus VEBA of $20.2 billion. We're now saying at year-end 2001, we had 17.7 billion of cash, including VEBA.

So a $2.5 billion decline, and if you look at the big chunks, obviously we had a profits after taxes were obviously a loss situation, we had net spending of over a $1. We had working capital improvements of close to $5 billion positive,

to then help offset dividend payments of 1.9 billion, a Volvo final payment of 1.6 billion, payment for Hertz of the remaining shares that we bought in, it was another seven-tenths.

There are lots of ins and outs and I would say that the operating losses and net spending and funding the dividends that working capital helped offset a big proportion of those outflows.

That's how I look at it without getting into the buckets and the cash flow statements.

OK, all right, then just a, you know, part of your funding slides, you know, you showed, you know, the commercial paper coming down by 25 billion and you know, the F

went up only by 11 billion, was a net difference there in the end?

In the end, the balance, you can think largely is made up from term funding.

OK, so it was really the other term funding you did in the fourth quarter?

Yes, because if you look at the 60 billion in, well not just the fourth quarter, but the pace throughout the year assumed a reduction of commercial paper over time, and if you look historically,

what we did last year was much higher than we had done in prior years, and is much higher than we would expect to do this year.

So this year is more back to what I would say more normalized levels, not assuming a lot of growth in the assets and just looking at funding the current securities of debt and amortization of the securitization.

OK, when you say exploring F

expansion, you know of any order of magnitude?

Well we'd like to see if we could get it up a few more billion, and I think from a market standpoint, that's possible.

OK.

So we have to work through some of the mechanics to get us positioned to that.

OK, all right. I'll detail, I'll e-mail some other more detailed questions to you.

Yeah, that's great. Thanks. David Moore would be happy to handle those.

OK, thanks.

Our next question comes from David Andrews from UBS Warburg. You may proceed.

Yes, good morning. Bibi, Beth, Ann Marie, how are you?

Hi David.

Good, how are you doing David?

Pretty good. Two questions. The first, a little bit of a follow-up on the cash flow issue, I was focused a little less on year-to-year and more quarter-to-quarter changes in net liquidity.

Was surprised to see it go up as much as it did and it seemed like, as you mentioned, the working capital was an important component in the fourth quarter in improving cash flow as well as the,

it looked like the transition, or the monies flowing between financial services and Ford Motor, and I'm trying to reconcile just the automotive net liquidity.

And I know it was mentioned, Bibi, I think you mentioned the taxes were sort of normal flows between Ford Credit and Ford Motor, but taxes, 877 million, that must be, it's a lot more there than taxes, right, I mean.

Can you help us understand, I guess, what that is and then directionally where would you think this is going as we go into '02? Currently you've had a lot of

capital, a lot of that's on the payable side.

There's got to be some limit to how much more you can do there, and then the 700 million contribution back into financial services will swing any of those flows that have benefited from in the fourth quarter coming out of financial services.

So should we be expecting that liquidity probably to fall into the first quarter and then into the rest of the year?

Let me address the automotive piece of it first. When I look at third to fourth quarter and a very large element of the positive or the improvement in growth cash as well as net cash was driven by working capital.

If you look at about 1.5 billion improvement happened in the, between the third and fourth quarter. We saw inventory levels down by $1 billion globally. We saw receivables down 500 million, and that's on top of, that's on top of two billions reduction in receivables that had happened prior to the, through the third quarter.

So the working capital management was about 1.5 billion good news in the fourth quarter. And that, that offset more than offset, as well as some other ins and outs on the operating performance.

So we feel very good about those improvements. We have, are targeting more improvements this year, although they, it would be difficult to say that they would be in the magnitude that they were last year, which with, if you look at the full year was worth about $4 billion of working capital improvement between inventory receivables and payables.

That's on the automotive piece of it.

I don't have the data cut for the fourth quarter David, but I think looking in total it was a normal seasonal going with some lower production by year-end or lower receivables levels, lower wholesale levels at the end of the year,

in part reflecting the zero-zero program, and the also the impact on, as we indicated, tax payments. I don't have the quarters, the fourth quarter data however.

OK, but that will probably reverse then in any case in the first quarter as you put the capital in from the parent into the credit.

Yeah, I think what we could say overall for automotive cash flow for this year is given our projection that we are going to be at break even for total corporate profits,

that you would expect that you will have a negative cash flow this year, and we have indicated that in our filed offering prospectus with the SEC today.

OK, that's helpful. The second question was on the funding chart, the, I assume it's 20 to 29 billion there on the total term. Is that, how sensitive is that to volumes?

We've already started to get some sense that initial expectations of very low volumes this year, and maybe a little bit too conservative and that we're going to be a little bit better.

In other words if we end up with a 16 million unit year this year, do you think that'll be incorporated within the 29 higher end of this guidance or do you think there could be, is this really based upon more of a 15 to 15.5 unit type of year?

The funding for Ford Credit?

Yeah.

Yeah, the, inherent in their assumptions are the same assumptions, obviously for Ford and that is an expectation of a 16.5 million industry this year.

OK, to the extent that it is greater than that, the term, the total term debt could end up being higher than that 29 upper range number you've got?

Well, I don't know. I think we'll have to see. As was discussed on January 11th in connection with our total revitalization plan, what we said is Ford Credit was planning to moderate its asset growth,

and there are ways to do that which don't impact new car sales, and yet looking at other aspects of the business. So I wouldn't necessarily assume that just is with the higher industry that we would see substantially higher funding needs.

So I think it has to, as we work through this transition year for Ford Credit to more on a path of moderating asset growth, we'll have to see how that actually plays out.

OK, great, that's helpful. Thank you.

I don't think we'll see the significantly different numbers than what we've given you on the page of 35 to 45 billion in total

OK, great, thank you.

Our next question comes from Brian Beargie from Bancone Capitol Mark. You may proceed.

Actually I was just trying to get a little bit more color around your loss expectation for 2002. On the equity call you suggested that, you know, assuming that the economic rebound hit stores the second half, you would see losses trending out flat for the year.

I guess there's two modes of thought circling around this, you know, one, obviously, the delinquencies and losses tend to build or lag after significant economic downturn. The first mode of thought is that, you know, after September 11th, the losses would continue to decline over the year;

however, I guess the other mode of thought, and tell me if this is the one that you're embracing, is that during 2001, we were already in an economic recession and basically the worst is already over. Is that kind of where you're coming from.

I think it's fair to say as Martin has said on a couple of times that we probably underestimated the underlying weakness in the economy before September 11th. That certainly exasperated it and compounded a number of factors that contributed to the actions that we took in the fourth quarter of 2001.

You're right, going forward, there is a lag in terms of the impact on the portfolio as the economy improves. Our expectation is that we'll see a level of unemployment that continues for some time through next year,

and our assumptions reflect that, so that we, we expect to see some improvements in some product lines, and some higher levels in some of our other product lines.

OK.

But in total, about the same.

And just, out of curiosity, I don't know if you've looked at this yet, as far as your funding costs, have you looked at the, I guess, maybe in terms of, you know, basis points relative to, you know,

what your cost of funding on a

would be from going to and I guess

,

to

. I guess you could just multiply that times the

outstanding and get the cost, but have you had a chance to look at that?

Well, if you, are you talking about the absolute cost, yeah, compared to with what?

Just, you know, just as far as your rate. Have you looked, you know, relative to where you were funding before, what it means for you now, being an

issuer as opposed to a ...

Yeah, I would say relative to being an

issuer, being an

issuer is about 40 to 50 basis points more expensive for commercial paper.

OK, so would I be right in assuming that, you know, going from a split to a full

would maybe be half that?

No.

Most of the, frankly was priced in ...

Back in October.

Yeah.

OK. Thank you.

Our next question comes from Michie Yana of Commerzbank. You may proceed.

Hi, I have a couple questions regarding the credit loss situation. First I was wondering if you can give some flavors about what you're expecting for the '02,

and also I would be curious to see what you expect, why you're now having a more prudent leverage target, if you're actually assuming the economic weakness going forward?

And also I was wondering if you can also shed some colors about the residual loss situation, if you still looking gains, or if you're break even?

OK, let me take one at a time first. The 2002 outlook for credit losses as we just indicated to the previous caller, our expectation is that we will be seeing something in about the same level of loss rates for next year.

There will be some differences across our product lines. We'll see some improvements in some and expect to see others that will stay at a higher level for a longer period of time. In total on the portfolio, though,

we would expect given some improvement in the economic outlook, not another sharp acceleration from where we are today, but we'll be about even where we were.

In terms of the leverage target, as we look through all of our liquidity and our work we've done with the rating agencies we can demonstrate that we've got an appropriate level of protection for both the shareholders and the bondholders.

As we look at all of the elements of protection that are available, we continue to look at what the appropriate leverage is and as Martin indicated we've made the commitment we will not be moving off of 14 to one for the time being.

You've indicated, the third question was on residuals, we've, I think we've said this on each of the last several conference calls, we build a reserve level that we accumulate through depreciation for our expected value of cars and trucks coming off lease.

This year for 2001, our, the results were in line with our expectations. We had some good news relative to expectation on some vehicle lines. We were a bit worse than our expectation on the compact utility.

In total though, when we factor cars and trucks across the different terms and also the number of vehicles that actually come across that went through to the options, we were in line with our expectations ...

So you're not looking additional loss or anything or are you still in the positive territory overall relative to your expectation?

We're in a balance position relative to our expectations, and we have assumptions for reserves for the year-end 2002 that reflect, we believe, some degree of appropriate level of the option values and vehicles being returned to the auction.

As for the leverage, if you see further softening, either in the economy or let's say the delinquency rates or the severity rate, would you consider sort of trying to inject equity or do, take any measures to sort of lower the leverage,

you know, let's say, you know, back to 13 times, you know, where you were, I guess about 18 months earlier or thereabouts?

Leverage is a topic that we have discuss every monthly. We look at where we are in the portfolio. We look at what's happening in terms of our overall losses and all of the forms of protection that we have available to the creditors in terms of equity as well reserves.

So we're always monitoring the leverage and we do several times a year, a deep, a full study of our equity protection. We'll be reviewing those with the rating agencies later this year.

OK, thank you very much.

Thank you. Our next question comes from Dominic Fumai from BNP. You may proceed.

Yes, hi, good morning. Couple quick questions. First of all, just on the provisions going forward, you took about what 1.5 billion this quarter compared to last year, that's quite a significant increase as we were expecting;

however, I just want to know, you know given some of the changes based on the revitalization plan Ford Motor Credit in terms of origination and so on, what are the sort of normalized amount going forward based on your current projections?

As Martin indicated today, this is a year of transition for Ford Credit. We're really working through how we best support the motors companies brands and its dealers and its customers. I think it's a bit early to give you some idea of that range.

OK, OK. What would you think it would have been absent the, you know, the extenuating circumstances?

Gosh, as Martin said earlier, we don't get into speculation.

OK, and my other question centers on the gains on the sales of receivables. For the year you guys earned about 1.2 billion. Can you tell us what the breakout is of that portion that was attributable to the gains?

I'm sorry. That was the investment in other income line?

Yes.

Yeah, for the full year, the absolute incurred gains will be about $750 million, 740, 750, in that range, and that number is included in the investments in other income line of the income statement.

OK, and just one final question. I just want to clarify something. On the funding ...

however, if I could just be clear. As we said on several occasions, the full-year impact on our results this year is not the gain on sale that's reported in the cash flow statement.

OK.

You really need to think about three things: the gain on this year's sales, the earnings you would have made on the assets you had on your books this year, and the loss of earnings from prior years' sales.

So when we think about what the impact on this year's results are, it's the net effect of those three actions.

and these are some of the things that we're going to give you some more clarity when we, more disclosure on these in the 10-K and then would plan a conference call to discuss it in more detail.

OK, great. Thanks.

OK,

.

Yes sir.

Hi, we have time for one last question.

Thank you. Our last question comes from Alan English. You may proceed sir.

Yeah, actually this is Dan

from Bank One, and you've already answered this question twice, so I don't mean to belabor it, but with respect to credit losses for 2002, you had said that they would be approximately what they were in 2001.

Now in the fourth quarter of 2001, there are 172 basis points for your U.S. managed portfolio, up quite a bit from the average for the year, which would appear was running at 115, 120 basis points before the fourth quarter.

So when you say they will be this, roughly the same in 2002, does that mean you're expecting a relatively significant decline from where they were in the fourth quarter or will that take some time so that perhaps in the first half of 2002, the running rate will be more like the fourth quarter.

I think the running rate will be higher in the first half of the year than it, for the first half of 2002 than it was for the first half of 2001.

As you know, the fourth quarter is traditionally a seasonally high level of credit losses, so I think it's more appropriate to think about the ratios on a quarter, comparable quarter compared to a year ago.

OK. So you expect all in it'll be at about 130 basis points for the year then roughly?

In general, I think I said the total worldwide number would be about the same and that there would be some plusses and minuses for the various portfolios.

Would the U.S. be higher or lower than from that?

I think that in total, we will be about the same. There will be plusses and minuses. Again the answer will depend on the implementation of our revitalization plan as well as the outlook for the economy.

OK, thank you.

Thank you very much for your participation.

, that's going to conclude our call for today. We'd like to thank everyone for participating.

Thank you Mr. Moore. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now disconnect. Good day.