福特汽車 (F) 2004 Q3 法說會逐字稿

Good day, ladies and gentlemen.

And welcome to the Ford Motor Company Third Quarter Earnings conference call.

My name is Carol, and I will be your coordinator for today.

At this time, all participants are in a listen-only mode.

We will take your questions towards the end of today’s presentation.

If at any time during the call you require assistance please press star, followed by zero and a coordinator will be happy to assist you.

As a reminder, ladies and gentlemen, this conference is being recorded.

I would now like to hand the presentation over to Ms. Barbara Gasper, Vice President of Investor Relations.

Ma’am, please go ahead.

Thank you, Carol.

Good morning, and thank you all for joining us, either by phone or on the webcast.

With me on the call this morning is Don Leclair, our Chief Financial Officer, Jim Gouin, Controller, and Mac Macdonald, Ford’s Treasurer.

Additionally, here in the room with us are Lloyd Hansen, Vice President of Revenue Management, [Ann Marie Petak] [ph], who has just been named as Ford’s Treasurer effective November the 1st, Patricia Little, our Director of Accounting, and Dave Cosper, Ford Credit’s CFO.

Before we begin, I’d like to review a couple of quick items.

First, copies of this morning’s earnings release and the slide deck that we will be using here today have been posted on the Ford Motor Company investor and media web sites for your reference.

I would also point out that the financial results presented here are all on a GAAP basis.

Any non-GAAP financial measures discussed on this call are reconciled to their GAAP equivalents as part of the appendix to the slide deck.

And finally, I need to remind everyone that today’s presentation includes some forward-looking statements about our expectations for Ford's future performance.

Actual results could differ materially from those suggested by our comments here.

Additional information about the factors that could affect future results is summarized at the end of this presentation.

These risk factors are also detailed in our SEC filings, including our Forms 10-K, 10-Q, and 8-K.

With that, I’d like to now turn the call over to Don Leclair.

Don.

Thanks, Barbara.

And good morning to everyone.

Well, we had a good third quarter.

Earnings from continuing operations excluding special items was 28 cents a share.

This exceeded the high end of our guidance by 13 cents.

And the improvement reflects primarily a recognition of interest related to tax refund that we had originally had expected in the fourth quarter, and we got it in the third quarter just at the end of the quarter, and favorable performance in Financial Services.

Per unit revenue improvements continued in North America but the market continues to be difficult.

New product in the fourth quarter should improve our U.S. market share.

And we’re making good progress in Europe, and while PAG’s results were disappointing they were improved from the second quarter.

South America, Asia-Pacific, and Africa, and Mazda all were profitable, and we saw continued strong performance at Ford Credit and Hertz.

Now, the second slide shows the standard financial metrics for the third quarter and the first nine months compared with a year ago.

We’ll cover most of this later on, but I want to point out a couple of items.

Our sales and revenue were $39b, that’s up 6 percent.

And for the Auto Sector sales were $32.8b, up $2.6b.

Of this increase about $600m was due to exchange rates.

The year-to-date tax rate of 26.6 percent primarily reflects favorable audit settlements.

We anticipate the full year tax rate to be about 25 percent.

This includes the extension of the research credit that will be reflected in the fourth quarter.

Over to slide three, this details special items incurred in the third quarter.

In total, special items reduced earnings per share from continuing operations from 28 cents a share to 25 cents.

Special items included an additional non-cash charge related to the revaluation of our investment in Ballard.

We expect that the restructuring announced in July will be completed around the end of this year.

In addition, discontinued operations represented a loss of 10 cents per share and reduced earnings per share from net income to 15 cents.

These charges are primarily related to our decision to exit [Formula 1] [ph], and we’ll discuss this and Jaguar restructuring later on.

Now, the next page shows pretax results by sector for the third quarter excluding special items.

And we incurred a loss of $609m on the Auto side, and that’s $61m worse than last year.

And Financial Services earned over $1,4b, $194m better than last year.

On slide five, provides an explanation of the 61m year-over-year reduction in pretax profits for the Auto side.

The volume and mix was favorable by about 100m, that’s explained primarily by higher unit volume in Ford Europe, South America, and Asia-Pacific.

Net pricing was unchanged, and we’ll talk more about that later on.

Cost performance was favorable by 200m, and we’ve got more on that later.

Foreign exchange was unfavorable by about 300m, reflecting primarily the impact of the weaker U.S. dollar net of hedging.

And then interest and other was 100m worse than a year ago, reflecting lower tax rate funds interest.

The third quarter this year results included interest income of 239m related to tax refunds, and that was lower by about 100m than what we had last year.

Over to slide six, this shows cost performance.

And for the first nine months of 2004 it was 800m favorable.

Quality related expenses were higher by 100m and, as we’ve said previously, ongoing quality improvements this year are being offset by the non-recurrence of last year’s reserve adjustment which reflected favorable experience on a prior year model.

And we continue to expect quality related cost performance to be about zero for the full year.

The manufacturing and engineering costs were 900m favorable.

And during the third quarter this improved by 500m, due in part to the non-recurrence of the UAW contract settlement costs that we incurred in the third quarter of last year.

Overhead, which primarily includes administrative and staff support, 400m favorable.

And net product costs were 200m favorable.

Depreciation and amortization, as you can see we were up about 600m in the first nine months.

And pension and retiree healthcare expenses were about flat.

We expect these costs to be about 100m favorable for the full year, primarily reflecting the affect of the new Medicare legislation.

And for the full year we continue to expect cost performance to be about a billion dollars.

Now the next slide shows our pretax results for each of our auto segments, and we’ll cover the operating activities later on.

But Other Automotive was a loss of 31m in the third quarter.

And that’s down 33m compared with a year ago, more than explained by lower tax refunds related interest.

And as I’ve mentioned before the normal run rate for Other Automotive is around 200m a quarter, maybe a little more.

Factors such as tax refund related interest, however, can cause this to vary.

Now, for the next two slides we’ll cover the Automotive operations.

And first, we’ll look at North America.

Vehicle unit sales were down slightly in North America by 2,000 units to 780,000.

This reflects primarily lower market share in the U.S., offset by higher U.S. stocks and higher volumes in Mexico.

Vehicle revenue was 18.1b in the third quarter, up slightly from last year, and we’ll cover that in more detail in a couple of minutes.

Pretax losses were 481m in the quarter, that’s 373m worse than a year ago.

The decrease in profitability reflects unfavorable exchange and lower volume, partly offset by favorable mix.

Now, although vehicle unit sales were about flat with last year, as you can see in the bar chart, production which is shown below the box on the left was down 39,000 units, from 786,000 to 747,000.

That difference between the change in vehicle unit sales and the change in production primarily reflects the fact that we had more units coming back from daily rental companies and being sold at auction than we delivered to the daily rental companies.

And our profits were driven off of production.

The volume deterioration is partly offset by favorable mix.

And on to the next slide which shows the third quarter and September calendar year-to-date changes in net revenue for North America.

And these charts reflect our net revenue divided by vehicle unit sales.

And for the third quarter net revenue per unit was up $423 from a year ago, the increase was almost entirely attributed to improved mix of new vehicle sales, and we chased flat net pricing for the third quarter.

Within that, higher retail incentives were essentially offset by increases in wholesale delivered prices.

For the first nine months of the year, our unit revenue was up $751 a unit with positive net pricing of about nine-tenths of a point.

And we’re pleased with our continued progress in this area during another tough year.

We continue to believe net pricing will be about a half a point positive for the full year.

We expect the fourth quarter to be our toughest for net pricing and product mix.

This partly reflects the strong revenue performance in the fourth quarter of last year when the new F150 was launched with essentially no incentives and a rich mix.

Also, given dealer inventories across the industry remain at relatively high levels, we do expect a tough pricing environment.

And on to slide 10.

This slide provides a little more detail on share and residual values.

The left-hand box is similar to the one we showed last quarter, and it shows our market share performance by business segment in the first nine months of this year compared with a year ago, breaking sales down between fleet and retail.

It also shows below the bar chart the change for each segment compared with a year ago.

Now, first, the daily rental segment has grown by 194,000 units from last year, that’s up 14 percent from a year ago.

And as you know, we’ve chosen to reduce our participation in this segment to improve our profitability and our residual value.

And as a result our share of the daily rental market is down 4.2 points.

And we’re seeing tangible benefits from this strategy in the auction values of our top selling daily rental vehicle.

The right-hand half of the slide shows the changes from the prior model year in one-year old auction values.

We’ve included the top five selling Ford Division vehicles and the Lincoln Town Car.

Residuals have improved on most vehicle lines.

The improvement on our vehicles is even greater when you compare that with the residual values of the closest competitors for these vehicles.

And that’s not shown on this slide.

The other fleet category refers to commercial and government accounts where we also are focusing our participation in the most profitable areas.

Now, our retail share has been under pressure this year, particularly as we balanced out our old model, and changed over to the new vehicles we have coming for 2005 model.

In the first nine months our retail share was down 1.1 points, eight-tenths of a point of which was in car, and that’s where we had most of our new products coming out.

Many of the new entries we are introducing just now are not updates to existing models but are, in fact, all new entries.

These include the Ford Freestyle, the Ford Five Hundred, the Escape Hybrid, and the Mercury Montego and Mariner.

And we expect these along with the all new Mustang and the redesigned S Super Duty will result in improvement in our retail share in the fourth quarter.

Now, turning to South America, third quarter sales were 76,000 units.

That’s up 21,000 from last year, reflecting higher volume for the Echo Sport and the Fiesta, primarily.

Our share was down because we are now capacity constrained at our new plant in [Camaseri] [ph] and the industry volumes are strong.

So, share was down a little bit but total volumes were up.

Revenue was 784m compared with 489m last year, and that reflects higher vehicle volume and pricing.

We posted a pretax profit of 59m in South America, and that’s an improvement of 85m from a year ago.

And that’s more than explained by higher volume in pricing with higher material costs as partial offset.

And it’s important to note that for the first nine months South America had a pretax profit of 96m, that’s an improvement of 221m from the same period last year.

Now, turning to Europe, vehicle unit sales were up by 46,000 units from a year ago to a total of 372,000.

This increase is explained by higher sales in the major Western European markets, primarily the Focus CMAX, as well as higher sales in Turkey and Russia.

Third quarter market share was 8.8 percent, up two-tenths of a point from a year ago, primarily reflecting the strong sales of the Focus CMAX.

Revenue was 5.9b, that’s up 1.3b from 2003.

Net pricing was 1.5 percent positive in the quarter, that reflects selective pricing actions, and the favorable impact of the new Focus CMAX.

The pretax loss of 33m in the quarter reflected low seasonal production and expenses associated with the launch of the new Focus.

Compared with a year ago losses have been reduced by 367m including higher volume and cost reduction, which includes the affect of our restructuring last year.

And during the first nine months of this year we’ve earned 134m in Europe, and that’s an improvement of 1.3b versus the same period a year ago.

Now, turning to PAG, while third quarter results were disappointing they were in line with our expectations, when compared with a year ago volume was up about 3 percent and revenues were up about 9 percent, reflecting the volume and the stronger exchange rates.

Pretax losses were 171m, that’s a deterioration of 147m, but an improvement compared with the second quarter of this year.

The cost of launching our new vehicles, particularly at Land Rover, was a large factor in the year-over-year change.

In addition, unfavorable exchange net of hedging contributed to the year-to-year decline.

And these factors were offset in part by higher volume.

As we’ve previously said, PAG will not achieve its profit milestone this year.

However, in the fourth quarter we expect PAG to approach breakeven despite the production cuts at Jaguar.

On slide 14 we summarize the recent PAG restructuring actions and the related costs associated with the discontinuation of Formula 1 racing.

These costs are about the same as we told you last month when we indicated 450m plus full year net losses in the F1 business of 50m to 60m.

Costs included in 2004 are projected to include 98m special items.

You can see for the Halewood and Browns Lane efficiencies, and the salaried restructuring, and 340m classified as discontinued operations, and that’s our Formula 1 racing business.

Included in discontinued operations are the first nine months net losses of 44m, associated with Formula 1.

And during 2005 we expect to incur further charges of about 75m related to shutdown of final assembly operations at Browns Lane.

In total, we expect 513m associated with onetime charges and operating losses for the first nine months.

Further operating losses will be incurred until we exit the Formula 1 business, but those will be included in discontinued operations.

Now, on to slide 15.

Asia-Pacific African Mazda earned a profit of 48m in the third quarter, that’s 40m better than a year ago, and this included 13m profit from our investment in Mazda and an improvement of 8m compared with a year ago.

Now over to slide 16, in Asia-Pacific and Africa vehicle unit sales were up by 15,000 to 111,000.

And this increase reflects higher industry volumes in China, Australia, and Taiwan, as well as improved market share in Australia and South Africa.

Revenue was up 261m to 1.9b, pretax profits were 35m for the quarter, a 32m improvement from a year ago reflecting favorable exchange, lower costs, and stronger volume in mix, offset in part by unfavorable net pricing.

And during the first nine months of the year we earned 58m in Asia-Pacific and Africa, and that’s 107m better than a year ago.

Now, slide 17 shows third quarter and first nine months Automotive cash and cash flow.

Now, we ended the quarter with gross cash of 23.4b including 4.1 of short-term [Viva] [ph] assets.

This is down 3.4b compared with June 30, 2004, and down 2.5b compared with yearend last year.

Our operating related cash flow excluding pension contributions was 2.9b negative for the quarter and 500m negative for the first nine months of this year.

Within operating cash flow net spending was 400m negative for the quarter and 200m positive for the first nine months.

Working capital was 100m positive during the quarter, but 1b negative year-to-date reflecting primarily lower production during the first half.

And other represents primarily payment and expense timing differences for items such as marketing, warranty, and retiree healthcare.

The $2b negative during the third quarter reflected the affects of production on marketing and warranty payments versus accruals, the higher usage of cash marketing incentives in lieu of APR, and cash tax payments.

Pension and OPED payments compared with expenses were a partial offset.

Now this is typical of the third quarter for us, and as you may recall it’s somewhat better than we did last year.

Last year the operating cash flow which this year was 2.9b unfavorable, last year on a comparable basis was 3.4, so this is a little better and it’s very much consistent with our normal pattern.

And as you can see at the bottom of this chart, Financial Services dividends continue to be a significant contributor to our cash position.

Now, moving from the Auto side, let’s now turn to pretax results for the segments within Financial Services.

And Ford Credit earned almost 1.2b in the third quarter, an improvement of 359m compared with a year ago.

And we’ll talk more about that in a minute.

At Hertz we earned 249m, and that’s 63m better than a year ago.

And that change reflects primarily higher rental car volume and higher profit from the disposal of used vehicles and equipment, and the improvements were partly offset by lower pricing in car rental markets and higher costs.

Now, on to slide 19, this slide provides greater detail on the change on Ford Credit’s pretax profits, and pretax profit was up 359m, as I mentioned.

Volume was unfavorable, 87m, primarily reflecting our strategy to focus on financing Ford brand sales only.

And at September 30 our managed receivables were 171b, and that’s down about 10b from a year ago.

Improvements in credit loss and lease residual performance are the main drivers of our improvement.

Improvement in credit loss performance reflects our efforts to improve the quality of our loan portfolio, and as a result repossessions are lower which further contributes to improving residual value.

And the continued improvement in our credit loss performance also has resulted in lower levels of credit loss reserves.

The improvement in lease residual performance is primarily the result of improved auction values and lower vehicle return rates.

And other consists primarily of improved operating costs and the improvement in net market valuations of derivative instruments, and the change related to derivatives was not reflected in our earnings guidance, and it is not expected to be repeated in the fourth quarter.

Now, let’s review our planning assumptions and operational metrics.

Based on industry sales for the first nine months we are now projecting a full year industry volume of about 17.2 in the U.S. and l7.3 for the 19 markets we track in Western Europe.

We’re on track to improve quality in all regions.

In terms of market share we’ve seen mixed results.

Shares improved in Europe but declined in the U.S.

And we do expect U.S. results to improve in the fourth quarter, reflecting the new products that we have such as the Ford Five Hundred, the Freestyle, the Mustang, and Mercury Mariner, and Montego.

And as we said in September, we now expect to achieve about $1b in cost performance for the full year, and we also expect to come in slightly below our capital spending milestone of $7b.

And we are likely to end up slightly below our 1.2b operating cash flow target.

The shortfall would have reflected the affects of lower volume on working capital and on expense and payment timing differences, as well as the previously mentioned change to a greater mix of cash sales incentives.

I don’t expect to miss this by much, and I know this Management Team is going to work very hard to hit that, but I just want everybody to know, you know, it was a chance we might miss it, and we’ll probably end up somewhere in the range of about three-quarters of a billion but we are going to work very hard to get as close to that milestone as we can.

Over to the next page, for fourth quarter production we’re projecting production to be down in all of our major operations compared with a year ago.

North America you see at 830, that’s down 70,000 from a year ago.

And Europe is projected about 400,000 units, and that’s down 42,000.

And PAG’s production is projected at 170.

That’s down 29,000 from a year ago, and it includes the production reductions we’ve mentioned the last month at Jaguar.

Now, slide 22 shows the current status of our 2004 financial milestones by operation.

Now, on the Auto side we expect North America will meet its full year milestone.

This is just a little less bullish than our previous outlook.

The marketplace here remains tough, and it doesn’t appear it’s going to be getting any less tough soon.

We now expect that Europe, South America, and Asia-Pacific will all exceed their full year milestones.

And PAG will continue to improve from the third quarter to the fourth, as I mentioned, probably getting close to breakeven in the fourth quarter, so the full year will be a loss.

And overall, we expect our Auto operations to achieve about 1b in pretax profit in 2004.

And because Financial Services continues to turn in better than expected performance they will exceed their milestone by more than we had previously indicated.

But we now expect to earn about $2.00 to $2.05 from continuing operations excluding items, and Financial Services is a primary reason for the increase in our full year earnings guidance.

Now, while on the subject of milestones, I want to take a quick minute to share with you what we’re planning to do next year is a little different than we’ve done in the past in January.

And during the Splinter Group Sessions held here in Detroit during the auto show we are planning to hold a Ford presentation on our stand at the Auto Show rather than here in Dearborn.

This will allow you to see our product line firsthand, which we feel is important because our new products are our key component in our future performance.

And after announcing our yearend full year earnings on January 20th we would plan to come to New York for a meeting on the morning of January the 25th.

At this time we will have a discussion of our business outlook for 2005 and present our 2005 milestones.

We think this will provide for a better, more complete discussion because we will have the final 2004 results in hand.

And we wanted you to have these dates so you could plan your time in January accordingly.

Now, before taking your questions let me mention one additional item.

I’m sure you all have read about the SEC’s inquiry into pension and OPED accounting practices.

While we are one of the companies that has received a request for information on this issue, given the size of our pension and retiree healthcare obligations I don’t think it’s surprising that a general SEC inquiry on these matters would include Ford.

We adhere to the highest accounting standards, and we will cooperate with the Agency in this review.

Now, we’d be happy to take your questions.

At this time, we’re ready to begin the question and answer session.

We will begin with about 30 minutes of questions from the investment community, and then take questions from the media, who are also on the call.

In order to allow as many participant questions as possible within our timeframe we ask that you keep your questions brief.

Operator, can we please have the first question.

[Caller instructions.] [ph]

Your first question comes to you from the line of Rod Lache of Deutsche Bank.

Please go ahead.

Good morning, everybody.

Hi, Rod.

How are you?

Okay.

A couple of things.

First of all, the interest related to the tax refunds that you mentioned, was that a onetime adjustment or is this on a higher cash balance that you have right now?

Well, actually, we got information from the Internal Revenue Service that we’d be receiving this refund, a portion of which is, you know, relates to interest.

Right.

Toward the end of the quarter.

So we had to accrue for the gain there, and we actually got the check in the mail just after the end of the third quarter.

Okay.

So it’s a onetime gain?

Because I didn’t see, there was no tax refund in the cash flow this quarter, right?

Right.

Okay.

It’s not a onetime gain in the sense that this is something that’s been happening ongoing as we complete our audits with the Internal Revenue Service.

We had some last year, in fact, this year’s amount was less than last year.

And you said that was a net gain of 249?

239.

239.

And that was – it was more than that last year.

It was just over 300m, as I recall, last year.

Okay.

So it’s something that happens.

It’s very hard to predict when it will finally occur, but we have a pretty good handle on where we’re heading going forward.

And it’s just when it actually occurs, it’s a tough part to call.

Also, did you say that the UAW contract charge in the third quarter of last year was 500m?

That seems higher than I recall.

No.

We said our improvement year-over-year on manufacturing costs, manufacturing and engineering together was about 500.

Included in there was a non-recurring for the charge related to settling the contract last year.

And that was about half of that amount, a little less than half of that, as I recall.

Okay.

Can you give us a little bit of a sense of the [walk] [ph] year-over-year in North America?

Obviously, there was a pretty, it was a meaningful earnings deterioration, average transaction prices are better, pricing is flat.

Was that deterioration entirely a function of volume, or was there some fixed cost reduction in North America, as well?

There was a small amount of cost improvement in North America in the third quarter, not material.

The two biggest factors were exchange, and that’s what I mentioned before, and the lower production volumes.

And favorable mix was a partial offset, so exchange in lower production volumes accounted, in fact, more than accounted for the deterioration of 373m.

Right.

And one last thing and I’ll get back into queue.

A year ago there was a pretty big shift in or increase in liabilities related to the Visteon bailout.

Just given the situation that that company is in now do you think that that is, that’s something that’s in the cards again, or could you kind of talk about how Ford is addressing that situation?

Let me answer it this way.

Last December we went through a, you know, updated operating arrangement with Visteon, and we signed some new contracts, and we had the supplemental agreement with the UAW that was, you know, part of the 2003 settlement.

We finally got that agreed earlier this year.

And at that time, we set-up what we referred to as a governance council where some senior people from both companies meet on a fairly regular basis to discuss, you know, matters of importance to both companies, generally of a strategic nature.

And, you know, we continue to have those discussions, and that’s really all I want to say about it now.

Okay.

Thanks.

Thank you, sir.

Your next question comes from the line of [Rob Henchles] [ph] of UBS.

Please go ahead.

Hey, good morning, Don.

Hi, Rob.

A question, Ford Credit, I know you backed out of some businesses a little while ago.

It looks like there’s talk about getting back into the sub prime market.

Can you walk through that a little bit?

I’m going to ask Dave Cosper to answer that.

I’m not aware of, you know, us getting back into…

Yeah, I saw an article on that.

And I think that may have exaggerated what we’re doing actually.

I mean we’ve always bought a wide spread of business and we’ll continue to do so.

We think it’s appropriate.

We tend to buy deeper than most banks, but if you’ll recall from a few years ago we were buying very deep.

And we’ve backed off on that.

And we don’t intend to go back that way.

Okay.

How – what kind of opportunity is there?

And what’s the interest?

Is it – are you leaving some sales on the table?

Is that sort of the line of thinking?

Well, I don’t think so.

I mean we have a sub prime activity triad, we’ve [had] [ph] for a number of years.

And it still participates in that business.

It doesn’t buy a lot of Ford vehicles.

Right.

I think our buying practices are consistent with what we’ve done on the Ford brands for many years.

And we judge the risk on each deal as it comes before us, and you know, and do what makes sense for Ford Credit and the Motor Company.

Yeah.

I wouldn’t anticipate any change from the strategy we’ve been on for the last 2.5 years, Rob.

Okay.

Rod was talking about North America, and I just wanted to ask another qeustion .

They are in the first quarter I guess production was so strong in the way you do the incentive accruals, it made numbers look pretty good.

Is this at all an unwinding?

And do we see more of that in the fourth quarter, of what happened in Q1, or is that not the right way to think about it?

I think what happened in the first quarter was production in North America, and in the second quarter, is very much consistent with what we said about our big product changes that we had in North America.

It really had to do more with that than anything else.

Okay.

What we’ve said, you know, when we announced the fourth quarter production of 830,000 units we said that was indicative of our brand to try and manage our dealer inventories in a very uncertain environment.

And I think that really is what’s driving us there.

I don’t know if that’s essentially your question?

Okay.

Thanks, Don.

All right.

Thank you.

Your next question comes to you from the line of Ron Tadross of Banc of America Securities.

Please go ahead.

Good morning, everyone.

Hi, Ron.

Hi.

Just one clarification, and then one question here.

When you talk about your new product improving your market share are you talking about your total market share or are you just talking about your retail market share?

Well, we’re really talking about our retail share there, but we think most of the, you know, downsizing we’ve done in our daily rental is not completely behind us, but the bulk of it will be behind us with this model year.

I think we’ll see our total share starting to improve next year, but I’m going to ask Lloyd to comment more fully on that.

Well, retail is the right answer.

I mean that’s where our focus is, is on retail [scare] [ph].

We’ve taken our daily rental volume down over three years by about 80,000 units.

But we, although we’re taking less out we still have more to go.

We’d like to take it down a little bit further.

And we’re seeing substantial improvement on residual values, partly as a result of that action you saw a slight – and Don pointed out the improvement on the daily rental volume, that’s where we expect to see it the soonest.

We also are up about $400 a unit on 36-month residual values.

And we’ve been very pleased with that.

That’s part of the, you know, Ford Credit performance that you see.

Now, that $400 per unit, maybe it’s a question for Dave, but was that reflected in the – in your – is that the assumption you used for your whole [full] [ph] vehicles?

When you adjust your depreciation did you basically adjust your depreciation by $400 a unit for all of your vehicles?

Well, if you look ahead to our presentation for the fixed income you’ll see some of those numbers in there.

Yeah, that is reflected, that’s an actual.

That’s it.

The units that we sold in the third quarter.

Yeah.

That’s merely looking at auction prices in the third quarter this year versus the third quarter a year ago.

And that’s reflected in that $180m of good news.

We’re up $220 on 24-month leasing, and $400 on 36, and 36 is where the bulk of the leasing [activity] [ph].

So you’re adjusting, when you adjust your depreciation rate you adjusted on your whole portfolio of vehicles, right?

Not just the ones that came off in the third quarter?

Well, yeah.

You’re right.

Our accumulated depreciation properly states our net investment in operating leases.

Okay.

At any given point.

So implicitly, there’s an assumption about auction values going forward.

All right.

And then just one final question here on pricing.

I mean it looks like you guys are pricing, you know, anywhere from a half to 1 percent better than the market.

And, you know, given the elasticity that even you’ve talked about in the past I’ve got to believe that there’s a bit of a market share tradeoff here between pricing and share.

And maybe you could just talk about that, you know, how long can you sustain pricing better than the market, if you agree with that a targeted share and, you know, I mean because the market looks like it might be getting a little tougher out there, be getting a little tougher out there?

In terms of where we have been able to outperform the industry on revenue it’s largely been on vehicles that were, you know, essentially selling what we can build.

The new Super Duty, for example, we have virtually no incentives.

We’re building all the units we have, so there’s not a lot of up side there.

We’re spending substantially less than the competition on the new F150, although it’s higher than when we launched a year ago with no incentive, but in our sales improvement has been 11 percent year-to-date up from a year ago.

We’re up 18 percent in the quarter, and up 22 percent last month.

So the vehicle is selling really well with less incentives.

So we’re very careful about where we tend to be under the competition.

On vehicles that we have good profit margins and we have open capacity we’re fully competitive.

And, you know, we watch that very carefully, and we don’t really like to lose retail market share in any of those markets.

Your next question comes to you from the line of [Semanchu Patelle] [ph] of JP Morgan.

Please go ahead..

Hi, good morning.

A couple of questions, Don.

On Europe you had mentioned that production was going to be down 10 percent in the fourth quarter, is that all due to the Focus changeover?

I would have thought a big part of that kind of got incurred in the third quarter?

No.

Really, the Focus launch is going now, and it’s – our production in [Sarlui] [ph] is quite a bit lower on a daily rate than the ongoing level.

And that pretty much accounts for most of that reduction.

Okay.

But as you can see on slide 21, we’re up 90,000 units for the year.

And that reduction of 42,000 really does reflect the Focus launch.

And we expect to be, you know, right on track going into next year.

Okay.

And then, you had mentioned that, I think, net pricing in Europe was up 1.5 percent.

I think the way you guys calculate in net pricing you include new models as they come off even if they’re not in the year-ago.

Correct me if I’m wrong on that, but if that’s the case what would be the net pricing number if you stripped out the CMAX?

I would say that the, this is just round numbers, but the CMAX accounts for about a third of that, so we were up 1.5 percent, I think, in net price.

And about a third of that was directly due to the, you know, strong performance of the CMAX, and the fact that like on the S Super Duty in the U.S. we don’t have to sell the CMAX with a full amount of marketing incentive.

So about a third of it, so it will be about one percent without that.

Okay.

And then shifting to slide six, where you gave your automotive cost performance on a year-to-date basis, I was wondering if you could just tell us the middle bar for net product cost improvement of 200m how much of that was for the third quarter, itself?

Zero, effectively zero.

You can see that on the slide.

Okay.

And that would end up – I’m sorry, for the fourth quarter what should we think about?

That should be presumably negative on the assumption that you’ve got, you know, the 500, the Mustang and the Super Duty coming out now?

No.

I wouldn’t say that.

I think we have a lot of cost reductions that we’re working on to offset any increases there.

And you know, the total is going to go up by a couple hundred million, and it could be it’s just spread across all the various elements there.

Okay.

And then lastly…

You won’t see any big change one way or the other on net product costs.

Okay.

And then lastly, any comments on healthcare inflation rate.

We’ve heard GM talking about potentially revising that up next year.

Well, I don’t know about GM, but I think we’re pretty much on track for hitting the numbers that we have planned on.

Okay.

Great.

Thank you.

Your next question comes to you from the line of [Michael Bruenstein] [ph] of Prudential.

Please go ahead.

Good morning, Don.

Hi, Mike.

Was there any incremental impact in the quarter from startup costs versus a year ago?

Well, I think there has been some.

In Ford Europe, the Focus in [Sar Louie] [ph], but I think most particularly at Land Rover.

It’s such a big changeover for them, and such a big part of their business, you know, it’s really the heartland of their product line of changing over now.

And that’s probably the single biggest changeover launch cost.

That’s what we call it launch cost.

Would be in Land Rover.

And that’s the sum of those plus, I guess, the Chicago Plant is more than the F150 impact last year on the minivan?

Well, we had Chicago and the Mustang.

Yeah.

And Sar Louie with the Focus, and the Land Rover.

I don’t know, probably about the same, maybe, you know, because last year we had the F-Series and we had the CMAX.

It’s about the same.

But it’s affecting Land Rover.

I think if you think about the impact relative to each of the businesses the biggest impact is on Land Rover.

Okay.

And then, could you clarify what you mentioned earlier about the revenue recognition, on production versus factory unit sales?

Because I understood that the revenue on these rental vehicles is recognized on their disposal when they were returned, and that you show lease income while the rental companies have them.

And you said that actually your income is generated on the production, not the factory unit sales?

No.

What I meant was our profits are mainly driven by production.

What was happening in the third quarter is we were having more units coming back from the daily rental companies and going through auction, those then count as factory or vehicle unit sales.

So we had more of those coming back than we had deliveries to the daily rental, because we’re going, you know, and reducing our participation.

That is more or less a seasonal affect.

But what you’re saying then is that…

Well, it’s more than a seasonal affect, Mike, it’s a seasonal affect in part but it’s also an affect of our change in strategy to reduce the number of deliveries.

So we’re having, you know, more coming back each quarter than we have going out because we’re reducing over time.

And those vehicles generate less income, is that what you’re saying?

Less revenue and less income, respectively, at the point of auction for the most part they generate no income.

Because, you know, we’re assuming that we sell on that auction for what we had them on the books for.

Right.

There’s effectively no profit at the time we sell them.

And that’s why it has a big impact, and I thought it was useful for you to see the production as opposed to the vehicle unit sales and the affect that has on volume and profits for North America.

Otherwise, it’s very hard to see what’s going on in North America.

Right.

And then, getting back to something you mentioned earlier about the Other Automotive.

Do we go back now to looking for 250m loss a quarter?

Or because this was this 31m loss was a lot less than we had been guided to in prior quarters, right?

Yeah.

Let me try it.

On a run rate basis somewhere a little north of 200m loss is what would be our net, you know, net interest carry per quarter.

And that’s what I’d use on an ongoing basis.

Your next question comes to you from the line of [Steve Dirsky] [ph] of Morgan Stanley.

Please go ahead.

Good morning, everybody.

Can you hear me?

Yeah.

Hi, Steve.

Hi, Don.

What’s the fleet percentage in the quarter?

Lloyd, do you have that?

Yeah.

I do.

It was 18 percent.

That was up 1 point from a year ago.

Year-to-date we’re at 25 percent, so it’s less, and that reflects the normal seasonality.

And the increase, basically, reflects a little bit higher mix of leased cars and commercial vehicles because, of course, our daily rental is down.

And you see that on slide 10.

Right.

And the interest on the tax refund, that 239, Don, that’s a net number or pretax number?

That’s pretax.

That’s what I thought.

Is there any talk, with Ford Credit doing so well on residuals and loss performance, what have you, is there any way to share that with the Auto company?

No.

Actually, no, we have a fairly strict set of rules that we use to govern the relationship between the parent and the finance company.

And those are set and we follow those.

You said you reset them every year, or no?

No, we really don’t.

The residual should be…

No.

There’s no residual risk sharing or anything, at all.

The one benefit, though, that we have with the higher residuals are we do have the opportunity to get back into the leasing business on some of the vehicles.

I think the strategy also has affected ALG, the way they perceive some of our new products, because with the new Ford Five Hundred and the Freestyle they’ve given them three-year residuals values of about 50 percent which is, you know, competitive with virtually anything that’s out there right now.

And so, you know, I would expect and this was part of the strategy from the beginning as the residuals get better, you know, we’ll be able to get back into the leasing business.

Obviously, we’ll control the leasing business, you know, within certain guidelines and percentages, but that’s an area that we’ve been very uncompetitive in the last couple of years.

Right.

And one more.

Can you just speak to, I know the quality of the share is up but the overall volume is down a lot.

Can you speak to some of the capacity actions that are, I think I read [Oakville] [ph] is taking a shift off.

There’s some talk about [Lorraine] [ph], and maybe even [Wicksam] [ph].

Can you, how do you think about capacity utilization now?

Well, I think, you know, we’re operating now at less than full capacity at Oakville, and that’s pretty clear.

We’ve kind of stated our intention to consolidate operations at Lorraine, and that’ll happen sometime in the near future.

And we’d rather not comment on any other specific capacity actions, you know, that may or may not, you know, be under study.

So these two, would there be more charges related to these two?

Or are these two already in the reserves you’ve taken?

No.

As I’m sure you know, we haven’t taken any charges.

But a few years ago you took charges?

We haven’t taken any charges in the U.S. for plant closings.

We’ve closed Edison, and we’ve closed Ontario Truck in Canada.

And we have a plan to close Lorraine.

We’ve announced that.

We’re going to be taking a shift off of the St. Louis assembly plant near the end of the year.

And, you know, what we’ve been trying to do is we, you’re right, we did have a reserve when we took the fixed asset impairment at the end of 2001.

And we’re trying to manage the work force, and you know, make sure that we provide employment opportunities for all our people as we go forward.

And that’s the path we’ve been going on, and that includes importantly the employees that we have assigned to Visteon.

So this is – we’re running St. Louis on one shift, we’re going to run Oakville on one shift, and…

No.

I didn’t say we were going to run Oakville on one shift.

I said we’re running, you know, we have some downtime right now.

We’re trying to work through that.

So that’s temporary downtime?

Or?

Yes.

Okay.

Thank you.

All right.

Your next question comes to you from the line of Chris Ceraso of Credit Suisse First Boston.

Please go ahead.

Thanks.

Good morning.

Thank you.

Just a follow-up on that, actually.

So is it fair to say that given where your market share is currently on a total basis, retail and fleet, that it’s probably lower than you contemplated when you originally made those actions at the end of ‘01, i.e., if your share stays at this level you will have to consider some further reduction of your footprint in North America?

Yeah, you know, I’d rather not comment on that.

I think it’s safe to say that we’re always working on improving our capacity utilization, our efficiency and effectiveness of our manufacturing, our product engineering, our marketing and sales productivity, all across our organization and into our supply base.

And that’s just a way of life in this business, and it will continue.

Okay.

Can you comment maybe on how the launch is going in Chicago?

And when do you expect to hit, you know, full availability of those products?

Well, the launch in Chicago is going very well, as it is in Flat Rock for the Mustang, and actually in Sar Louie on the Focus, and in [Salihall] [ph] for the new Land Rover Discovery LR3.

I think it’ll be another month or so before we really get the pipeline filled up, particularly for Chicago.

Of course, it’ll be a little longer for the Mustang.

And we’re just starting off there with a group, as I’m sure you know, we start up with a convertible in the first quarter of next year.

Okay.

And then, lastly, on raw materials, can you comment on what percent of your steel buy is on contracts that extend through 2005?

No.

I’d rather not comment on that.

Because frankly, you know, we are in the middle of discussions with our suppliers of steel.

And it would be inappropriate to talk about that now.

Okay.

Thanks, Don.

Your next question comes to you from the line of Dominic Martilotti of Bear Stearns.

Please go ahead.

Good morning.

I just wanted to hit on the Ford Credit business, and in looking at the credit loss performance and also the performance, is that a significant share or a contributor over the last few quarters, to say the least?

And if you look at your allowance for credit losses year-on-year a pretty dramatic drop-off of around 600m.

So I think it would go forward is it safe to assume that you will not achieve those types of improvements on the credit loss, or perhaps the lease, because you’re now taking lower losses?

Reserves?

Yeah.

You’re right.

I think our allowance for credit loss has peaked at 3.2b last year.

It stands at 2.6b presently.

As a percent of receivables it’s about 1.95 percent.

Clearly, you can’t reduce reserves forever.

I mean there’s going to reach an ambient level, but it’s sort of consistent on the size of the balance sheet and how we continue to perform with our credit losses.

You know, it’s going to taper off, but if we continue to perform there, you know, it may reduce further.

Especially if the balance sheet shrinks.

I think over the next couple of quarters, I mean how quickly would you anticipate perhaps that improvement declining?

Well, it’s really a function of what goes on in the economy.

The risk profile of our assets.

And we look at it every quarter.

Okay.

We’re appropriately reserved at present, and we’ll watch the thing as we go forward.

Right.

All right.

And looking at, because you’ve done better on performance and the ALG has given you better numbers where does your leasing stand as a percentage of retail sales now, and if you look at a target maybe for the fourth quarter or the first quarter?

Yeah.

We dropped down pretty low.

We dropped down to about 9 or 10 percent.

We are looking at select opportunities.

We’re – we can do a little bit more leasing, but I don’t think it’s going to be enormous growth for us.

I would think our plan is to try and get more ongoing balance in the leasing area, and so we’re going to come up some as the residuals improve consistent with our strategy, but not to the levels that we ran several years ago.

Okay.

Thanks.

Thank you.

At this time, ladies and gentlemen, we are going to entertain our last institutional investor question.

For those in the media if you’d like to register your question please key star, one now.

Sir, your next question comes from [John Cacessa] [ph] of Merrill Lynch.

Thanks, very much.

Don, just two things.

Can you tell us anything about what the SEC is asking you for?

Is it just related to your assumptions, or is there something more to that?

And secondly, what’s the exit strategy for the Formula 1 business?

Do you, can you sell it, can you close it?

I don’t know anything about this business.

I mean how is it going to work?

Let me take those in reverse order.

Our, you know, exit strategy for the Formula 1 business is to sell them, and we’ve engaged an outside partner to help us in that process.

We’re in the middle of it now.

And you know, stay tuned.

Okay.

We will have some announcements on that, but that’s our base plan is to sell.

And we’re working our way through that.

And as far as what the SEC has asked I’d rather not comment on that.

I think what’s – what you’ve read about in the newspapers is pretty close to the kinds of things that we’re, that we’ve been asked to look into.

Okay.

Thank you.

Your next question comes to you from the line of [Norrie Sharuzu] [ph] of Wall Street Journal.

Please go ahead.

Hi, Don.

Hi, Norrie.

Hi.

Can you explain, can you talk a little bit more about North America, the pretax profits went down substantially?

And one factor you’re saying is exchange rates.

How do exchange rates affect the North American operations?

I mean are you talking about more expensive components from overseas, or what?

Well, there’s a couple of things, one of them is the dollar has weakened.

For example, against the Euro.

We buy engines and transmissions and other components from Europe, and so the cost in dollars in the U.S. has gone up.

That’s a piece of it.

Okay.

There’s also the fact that we had some hedges, and those hedges are rolling off, and that’s a piece of it.

Okay.

All right.

One more thing, can you tell me the total amount of reduced loan loss allowance for the quarter?

Is that 65m?

It is 65m.

Okay.

Okay, thanks.

Thank you.

Your next question comes to you from the line of Bill Koenig of Bloomberg News.

Please go ahead.

Good morning.

Hi, Bill.

Don, two questions.

One technical, one more general.

The first one, on the interest that you got in the third quarter that you were expecting the fourth quarter, what was the amount, again?

I heard 239 but I wasn’t sure if you were talking per share?

239m pretax.

Okay.

So that, so in other words, that was the amount that you ended up getting in the third quarter but you had expected later?

Yes.

That was the amount that we ended up booking in the third quarter.

The actual cash came just after.

Right.

You know, the first week of October.

And then a more general question, it’s related to Visteon but not, this is different from the question you were asked before.

Basically, Viesteon right now seems to be in quite a lot of hurt.

And I was just wondering if there’s a general concern at Ford whether that, you know, their problems could somehow take your, you know, turnaround plan off stride somehow?

Because I mean they are your largest supplier.

Well, you know, as I said earlier, Bill, we’re not really going to talk about that now.

But let me just say that, you know, we work with all of our suppliers on a regular basis.

You know, and right now we’re talking to steel mills and other suppliers.

You know, there are lots of issues in this world today.

And certainly, Visteon is our largest supplier and in many respects our most important because we have, you know, 18,000 now of our people assigned to work there.

So we are working with them, and you’ll just have to stay tuned.

Okay.

Thank you.

Gentlemen, you have a follow-up question from the line of Mr. Norrie Sharazu of Wall Street Journal.

Please go ahead.

Hi, Don.

Can you explain again about, we’re looking at slide 19, credit loss performance improvement of 182, so 117 comes from what?

Well, it comes from actual improvement in credit losses.

There’s two: repossessions and improved severity.

Okay.

There’s an actual piece and a reserve piece.

Okay.

Okay, thanks.

Okay.

All right.

Your next question comes to you from the line of [Darren Kimball] [ph] of Lehman Brothers.

Please go ahead.

Hi.

Thank you.

I was just wondering if you could talk a little bit about your earnings guidance in the context of the fourth quarter?

It looks like you’re leaving room for about 15 to 20 cents in the fourth quarter, which is lower than what you’re earning in the third quarter.

Your volumes are obviously off year-over-year, but they are better sequentially, and I was just hoping you could help us do the walk?

Well, in the full year we’re talking, you know, we’ve taken our earnings guidance up at, you know, about 5 cents to 10 cents.

And a piece of that is the tax change I mentioned related to the research tax credit, and a piece of it is the improvement at Financial Services.

And what we’ve really been saying all along on the Auto side, that we’ll make about $1b pretax.

And so there really isn’t any change there and hasn’t been for, you know, the whole year.

Okay.

So it may fall into the category of conservatism?

No.

No, as I mentioned, you know, this is a very tough market we’re in, and we’re going to be, we think, in a position where our net pricing, you know, is going to be very tough in the U.S. in the fourth quarter.

And we’ve had the, you know, the production cuts in Jaguar which are included there in the fourth quarter, as well.

All right.

Actually, on that subject, I mean I’m just trying to understand how to look at the PAG loss performance in the third quarter, I’m just, how much of the improvement I guess sequentially or however you want to look at it is explained by the discontinued ops treatment of Formula 1?

And I was also wondering if you could talk about the seasonality there?

Was there charges in there?

Because you lost a little bit of money in the first half, and then I think it was $300m plus in F1 in the third quarter?

Yeah.

The ongoing loss is about, you know, 12m to 15m per quarter, and so that would be included in what we had in the second quarter before.

But as of now we’ve changed, you know, the second quarter for Formula 1, and we’ve put that, put Formula 1 down in the discontinued operations line.

So going from the second quarter for PAG, or the third quarter, you know, there really isn’t any affect.

Okay.

And on the…

We made an improvement, you know, and we don’t break it out by brand.

What’s going on, though, is as I mentioned the big changeover at Land Rover in the third quarter, and that’s offset fundamentally by improvements in other areas.

Okay.

And on the tax rate, can you be a little more specific about the fourth quarter?

I think you said the full year will got to 25.

I wasn’t sure when the research tax credit fell in. but do you have some catch-up, favorable catch-up in the fourth quarter?

Because I think it’s 26.6 year-to-date on the tax rate?

So there’ll be – yes, yes, there is some catch-up in the fourth quarter.

So what do you think the right rate to use is?

Somewhere in the 10 to 15 percent range because of the affect of the catch-up.

It would be enough to take that full year rate to about 25 percent.

Okay.

That’s helpful.

And just lastly, I mean FSG has paid $3b in dividends year-to-date, is the dividend in the fourth quarter a possibility?

I think so.

Okay.

That’s great.

Thank you.

All right.

thank you.

Our next question comes to you from the line of [Jamie Butters] [ph] of the Detroit Free Press.

Please go ahead.

Hi.

Good morning, Don.

Hi, Jamie.

I wanted to follow-up on Dan’s question about the Formula 1, what, in the first half you’re losing 14m a quarter and then you lost 300m plus in the third quarter, I mean is that fourth quarter, you’ve got the TVD, is that more likely to be in the hundreds or in the teens?

I mean can you give us some sort of direction on that?

Yeah.

There’s a couple of things going on in there.

What you see in the first half is the operating loss which is, as I said, 12 to 15 per quarter.

So there’s a similar amount of operating result in the third quarter.

The balance of what’s in the third quarter, which is the bulk of it, is what we said that we have to do at, in our call on September 17, is because we’re getting out of this business, the discontinued operations, and we’re effectively writing off goodwill and fixed assets in accordance with generally accepted accounting principles.

That’s what that is.

The ongoing piece will be if we were to stay in Formula 1 for the fourth quarter it would be 12 to 15m.

But we’re not going to do that, we’re going to get out, but we don’t know what the gain or loss will be on the transaction as we get out.

I would think of it as a fairly small number, and we’ll update you on that as we conclude the transaction.

So you had roughly 300m in goodwill attached to Formula 1?

Goodwill and fixed assets.

Thank you.

Thank you.

Your next question comes to you from the line of [Eric Maine] [ph] of Detroit News.

Please go ahead.

Good morning, Don.

Could you please give us a little more color on what’s driving the per unit revenue trend?

What role does mix play, for instance?

And is there a cost-cutting component there that’s helping you?

Well, basically, if you look at slide nine, what we’re seeing there is the mix improvement in the third quarter accounts for pretty much all of that $423 a unit because the net pricing is zero, but I’ll ask Lloyd to provide a little more color on that.

Yeah.

Don is right.

For the $400 it’s essentially all mix.

Some of the things that are driving that would be, you know, the new F150.

We’re selling, you know, very – the customers are demanding a lot of the new features, a lot of the new options in the Series.

For example, the Super Crew mix is about 40 percent, that’s four points higher than on the model that it replaced.

The FX4 in Lariat which is our highest series is running at 41 percent.

That’s up about 10 points.

The 4 x 4 mix is up 16 points at about 55 percent, so we’ve had a lot of improvement there.

Very good acceptance of a lot of the new features on the Expedition and the Navigator, like the full navigation systems, power lift gates, those kinds of things that have, you know, been kind of right on.

I think the other significant part is the fact that we have been able to offset the incentive increases with pricing and be relatively flat year-to-year, and that’s allowed the mix to flow-through to the bottom line.

But the improvement is 423 this quarter.

You can see we’re up about 1,400 versus the go, and we’re up about [2350] [ph] versus the revitalization plan, so that we’ve had a pretty good long-term trend in that area.

Any idea of what it will be at the end of the year?

I would expect that the unit increases to continue, but they’ll be smaller.

You know, we captured a lot of the, we’d say kind of lower hanging fruit.

We also had a real homerun with the F-Series.

And that was a high volume vehicle that we sell.

I would expect to get some improvement with the new vehicles and the Series on the 500.

There’s a lot of, the orders are coming in very strong with the 500, and with the Freestyle, and some of the new vehicles.

But just because the volume isn’t as big as F-Series we’re not going to see the sized numbers that we’ve had for the last two or three years.

So they’ll be smaller.

On the net price we’ve run nine-tenths year-to-date.

As Don pointed out in the presentation, we expect to be up about a half a point for the year.

Which is [low] [ph] performance because the fourth quarter will be our toughest quarter from a net price, and that’s for we launched the new F-Series last year with virtually no incentives on it, and we have incentives on it this year plus we have a very competitive pricing environment.

So I would expect, that the net price will get a little more difficult and the mix improvements will be smaller than what we’ve seen in the last couple of years.

Thank you.

Ladies and gentlemen, there are no further media questions at this time.

I’m now going to turn the presentation back to Barbara Gaspar for her closing remarks.

Ma’am.

Thank you very much, Carol.

Ladies and gentlemen, thank you again for joining us this morning.

If you have any additional questions on our third quarter results please feel free to contact either your Ford Investor Relations or Public Affairs contact.

Thank you.

Have a good day.

Ladies and gentlemen, thank you very much for your participation in Ford’s Third Quarter Earnings conference call.

This concludes your presentation, and you may now disconnect.

Have a great day.

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