福特汽車 (F) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth-quarter Ford Motor Company Fixed Income earnings conference call. My name is Katina and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this presentation. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. David Dickinson, Fixed Income Investor Relations Manager. Please proceed.

Thank you, Katina; and good morning, ladies and gentlemen. Welcome to all of you who are joining us either by phone or webcast. On behalf of the entire Ford management team I would like to thank you for spending time with us this morning.

With me this morning are Bob Shanks, Ford Vice President and Controller; K.R. Kent, Ford Credit Vice Chairman and Chief Financial Officer; and Neil Schloss, Ford Vice President and Treasurer. We also have some other members of management who are joining us for the call, including David Brandi, Assistant Treasurer; Mike Seneski; Assistant Treasurer; and Paul Andonian, Director of Global Accounting.

Before we begin, I would like to review a couple of quick items. A copy of this morning's earnings release and the slides we will be using today have been posted on Ford Motor Company's investor and media websites for your reference.

The financial results discussed herein are presented on a preliminary basis. Final data will be included in our Form 10-K for the period ended December 31, 2009.

Additionally, the financial results presented here are on a GAAP basis and in some cases on a non-GAAP basis. Any non-GAAP financial measures discussed on this call are reconciled to their GAAP equivalent as part of the appendix to the slide deck.

Finally, 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 detailed in our SEC filings including our annual, quarterly, and current reports to the SEC. With that, I would like to turn the call over to Ford Vice President and Controller, Bob Shanks. Bob?

Thanks, Dave. Let's start on slide 1, and my initial comments will be on the first two columns on the fourth quarter.

Starting at the top, our vehicle wholesales in the quarter were 1.4 million units, which were up 301,000 units from a year ago. Our revenue was $35.4 billion, which was a $6.4 billion increase, which was more than explained by higher volumes and favorable net pricing.

Our pretax operating profit excluding special items was about $1.8 billion, a $5.5 billion improvement, with Automotive results improving by $4.4 billion and Financial Services improving by about $1.1 billion. Our net income attributable to Ford was $868 million, which included unfavorable pretax special items of $711 million, a $6.8 million improvement.

Now for the full year, in the last two columns, our pretax operating profit excluding special items was $454 million; and net income attributable to Ford was $2.7 billion. And this was despite revenues that declined by about $20 billion. We ended the year with $25.5 billion of Automotive gross cash, which was up $12.1 billion from a year ago.

Now let's go on to slide 2, which details our special items; and I will comment initially on the first column, the fourth quarter. We recorded $346 million of Retiree Health Care and related charges in the quarter, reflecting primarily a net loss on the settlement of the UAW Retiree Health Care VEBA Agreement.

We also recorded a charge of $296 million for job security benefits, which was explained primarily by a reserve increase related to the announced closure of the St. Thomas, Canada, plant next year and additional global personnel reduction charges of $173 million.

We also recorded $134 million for held-for-sale accounting-related adjustments for Volvo, which reflected the elimination of depreciation and related costs. Now based on our plan to sell Volvo in 2010, beginning in the first quarter all of Volvo's financial results will be reported as special items and excluded from our operating results.

Now looking at the last column to the right for the full year, our pretax special items were a net gain of about $2.6 billion, which was more than explained by $4.7 billion of gains on debt reduction actions, offset partially by the global personnel reduction actions that we took and the UAW Retiree Health Care VEBA settlement.

All right, let's go on to slide 3 and we'll talk about cash. Again, let's focus on the fourth quarter. We ended the year, as I said, with $25.5 billion in Automotive gross cash, which was up $1.7 billion from the end of the third quarter.

Our operating-related cash flow was $3.1 billion positive in the quarter, and this reflected a number of things. First, our Automotive pretax operating profit of $1.1 billion; capital spending during the quarter that was $100 million lower than depreciation and amortization; and changes in working capital and other timing differences that were $2.3 million positive.

This was explained primarily by favorable working capital of about $800 million and other timing differences related to end-of-year production shutdowns. Additional favorable timing differences in marketing payments and one-time tax refunds were offset partially by unfavorable timing differences for healthcare payments. And finally, we had a payment of $400 million to Ford Credit, reflecting the upfront payment of subvention.

Based on positive operating-related cash flows during the third and fourth quarters, our full-year operating cash flow was $300 million unfavorable.

Other major changes in the fourth quarter. Automotive gross cash included payments of $2.5 billion on notes, and amounts due to the new VEBA, including a prepayment of $500 million; a net $1.9 billion repayment related to our revolving line of credit extension, as we restructured the commitments to extend the maturities through December of 2013; equity issuance proceeds related primarily to our recently announced plan to issue up to $1 billion of equity; and finally additional cash inflows of $2.8 billion which were more than explained by the issuance of convertible debt.

Including these impacts, the total increase in Automotive gross cash during the quarter, as I said, was $1.7 billion.

Now let's look a little bit more at our Automotive debt on slide 4. In the fourth quarter we ended the year with $34.3 billion of Automotive debt, which was $7.4 billion higher than September 30. Some of the significant changes in those debt balances included the following -

First, we concluded our agreement, as I said, to transfer our UAW retiree Health Care liabilities to the VEBA Trust. As part of this agreement, we issued two notes which, after making $2.5 billion of payments at the end of last year, including a $500 million prepayment, had a fair market value of $7 billion.

We also entered into an agreement with our lenders to reduce, as I said, and extend to 2013 from 2011 most of our secured revolving credit facility. As a result of this agreement, the extended revolving facility was reduced by $2.7 billion, of which $1.9 billion was repaid and $700 million was converted to a new term loan. At year-end, we had $7.5 billion outstanding of the extended and non-extended revolving facilities.

And finally, in addition, we issued $2.9 billion principal amount of convertible debt, which will mature in November of 2016. The initial carrying value of this debt is $2.2 billion.

All right, let's go to slide 5, which summarizes our Automotive sector's cash and debt position. At the end of the quarter, as we just went through, Automotive debt was $34.3 billion of which $2 billion matures during this year. Our gross cash net of debt at the end of last year was $8.8 billion negative.

The adoption of a new accounting standard related to consolidation will require us to deconsolidate many of our joint ventures beginning in the first quarter of this year. This will result in about $550 million of cash and about $800 million of debt being deconsolidated in the first quarter. The decrease in debt includes about $500 million of debt out obligations maturing in 2010.

Now on to slide 6 which shows the results of our 2009 full-year key planning assumptions and operational metrics; and let's focus on the right-hand column. You can see that we ended the year in terms of US industry volume at 10.6 million units and Europe at 15.8 million, both of which -- or at least the US, which was in line with our guidance and Europe a bit higher.

If we go down and look at quality, you can see that we met the metric on the US where we improved. And in international was mixed due to some issues in Europe that we're making progress on.

In terms of structural costs, we ended at $5.1 billion reduction, which was far in excess of the target of $4 billion.

In terms of share in the US, both in terms of total market share and retail of retail our share was higher than 2008. Our Europe market share at 9.1% was also up at 0.5 point versus 2008. And our operating-related cash flow, as we went through, was negative $300 million, but substantially better than 2008.

It's important to note in terms of our cash outflow that, in addition to what we saw in terms of the improved profitability, we also benefited from a large increase in payables as we returned balances closer to normal. Also inventory reductions were substantial, and we expect that to be what we expect to see ongoing into the future. Our capital spending was $4.5 billion, and this is a decrease from our initial guidance. This largely reflects efficiencies as our product plans remain intact.

Now let's talk about 2010 on the next slide. We expect in terms of industry sales in the US for it to range from 11.5 million to 12.5 million units, and in Europe from 13.5 million to 14.5 million units. In terms of the other operational metrics, we expect to continue to improve our quality; we expect our structural cost reductions to be somewhat higher in 2010 as we increase production to meet demand.

In terms of market share, we expect full-year US total share and our share of the US retail market to be equal or improved compared with 2009. And in the case of Europe we expect it to be about the same as last year.

Our Automotive operating related cash flow is expected to be positive, but we expect it to be less than the run rate that would be implied by the strong second-half cash flow that we had in 2009. That performance was heavily influenced by seasonal factors including normal year-end inventory reductions and significant nonrecurring factors such as tax refunds and higher production to rebuild depleted dealer stocks.

Our capital spending is expected to be in the range of $4.5 billion to $5 billion as we continue our focus on our product plan. Now this planning assumption excludes Volvo and the joint ventures that will be de-consolidated; so on a comparable basis the 2010 capital spending is actually up about $1 billion from 2009.

So for the full year, we are planning to be profitable on a pretax basis excluding special items for North America, total Automotive and total Company, with positive Automotive operating cash flow based on our assumptions. Our guidance for 2011 remains unchanged, which is that we expect to be solidly profitable on a pretax basis excluding special items, with positive Automotive operating cash flow. And now I will turn it over to K.R.

Thanks, Bob. Slide 8 shows Ford Credit's operating results and key metrics for the fourth quarter of 2009. As shown in the left box, our fourth-quarter pretax profit was $696 million, compared with a pretax loss of $372 million in the fourth quarter of 2008.

You can see in the right box our December 31, 2009, on-balance sheet receivables were $93 billion, about $23 billion lower than a year ago. This decline reflected primarily lower industry volumes, lower dealer stocks, and the transition of Jaguar, Land Rover, and Mazda financing to other finance providers. Our December 31 on-balance sheet and managed receivables were about the same as at the end of the third quarter.

Chargeoffs for on-balance sheet receivables in the fourth quarter were $238 million, and the worldwide loss to receivables ratio was 98 basis points, which was down 20 basis points from the same period last year. I will speak more on this in a few minutes.

At December 31, the allowance for credit losses for on-balance sheet receivables was $1.5 billion or 161 basis points of receivables. The allowance was about $150 million lower than the end of the third quarter and about $100 million lower than a year ago. We did not pay any distributions to our parent during the fourth quarter. We did, however, pay $1.5 billion in distributions during the first three quarters of 2009, and we do plan to pay distributions of about $1.5 billion during 2010. We will continue to balance future distributions with the successful execution of our funding plans.

At December 31, our managed leverage was 7.3 to 1, compared with 9.9 to 1 at December 31, 2008. And at the end of the fourth quarter, our equity was about $11 billion.

Slide 9 explains the change in Ford Credit's pretax profits for the fourth quarter of 2009 compared with the fourth quarter of 2008. For the fourth quarter, we reported a pretax profit of $696 million, a $1.1 billion improvement from a year ago.

Volume was about $200 million lower compared with a year ago, reflecting the decline in receivables. Financing margin was about $100 million higher compared to a year ago, reflecting lower overall borrowing costs. The decrease in the provisions for credit losses of about $500 million reflects primarily a higher credit loss reserve release and lower charge-offs.

Residual losses declined about $500 million in the fourth quarter, compared with last year. This improvement reflects primarily the impact of higher auction values on vehicles returned during the quarter.

The improvement in Other of about $200 million is more than explained by the non-recurrence of net losses related to market valuation adjustments to derivative and lower operating costs.

For the full year, we reported a pretax operating profit of $2 billion, which was a $2.5 billion improvement from a year ago. This improvement reflects primarily lower depreciation expense on leased vehicles due to higher auction values and a lower provision for credit losses, offset partially by lower volume.

Our international segment, which is primarily Europe, reported a pretax profit of $47 million in the fourth quarter of 2009, which was a $19 million decline from a year ago. This decline is more than explained by lower volume across all regions. We do expect to be profitable in 2010, but lower than 2009, based on lower average receivables and the non-recurrence of certain favorable 2009 factors.

Slide 10 shows quarterly trends of charge-offs and loss to receivables ratios for our on-balance sheet portfolio. The top box shows loss to receivable ratios for the worldwide portfolio and loss to receivable ratios for the US, Ford, Lincoln & Mercury retail and lease business. The worldwide loss to receivable ratio was down from the year ago level, reflecting lower losses in the United States, offset partially by higher losses in Europe.

US Ford, Lincoln & Mercury loss to receivable ratios decreased from a year ago, reflecting primarily lower severity and lower wholesale and dealer loan losses. Worldwide, fourth-quarter loss to receivable ratio was about the same as the third quarter. US Ford, Lincoln & Mercury fourth-quarter loss to receivable ratio increased from the third quarter, reflecting primarily higher severity, offset partially by lower repossessions.

Charge-offs in the fourth quarter were $238 million, which was down $126 million from a year ago, reflecting lower severity, lower disposable volume, lower wholesale and dealer loan losses, and lower other charge-offs in the United States.

Slide 11 shows the primary drivers of credit losses in the US Ford, Lincoln & Mercury retail and lease businesses. Repossessions in the fourth quarter were 23,000 units, which was up 1,000 units from the fourth quarter of 2008, but down 1,000 units from the third quarter.

Severity of $7,700 in the fourth quarter was $3,000 lower than last year, reflecting improvements in auction values in the used vehicle market. Fourth-quarter severity was $400 higher than the third quarter, reflecting primarily deterioration in auction values.

Over 60-day delinquencies totaled 20 basis points in the fourth quarter, which was down 8 basis points from last year and down 4 basis points from the third quarter. Bankruptcy filings totaled $11,000 in the fourth quarter, which was up $1,000 from last year but down $2,000 compared with the third quarter.

The credit quality of our contract placements remains very good. We continue to see ongoing stress on the consumer and commercial portfolios; and we closely monitor our key loss metrics for any change related to broader trends in the overall economy.

On the next two slides, slides 12 and 13, I want to cover a little bit of history to give you some long-term perspective on our credit losses. While we have seen a deterioration in the last couple of years, as represented in our repossession ratio and severity, the decision earlier in the decade to improve the overall quality of our portfolio has limited these losses.

Slide 12 shows the longer-term trends of key metrics for our on-balance sheet portfolio over the past nine years. I've mentioned several times in the past the higher credit quality portfolio we have today.

The top left box shows the average placement FICO score for the United States retail and lease portfolio, which is a substantial portion of our overall portfolio. The average FICO in 2009 is consistent with our efforts to maintain the credit quality of our portfolio. Although we do not underwrite strictly on FICO, FICO is a part of our underwriting and is an easy way for us to communicate with you to give a recognized measure.

The top right box shows worldwide on-balance sheet loss to receivable ratios. The loss to receivable ratio is up from 2008, but still well below 2001 to 2003. The improvement in loss performance compared with the early part of the decade reflects the increase in the quality of our portfolio.

The bottom box shows on-balance sheet charge-offs and the allowance for credit losses. Charge-offs are essentially unchanged in 2009 compared with 2008. The allowance at the end of 2009 is down from 2008, reflecting primarily lower receivables and improved severity in North America, offset partially by higher repossessions.

Slide 13 shows the longer-term trends of our Ford, Lincoln & Mercury US retail and lease portfolio through several key metrics for the past nine years. Full-year 2009 repossessions and repossession ratio were higher than the past few years but below the historical peak that we experienced in 2003. Loss severity of $8,300 was below the peak we experienced in 2008, primarily due to improvements in auction values in the used vehicle market.

Over 60-day delinquencies totaled 24 basis points in 2009, the same as a year ago, but well below the high seen earlier in the decade. Bankruptcy filings totaled 47,000, which was up 10,000 compared with 2008 and are the highest we have seen since the implementation of the Bankruptcy Reform Act of 2005.

Slide 14 shows the lease residual performance for our Ford, Lincoln & Mercury US brands. Lease return volumes totaled 36,000 units in the fourth quarter, which was down 2,000 from the same period last year, reflecting primarily the lower overall return rate. The return rate was down 21 percentage points to 69% as a result of the higher auction values. Lease return rates were also down 1 percentage point in the fourth quarter compared with the third quarter.

In the fourth quarter, auction values for 24- and 36-month lease vehicles at constant mix were up on average about $3,500 per unit and $3,300 per unit, respectively, from year-ago levels. This reflects primarily the overall auction value improvement in the used vehicle market. Compared with the prior quarter, auction values were down about $1,100 and $300 for 24- and 36-month lease vehicles, respectively.

Lease placements continue to shift toward cars and crossovers and away from full-size trucks and SUVs. In the fourth quarter, cars and crossovers represented 79% of new placements, up from 74% in the fourth quarter last year and down about 18 points from the third quarter this year, reflecting higher Escape and Mariner SUV lease volumes in the fourth quarter. Our lease portfolio is presently 61% cars and crossovers, which is up 9 percentage points from one year ago.

Our worldwide net investment in operating leases was $14.6 billion at the end of the fourth quarter, which was down from $22.5 billion in the same period last year. With that, I will turn it over to Neil.

Thanks, K.R. Turning to slide 15, we continued to see positive momentum in the capital markets for the third consecutive quarter, as evidenced by improved market access and credit spreads.

For 2009 we issued $5 billion of unsecured debt including $1.5 billion in the fourth quarter. We completed $15 billion of public securitizations, including a non-TALF retail securitization transaction of $1.6 billion in November. We executed our international funding plans, primarily through securitizations in the public and private markets, including nearly $5 billion in Canada.

Spreads have continuously narrowed throughout 2009, evidenced by the yields on our unsecured debt issuances going from a high of 13% to 8 and 1/8%, and a weighted average triple-A spread on our US retail public securitizations, improving from 295 basis points to 48 basis points. The spreads and term of our asset-backed CP program, our FCAR program, have returned to pre-crisis levels.

We have also reduced the program size to match our funding needs and to reflect the commercial paper market conditions. Our funding strategy remains dependent on capital market access for public and private securitizations, asset-backed commercial paid paper, unsecured debt, and hedging instruments.

We continue to extend the term of our securitization and unsecured funding, as evidenced by our recent 10-year unsecured debt transaction and three-year US floorplan securitization. We also resumed selling subordinated notes from prior retail and floorplan securitization transactions.

Our strategy on committed capacity is to achieve renewals consistent with the size of our balance sheet. We will continue to explore and execute alternative business and funding arrangements in those locations where we lack diverse funding capability, while also ensuring that Ford has continued support in these markets.

Overall, the funding environment is improving; and Ford Credit's funding strategy remains focused on maintaining liquidity to meet short-term funding obligations, including holding substantial cash balances.

Moving to slide 16, which shows our trends in funding for our managed receivables. At the end of the fourth quarter, managed receivables, as K.R. mentioned, were $95 billion. We ended the year with about $17 billion in cash, including $5.2 billion to support on-balance securitizations. Securitized funding was 56% of managed receivables at the end of 2009, down from 62% at year-end 2008.

We are projecting 2010 year-end managed receivables in the range of $80 billion to $90 billion. The projected decline in 2010 managed receivables reflects primarily lower industry and financing volumes in 2009 and 2010 relative to prior years and transition of Jaguar, Land Rover, Mazda, and some Volvo financing to other providers. We are projecting securitized funding to represent about 55% to 60% of total managed receivables.

Slide 17 shows our 2010 term funding plan for Ford Credit, which does not include our short-term funding programs or asset sales to our on-balance sheet asset-backed commercial paper program. For 2009, we completed about $31 billion of term funding. About $20 billion of this funding was public, of which $10 billion was from TALF-eligible securitizations.

In the fourth quarter, public term funding totaled about $5 billion, including two unsecured debt offerings totaling $1.5 billion and a $1.6 billion non-TALF retail securitization. In addition, we completed about $11 billion of funding through our private channels in 2009, of which about $2 billion was completed in the fourth quarter .

For 2010, our public term funding plans are in the range of $12 billion to $ 17 billion, consisting of $8 billion to $12 billion of public securitizations and $3 billion to $6 billion of unsecured debt. We are forecasting $8 billion to $13 billion of funding from our private sources.

Our 2010 funding plan has had a successful start. Year to date we have completed more than $3 billion of public term funding, including a 10-year unsecured debt issuance of $500 million; a three-year US floorplan transaction of $1.5 billion, including the sale of subordinated notes; and a Canadian retail securitization of about $500 million. We have also completed a private retail securitization for about $750 million.

Slide 18 details our liquidity programs and utilization. The top box shows Ford Credit's committed capacity, which includes unsecured credit facilities, FCAR asset-backed commercial paper lines, and asset-backed conduit capacity.

At year-end 2009, we had over $51 billion of committed capacity and cash. After excluding securitization cash and adjusting for available assets, liquidity was $39.5 billion, of which $18.4 billion was utilized, leaving about $21 billion available for use given our present level of eligible receivables.

Available liquidity as a percent of managed receivables was 22%. At year-end, our cash not related to securitization totaled about $12 billion. During 2009, we repurchased or called about $3.3 billion of near-term unsecured debt, of which about half were 2009 maturities, with the remainder mostly in 2010.

During the fourth quarter, we renewed about $3.2 billion of our $3.5 billion of committed capacity that came due, resulting in an effective fourth-quarter renewal rate of 93%. The second-half renewal rate was 83% compared with a renewal rate of 52% in the first half. For 2009, we renewed about $20.1 billion or about 63% of our committed capacity that came due.

In addition to our available liquidity, we ended the quarter with $6.4 billion of excess capacity. This excess capacity reflects our higher than expected committed capacity renewals, lower assets, and higher public ABS issuances during the year.

Of the $33.8 billion of total committed capacity, about 68% is up for renewal in 2010. About 6% of the total is coming due during the first quarter. We will continue to rightsize future renewals to appropriately balance excess capacity.

Moving to slide 19, this slide reflects the liquidity profile of Ford Credit's balance sheet. The bars on the left show cumulative principal maturities of on-balance sheet consolidated assets; and the bars on the right show cumulative maturities of debt over upcoming annual periods.

Assets include finance receivables, leases, and cash. The 2010 maturities include, amongst other items, all FCAR asset-backed commercial paper , all wholesale receivables and related asset-backed debt, and all borrowings under the Ford Interest Advantage.

In 2010, assets scheduled to mature exceed debt coming due by $23 billion. In addition, cumulative asset maturities exceed cumulative debt maturities in each of the extended periods shown on the slide, demonstrating that Ford Credit's balance sheet remains liquid.

In summary, Ford Motor Company reported a full-year operating profit excluding special items of $454 million, a $7.3 billion improvement from a year ago. Net income attributable to Ford including special items was $2.7 billion, a $17.5 billion improvement from a year ago. Automotive gross cash at year-end was $25.5 billion. Our revolving lenders agreed to extend the maturity of $7.9 billion worth of debt to 2013 from 2011.

We issued $2.9 billion in convertible debt during the fourth quarter, and total for the year $2.4 billion of equity to strengthen our balance sheet, a key pillar of our One Ford strategy.

For Ford Credit, full-year pretax profit was $2 billion, a $2.5 billion improvement from a year ago. And net income was $1.3 billion, a $2.8 billion improvement.

In the fourth quarter, Ford Credit's pretax profit was $696 million, and net income was $440 million. Ford Credit did not pay any distributions to its parents during the fourth quarter. However, Ford Credit did pay $1.5 billion in distributions during the first three quarters of 2009.

Ford Credit completed about $31 billion of term funding in '09, of which $20 billion was public. Ford Credit's liquidity available for use is about $21 billion, of which about $12 billion is cash not related to securitization. And with that, I'll turn the phone back over to David to begin the

Thank you, Neil. Katina, can we please have the first question?

(Operator Instructions) Jeff Skoglund, UBS.

I was just wondering if you could maybe elaborate on slide 17, the thought process between -- around the targeted $3 billion to $6 billion of unsecured financing. Recognizing that you expect the balance sheet to shrink a little bit, I thought you might have taken the opportunity with the open credit markets to maybe reduce the securitized funding as a percentage of the managed receivables a little bit more than was projected on slide 16.

Yes, I think from the perspective of how we're thinking about this, we obviously have access to all the markets to fund our assets, which I'm not sure we could have said that a year ago. And as spreads have come in on all of our funding, we are going to continue to maintain a balanced approach. And that's why you see the ranges from the standpoint of both secured and unsecured.

Okay. One second question here would be, the repo rate kicked up a little bit as evidenced on slide 13. I am curious as to how you are looking at that progressing relative to the economy and also employment from a lag standpoint. How much upside there might be, basically.

Yes, Jeff, the repo ratio did spike up a little bit more in the fourth quarter, but it really boils around what's going to happen with unemployment. There is a nice correlation between repossessions and unemployment.

There is also a little bit of a mathematical technicality when you have less originations, for example, in 2009. But generally you don't repossess many vehicles in the first year; you typically repossess 2.5 to 3 years into a contract. So there's a mathematical push-up on the number as a result of that.

But, it really boils down to where unemployment is going to go in the US. And if it stays around 10%, 10.5%, it should probably stay in this kind of a range.

Thank you.

Brian Jacoby, Goldman Sachs.

Good quarter. I had two questions that are just to clarify what was said earlier as well as on the earnings call. The first just being -- you did say $800 million in working capital is in that number. Is that correct?

Yes, that's correct.

Okay, and then on the earnings call earlier today, you'd mentioned something about a $400 million currency gain at FMCC. Can you elaborate? Or did I hear that correctly? Can you just give more color on that?

Yes, Brian. During the second quarter where we had loans, for example, to Canada, we were not in a position that we could actually hedge those loans. As a result of where the currencies moved, we actually picked up a gain over the second and third quarter of about $316 million.

At this point in time, two things have happened. One is, we've gotten a lot of funding done in Canada. For example, we have done about $5 billion in Canadian funding this year. And the second one is we are back into a position where we do hedge all of our foreign currency loans -- loans made from the US to other countries.

Okay, so there was no big gain in the fourth quarter on currency?

No, no. We were back in a hedging position I want to say like late August, early September.

All right, and then two other quick questions. For the Other Automotive, where you guys usually provide some guidance, in that component is obviously interest expense. Now that we have the VEBA notes are on the balance sheet and so forth, can you give us an idea of what you are thinking Other Automotive -- the item will be?

I mean in the past it's kind of bounced around that $300 million number. Can you give us an idea how much that might be in 2010?

Then regarding the $1.5 billion in dividend up to the parent, any plans for what you are going to do with that? I'm assuming you've got a lot of options, but debt reduction could be one of them. But maybe you can give color on that.

Yes, first on the interest expense question, we expect the impact of VEBA and the $7 billion of debt that we've added to the balance sheet to add about $600 million to our full-year interest expense. And that's part of the notes themselves. But that will be reflected in interest expense for the year.

So, but what's -- I mean, are you guys not providing guidance anymore on how to think about that Other Automotive on a per-quarter basis like you did in the past?

No, I think you can look at this year and just directionally just add that $600 million.

Okay, all right.

And then on -- with regards to -- I think the Automotive Company or the parent, as it will use the Ford Credit distribution consistent with general cash flow to continue to invest in the business and improve the balance sheet.

Okay, thanks.

Eric Selle, JPMorgan.

Hey, good morning. Good day. Just real quick, did you guys pay -- did FCE pay a dividend to Ford Credit in the fourth quarter? And if so, how much was it in the year?

Eric, off the top of my head, FCE did pay a dividend during 2009. I can't remember -- it was in the second half, I can't remember if it was third or fourth quarter. It will show up in our 10-K, obviously; but it was about $80 million.

$80 million?

Yes. -- Pounds. Sorry.

Pounds, pounds, pounds. A little bit more on the dollars. And then looking at the debt reduction at Ford Motor, how do you guys expect to fund that debt reduction?

Well, I think the first piece of improving the balance sheet and getting the most focus is generate positive cash. Because fundamentally that's how you improve your balance sheet, you pay off your debt.

And then when you guys are looking at debt, which debt are you targeting? Is it the high coupon stuff or is it the near-term maturities? ))K.R. Kent: I think, Eric, you're getting into a little bit more than I think we are willing to say at this point.

I figured as much, but you know what? Your momma said you got to try. Just generally -- we saw delinquencies improve in September and October. Very unseasonal, and then it got worse in November and December. I guess November you could explain that the month ended on Monday, so you had five days that you weren't collecting. But then it got worse again in December.

Where do you guys see the state of the consumer right now? And what is your predisposition towards underwriting standards?

Eric, I would say that we continue to see stress out there. We do everything we can to keep our customer in the vehicle. And whether that's -- sometimes will give him an extension; we will work with the consumer to try to keep them in the vehicle. The repossession is really only at the last resort that you have in case you can't get payment.

But overall, I still see stress out there. And like I mentioned before, it does go with unemployment. So I think you are going to see that continue for a little bit longer.

Okay. Then finally, you guys are -- I think Lewis was talking about raw material inflation. Do you envision -- obviously not specific numbers, but do you envision supplier concessions being able to offset the raw material inflation this year?

Because it just seems like the last couple years you guys were up-contenting your vehicles, and it seems like that's done, and that we should see some of those supplier concessions come through. Or am I just -- is some of that going to going to go back into the supplier base and the raw material will offset it?

Well, we expect the cost reductions that we negotiate with our suppliers to continue in 2010 at least at the same levels that we saw in 2009. The difference will be that in 2009 we had commodity prices going down year-over-year. In 2010, they're going to go up year-over-year.

But we don't expect to see anything materially change in terms of the contribution to the bottom line from the cost-downs with our supply base.

All right, great. Thanks a lot for your time.

Eric, just to come back on your question on the FCE dividend, they did pay a dividend. It was in the fourth quarter, about $140 million.

Dollars? Dollars?

About $140 million.

Okay. Thank you, sir.

(Operator Instructions) Randy Gaulke, Muzinich.

Just looking at Ford Motor Credit with the $12.1 million in cash net of related securitizations, I think at the beginning -- or at the end of the third quarter, it was about $17 million or $17.2 million number. So I know you did some issuance in the quarter. But could you just go through the reasons for that, the cash burn on that side?

Yes, I think the biggest -- we ended the third quarter with a lot more liquidity in part because we had a very large maturity in October from the standpoint of our unsecured debt. So if you go back and look at second quarter, third quarter, fourth quarter liquidity, in the second quarter we were at $20 billion; in the third quarter we were at $24 billion; and we ended the year at $21 billion in total. And cash sort of mirrored that. But it's basically the big maturity we had in October.

That was the biggest piece? There's nothing else to be concerned about?

Nothing else of a material nature.

[Matt Lynch], Quattro.

I just have a question on the trust-preferreds. I just wanted to know if you can give us an update on what your thoughts are for handling those, or if there is still a rationale for deferring the dividend.

I think at this point we aren't saying anything from a standpoint of what we will do with that security as we go forward.

Thanks.

With no further questions in queue I would now like to turn the call back to Mr. Dickenson for closing remarks.

Ladies and gentlemen, that concludes today's call. Thank you for joining us.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day.