福特汽車 (F) 2011 Q4 法說會逐字稿

Great day, ladies and gentlemen, and welcome to the fourth-quarter Ford Motor Company 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 facilitate a question-and-answer session towards the end of the 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.

George Sharp, Director of Investor Relations and Executive Director.

Please proceed.

Thank you, Katina, and good morning, ladies and gentlemen.

Welcome to all of you who are joining us today either by phone or by webcast.

On behalf of the entire Ford management team I would like to thank you for spending time with us this morning so we can provide you with additional details of our fourth-quarter and full-year 2011 financial results.

Presenting today are Alan Mulally, President and CEO of Ford Motor Company, and Lewis Booth, Chief Financial Officer.

Also in attendance are Bob Shanks, Corporate Controller; Neil Schloss, Corporate Treasurer; Paul Andonian, Director of Accounting; and Mike Seneski, Ford Credit CFO.

Before we begin I would like to cover a few items.

Copies of today's -- this morning's press release and the presentation slides that we will be using today have been posted on Ford's investor and media website for your reference.

The financial results discussed today are presented on a preliminary basis; final data will be included in our Form 10-K that will be filed next month.

The financial results are presented on a GAAP basis and in some cases on a non-GAAP basis.

The non-GAAP financial measures discussed in this call are reconciled to the US 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.

Of course, actual results could differ materially from those suggested by our comments today.

The most significant factors that could affect future results are summarized at the end of this presentation.

These risk factors and other key information are detailed in our SEC filings including our annual, quarterly, and current reports.

With that, I would now like to turn the presentation over to Ford's President and CEO, Mr.

Alan Mulally.

Thank you, George, and good morning to everyone.

We are pleased to have the opportunity today to review our fourth-quarter and full-year business performance and the progress we continue to make in delivering our plan.

We also will share with you this morning our major assumptions and key metrics for 2012.

Let's start by turning to slide 3.

Our fourth-quarter results reflect higher volume and net revenue, the 10th consecutive quarterly pretax operating profit and positive Automotive operating-related cash flow.

In the quarter, North America drove our Automotive profitability with strong performance.

However, since the third-quarter earnings call, the deteriorating external environment impacted most of our Automotive operations outside of North America.

In addition, commodity costs, exchange rates, and the floods in Thailand all had a greater than expected adverse impact.

As a result, our margins were somewhat lower than the guidance we provided in October.

In 2011 we improved total Company pretax operating profit and improved Automotive's operating-related cash flow, enabling us to further strengthen our balance sheet.

In addition, Ford Credit continued to perform strongly, providing significant contribution to our overall profit, consistent with our guidance.

During the quarter and throughout the year, we continued to invest for future growth and a stronger product lineup around the world.

Turning to 2012, we expect to continue improving our business and delivering solid profits and strong Automotive operating-related cash flow while working to strengthen our operations in Europe and South America, and continue to grow.

We believe our 2011 performance, as well as our guidance for 2012, confirm that we are well on track to achieve the mid-decade outlook we provided in the middle of last year.

Let's look more closely now at the financial highlights of the quarter and full-year 2011.

Slide 4 summarizes our fourth-quarter and full-year business results compared with a year ago.

In the fourth quarter, vehicle wholesales were 1.4 million units, up 38,000 units or 3% from 2010.

Revenue was about $35 billion, an increase of about $2 billion, or 6%.

Pretax operating profit excluding special items was $1.1 billion, $189 million lower than a year ago.

Earnings were $0.20 per share.

Net income attributable to Ford was $13.6 billion.

This includes a favorable special item in our taxes totaling $12.4 billion, reflecting the release of almost all of the valuation allowance against our net deferred tax assets.

We also had favorable pretax special items of $349 million.

Earnings were $3.40 per share.

Automotive operating-related cash flow was $700 million, the seventh consecutive quarter of positive performance.

In the full year compared with a year ago, vehicle wholesales increased by 7%, and revenue improved by 13%.

Full-year pretax operating profit excluding special items was $8.8 billion, a $463 million improvement.

Net income attributable to Ford was $20.2 billion, $13.7 billion higher than a year ago, reflecting mainly the tax valuation allowance release.

Operating-related cash flow was $5.6 billion for the year.

We ended 2011 with $22.9 billion of Automotive gross cash, and with Automotive gross cash exceeding debt by $9.8 billion.

This is a net cash improvement of $8.4 billion compared with a year ago and $1.7 billion higher than the third quarter.

Despite a challenging external environment, we had a good fourth quarter and a strong full year, reflecting the strength of our business and our One Ford plan.

Slide 5 recaps our key highlights in the fourth quarter as well as some of the many things we accomplished throughout 2011 as we executed our One Ford plan.

We continued to introduce strong products in the fourth quarter, launching the new global Ranger and 1.0-liter 3-cylinder EcoBoost engine.

We also debuted the all-new Ford Escape.

2011 was our third straight year of higher US market share.

Ford brand market share also increased by 3 points over the same period.

We finished 2011 with higher share in Asia Pacific and Africa; and in Europe we have reported three consecutive quarters of year-over-year market share gains.

In October, we reached a new four-year agreement with the UAW that improves our US competitiveness.

We announced 2011 profit-sharing for eligible hourly workers, and in December we announced that we will resume paying a quarterly dividend.

Included in our 2011 results, we now have two consecutive years of more than $8 billion in pretax operating profits, as well as three consecutive years of improved annual operating profits.

We reduced Automotive debt by $6 billion and increased our Automotive cash net of debt to $9.8 billion by year-end.

Finally, we continued our aggressive growth plans by breaking ground on four new assembly and powertrain plants in Asia Pacific and Africa and by launching our new FordSollers joint venture in Russia.

Now, I would like to turn it over to Lewis, who will provide more details of our fourth-quarter and full-year financial results.

Lewis?

Thanks, Alan.

Let's start with slide 7, which shows our financial results compared with a year ago.

Since Alan already summarized the results, I will focus on one-time special items included in our results.

Pretax special items in the fourth quarter were a positive $349 million.

This includes a $401 million gain related to the sale of our Russian operations to the newly created FordSollers joint venture, which began operations on October 1.

Within our benefit from income taxes, there is a favorable one-time non-cash special item of $12.4 billion related to the release of almost all of the valuation allowance against our net deferred tax assets.

Given the magnitude of the impact related to the release of the valuation allowance, let me provide some additional insights on the next slide.

On slide 8, we began to record a valuation allowance against net deferred tax assets in 2006, reflecting large cumulative losses incurred as well as our financial outlook at the time.

Consistent delivery over the past few years of strong improvements in our business results now supports the release of almost all of the valuation allowance, resulting in the favorable one-time non-cash special item of $12.4 billion in the fourth quarter, improving both after-tax profit and equity.

Going forward, this change is expected to result in ongoing operating tax rates of about 30%, although our cash tax payments will not be affected, remaining at low levels for a number of years.

To allow for appropriate future period-to-period comparisons of our non-GAAP operating after-tax results and earnings per share, we now are expressing our 2011 quarterly and full-year tax expense as if the valuation allowance had not existed as of the start of the year.

This does not, however, affect results for reported in line with US GAAP; please refer to the appendix for details.

While this action is a matter of following accounting guidance, it also is a significant milestone in our restructuring, underscoring the steady and sustained progress in our turnaround.

It is also a strong indication of the confidence we have in our future results.

So let's now turn to slide 9 for a look at our pretax results by sector.

Total Company fourth-quarter pretax profits of $1.1 billion reflects positive contributions from our Automotive and Financial Services sectors.

As shown in the memo, total Company pretax operating profit decreased by $189 million compared with 2010.

Compared with the third-quarter 2011, total Company pretax profit also declined.

Total Company full-year pretax profit of $8.8 billion reflects strong results from both sectors.

When compared with last year, total Company improved driven by a $1 billion improvement in the Automotive sector, with Financial Services delivering strong results, although lower than last year, in line with our guidance.

Slide 10 highlights the key market factors and financial metrics for our total Automotive business.

Fourth-quarter wholesale volume and revenue both increased compared with the year-ago period, but pretax operating profits at $586 million decreased by $155 million.

Operating margin was 2.2%, down 8/10 of a percentage point from a year ago.

And this includes an adverse effect of 1.9 points from higher commodity costs, including the hedging losses.

Full-year wholesale volume, revenue, and pretax operating profit were higher than the year-ago period; but operating margin at 5.4% was down 7/10 of a point.

Higher commodity costs reduced our margin by 1.8 points.

Slide 11 summarizes the decrease in total Automotive fourth-quarter pretax profits compared with 2010 by causal factor.

We had strong performance in market factors; that is, volume, mix, and net pricing, collectively improving $1.8 billion despite production losses in Asia Pacific and Africa due to the Thailand floods.

This was more than offset by higher costs, which included commodity costs across all regions; higher contingent compensation costs, such as the one-time ratification bonuses and profit sharing in North America related to the UAW agreement, as previously disclosed; and unfavorable exchange.

Slide 12 summarizes the $700 million decrease in fourth-quarter total Automotive pretax profit compared with the third quarter by causal factor.

Market factors were positive driven by favorable volume and mix, mainly favorable dealer stock changes in North America.

Our stock levels across the globe are at an appropriate level, consistent with our practice of matching supply with demand.

This was more than offset by a normal seasonal increase in structural costs and the higher compensation costs in North America.

Slide 13 shows fourth-quarter pretax results for each of our Automotive operations as well as Other Automotive.

Our Automotive pretax operating profit of $586 million was led by our North American operation, with South America also reporting a profit.

Europe and Asia Pacific and Africa incurred losses.

The loss in Other Automotive of $138 million reflected mainly net interest expense.

Slide 14 summarizes the $1 billion improvement in total Automotive full-year pretax profits compared with 2010 by causal factor.

The profit improvement was driven by strong performance in market factors and lower net interest expense, offset partially by higher costs, higher compensation costs in North America, and unfavorable exchange.

Within the increase in contribution costs of $4.2 billion, $2.3 billion or about 55% is attributable to higher commodity costs.

Structural costs increased by $1.4 billion, which is lower than prior guidance as we continue to identify and achieve efficiencies.

These cost increases include the effect of higher volumes, new product launches, and investments to support our future product capacity and brand-building plans.

Slide 15 shows full-year pretax results for each of our Automotive operations as well as Other Automotive.

Total Automotive pretax profit of $6.3 billion was led by a $6.2 billion profit from our North American operation.

South America earned a solid profit, while Europe was about breakeven, incurring a small loss driven by the economic uncertainty in the region.

Asia Pacific and Africa incurred a loss as well, more than explained by the impact of the Japan and Thailand natural disasters.

The loss in Other Automotive reflects net interest expense and fair market valuation adjustments, mainly for our investments in Mazda.

For 2012, we expect net interest to be about the same as 2011.

While interest expense will be reduced through our debt reductions, the effect of lower interest rates will lower interest income.

Turning now on slide 16 to our Automotive business in North America.

Fourth-quarter wholesale volume and revenue increased compared with a year ago, improving 13% and 14%, respectively.

Pretax operating profit and margin improved despite an adverse impact on the operating margin of 2 percentage points due to higher commodity costs.

US industry SAAR increased compared with a year ago, but our US total market share declined by 1/10 of a percentage point.

Full-year wholesale volume, revenue, and pretax profits were higher than in 2010.

Operating margin declined 1/10 of a percentage point; and this includes the adverse impact of 2 points due to higher commodity costs.

Slide 17 shows the $200 million improvement in fourth-quarter North America pretax results compared with 2010 by causal factor.

Market factors improved compared with last year by $1.6 billion, including a favorable stock adjustment of $500 million.

Total costs increased by $1 billion, mostly explained by higher commodity, warranty, and freight costs.

Other includes higher compensation costs such as the one-time rectification bonuses and profit sharing related to the UAW agreement, as previously discussed.

As shown in the memo, pretax profit decreased by $700 million compared with the third quarter, reflecting normal seasonal increases in structural costs, higher compensation costs, and increased warranty costs.

Favorable volume and mix is a partial offset.

As we look ahead to this year, we expect North America to continue to be the core of our Automotive operations, with improved profitability for the full year 2012 compared with 2011.

Slide 18 shows our US market share.

US total market share in the fourth quarter at 16.3% was down 1/10 of a percentage point compared with the same period last year, but equal to the third quarter.

Our retail share of the US retail industry in the fourth quarter, estimated at 14.2%, was up 1/10 of a point from a year ago.

And our share was unchanged from the third quarter.

In the full year, our US total market share improved by 1/10 of a point, with the Ford brand improvements of 8/10 of a percentage point more than offsetting the discontinuation of Mercury.

Our US retail share of the US retail industry was unchanged.

Now, let's turn to South America on slide 19.

Fourth-quarter wholesale volume declined 13% compared with a year ago, while revenue was unchanged.

Pretax and operating margins both declined.

South American industry SAAR and Ford share both were lower than a year ago, with the share decline due to increased competitive pressures.

Full-year wholesale volume and revenue increased compared with a year ago, but pretax profit and operating margin declined.

Slide 20 shows the $173 million decrease in fourth-quarter South American pretax results compared with 2010 by causal factor.

The lower profit is explained primarily by unfavorable exchange and higher costs; and essentially all of the total cost increase driven by higher commodity costs.

As shown in the memo, pretax profit decreased by $168 million compared with the third quarter, reflecting mainly unfavorable exchange and higher structural costs.

Looking ahead, the competition in South America is intensifying with substantial capacity increases planned by a number of companies and new entrants.

Against this background, we expect our South American operation to continue to generate solid profitability for 2012, although somewhat lower than 2011.

We are continuing to work on actions to strengthen our competitiveness in the changing environment.

These actions include fully leveraging our One Ford plan, including the introduction of an all-new lineup of global products over the next two years, starting in the second half of 2012.

Slide 21 covers Ford of Europe.

Fourth-quarter wholesale volume declined 2% while revenue increased slightly compared with a year ago.

The pretax loss and operating margin were lower than a year ago.

Industry SAAR for the 19 markets we track was lower, while our fourth-quarter market share improved 3/10 of a point, primarily driven by C-MAX.

Full-year wholesale volume improved slightly compared with a year ago, while revenue increased by about 15%.

Both pretax profit and operating margin declined, with higher commodity costs contributing a negative 1.5 points to the European full-year margin.

Slide 22 shows the $139 million decline in fourth-quarter Europe pretax results compared with 2010 by causal factor.

In the difficult external environment, market factors, including net pricing, were favorable compared with the same period in 2010.

Contribution costs increased by $225 million, approximately half of which is due to commodity costs.

This was offset partially by structural cost improvements.

Other reflects continued investment in our Craiova facility in preparation for the production volume ramp-up in 2012, as well as lower joint venture profits.

As shown in the memo, fourth-quarter pretax results improved $116 million compared to the third quarter, driven mainly by favorable volume and mix.

The external environment in Europe is uncertain and is likely to remain so for some time.

Given the challenges in Europe, we will continue to review, take, and accelerate actions to strengthen and improve our business.

This will include the full leveraging of One Ford plan in our global resources.

And now, let's turn to Asia Pacific and Africa on slide 23.

All of the fourth-quarter key metrics were impacted adversely by the Thailand flooding.

Asia Pacific and Africa's industry SAAR was lower than a year ago, more than explained by China; and our fourth-quarter market share was unchanged.

Full-year wholesale volume and revenue increased, but we incurred a pretax loss compared with a profit a year ago and a lower operating margin.

Slide 24 shows the $106 million decrease in fourth-quarter Asia Pacific and Africa pretax results compared with 2010 by causal factor.

Pretax profits declined due to the impact of the Thailand flooding, primarily reflected in volume and mix, as well as higher costs associated with new products and our investments for future growth.

Higher net pricing is a partial offset.

As shown in the memo, Asia Pacific and Africa's pretax results were lower compared with the third quarter, more than explained by higher costs.

We expect Asia Pacific and Africa to grow volume and be profitable for 2012, even as we continue to invest in additional capacity and our product lineup for an even stronger future, in line with the implementation of our One Ford plan.

Slide 25 covers 2011 fourth-quarter and 2012 first-quarter production.

2011 fourth-quarter total Company production was about 1.4 million units, up 20,000 units from a year ago and 16,000 units lower than our most recent guidance.

The decrease reflects lower demand for commercial vehicles in China and the impact of Thailand flooding.

We estimate the production impact of the Thailand flooding was about 34,000 units, about 4,000 units higher than we assumed in our fourth-quarter guidance.

We expect first-quarter total Company production to be about 1.4 million units, down 51,000 units from a year ago.

This reflects lower industry demand in Europe and the launch-related effects of new products in Asia Pacific and Africa.

This outlook is consistent with our disciplined strategy to match our production with consumer demand.

And compared with the fourth quarter, first-quarter production will be up 32,000 units.

Turning now to slide 26 and our Automotive gross cash and operating-related cash flow.

We ended the quarter with $22.9 billion in Automotive gross cash, an increase of $2.1 billion from the end of the third quarter.

Automotive operating-related cash flow was $700 million.

Our cash flow before changes in debt and pension contributions was $1.9 billion, including receipts from Financial Services of $1.3 billion.

Net debt inflows in the quarter totaled $300 million, reflecting primarily an increase in low-cost loans for the development of advanced technologies.

We made payment of $100 million to non-US funded pension plans.

Full-year Automotive operating-related cash flow was $5.6 billion, and cash flow before changes in debt and pension contributions totaled $9.3 billion.

For 2012, we expect strong positive Automotive operating-related cash flow.

Slide 27 summarizes our Automotive sector cash and debt position at the end of the fourth quarter.

Automotive debt was $13.1 billion at the end of the year.

We continue to make significant progress in improving our balance sheet, and we ended the year with net cash of $9.8 billion, an improvement of $8.4 billion compared with the end of 2010.

Automotive liquidity is now more than $32 billion.

Turning now to Ford Credit, slide 28 shows the $66 million decrease in fourth-quarter pretax results compared with a year ago by causal factor.

In line with our expectations, the results are more than explained by fewer leases being terminated, which results in fewer vehicles sold at a gain, offset partially by Other, reflecting primarily foreign currency translation adjustments related to the discontinuation of financing in Australia.

As shown in the memo, Ford Credit's pretax profit decreased by $75 million, compared to the third quarter, more than explained by the same lease factor just mentioned.

Slide 29 provides an explanation of the change in Ford Credit full-year results compared with 2010 by causal factor.

Ford Credit reported full-year pretax profits of $2.4 billion, a $650 million decrease.

The decline reflects fewer leases being terminated, which resulted in fewer vehicles sold at a gain, as well as lower credit loss reserve reductions.

Ford Credit paid distributions of $3 billion to its parent during 2011.

For full-year 2012, we expect Ford Credit to be solidly profitable but at a lower level than 2011, reflecting primarily the same factors just mentioned.

The pretax profit contribution related to the lease and credit loss reserve factors was about $800 million favorable in 2011, and these factors are expected to be minimal in 2012.

In addition, Ford Credit expects to pay distributions of between $500 million and $1 billion.

At year-end 2012, we expect managed receivables to be in the range of $85 billion to $95 billion.

Slide 30 covers Ford Credit's liquidity and funding.

The left box shows committed liquidity programs, cash, and the utilization of Ford Credit's liquidity sources at the end of the fourth quarter.

Ford Credit's available liquidity was about $17 billion.

As shown in the right box, Ford Credit completed $35 billion of full-year funding despite volatile market conditions.

Our funding strategy remains focused on diversification, and we plan to continue accessing a variety of markets, channels, and investors.

Our liquidity remains strong.

We will continue to maintain cash balances, funding programs, and committed capacity to ensure we have strong liquidity to reach our business and funding requirements.

And at the end of the fourth quarter, Ford Credit's managed leverage was 8.3-to-1, and equity was $8.9 billion.

Slide 31 provides an update of our pension funds.

Worldwide pension expense in 2011 excluding special items was $900 million, $300 million higher than 2010.

In 2011 we made $1.1 billion in cash contributions to our worldwide funded pension plans, up $100 million compared with a year ago.

Worldwide, our pension plans were underfunded by $15.4 billion at 2011 year-end, a deterioration of $3.9 billion compared with a year ago.

This primarily reflects sharply lower discount rates.

At the end of 2011 our projected long-term return on asset assumption for the US is 7.5% at our present asset mix, down 50 basis points from a year ago.

Slide 32 provides background on our long-term strategy to de-risk our funded pension plans.

This will reduce our balance sheet and cash flow volatility and, in turn, improve the risk profile of the Company.

Key elements of the strategy include limiting liability growth in our funded plans by closing participation to new entrants; reducing planned deficits through discretionary cash contributions; and progressively rebalancing assets to more fixed-income investments.

This will provide a better matching of plan assets to the characteristics of the liabilities, which will reduce our net exposure; and finally, other strategic actions under development, which we will share with you at a later date as appropriate.

As part of our long-term de-risking strategy, 2012 cash contributions to funded plans are expected to be about $3.5 billion globally compared with $1.1 billion in 2011.

2012 includes discretionary contributions to our US plan of about $2 billion.

As we have said previously, based on our present planning assumptions for long-term asset returns, a normalization of discount rates, and planned cash contributions, we expect our global pension obligations in total to be fully funded over the next few years, with variability on a plan-by-plan basis.

And now, Alan will cover the business environment, our key metrics for 2011, and our key planning assumptions for 2012.

Thank you, Lewis.

Slide 34 provides an overview of the business environment.

Overall, we expect global growth to continue at a 3% pace during 2012.

Economic growth in the US is expected to be in the range of 2% to 3%.

Growth in Europe, however, remains very challenging.

We expect weak conditions in Europe, with some markets doing better than others while fiscal austerity programs are implemented.

Several key emerging markets including China, Brazil, India, Indonesia, Thailand, and Turkey have entered cycles of policy easing to support economic growth.

Despite recent declines in commodity prices, we expect them to increase modestly in 2012.

Longer term, we expect prices to continue to trend upwards given global demand growth.

Overall, we assess the global business environment for automotive industry growth to be favorable in 2012, with sales projected to be about 80 million units, up from 76 million units in 2011.

In light of the volatile external environment, however, 2012 sales could range from 75 million to 85 million units.

Slide 35 summarizes 2011 results for our planning assumptions and key metrics compared with the plan we shared at the beginning of the year.

Overall, we achieved solid results across the business in 2011, meeting or exceeding our plan in most instances.

Importantly, we delivered improved total Company pretax operating profit and Automotive operating-related cash flow compared to 2010.

US and Europe industry sales were in line with our expectations, and we met or exceeded our share targets for the United States.

Both structural and commodity costs increased in 2011, as we had expected.

Capital spending was less than we projected due mainly to efficiencies.

Shortfalls to our plan occurred in quality in the US and with our Automotive operating margin.

We believe we have the quality issues well in hand and are back on track to deliver quality levels that are among the best in the business.

Our operating margin shortfall can be more than explained by higher commodity costs which, we noted earlier, reduced our margin by nearly 2 percentage points.

In summary, 2011 was a strong year and kept us well on track to our mid-decade outlook.

Now let's turn to 2012 on slide 36.

Our entire organization is energized as we enter 2012, keenly aware of the challenges but also the opportunities we face in the current environment.

While the uncertainty surrounding the European debt crisis and its impact on the global economy presents a challenge for everyone, our strong product portfolio and this prospect of global economic growth offer opportunities for our business going forward.

Although we will keep a close eye on the economic environment throughout the year, we are sharing key current planning assumptions as follows.

We expect full-year industry volume to range from 13.5 million to 14.5 million units in the US, and from 14 million to 15 million units in Europe.

We project full-year market share in the US and Europe to be about equal to compared to 2011.

For quality, we expect to deliver year-over-year improvement.

Compared with 2011, we expect our 2012 financial performance to reflect the following.

Automotive pretax operating profit to improve; Ford Credit to be solidly profitable, although at a lower level due primarily to the factors mentioned previously; total Company pretax operating profit excluding special items to be about equal; Automotive structural costs increased by less than $2 billion as we support higher volumes, new product launches, and our growth plans; and Automotive operating margin to improve.

For 2012, we expect capital spending to be $5.5 billion to $6 billion.

Although not shown on the table, we are expecting nonmaterial increase in commodity costs for 2012.

Overall, we expect 2012 to be a solid year for the Ford Motor Company, consistent with our glide path to our mid-decade guidance.

We are off to a good start with the overwhelmingly positive reaction to recently introduced global products, including the all-new Fusion at the Detroit Auto Show, the all-new EcoSport at the Delhi Auto Show, and the all-new Escape in Los Angeles.

Finally, slide 37 summarizes our One Ford plan.

Clearly, we remain focused on delivering this plan, which is unchanged.

Our track record for making continued progress in delivering great products, investing for global growth, building a strong business, and providing profitable growth for all Ford stakeholders is evident in our results.

What especially excites all of us in Ford is the knowledge of what lies ahead, knowing that by building on what we have accomplished so far, the majority of the benefits that we will ultimately deliver from leveraging our global scale are yet to come.

We recognize that we have both challenges and opportunities ahead.

Chief among our tasks is the acceleration -- accelerating the realization of the full potential of the global scale and operating margin benefits inherent in our One Ford plan.

This task includes improving even further our already-strong operation in North America; strengthening and growing our profitable South American operation in the face of increasing competition in the region; ensuring that our European operation remains on track to deliver sustainable and appropriate returns in an uncertain environment; achieving strong growth in profit contribution from Asia Pacific and Africa; and continuing the strong performance of our strategic asset, Ford Credit.

We will continue our laserlike focus on strengthening the Ford brand around the world and continue the journey of making Lincoln a world-class luxury brand.

Thanks to the strong performance in 2011 and our plan for continued strong performance this year, we are going further to achieve the full potential of our One Ford plan, including achievement of our mid-decade outlook.

Now, we would be pleased to take your questions.

Thanks, Alan.

Now, we will open the lines for about a 45-minute Q&A session.

We will begin with questions from the investment community then take questions from the media.

In order to allow as many questions as possible within this time frame, please keep your questions brief.

Katina, can we have the first question?

(Operator Instructions) Himanshu Patel, JPMorgan.

Hi, good morning, guys.

I wanted to just delve into Europe a little bit.

You guys -- particularly, you, Lewis -- have been speaking very cautiously on the market for about six months now.

But your 2012 volume guidance is down, but not that much; it is sort of mid-single-digit volume decline.

You have posted two quarters in a row of net pricing growth in Europe year-over-year.

And I think even sequentially in the fourth quarter it was sort of flattish.

So I am just curious, what are you seeing prospectively to cause the caution?

Is it really just a general macro kind of hedged comment that you are making, that volumes haven't fallen yet but you expect them to?

Or is it something you are seeing prospectively on net pricing that maybe is just not evident so far in the data in the last couple of quarters?

Okay, let me try and frame it.

I think for the obvious external reasons, we remain cautious about the economic development of Europe.

Very different by country.

Some countries well in recession; some countries perhaps on the verge of recession; and one or two countries continuing to do okay.

We haven't seen dramatic volume drops, although we have seen incentive spending increase.

Encouragingly for the Ford team, we have seen as you said net pricing improvements.

We have achieved positive pricing that more than offset the increased incentive spending.

So I think our overall caution is around the customers' concern about the economic environment.

And it is harder -- just where we stand at the moment, Himanshu -- to say, is it going to show in volume, with volumes coming off a bit more?

Or is it going to show in incentive activity, with incentive spending going up a little bit?

Because as you know, we have been restructuring the European business really since -- for over a decade, but there's still -- most of our competitors, tremendous amount of open capacity, which results in some incentive activity levels that isn't great for the business.

Himanshu, I might just add to Lewis's comments that we have been continuing to restructure Europe over the years, and we are at about 93% utilization of our capability.

In addition to that, it was really important on our One Ford plan to accelerate the development of the new products that we believe the European customers want and value.

Also in 2012, we will be launching 10 new or significantly refreshed vehicles including the all-new Ranger, the B-MAX, and the Kuga.

So I think both on the revenue side, in addition to our continuing matching the real production -- our production to the real demand, that we have opportunities both on the revenue side and the production side.

Would you guys expect Europe to be lossmaking this year?

It is too early for us to give you a clear view of that.

I think as you think about the Automotive business, we are guiding that total Automotive we expect to be up year-over-year, but we are not giving a guidance on Europe at the moment.

Okay, if I could sneak in one more on Europe.

A lot of the US banks are very happy with automotive lending.

It clearly seems like an asset class where they are comfortable coming out of the Lehman recession.

What is the outlook on European consumer credit availability?

Particularly as it pertains to vehicle financing, not just for Ford Motor Credit, but what you are seeing out of the banks out there.

Yes, Himanshu, it's Mike Seneski.

At this stage, actually, we have seen a pretty stable environment for consumer credit.

We have not yet seen any follow-on impacts.

And the banks have indicated that there will be some slowdown in lending; but to this stage, we have not seen anything.

Tim Denoyer, Wolfe Trahan.

Thanks for taking my question.

Quick one on medium and heavy truck in Brazil if I could.

Can you get a sense of how orders have been coming in?

I would guess that backlogs there are a quarter or two.

It just seems like expectations are ranging pretty widely from down materially to up a little bit.

It seems pretty clear there was some pre-buy in 2011 ahead of the Euro 5 emission standards that went into effect.

Yes, exactly.

We're ahead of plan.

The new vehicle is being very well received and very, very competitive.

Can you give a sense of if orders are stepping down in the first quarter of 2012 and how you expect that to go through the year?

We think relatively flat.

Okay.

Then secondly on slide 34, was wondering, the 80 million unit global industry production forecast, how does that compare to 2011?

2011 came in at close to 77 million; so it was like 76.8 million or 76.9 million or so.

Global industry tends to carry on counting for a few weeks after the end of the year.

So, it is close -- it's moving up towards 77 million.

Okay, and just one detail --

One more question, then that's it.

Okay.

But just one little detail on the less than $2 billion Automotive structural costs increased guidance for 2012.

Can you give us a little -- how much more below $2 billion that might be?

No; the guidance is less than $2 billion.

You are seeing an increase in structural costs associated with our growth plans, both in continued investment in new capacity around the world, continued investment in new products around the world, and then continued efforts by Jim Farley and the team to get the message out through advertising and sales promotion to continue to improve the brand around the world.

So it is really associated with the growth of the business.

Thanks a lot.

Joseph Spak, RBC Capital Markets.

Good morning, gentlemen.

Thank you.

Maybe just a couple of quick ones on North America.

Given that a good portion of your North American production is brand-new, what is the outlook for net pricing?

You have been able to make good progress, but the comps do get a little bit tougher.

So maybe just a little bit of color on that.

Well, you know, as we've said I think several quarters in a row, we expect to see continued improvements in net pricing, but slowing down.

I think slowing down for a couple of reasons.

One, as you say, the comps are more challenging.

But really the plan around the North American recovery was to have world-class products and to achieve competitive transaction prices; and we are closing the gap with the best of our competition.

So, there is less gap to close as we continue going through our new product launches.

But the other key to the North American plan is to keep products fresh.

And I think you can -- if you were at the Detroit Show you could see the real efforts going on to continue to have really fresh product, not just in North America but around the world.

That is the underlying -- that is what One Ford is about -- great products, fresh around the world, earning competitive transaction prices, with a competitive cost because of the scale we can generate.

Then maybe just some color.

I know last year you gave the outlook for retail share in the US equal to improved.

Maybe some color on what you expect in 2012?

And then similarly, strong operating-related cash flow.

Will it be higher than 2011, in line, or maybe a little low?

Let me talk about being the operating-related cash flow first.

Yes, we do expect it to be stronger.

I think if you think about it as probably comparable with this year; but adjusted for the increased CapEx that we are expecting, we are guiding to more than $1 billion of incremental CapEx this year.

So, if you think about it as comparable, adjusted with the CapEx levels.

We are not giving out specific details of retail and retail share.

We think we are talking about total share being equal or slightly improved.

Thanks.

If I could just do one quick one.

You mentioned in Ford Credit, I think you said you still had a benefit of -- or either an $800 million from the lease and credit loss this year, even though I think on a year-over-year it was a headwind.

But I understand that is coming down.

But is that to imply that 2012 will be roughly that $800 million lower than '11?

Well, that is one of the major factors of our outlook for Ford Credit being lower in 2012 than 2011.

We had been guiding for some quarters that the very favorable factors associated with very strong residual values on the vehicles being returned from lease, and astonishingly good performance by our book with our customers really paying for their vehicles.

We did expect those to be tailing off in the period.

We are now at record low credit loss reserves, so there is no more credit loss reserves to release.

In fact, as our receivables start to grow, as we have guided, you can expect to us to actually increase our credit loss reserves a little.

So yes, those are the significant parts of the year-over-year reduction.

Peter Nesvold, Jefferies.

Good morning.

I'll be very brief.

So one of the things that jumped out from the outlook was that material costs are not expected to be significant in 2012.

Is that a function of your hedging programs?

Or are you seeing some other relief there that gives you more optimism there for 2012?

We saw commodity costs come off a bit in the fourth quarter.

We are seeing that sort of levels in the first quarter; but we do expect commodity cost to be up a little bit year-over-year.

But if you think on the year-over-year comparison we will have -- got the benefit of hedging.

We have got the nonrepeat of the hedging losses that we saw in 2011.

And we have got some modest commodity cost increases.

But net we don't expect it to be material.

Terrific.

Thank you.

John Murphy, Bank of America Merrill Lynch.

Good morning, guys.

I will just keep it to two questions.

First, how much lending is Ford Motor Credit doing in Europe as a percent of your total sales?

Is that in the ballpark of 30% to 40%, like we'd see in North America?

Or is it a lot lower or higher?

It's lower; it's --

Yes, separate out between wholesale and retail, it is stronger on wholesale.

Most of our deals are financed through Ford Credit and a bit lower on retail.

If you look in appendix 17, John, it gives you a breakdown of our receivables by our North American and international.

Great.

And you feel like you could probably step in there to support the business like you did in North America '08 and '09?

Yes, I mean I think you can watch our behavior.

We will keep the Credit Company well-funded.

It is an important asset both here and in Europe, and we are not going to deflect from that plan.

And we are comfortable that we can do that.

Great, then second --

Just one other, just one other observation about Ford Credit, because I was describing the year-over-year reduction.

I think we can expect to see a bit of pressure on margins because we are moving some of our borrowing towards unsecured.

So we can see -- as well as the factors we have been talking about, I think you can see a bit of pressure on margins because of that.

Okay.

Then just a second question, Alan, for you.

As you look at your midterm targets, you're basically talking about global Auto op pretax margins of 8% to 9%.

We're roughly running about 300 to 400 basis points below that currently.

If we were to see the market somehow all of a sudden shoot up to those midterm targets on volumes or sort of mid-trend levels in North America and Europe, do you think you would get there just by the cycle and volumes recovering?

Or are there other steps internally at Ford that you think you need to take to make some significant changes to get there?

Just trying to understand what is internal and what is just returning to trend volumes.

I would put both of those in there, John, because clearly the expansion in the world economy and the industry is a plus; but also the power of capturing the value of the One Ford plan, as we have talked about.

And we, as we have talked about, we are just on the beginning of being able to capture that value.

Because as we move to our global platforms and our aligned business framework with our suppliers worldwide, over the next two to three years we are going to have nearly 85% of our volume going to be on these nine platforms.

And as we continue to implement this across the product line, we will continue to reap the benefits and the value of that.

So I would say yes, I would have both of those in there.

So, I mean, to try to characterize that, would that be a third pricing, a third volume, and a third cost, roughly?

Or is that parsing it too fine?

I think that is a little bit too fine.

But to your point, we are clearly -- as we talked about a little bit earlier we are clearly seeing us closing the gap on the value of the products, based on the quality and the features and the fuel efficiency and the smart design features.

People really are valuing the Ford product line.

So I think we will continue to stay competitive that way.

We will see the volume increase, and then we will see continuing year-after-year increase in the productivity, including the investment efficiency, because of the One Ford global platforms also.

Great.

Thank you very much.

Adam Jonas, Morgan Stanley.

Thanks, Katina.

Hey, guys.

Lewis, any comment on pre-registration activity in Europe?

We hear it is running as high as 20% in recent weeks.

No, it varies by manufacturer.

It varies quite significantly by country.

We will stick to our process of not chasing marginal business.

But are you seeing a pickup from the competition?

Yes, we have seen tick-ups in -- particularly right at the month end.

Okay.

That is the way it usually works.

Mike, a question for you.

You mentioned that credit loss is still at historic lows and I think even improving quarter on quarter, at least they were 3Q.

If you really were pressed to look anywhere for a sign of weakness in terms of credit quality, not the availability -- you said to Himanshu's question that was pretty stable -- where are you seeing it start to crack?

Or anywhere?

We are not.

I mean you will see on the Fixed Income call our input FICOs look good.

The credit quality of the portfolio looks good.

Amazing.

Adam, we should comment.

Clearly in some of the peripheral markets in Europe there is tremendous pressure on the consumer, and we have seen some pressure there.

But that is not material to the Ford Credit business.

Okay, finally, quick one.

Just North American model launch disruption this year, Fusion, Escape, MKZ, the big ones.

Can you try to dynamic when it's most disruptive, when we start seeing the benefit?

I will leave that more open-ended for you to describe, so we can have a better understanding quarter by quarter, please.

Thanks.

Yes, we've got a huge amount of product launches, not just the major car lines you are talking about, but continued expansion of EcoBoost, for a sample.

The biggest periods of launch are the second and third quarter.

But you can expect us right through the year to have a lot of launch activity.

So in the second and third quarter you'll in particular see some manufacturing launch losses.

But you will also see we have got capacity actions, so we have got third shifts coming on in three of our plants; we've got a second shift coming on in Kansas City Truck.

And they are spread I think mostly in the first half.

And then you will see, if you are thinking about structural costs, you will see the advertising and sales promotion that goes with all those product launches.

So actually it is going to be a pretty busy year.

I know Mark is sweating the thought of it, but excited.

Because I just want to get back to the thesis.

You know, you come onto our stand at Detroit and you see what our future looks like.

I mean, just great product.

Awesome.

Thanks, guys.

Brian Johnson, Barclays Capital.

Yes, rather than rehash guidance, one really question for Alan.

How would you say you are managing the Company differently along with Lewis in an area where we are looking at some macro downturns in Europe and South America, as opposed into the rising environment we have generally had over the last three or four years?

And in particular, how is that affecting the cost discipline?

Are you looking for faster cost takeout than you normally might have looked at?

How is it affecting how you are monitoring pricing, which seems to be holding up even in the face of some of these weakened macros?

And are there other changes, say for the example in your Thursday meetings, as we go forward?

Oh, you bet.

Well, it is just fantastic.

The way we manage the business has enabled us in the past and now to move decisively to the changing conditions.

And to your point, every Thursday we review everything, the macro environment worldwide, also where we are versus the plan and areas that need special attention.

Clearly, what we are working on now for this year is to continue to improve an already very well-operating operation in North America.

We are strengthening and growing our profitable South American operation in the face of the increasing competition as we talked about.

We are ensuring that our European operation remains on track to deliver sustainable and appropriate returns in an uncertain environment, as we discussed, using our One Ford plan.

And of course, continue to implement growth and increasing profit contribution from Asia Pacific going forward.

And as we have covered today, continuing to really perform in Ford Credit.

So if you look at all of that together, then you come back to our plan, the thing that is enabling us to respond decisively around the world is the fact that we have dramatically simplified and focused our Ford plan.

So we are continuing to match production to the real demand; we are continuing to accelerate the development of new products; and as we just talked about, we are looking to accelerate getting the value out of our One Ford plan, led by the global platforms and the simplification of the product line, but also expanding our market presence around the world.

So the One Ford plan and the way we manage the business is continuing to serve us very well.

In particular, as you look at markets like Brazil, how do you make the trade-off?

Would you -- A, is the pricing deteriorating there and you are standing out, and that is why share is declining?

And is there a point at which you would accept even greater volume declines?

As you well know, the fundamental strategy is to manage for profitable growth.

In Brazil specifically, as we have talked about, the market is becoming more competitive.

And again, based on our matching the production to the real demand and also in Brazil the introduction of all the new vehicles that we have that are moving on to the global platforms for the first time, we're going to be able to work the revenue side even much better, in addition to working our fundamental productivity with the global platform.

So, Brazil is going to continue to be a really good market for us.

Okay, thanks.

Matthew Stover, Guggenheim.

Thank you very much.

I had one administrative question, and then a real question.

The first question is on the materials and the commodity hedge.

What was the full value of that?

I must have missed it.

In '11, Lewis?

Total year-over-year increase was $2.3 billion.

That was on the hedge?

That was commodity and hedge.

We haven't split them out this time.

Okay.

I mean -- so when you make the comment about the commodities, then it is off of that base?

We don't see a material improvement or change at all off of the full (multiple speakers)?

Year-over-year we expect a slight increase, but we don't expect it to be material.

Okay.

Then the other question is, Alan, you made a comment about Europe running at 93% capacity utilization.

And the business right now is losing a couple hundred million bucks.

I recognize that there is a structural issue in Europe.

There is just way too much capacity.

Given that high level of utilization, do you folks look at your fixed asset base and feel as though you need to do something?

Well, we are.

I think that is an important question, because we are continuing to utilize even more our lower cost operations in Turkey and Romania.

We are also, as you know, we have just signed a very mutually beneficial joint venture with Sollers in Russia.

So we are nearly tripling our production capacity there to serve the Russian market, which is going to be over the next year or so probably the biggest market in Europe.

So we will continue to look at the balance of our production throughout Western and Eastern Europe and Turkey.

But again I think the most important thing, as Lewis mentioned, is that we have continued to work the structure and the competitiveness of Europe over the years.

This is just a tough last year in there, especially with the commodities and the economy slowing down and the industry slowing down.

But I think the fact that we have been working it and we continue to work it -- I think we will be in very competitive shape going forward.

Okay, thank you.

Colin Langan, UBS.

Good morning.

Can you comment on South America?

The margins fell pretty significantly in the fourth quarter, and you seemed to indicate that the margins will be lower next year.

I mean, is the fourth quarter abnormally worse or is that going to be the new run rate?

And also, I know there were some import taxes in Brazil that came in effect in December.

Is that going to help in the first half of the year as some of your competitors are pushed out of the market there?

Let me try to give you a sort of slightly broader answer.

I think what we are seeing in South America, and Brazil in particular, is a change in the environment.

With the way the Real strengthened so dramatically, it has attracted people in, importers that typically hadn't been a big player in the marketplace.

And that put pressure on pricing for a couple of reasons.

One, just increased competition.

And secondly, those importers were bringing in global products, whereas historically most of South America was really operating on legacy products.

So what we have seen is in the typical past of Brazil with high inflation, high local inflation, exchange rate variability, we could price to offset that.

What we saw in the fourth quarter is that ability to price to offset in the fourth quarter both pretty high local inflation and deterioration in the -- or weakening of the currency, we couldn't price to offset that.

As we look forward, I think the real key is we are moving towards our global products.

And we will see starting in the second half -- and no secret; we showed it at Delhi, the new EcoSport, a tremendously important product for South America.

And starting from then we will essentially have a complete transformation of the product line from historically legacy platforms and local solutions to global platforms and global solutions.

And by the mid-decade we will have 16 new products, 15 of which will be on global platforms.

So I think that is the sort of transition you can see in the market.

And I think as you think about 2012, I think we would expect to see the second half better than the first half because of the launch of the new products.

I might just add also, in the fourth quarter specifically nearly 50% of that deterioration was exchange.

And just one more comment, building on what Lewis shared, is as we introduce our new One Ford global platforms we are going to be increasing our market coverage from 67% up to nearly 82% with our new family of vehicles.

So we have some real opportunities to serve new market segments going forward also, with products that are going to have a lot more value and a lot more competitiveness.

I talked about EcoSport in the second half.

I should also -- we're very excited about Ranger, because Ranger is going to be important around the world.

And it's also going to be in South America in the second half of this year.

Then I guess just two more quick ones.

Any color on what you are expecting for FX next year?

It seemed to have been an issue this quarter.

And any comment on structural cost?

It is up $2 billion this year.

At what point does it hit a plateau where the incremental growth is no longer that large?

It sounds like you have been doing maybe some global catch-up over the last few years.

Well, in terms of our structural cost, we have still got some period to go because, as we have said, we broke ground on four new plants in Asia Pacific last year; we have got seven plants in Asia Pacific under construction now.

And as our volumes grow, we will have increased manufacturing cost just because of our volumes growing.

And as we want to continue to improve our brand, we will have increased advertising and sales promotion.

So, I think it is too early to say we will get to a plateau.

It is something we pay a lot of attention on.

Alan referred to the Thursday meetings; it's something that gets discussion at every Thursday meeting.

In terms of foreign exchange, I wouldn't want to guess on that.

But clearly it is part of our plan to grow towards that mid-decade guidance that we gave that we are going to move up to around 8 million vehicle production, as well as moving the guidance up to 8% to 10% -- the margins up to 8% to 10%.

And that is fueled by especially the growth in Asia Pacific, as Lewis mentioned, both on the product line coverage as well as the new production facilities.

Ladies and gentlemen, at this time we would now like to welcome questions from the media community.

(Operator Instructions) Dee-Ann Durbin, The Associated Press.

Good morning.

Thanks for taking the call.

You talked about the loss of US market share in the fourth quarter.

Since the retail share remained the same, I wanted to talk about the fleet apparently that you are losing.

Is it good fleet?

Is it bad fleet?

What is going on with fleet?

You know, I think really it is more noise than any signal.

I mean it was only a very small change.

So I don't -- we don't see any signals in that.

It is just the timing of the orders.

Okay.

Thank you.

Dee-Ann, like we have talked about, the fleet is really good business dominated by the companies and very good, very important part of our plan.

I just wondered if you were -- I mean are you losing, for example, police contracts, taxi, that kind of business?

No, not at all.

Just with that one specific I think our new Interceptor and the fact that it was designed in concert with the police throughout the United States is going to be a terrific product for them.

Thanks.

Ben Klayman, Reuters.

Yes, hi.

Today's GDP numbers show inventories accounted for a big chunk of the economic growth in the fourth quarter.

I was just hoping to get your guys' insight as to, are you guys still ramping up inventories?

Are you keeping them stable or letting them run down?

What signs are you picking up about the strength of demand from US consumers?

We are being very careful on inventories.

In the US we had a dealer stock build in the fourth quarter, but it was really to make sure we had the inventories that are now -- to support the going rate in terms of days supply.

I think we are at 58 days, which is just slightly actually lower than our typical level.

So we're -- I think as you have seen over the last several quarters, in fact several years, Mark and the team have done a really nice job of matching our production with demand.

We do see our running rate -- the industry running rate is going up, so you can expect to see dealer stock levels increase a little bit as the industry goes up.

But not our days supply.

We will keep our days supply well under control.

Okay.

We have talked about this a little bit.

This is a slower recovery than we have had from recessions in the past, but it's a very important recovery.

The guidance that -- or the economic expansion we see now in the United States is going to be between 2% and 3%.

Also we have moved the industry volume up from 13 million units this year to between 14 million and 15 million next year.

13.5 million.

I'm sorry, 13.5 million to 14.5 million next year.

The neat thing about that too is that with the average age of the vehicles getting closer to 11 years, that the consumers really do want to obtain the value and the fuel efficiency of the new vehicles.

So we've got a number of things in here that look really well for us going forward in the market.

Okay.

Then one other quick question I just had about freight costs.

I was hoping you guys could provide some color as to where you are seeing that.

Is it in the US and is it rail?

And are you going to be able to pass that on to the customers?

No, the freight cost increase we have seen is really associated with the premium freight we have had to enable -- to support our plans for a couple of reasons.

One, during the year as we went through the tsunami crisis and then the Thailand crisis, we had to accelerate our supply lines by putting stuff in there in premium freight.

Then as we have grown, our suppliers in one or two cases have struggled a little bit to keep up with this.

And again we have had to have some premium freight to keep the plants going.

So it is more expedited freight cost levels rather than specific ambient freight costs.

(Operator Instructions) David Shepardson, The Detroit News.

Thanks for having the call.

Lewis, you talked about other strategic actions you are considering with the pension plans.

Are you considering an hourly pension buyout program?

David, when we are ready to talk about our other plans, we will talk about it at the appropriate time.

We are not ready to talk about things we have in mind.

How many years do you think it will take until you can fully fund your pension plans?

Well, as we guided, we expect with both asset returns, a return to a more normalized discount rate -- I mean, the discount rate is at historic lows -- and our cash contributions, we expect overall our funded pension plans to be fully funded by the end of the plan period.

So in the next few years.

Obviously, that's -- there were three caveats you just heard, but that is what we expect.

All right.

Thanks a lot.

Alisa Priddle, Detroit Free Press.

Good morning, gentlemen.

You have talked a lot about North America being the real driver in the fourth quarter.

Can you give us a little bit of context of how dominant you think the role of North America will be in 2012?

Yes.

I mean we would expect North America to continue to be an extremely strong contributor to the business, I think for a couple of reasons.

One, it is our largest business unit, by some.

And more importantly, it is operating in a gradually expanding environment.

Then also within North America, by far the dominant part of Ford Credit's profits are earned in North America.

You know, Europe you have heard us express some caution about giving guidance.

South America we expect to be strongly profitable next year, although perhaps a little bit lower than this year.

And Asia Pacific we expect to return to profitability.

But within that context and within the fact we're investing for the future in many of the other regions, we expect North America to be a very strong contributor to 2012.

One of the neat things about North America, too, is that it has the widest and most of all the members of the complete family of best-in-class products.

So it really is the engine also for supporting our growth worldwide.

In terms of net pricing can you give any color on -- now that you are adding the Fusion, completing the car line -- what kind of effect you think it might have?

As I said earlier, we expect to see continued net pricing opportunities.

We are seeing a fairly stable pricing environment in the US.

And as our products continue to get great, every time we launch a new product we close the gap.

And I think that we will continue to do that.

Okay, thank you.

At this time, I would now like to hand the call back to management to proceed to closing remarks.

Well, thank you very much, Katina.

Well, thank you, everyone.

That concludes today's presentation.

We appreciate all of you joining us today.

Thank you.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Good day.