PROFITABLE GROWTH FOR ALL

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 2010 Compared with 2009 Total Automotive. The charts below detail key metrics and the change in 2010 pre-tax operating results compared with 2009 by causal factor. Automotive operating margin is defined as Automotive pre-tax operating results, excluding special items and Other Automotive, divided by Automotive revenue. The increase in wholesales for total Automotive reflects higher wholesales in Ford North America and Ford Asia Pacific Africa, offset partially by lower Volvo wholesales (reflecting the sale of Volvo). The improvement in total Automotive results primarily reflects favorable volume and mix, net pricing (mainly in North America), changes in currency exchange, and the non-recurrence of Volvo operating losses from 2009, offset partially by unfavorable cost changes and higher net interest expense. Favorable volume and mix primarily reflects higher industry volumes, market share improvements in North America, and the non-recurrence of prior-year stock reductions, offset partially by lower market share in Europe. 44 Ford Motor Company | 2011 Annual Report
Management’s Discussion and Analysis of Financial Condition and Results of Operations Total costs and expenses for our Automotive sector for 2010 and 2009 was $113.5 billion and $107.2 billion, respectively, a difference of $6.3 billion. An explanation of the change as reconciled to our income statement is shown below (in billions): 2010 Better/(Worse) 2009 Explanation of change: Volume and mix, exchange, and other Material costs excluding commodity costs (a) Commodity costs (a) Structural costs (a) Warranty/Other (a) Special items (b) $ (12.1) 1.1 (1.0) (1.2) 0.1 6.8 Total $ (6.3) _________ (a) Our key cost change elements are measured primarily at present-year exchange; in addition, costs that vary directly with volume, such as material, freight and warranty costs, are measured at present-year volume and mix. Excludes special items (primarily changes in Volvo costs and expenses reflecting the sale of these operations). (b) Primarily reflects changes in Volvo costs and expenses. Results by Automotive Segment. Details by segment of Income/(Loss) before income taxes are shown below for 2010. Total Automotive pre-tax operating profit was $5.3 billion, with each Automotive segment profitable. The decline in Other Automotive primarily reflects higher interest expense net of interest income. This is more than explained by interest expense associated with the debt owed to the UAW VEBA Trust that was added at the end of 2009 and prepaid in full during 2010, and the interest expense associated with our convertible debt issued in November 2009, offset partially by lower interest expense on our revolving debt which was 90% repaid in 2010. Ford Motor Company | 2011 Annual Report 45
Page 1 and 2: PROFITABLE GROWTH FOR ALL Ford Moto
Page 3 and 4: 1 2 ON THE COVER The all-new Ford F
Page 5 and 6: A MESSAGE FROM THE PRESIDENT AND CE
Page 7 and 8: Environmental and social goals are
Page 9 and 10: 1 1) Joe Hinrichs, Group Vice Presi
Page 11 and 12: 3 4 Our product strategy remains co
Page 13 and 14: 2 3 UTILITIES The latest One Ford g
Page 15 and 16: LINCOLN CUTTING-EDGE PRODUCTS, PERS
Page 17 and 18: 1) Ford Focus Electric builds on th
Page 19 and 20: SMART As technology becomes ever mo
Page 21 and 22: The key to our projected growth is
Page 23 and 24: THE POWER OF CHOICE With record sal
Page 25 and 26: 1 “A business that makes nothing
Page 27 and 28: FINANCIAL CONTENT * 26 Management
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Employment Data The approximate num
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Stock Performance Graph SEC rules r
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GLOBAL OVERVIEW Automotive Brand Cu
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PROFITABLE GROWTH FOR ALL

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