In the fourth quarter U.S. PAG share was 1.1%. That is down a tenth from 2005, primarily at Volvo. Fourth quarter Europe PAG market share was 2.3%, equal to a year ago. The revenue was $8.6 billion, up more than $600 million from a year ago, reflecting primarily increases at Volvo, and positive mix at Jaguar. Fourth quarter pre-tax profits were $191 million. That is $129 million better than a year ago, and the improvement primarily reflects favorable volume and mix at Volvo due to the new product introductions as well as favorable pricing at Jaguar and Land Rover. These were partly offset by the effect of a weaker U.S. dollar against the European currencies.

Asia-Pacific, Africa and Mazda results were a loss of $84 million.

. Mazda continues to perform well, and for the fourth quarter the company earned $51 until from investment in Mazda and associated operations.

- Asia-Pacific whole sales were up versus 2005. Volume increases in China and India were partly offset by declines in other markets, mainly in Taiwan and Australia. Excluding the volume growth in China which is not included in consolidated revenue, whole sales would have been down by 10,000 units.
- Revenue was $400 million below 2005 in the fourth quarter, mainly reflecting the lower volumes, adverse exchange, and mix. Asia-Pacific reported a loss of $135 million in the fourth quarter. That is $96 million worse than 2005, reflecting adverse volume and mix as well as exchange, partly offset by favorable cost reductions.

Automotive cash and cash flow was $33.9 billion, an increase of $10.3 billion compared with September 30, and an increase of $8.8 billion compared with year end 2005.

That includes $12 billion of financing completed in December. Operating cash flow is $1.8 billion negative.

Earnings at Ford Credit were $406 million.

That is $76 million down from 2005.

- Worldwide 2006 pension expense excluding special items was $1.4 billion, up $200 million from 2005, reflecting lower discount rates and lower expected asset returns. Year-end 2006, U.S. funded plans were overfunded by $1.2 billion, and worldwide pension plans were underfunded by about $8 billion, an improvement of $2.4 billion from year-end 2005. 2006 expense was $2.1 billion, than is down $700 million, reflecting improvements associated with salary benefit plan and retiree health care agreement with the UAW. Total U.S. health care expense including active employees was $3.1 billion or about $1200 per vehicle. Retiree benefit payments were $1.5 billion in 2006, and the VEBA balance was $4.9 billion at year-end 2006. Of this, $1.8 billion is available to be used within the next 18 months pay for retiree benefits, is included in automotive cash.

Fiscal 2006 Highlights

- The total company lost was $3.3 billion including a loss of 5.2 on the auto side and a profit in financial services of over $1.9 billion.
- In the automotive sector, the company lost $5.2 billion. That is about $4.2 billion worse than 2005.
- Net pricing was unfavorable by $1.9 billion. These declines were explained by adverse volume and mix, and higher incentives in North America.

- Costs were $1.4 billion favorable.
- Change was about $6.1 million unfavorable - hedges that were put in place a few years ago.
- Interest was nearly $400 million favorable, primarily reflecting the impact of higher interest rates on cash portfolio.
- Automotive results were a loss of $4.5 billion, and the decline is more than explained by adverse volume and mix and higher incentives in North America.

- Market share was 16%, including retail at 10.8% complete at 5.2%. The company has reduced production of the Taurus, Freestar and Monterey in 2006. Going forward, fleet share will decline.
- Cost performance in North America was $4 billion. Plans for 2008 are to reduce annual operating costs by $5 billion compared with 2005. Much of these savings will be associated with personnel reductions and capacity reductions.

- South America whole sales were 381,000, up 46,000, primarily reflecting stronger industry volumes.
- Revenue was $5.7 billion, reflected higher vehicle volume, a stronger resilient currency and favorable pricing.
- South America posted a pre-tax profit of $551 million. That is an increase of $152 million, and the increase in profits is explained by higher volumes, and that was partly offset by unfavorable expansion

- Europe profits were $469 million, $396 million better than 2005. Results included the favorable impact of about $90 million from several non-recurring factors that individually were immaterial but were largely all in the same direction.

- PAG whole sales results were a loss of $327 million, $238 million worse than in 2005, and the decline is more than explained by prior model warranty accrual adjustments at Jaguar and Land Rover as well as unfavorable currency exchange. Those declines were partly offset by cost reductions in favorable mix and pricing.
- Asia-Pacific, Africa and Mazda results were a loss of $17 million. Mazda continues to perform well, and the company earned $168 million. In the full year decline of $87 million is more than explained by the non-recurrence of gains on investment in Mazda, convertible bonds in 2005.
- Asia-Pacific whole sales increased by 44,000 units compared with 2005, and volume increases of about 90% in China and India were partly offset by volume declines, mainly in Taiwan and Australia.

- Automotive operating cash flow is $5.6 billion negative. The full year change includes net spending of about $300 million favorable, and working capital changes of about $2 billion unfavorable. This reflected lower production volumes on accounts payables, the effect on inventory of having several new product launches at year-end, and changes in value-added tax and receivables collection process in Europe. Differences were $1.3 billion favorable for the full year. Separation programs were an outflow of $1.2 billion and the company contributed $800 million to pension plans worldwide. Earlier this year the company indicated its plan to draw down retiree VEBA over time. That had a favorable impact of $3.4 billion on cash for the full year.
- Ford Credit earned $13 million. The decrease in earnings primarily reflected higher borrowing costs and higher depreciation expense, partly offset by market to market valuations on derivative portfolio. Bankruptcy filings, repossession ratios and loss to receivables ratios all improved compared to the same period last year, and the company ended the year with manage receivables of $148 billion, down $2 billion from a year ago.


Fiscal 2007 Outlook

- The company expects to continue to improve quality, and market share, the company plans to reduce fleet shares in the U.S., but new product introductions should allow stabilizing retail share in the U.S., and growing share in most other regions. The company plans to continue to reduce costs during 2007, and it is on track to deliver $5 billion of cost reductions in north America compared with 2005 by the end of next year. Automotive-related cash outflows would be about $10 billion, and restructuring expenditures would be about $7 billion. These cash outflows include plan to continue to invest in new products at about the same level over the last several years, or about $7 billion annually. The company expects regulatory compliance costs, particularly those for diesel emissions, to continue to increase for the year. Advertising costs should be about flat. All other costs will be declining, driven largely by structural improvements and other product cost efficiencies.