Good morning, ladies and gentlemen. And welcome to the Ford Fourth Quarter Earnings Conference Call hosted by Executive Director, Investor Relations George Sharp. My name is Julie and I am your event manager. (Operator instructions) Now I’d like to hand over to George Sharp. Please go ahead.

Thank you, Julie, and good morning. Welcome to everyone joining us today either by phone or webcast. On behalf of the entire Ford management team, I’d like to thank you for taking the time to be with us this morning so we can provide you with additional details of our fourth quarter and full year 2013 financial results. Presenting today are Alan Mulally, President and CEO of Ford and Bob Shanks, Chief Financial Officer. Also participating are Mark Fields, Chief Operating Officer; Stuart Rowley, Corporate Controller; Neil Schloss, Corporate Treasurer; Paul Andonian, Director of Accounting; and Mike Seneski, Ford Credit CFO. Copies of this morning’s press release and presentation slides are available on Ford’s investor and media website. Please note that the financial results discussed today are preliminary and include references to non-GAAP financial measures. Final data will be included in our Form 10-K and any non-GAAP financial measures are reconciled to the U.S. GAAP equivalent in the appendix of 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 be different. The most significant factors that could affect future results are summarized at the end of this presentation and detailed in our SEC filings. With that, I’d now like to turn the presentation over to Alan.

Thank you, George and good morning to everyone. We are pleased to review our fourth quarter and full year 2013 business performance and the progress we continue to make in delivering our One Ford plan. We will also reconfirm today our major plan assumptions and key metrics for 2014. Let’s turn to the first slide, please. The foundation of everything we do is our One Ford plan shown here. Across the Ford enterprise, we continue to aggressively restructure the business to operate profitably at current demand and the changing model mix to accelerate development of new products our customers want and value, finance our plan and improve our balance sheet, and work together effectively as one team leveraging our global assets. Our commitment remains to serve customers in all markets with a full family of best-in-class vehicles, small, medium, and large cars, utilities, and trucks, delivering profitable growth for all. We continued to make good progress towards this goal in the fourth quarter, which we will now review starting on slide two. The company had a solid fourth quarter, achieving our 18 consecutive profitable quarter. Automotive operating-related cash flow was positive and liquidity remains strong. The topline grew year-over-year for the fifth consecutive quarter, with market share gains both in the U.S. and in Asia-Pacific and Africa where we realized record share. Among our business units, North America delivered a strong profit, Asia-Pacific and Africa earned a record profit for the fourth quarter, South America incurred a loss as expected and Europe reduced its loss compared with last year. Ford Credit once again contributed solid profits. For the full year, the company’s pre-tax operating profit was among the best in our history and automotive operating-related cash flow was a record. These full year results reflect an automotive sector and operating…

Thanks, Alan, and good morning, everyone. Starting at the top of slide four, fourth quarter wholesale volume was $1.6 million units, up 76,000 units or 5% from year ago. And revenue was $37.6 billion, up $1.3 billion or 4%. Pre-tax profit was $1.3 million, excluding special items, $402 million lower than a year ago. After-tax earnings per share at $0.31 were unchanged. Net income attributable to Ford, including pre-tax special item charges of $311 million and favorable tax special items of $2.1 million was $3 million, $1.4 million higher than year ago. Earnings were $0.74 a share, up $0.34. Automotive operating-related cash flow was $0.5 billion, marking the 15th consecutive quarter of positive performance. Automotive gross cash was $24.8 billion, exceeding debt by $9.1 billion. For the full year, vehicle wholesales increased by 12% from a year ago and revenue improved 10%. Pre-tax operating profit, excluding special items, was $8.6 billion, a $600 million improvement. Net income was $7.2 billion, $1.5 billion higher. Slide 5 walks our pre-tax operating results and net income. And we’ll focus here our comments on the fourth quarter. As just mentioned, total company pre-tax operating profit was $1.3 billion. Pre-tax special item charges of $311 million included $156 million for separation-related actions, primarily in Europe, to support our transformation plan, and $155 million associated with our now completed U.S. salaried lump sum payout program as part of our pension derisking strategy. You can find additional detail on the special items in the Appendix 3 and on the pension derisking in Appendix 6. We also benefitted in the quarter through $2.1 billion of tax special items, including the impact of a favorable increase in deferred tax assets related to investments in our European operations and the release of valuation allowances held against U.S. state and local…

Thank you, Bob. Slide 28 summarizes our view of the business environment for 2014. We project global economic growth to be in the 2.5% to 3% range and global industry sales to be in the 85 million to 90 million unit ranges. U.S. economic growth is projected to be in the 2.5% to 3% range with the industry sales supported our continued improvement in the housing sector and replacement demand as a result of the older areas of the vehicles on the road. Policy uncertainty now has reduced with the federal budget agreement and the Federal Reserve policy announcement in December. In South America, Brazil’s economy is relatively weak with the low trend growth, while in Argentina and Venezuela there are escalating risk as both the economies are weak with unclear economic policy direction. In Europe, on the other hand, economic indicators are stabilizing. For 2014, we expect GDP growth of 1% in the Euro area and 2% in the UK. The European Central Bank goes passed the interest rate to quarter 0.25% in November and has indicated it will keep rates low for an extended period. The Bank of England also has indicated it will keep rates low until the unemployment rate has declined. In Asia Pacific and Africa, stable economic growth is expected this year. In China as it cherries out the structure reform transitions to a consumption lead economy. Growth in India is expected to improve modestly as the country moves beyond election uncertainty and a new government assures in more pro-growth economic policy. Overall, despite challenges, we expect global economic growth to continue in 2014. Slide 29, summarizes our 2014 outlook for our automotive sector and Ford Credit. First, we expect North America to be strongly profitable, but at a lower level than 2013 with an…

Thanks, Alan. Now we’ll open the lines for about a 45 minute Q&A session. We’ll begin with questions from the investment community and then take questions from the media. Now in order to allow for as many participants as possible within this timeframe, please keep your questions brief and please avoid asking more than two. Julie, can we have the first question please?

You can indeed. And the first question from the line of Adam Jonas from Morgan Stanley. Please go ahead.

Thank you very much indeed, just a few questions. First could you take this opportunity to describe how the F-150 truck change over, given the 11 weeks of production downturn that you highlighted in the prepared remarks, how that can impact North American results this year by quarter even qualitatively? Any extra guide qualitatively could be very helpful given the potential for significant disruption quarter to quarter.

Sure, Adam. Okay Adam, it's 13 weeks in total. It’s 11 at Dearborn and two at Kansas City. And I think it's first of all, stepping back. But I think it’s fair to say that when you look at the decline year-over-year that we’re expecting in North America’s results, it’s largely attributable to the F-Series. And that’s probably about all we’re going to say in terms of the financial affect of F-Series. In terms of [counterization], I’m going to answer that somewhat differently because we didn’t provide any specific commentary today on [counterization]. I was expecting that you guys would ask about that. I think it could atypical year and I think it’s because of the product launches. It's also because of the uncertainties around particularly South America from the emerging economies and the effect that they could have on us quarter-by-quarter because we said in New York and similar internal assumptions, we’re assuming some sort of evaluation that will be able to reflect in Venezuela. But given the recent announcement from general government, they are not clear exactly how that would happen if they set up this two-tier network and how we’d be able to capture that more accurate value of the currency and let that flow through to a devaluation. So I think it's going to be an atypical year and what I plan to do is as we go through these quarter and we kind of see where you guys are if we think we need to kind of nudge it one way or the other we'll try to find an opportunity to do that in the course of that quarter.

Thanks Bob. Yeah, that would be very helpful given the potential disruption and of course to get the investors to kind of more think about 2015 and get some comfort this year, thanks. And just the second question then; on the Turkish Lira and the economy, can you guys remind us on your open position in Turkey. Are you net long or net short Lira given the export of transit and if so it maybe more simply, if the Lira were to weaken substantially or stay weak, does that help your exports more than it hurts your local sales in terms of translation of profits? Thanks.

Well, some of that depends on the degree to which we can price in Turkey for that. But I think what it probably means is that it will hurt the profitability of the Ford Otosan joint venture, but could have benefits or at least more balance if you want to cross Ford because so much of what they build in Turkey is exported back into Ford Europe.

So you're not highlighting any particular direction. One way or the other would you say it’s kind of balanced over all, the impact on the company?

I think maybe slightly negative. We actually had some negative effects within the year-over-year performance in Europe related to the Turkish Lira.

Great, thanks very much.

Thanks Adam.

Thank you for that. (Operator Instructions) The next question comes from the line of Brian Johnson from Barclays. Please go ahead sir.

Talking about capacity actions and some of the cost of those both in our ‘14, for later years, wondering a couple of things. One just strategically given that we seem to be in era of cheap oil given the U.S. domestic production, ageing demographics and given that your planned capacity utilization seems to be running better in trucks, SUVs and in cars. Are you thinking about cars any differently, the balance between cars, SUVs and truck any differently than you might have been say three or four years ago. And secondly, are any of these capacity actions to have SUV capacity or to make more of your factories flexible between the SUV and car variance of your platforms? Thanks.

You bet, Brian, Mark will take a lead on that.

Well, I think, fundamentally as you know, as you see in the past, we view the price of fuel overtime to rise, that’s why we’ve been so focused on fuel economy as a reason to buy for Ford. So I think we have not changed our view on that. I think, we’re well positioned from a capacity standpoint. As you know, we’ve been designing our manufacturing plans to be very flexible. And also as the same time as we mentioned before, we now with our global One Ford products, we also have more flexibility on where that production comes from, depending upon the region. So I think we’re comfortable with our assumptions right now and we have the flexibility if we see changes.

So what are the capacity actions here contemplating?

Well, as we said from our capacity standpoint here in North America, we have six facilities that will have some capacity actions this year. Globally, as we mention we’re opening three plants this year, two in China, one in Brazil and that’s part of overall in Asia Pacific or 10 plants we’ve been building which we’ve opened four so far and six to go. So as we grow the business, we think that we’re making sure we have the appropriate amount of capacity and flexibility to use the assets to the greatest extent.

So are you going to make more plants in North America flexible, let’s say focus estate?

Well, I think, majority of our plants are flexible here in the U.S. We’ll talk about -- we won’t get into additional details of what we’re doing but clearly our whole approach of being able to match production to demand and do that flexibility as you see in a number of plants, we’ll continue to walk on that path.

Okay. Thanks.

Thanks Brian.

Thank you for your question. The next question comes from the line of Joe Spak from RBC Capital Market. Please go ahead.

Good morning everyone. Thanks for taking my question. Just you guys have talked a lot in the past about the ongoing negative mix shift in North America and if we just reviewing the year that totaled about $1 billion this year during which where trucks significantly outpaced cargo. So I’m just trying to get a sense from you guys. Are we through the largest part of this year-over-year decline this year or does it actually get worst from 2013 looking ahead? RBC Capital Market: Good morning everyone. Thanks for taking my question. Just you guys have talked a lot in the past about the ongoing negative mix shift in North America and if we just reviewing the year that totaled about $1 billion this year during which where trucks significantly outpaced cargo. So I’m just trying to get a sense from you guys. Are we through the largest part of this year-over-year decline this year or does it actually get worst from 2013 looking ahead?

This is Bob. How are you today?

Good. RBC Capital Market: Good.

Good. Yeah. We did have a negative effect. Year-over-year, it wasn’t as large as you indicate. I’m just checking my factory here. We’re looking on a year-over-year basis of about eight-tenths and only about six-tenths of that was mixed among vehicles which is what you're talking about.

Okay. RBC Capital Market: Okay.

And that was largely the fact that we had such great success with our super segment vehicles. S-series were less as a percent of the total. It actually grew it share of the segment and in the growing segment, so it's a big positive for us. So I think as we talk about this before, Joe, I think it’s a positive. We’re focused in a one element of change which is mixed but its more growth in total. And so while the margins of those vehicles are as great as they are in the larger vehicles, it’s more in total in terms of revenue and profitability and certainly helping our returns. And that is our plan going forward in terms of extending our portfolio and particularly focusing on all segments, not just trucks as we did historically.

Stuart, would you classify where we are on that path along the shift as through the larger part of the steeper decline? RBC Capital Market: Stuart, would you classify where we are on that path along the shift as through the larger part of the steeper decline?

I wouldn’t expect to see that type of the set in 2014. But we’ll have to wait and see in terms of what happens after that.

Okay. And then just maybe point of clarification for me on the outlook. When you are talking about Asia Pacific about equal, is that what the actual printed results or I’m assuming eventually we’re going to get some sort of split up between with the Middle East and Africa being separated out. So maybe you could just pull out a little bit of clarification there? RBC Capital Market: Okay. And then just maybe point of clarification for me on the outlook. When you are talking about Asia Pacific about equal, is that what the actual printed results or I’m assuming eventually we’re going to get some sort of split up between with the Middle East and Africa being separated out. So maybe you could just pull out a little bit of clarification there?

Yeah, that’s with or without Middle East broken out; we probably would have given the same guidance.

Okay. RBC Capital Market: Okay.

And what we’re planning that we’re going to have a Ford University event later in the quarter and one of the things that we’ll do and I think we’re going to do this in the 10-Q as well as to provide some insights in terms of, what the impact of that changes on the affected business units.

Okay, thank you. RBC Capital Market: Okay, thank you.

Thank you.

Thank you for your question. The next question comes from the line of Matthew Stover from Guggenheim. Please go ahead.

(Inaudible)

We can't hear you, Matt?

We'll go on to the next question, Operator.

Matt are you there?

Why don’t we move to another analyst?

We have now John Murphy from Bank of America.

Good morning guys, can you hear me?

You bet John, loud and clear.

First question; as we moved in the declining in margin in North America from 2013 to 2014, you highlighted the F-150 as the major reason for the -- you had a change over there, it’s the major reason for the decline. As we get into ‘15 and ‘16, are there any other structural factors you think are going on in the market or in the business that shouldn’t allow you to get back to that 10% margin range we’ve seen for the last two years?

Well, we still think that the target of 8% to 10% that we’ve talked about is appropriate. I think as we go forward, yeah, we just had the question from Joe I think, we’ll see pressure from a higher mix of smaller vehicles and we talked about that before. The pressure from increasing cost to meet regulatory requirements and the extent to which we can price or not to recover those as well. And then as you recall in the discussion that we had in New York in December, we’re building into ’14, we wanted to see how long does it last, but we're building in a proper pricing environment because of the benefits that Japanese manufacturers have from a weaker Yen. That can change over time, but we kind of built that in going forward as well. So we’re still comfortable with 8% to 10%, but those are types of examples of factors that, sometimes we have quarter that's well over something like that, we all get excited and think that we’re on a some new step level of performance in North America. It’s these types of factors that we think are going to keep us in that 8% to 10% range.

12% is a good number in a quarter. You get excited about even if it's just for a quarter.

I would love to have that for and we agree.

Second question on the U.S. pension plan; I mean, given that you’re now probably 5% underfunded or maybe even a little bit less than that and the trajectory of rates should be reasonably good for that funded status going forward. Do you think there is the potential to free this plan or potentially cut a deal with the UAW similar to what you did in 2007 with your Health Care Trust? It just seems like you're getting to a point where you have other parties that might be interested in taking this on and sort of taking it out of the company and really eliminating their risk in the equation. Just seems like, given that the funding status has improved so much, you might have some options on the table. Have you had those discussions or have you thought about potential structural solutions here now that you’re getting closer to fully funded?

No, we can comment on discussions that we may or may not be having with UAW on this. That would be private between us. It’s true that -- we’re finally -- the light isn’t at the end of the tunnel in terms of the funded status and all of our global funded plans and we expect to get there by this decade. One thing I would say is John is that our objective is to get to a funding status on an economic basis, not just on a U.S. GAAP basis. So we have to go a little bit beyond in terms of what you’d see from these data which are U.S. GAAP. But we’re close. I think what it really means is that we don’t have to contribute as much over the next two or three years and we talked about that in December and now maybe about a billion to two a year, maybe at the low end of that range to get the fund status. And then, of course, there are options, because once it’s fully funded, you can think about some of the things that you’ve talked about. There is always a premium involved in that. I don’t know if that would make sense with one investor or cash and outlay, but it’s certainly an option that we don’t have any plans to do that at this time.

Okay. And if I could just sneak in one follow-up question on the F-150, traditionally when you go through a changeover that is large, there is a period, a quarter or maybe even few where there is an inventory buffer that’s builds ahead of the changeover and then there is also some pricing actions ultimately to clear out that inventory. Do you think that you are going to manage this launch differently than that sort of historical pattern where you actually might be in period where the inventory is really incredibly light or will you build this buffer? I’m just trying to understand this because it is -- if it’s a big issue because if you don’t build that buffer, the industry can be wildly short of pickup trucks and pricing of pickup trucks should be very strong this year. So just really trying to understand if you are going to build that inventory buffer or not?

Well, I think, overall, John, it’s a good question. As you know, we have a lot of experience with this going back to the current generation of our F-150 which we did about four, five years ago and then the new generation five years before that where we have staggered launches. So I think what you are going to expect from us is we have assumptions obviously around the industry and around segmentation. So I think we are well-positioned from a stock standpoint to support dealers throughout the year. You may see some months where it might be a bit elevated depending upon the sales rate but we are manufacturing out our accessories of production this year and we feel comfortable with our assumptions.

Move on to the next question please.

The next question comes from the line of Ryan Brinkman from J.P. Morgan. Please go ahead, sir.

Hi. Good morning. Thanks for taking my question.

You bet, Ryan.

You touched on Argentina, obviously, it’s still an evolving situation. But could you perhaps help us a bit more in the potential near-term negative impact, perhaps by relying maybe how much cash is in that country relative to, a place like Venezuela? And then, I am curious, if you see any potential longer term benefit, given that you export a lot of vehicles, I think, the folks from range from there to Brazil and other places too?

Ryan, your question actually highlights why we look at South America and what’s going on now on it, just trying discuss exactly what’s going to happen, because all those things are in play and it depends to the extend in which we comprise, it depends to the extend, the government could take other actions as they did in Venezuela. We have been able to get cash out of Argentina away, we don’t have the same type of exposure that, that we face in Venezuela, where we have been unable to get the cash out. We still have about $700 million of cash sitting in Venezuela, whereas in the case of Argentina cash at minimal impact our local balance sheet relative balanced. So don’t take that issue. There is also positive, I mean, the thing is interesting as Argentineans trying to store value and something that’s more durable has actually created maybe a bit of the bubble in the overall industry, pricing has been good there recently and because people want to purchase their currency or their value and something car like a vehicle, so it’s actually been a positive. But, overall, clearly, now what we are seeing is much, much higher labor inflation, much, much higher level of devaluation, we will have to see how the government chooses to respond to that in term of any constraints they put on since we try to manage the business. Longer term, we could make Argentina more competitive and as you point out we do export from there, so that would be a positive. But we just have to wait and see how all that mixes out with the time it is. I think you have highlighted something, I wanted to underscore today, which is to repeat maybe with a bit more emphasis than what I even said in December, which is we have got an outlook for South America about the same as what we saw last year, but I would just underscore again the level of risk that we are going to have to manage particularly over the next few months in Argentina and Venezuela. We expect to see how that all sorts out. I would remain you we have been in Argentina 100 years, so we have been through this before, but it takes a lot of work, we have got folks no matter even that type of environment.

Okay. Very helpful and interesting. Then just second and last question, I understand that you just increase your dividend sizably, but also that $36 billion in liquidity your $6 billion over your target with a lot of your outside pension contributions now behind you. So how should we think about the timeline of progressing toward your $30 billion target? Thank you.

Yeah. We will go back to what we have talked about in August as the conference relate on our cap strategy. We still have ahead of us about $6 billion reduction in automotive debt, so if you remember we talked about getting down to about 10 and we’re 15 -- 157 I think at the end of last year, so that's got to be handled. Going back to the earlier answer on pensions, we still have $1billion to $2 billion a year over the next two or three years, can manage there. We also -- I'll remind you we’ve got the -- one of the large convertibles that needs to be taken care towards the end of this year that we worked about a $1.6 billion or so depends on the stock price to take care of that if we were to use cash as opposed to stock and so that option is on the table. So I think if you take all those together, you’re going to find us getting down to $36 billion and cash $20 billion to $21 billion.

Great, thanks.

Thank you for your question. The next question comes from the line Rod Lache from Deutsche Bank. Please go ahead sir.

Good morning, everybody.

Hey Rod.

You mentioned earlier and said this maybe a week or two ago that you’re looking to expand capacity at six plants in North America. Can you clarify is F-150 among the products that you’re looking to build capacity for you basically holding at the three shifts capacity at two plants?

Mark?

Yeah. Rod. We'll just reiterate on the F-150. As you know we had a third crew on Kansas City last year. So that is not one of the plants. There were weak in their capacity, we have sufficient amount of capacity at the F-Series plants. It’s really some of our other plants and some of it is adding capacity, some of it is changing line rates and those type of things.

Okay. So if you were thinking about the drivers of North American earnings beyond 2014, obviously the thirteen weeks of downtime for F-Series doesn’t recur an opportunity for truck volume beyond that or you basically kept out and is there an opportunity to improve contribution margins or is that something that you would think as more difficult given the regulatory requirements?

I think -- this is Bob. I think we’ll see -- our expectations are that we’ll see industry growth. We’re still making investments in products that could include expansion in the portfolio, we'll have to wait and see. And we’re working to strengthen the brand and to make sure that we can get more out of every unit that we sell in terms of revenue. So I think -- and of course F series getting a back up to speed after the changeover to the all-new F-150, obviously will put that back on track. So I think it just -- it’s growth across the entire portfolio supported by a growing industry.

Okay. And just lastly, structural costs grows quite a bit in 2013 and historically you’ve given us some feeling for magnitude and regional increases and structural cost. Do you have any thoughts you can pass along for 2014?

Yeah, I think we’ll see another year of increase in structural cost as we continue to grow across the world. It just will be quite to a level that we saw in 2013.

Okay. All right, thank you.

Thanks, Rod.

Thank you for your question. The next question comes from the line of George Galliers from the ISI Group. Please go ahead sir.

Yeah, good morning and thanks for taking my question. I had two questions on Europe, firstly, you’re making big strides in retail share, but commented that the course was weaker sequentially dude to a seasonal slowdown in the UK. How much of your retail share gain is down you exposure to the UK, which is clearly been outperforming and therefore not structural and how -- what do you see as a sustainable level of retail share going forward?

Yeah, I don’t know the answer right off the top of my head. As you know, we have a higher share in the UK than we do on average across Europe. So certainly the fact that the UK industry has outperformed the rest of Europe has benefited us. But, I don’t think that’s a major part of the share increase at all, it’s largely due to the retail focus that we’ve had in Europe and across a number of different vehicles including Fiesta Kuga, we’ve got Eureka Ford sport coming in and so forth. So I think it’s largely around the focus of the team, the new products that we’re rolling out, 40% to 45% of the lineup was new this year in terms of what we told. So I think that’s a bigger driver than the effects of the UK although that actually didn't help us.

I would just also add on the second part of your question on growing our retail shares going forward. It’s all based obviously on getting great product to customers and you’ve heard in the past our 25 vehicles that we’ve been launching in the last five years. So we launched 11 last year, we are going to launch 12 this year. So that gives you a little indication of the product part of the plan and how we are supporting new products to the marketplace. A little over 40% of the sales in cost lining Europe in 2013 was from new products or significantly refreshed products. And when you look at our order banks, December year-over-year it’s up about slightly less than 30%. So we feel as long as we can continue to deliver these great products to customers, we are very encouraged by the response from them. And importantly our dealers are feeling more encouraged. They improved their profitability last year and also importantly they have stepped up and over 2,500 dealers have agreed to upgrade their facilities over the next year or two. So they are also very encouraged in anticipation of the growth. And finally from a brand standpoint, getting back to our Europe transformation plan around product brand and costs. On the brand front, the brand is getting stronger based on the metrics that we see. Pricing is improving versus the competitors. And as you know, we’ve gotten our stocks in line, particularly along the lines of self-funded stocks which are down significantly resulting in our brand.

Excellent. That all sounds very positive. Actually just sort of accelerating on from start, my second question was could you provide some color on your European forecast where you have production down slightly year-on-year in Q1? It just seems a bit conservative to me given stock today is around 5% higher than Q1 last year and as you mentioned your stock levels are down considerably based year-on-year and sequentially.

Well, right now when you look at our stock levels, they are broadly in line with our plan. Obviously it’s part of our process. We look at the sellers, both across Europe and within each country on a monthly basis when we make appropriate production changes. So we will stick exactly to our plan of matching production to demand and as we see the industry, potentially as it picks up we will produce more and if now or just our stocks accordingly. Can we have the next question, please?

Yeah. The next question comes from the line of Itay Michaeli from Citigroup. Please go ahead.

Great. Thanks. Good morning.

Good morning.

Bob, just a point of clarification, with the improvement in the pension in 2013, can you provide any outlook for pension expense in 2014, any thoughts with North America and international if you have it?

As you saw on the slide 26, the pension expense was $1.6 billion. We expect that to be lower in 2014, reflecting the improved tonnage status.

Okay. And expect to be more in North America given the contributions, or would that improvement be a bit more broad based geographically?

Mainly, North America and Europe.

Okay. Perfect. And then just the second question, hopefully we could do a bit more of a big bucket walk into the profit outlook for Europe in 2014. I know you’ve had some slight market growth assumption. I think there is maybe a $50 million tailwind from lower restructuring. Any other big buckets in terms of what you are expecting, or are you kind of modeling in for pricing and maybe, other cost buckets we should think about for Europe in 2014?

Just very broadly, I mean, the way that I would think about Europe and I would put into any dimension the actual improvement that we are looking at, at least not at this point in time. But we are going to see positive market factors in Europe in 2014. And we would expect that to be both and sort of more on the mix and I think we will do better on net pricing. Going to back to Mark’s comments around all the new products as well as the fact that the markets seems to be slightly turning, which is going to help a bit. We don’t expect to see too much change in total one cost and so one of that will just flow through.

That’s helpful. Thank you.

Thank you for your question. (Operator Instructions) We are now switching to media. (Operator Instructions) First question comes from the line of Craig Trudell from Bloomberg News. Please go ahead, sir.

Hi, good morning. I have a question related to the guidance for pricing for North America and the comments about the Yen. Ford has been pressuring the government to include some provisions related to currency issues in the TPP trade deal. I wonder to what extent you can talk about just how respective you’re sort of feeling -- how receptive the regulators are about to that as they work on this deal?

Craig, this is Alan. We’re very positive with the response and discussions that are taking place, which is clearly the awareness of the global interdependencies and the importance of global rule based trading is really, really becoming clear to everybody. So, currency discipline and having the markets set the currency rates is going to be very well understood and the importance of it. So we are very pleased about the dialogue that is going on now, as you pointed out with TPP.

Great, thank you.

You’re welcome.

Thank you for your question. The next question comes from the line of Alisa Priddle from Detroit Free Press. Please go ahead.

Good morning, gentlemen. Can you hear me?

We can Alisa, it sounds good.

Excellent. I just wanted to ask, you were saying that basically all of your metrics were met except for quality. I don’t know if you’re able to quantify sort of how far off you are and more importantly how you would -- are addressing up for 2014 and now you think this year will be better on that front?

Hi Alisa, it’s Mark. When you look at our quality performances, as we mentioned the three big areas where we’ve talked about before in North America around MyFord Touch and transmissions and [some security items], we’ve made a lot of progress, interestingly enough, significant progress on MyFord Touch. At the same time, we’ve seen a much higher take rate of MyFord Touch. So that has tempered our improvement that we’ve seen there. I can tell you that we’re all intensely focused on continuing to improve our quality, not only hear in the U.S. of course during the year, we have a lot of launches, but when you look in South America we had some issues at the end of 2012. We think we’re through that. We’ve had very good performance in Europe as well as Asia Pacific. So we’re just going to stay intensely focused on that and keep listening to our customers and improving our quality. We’re absolutely committed to that.

Because it’s -- with the focus that has been coming down from the top for a number of years and as you say this is going to be an even tougher year. So I don’t know -- just try to figure out what changes to tackle it?

I think (inaudible) -- as we mentioned consistent commitment to this. Joe Hendrix and the North American team are very focused on this particularly around the launches as well as the implants controllable. We’re very confident, we’re working on the right items and we’ll continue to do that going forward.

The next question comes from the line of Karl Henkel from The Detroit News. Please go ahead sir. Seems to be some interference on the caller’s line. Karl, are you there?

I am, yes.

Please go ahead, sir.

Sorry about that. The pie chart that normally is on Slide 1 of your presentations and the breakdown between Americas, Europe and Asia Pacific and Africa, I’m just wondering with the Middle East and Africa breakout now, how we should kind of view that break down moving forward. And then the second question is, we brought in the F-Series and more on the powertrain side. I know you’re adding the new EcoBoost engine for the lineup, but I haven’t quite heard, are you saying anything about where that incremental production is going to come in at and how you’re going to -- I guess worked at situation during the kind of extended crossover from this generation to the next generation.

Karl, I’ll take the, kind of the first one and Mark can maybe help you out in the F-Series question. I think the way to think about Middle East and Africa and obviously we'll talk more about that as the year progresses. Is this maybe about 70%, 80% the size of South America in terms of the industrial volume? We’ve had about 5%, 5.5% market share. So when you think about where the volume will come from, you’ll see some volume coming from our North America and that was largely going towards Middle East. So we will see some volume coming out of Europe because that volume largely was going into North Africa and into Israel, and other parts of Middle East and then you’ll see some volume coming out of Asia Pacific Africa and as far as the Ranger, that was exported from both AAT and Thailand and a little bit in South Africa. So that will all collect into what is -- but will be our new business unit in Middle East and Africa. So it was only about, maybe 250,000 units to 20,000 units something of that range and you break it among the three, it’s not going to have a big effect immediately. What we are really targeting is the huge growth opportunity. That region was about 3 billion of customers that represents in the year ahead. If there is (inaudible) income continued to rise.

And, Carl, the second part of your question is part of the [Escape’s] launch capability. We stressed capability, so we have the four new powertrain, like two of all new when you mentioned the 27, our EcoBoost. We have a new V-6, naturally aspirated and of course the 5-liter as well as the 3.5-liter EcoBoost. So from the manufacturing standpoint, we’re not going to discuss the 2.7 today but we will in the future as we get closer to the launch.

Thank you.

Thanks, Carl.

Thank you for your question. The next question comes from the line of Mike Ramsey from the Wall Street Journal. Please go ahead, sir.

Hi. Good morning everybody. I, mainly just wanted to ask the question and maybe Bob, or anyone who want to take this. In terms of the heavy investment cycle for new products, you have a large meat of the share. If we were to look out over the next couple of years, it’s just your heaviest year for big investments around the world and will it ease up in the next couple years after this, or are you going to stay on this kind of levels investment for a few years out?

Well, what we’ve guided is, with the mid decade about $7.5 billion of CapEx for years and months, we would expect to the years ahead. That will fluctuate little bit around that and as we find more and more growth opportunities, hopefully, I hope we have the chance to invest more into even more growth and that’s actually what happened on June ’11. And June 11, we guided to $6 billion. And as we understood the opportunities of the ONE Ford plan, we just found so many more ways in which we were going to be able to drive the business growth slower and that, results in the increase in spending. But I think $7.5 million plus or minus over the next two to three years is probably about right.

In terms of the cash flow growth, I’m curious whether the cash flow situations expected to maybe improve out after this year in terms of positive net cash flow?

Yeah, I would expect that.

Okay. Cool. Thanks.

Thanks Mike. That thing is very helpful. Great summary, Mike.

Thank you for your question. The next question comes from the line of Dee-Ann Durbin from Associated Press. Please go ahead.

Good morning. Thanks for taking the call. On slide 23, Bob, you talked about unfavorable residual and lower than expected auction values impacting Ford Credit. Can you just explain that a little bit, what was going on there?

Yeah. I’ll give a brief comment and then, Mike Seneski can fill in. When you look at what happened, this is largely -- if you look at the previous slide, it all happened in the fourth quarter. And part of what happened is we had a reduction in auction values, but also what you had -- last year, if you remember we had hurricane Sandy that really devastated northeast. And the northeast is an area of high lease take rates. And so that storm had the affect of creating, if you were a little bubble if you will have auction values. Now the year-over-year basis, we kind of normalized versus that and so on a comparative basis, you're seeing a big decline. I think that explains lot of what Mike supplements.

That’s exactly right, Bob. Overall, the industry for late model used vehicles was down pretty substantially and is because you’ve got a strange comparison. Hurricane Sandy really increased values for those vehicles, not only in the fourth quarter of 2012 but also in the first quarter of 2013. So we don't think this signals any type of bad news trend for our residuals and we will keep a good watch on it going forward.

Okay. Thank you. That helps us plan. Thanks a lot.

Thank you for your question. The next question comes from the line of Joann Muller from Forbes.

[Ian] asked exactly the question I was going to ask. So thank you very much. That’s all.

We now go back to the investors’ questions. And the first question comes from the line of Emmanuel Rosner from CLSA.

Wanted to ask you a point of clarification on the tax rate in the quarter. Obviously you had a big tax benefit which you excluded from the operating results. But given the operating results, it looks like the tax charge was quite low. I apologize if you (inaudible) already. But could you please explain what happened?

No, on the operating side, we had a benefit from a change in our repatriation plans of distributions from Ford Credit outside the U.S. So we have booked (inaudible) assumption that we would make that repatriation but we didn’t through some restructuring in Europe leaving the cash there. So that enabled us to -- we had to reverse that, if you will, into the fourth quarter. The other thing that happened on the special front, which is about $2.1 billion good news which as you said was not included in the operating, about $1 billion of (inaudible) have to do with investments in our European legal entities which enabled us to increase our deferred tax assets. And then in addition to that, we had about $440 million, good news that was a tail of what we did back in December of 2011. At that time, we released most of our valuation allowances against our U.S. deferred tax assets but not all. The ones we didn’t release were largely related to U.S. state and local income taxes. And (inaudible) concluded that as we look ahead that we’re going to be able to utilize those assets that we have released valuation allowance against that which enable to defer tax assets that show up, if you will, on the balance sheet and flow-through income. So those two explain largely $2.1 billion.

And what I would like to do is answer my own question. So my own question is, why are your results in the fourth quarter in Europe so much worse than the third quarter, as I kept waiting for someone to ask the question. Since you didn’t, I am going to ask it for you. And the answer, as I said, is largely around the fact that -- and this has been (inaudible) couple. We had about $110 million of a number of different one-time [comp clean-up] factors that occurred in the fourth quarter. We had about $50 million to $60 million of favorable tax in the third quarter which I did not highlight, because it’s not material, we normally wouldn’t talk about something that’s small (inaudible) getting caught on a quarter-to-quarter basis, going from favorable to unfavorable. But about 50% of the impact -- and this is about $115 million or so of seasonality, so it’s about 34% of the difference, which is largely a cost but also there is a seasonal effect in Europe in terms of how the profitability of parts and service. So that basically explains most of it and the balance is related to higher restructuring in the fourth quarter versus the third. So I wanted to tell you that because I know that, that’s probably going to be a question that you guys will be coming back and talking to George and John as a team, I just wanted to get it out there publicly so that they could talk with you about that.

All right. Well that was not going to be my second question. But so still very helpful. Just wanted to get back on the North American margin guidance, I understand that you will provide some helpful guidance throughout the year to help us in the right direction. But when I think about the full year number of 8% to 9% margin and the fact that your downtime seems to be more weighted towards the second half, how much below this 8% to 9% can margin be in any given period?

I would not provide any guidance on that. But I would like to maybe share one other thing with you that maybe will help you guys as you’re thinking about the first quarter. One of the things that we’ve noted is that in general you guys are expecting higher wholesales relative to production than what we are seeing. And I just wanted to let you know that we expect to see bigger gap between production and wholesales in North America in the first quarter than what you’re presently expecting on average. And that’s because we’ve got increased export, some of that is a phenomenon of Middle East that I talked about which those units now no longer will be in wholesales for North America at least the ones that they send over and that will be joined us in Middle East and Africa. And we also have normal inventory so far in the year end shutdown. So just wanted to make your guys aware of that as we’re kind of looking at your analysis, which we do.

Right. Thanks for your answer and thanks for your question.

Thank you.

I hope I answered my own question.

Thank you. Okay. With that, we’ll wrap today’s session. I’d like to thank everyone and we’re really glad that you’re able to join us.

Thank you, George. Ladies and gentlemen that concludes your conference call for today. You may now disconnect. Thank you for joining. Have a great day.