LEWIS BOOTH: If I'myour definition of a rock star, you guys need to get alife. Okay. I'm delighted tobe here, and I was just sitting on the plane last night rehearsingthe presentation. I thought, I'm really gladit's this year we're doing it rather than two years ago when Ibecame CFO, because two years ago it was just after Lehman Brothershad gone bankrupt, and we were really beginning to wonder what therest of the world was going to looklike.

So I'm going to try and take you through the turbulenttimes we've been navigating, actually for about the last five yearsfor Ford. Because we had our own turbulencebefore the world economy fell apart. I'vesimplified, I'm going to talk about the automotive companyonly. I'm not going to talk about how we keptFord Credit Finance, because frankly that's also been a prettyinteresting tightrope walk, but I couldn't cover all ofthat. I'm not going to cover selling Jaguar LandRover to Toyota and selling Volvo to Geely, because again that'sanother story.

So you know I'm just going to talk about Ford, and I'mgoing to present on behalf of not just the team I have working forme now, but also the team that was in place right after the startof the journey, including my predecessor, DonLeclair.

If you can't sit in the back, there's plenty of room up atthe front, so there's no problem makingspace.

If you see how our turbulent times started, we were in aperiod in 2006 where the auto industry in the U.S. was running atabout 16 or 17 million units, a pretty healthy industrysize. Ford was actually going through cashfairly comprehensively at that stage, but things began to feel abit weaker in 2007 as the economy began to feel that there weresigns that all wasn't well. And then we sawrapid rises in oil and commodity prices at the end of2007.

Get to 2008, the financial crisis is beginning tostart. Lehman files in September, and then, youknow, the slide says credit markets tighten. Well, actually credit markets closed for quite sometime. And then in about March the S&Pbottomed, and according to the Economist, the economicrecovery started in the second quarter of 2009. All I can tell you is that it certainly didn't feel like it in thesecond quarter of 2009, and for our industry we certainly weren'tin a recovery stage at that.

So we had lots and lots of turbulence beginning todevelop. As you can see, oil and commodityprices started to rise. Gas started going up to$4 a gallon in the U.S. We saw the industrysales dropping, and for Ford even worse than that, we saw vehiclemix shifts moving away from trucks and into smallcars. It played to the import brand strength andit played to the domestic brands' weaknesses. And you can see we dropped down from 16 or 17 million units down toa low of 9 1/2 million units. That spike in thelate summer of 2009 was Cash for Clunkers, but the recovery reallyfrom the trough was very slow apart for the Cash for Clunkersperiod.

And then right in the middle of this, we went to Washington tosupport GM and Chrysler's request for funds. Weasked for a standby line of credit, because we didn't know how badthings were going to get. And then right at theend of the year, the outgoing administration provided loans to GMand Chrysler to keep them going until the new administration coulddecide what they wanted to do with them. Andthen I think the unthinkable happened with this very, very fast,and I think extremely well-orchestrated bankruptcy of, first of allChrysler, and then GM. And at the same time forus equally worrying, we were going through a number of majorsuppliers' bankruptcies as well. So these werevery tough times.

So having just given you the backdrop, let me just tellyou what we were doing about it. By the end of2006, early 2007, we had a plan, and the plan as you'll see wasaggressively restructuring to operate profitably at current demandand changing global mix. We had no idea that thecurrent demand was going to drop as far as it was, but thediscipline we put in place is, we were going to stop shipping carsto dealers that customers didn't want to buy. Wewere going to stop building cars that nobody wanted, and that was areal significant step forward for Ford.

The second thing we committed to—even in the depths of thetough times—we were going to continue to accelerate the developmentof new cars that customers want and value. Ifyou've been around this business for any length of time, you knowthat recessions ultimately stop. Sometimes youdon't know when it's going to stop, but we knew that when therecession started improving, we had to have greater revenueproducts, because in past recessions we stopped our productspending to cut back on capex, and improve our cash flow when youcome out of the recession, and then all the guys around the worldwho haven't stopped spending on product took market share fromyou.

I'm going to spend quite a lot of time on financing ourplan and improving our balance sheet. And then Ithink probably the new Ford of working together effectively as oneteam leveraging our global assets, and I'll talk about that alittle bit. I'll cover all elements, but Ireally want to spend some time on financing our plan, and improvingour balance sheet.

And I just want to make the point here: if you go into arecession, and you don't have a plan that is fundamentally going tochange your business model so that you can operate and make moneyat lower levels of demand, then getting more liquidity is aninteresting exercise, but all it does is slow the decline. You'restill going to go out of business if you really don't have a planthat commits you to change the whole way you do business, and Ithink people think of liquidity as the onlyanswer. You've got to have liquidity, but you'vegot to have a plan that's going to improve yourbusiness.

So we changed the management at Ford North America at endof 2005, we developed a plan in early 2006 to improve the NorthAmerican business, because the North American business in 2006 wasour principal issue. We were burning a lot ofcash. We went through $5.6 billion of operating cash in 2006. Weaccelerated the restructuring in the middle of the year as westarted to see our market share begin todecline. And then Alan Mullaly arrived inSeptember of the year, and in December we raised what we call thelargest home improvement loan in the world, because we knew we hada lot of restructuring ahead of us.

We knew we had a plan that was going to improve the business,but we wanted to make sure that lack of liquidity didn't stop usmaking the fundamental changes to our business model that weneeded. And I think although we didn'tanticipate that the recession was going to be so deep, that raiseof liquidity back in December 2006 frankly is the big differencebetween where we find ourselves now, and where some of ourcompetitors find themselves.

So we went out in December and raised $23.5 billion ofliquidity: $11.5 billion of a five- year securedrevolver; $7 billion of a seven-year securedloan; and then $5 billion of senior convertibledebt. We mortgaged everything, you know, rightdown to the Ford Oval, to our banks, and we had frankly a fantasticresponse from our banking partners to provide us with theseloans. They bought into the plan; we took themthrough the plan. They bought into the recoveryactions we were taking, and they provided us with all thisfinancing to ensure that we could get through these really toughtimes.

I think the last lesson of this is we did it just at theright time. We all know you have to haveliquidity, but frankly if you don't have it before you need it,when you really need it, it's typically notthere. If we tried to get liquidity during 2008,for example, it wouldn't have been there, and I think at least oneof our competitors discoveredthat.

So in 2007, we were back implementing the plan, and thenactually thinking about risk, and particularly thinking aboutderisking our pension plan.

We sort of formalized and crystallized the One FordPlan. You can see in the middle of the left-handbox, I don't know if you can see it back there, but in the middleof the left-hand box, you see the four steps of ourplan. I think also importantly, we actuallyidentified the behaviors that we wanted people tooperate. I think many of you know the history ofFord is a somewhat balkanized business, with Ford of Europeoperating differently to Ford of North America, differently fromSouth America and Asia-Pacific. We no longer hadthat luxury. We knew that if we were going tocontinue developing products for around the world, the only way wecould afford to do it was to make sure around the world one productfit, rather then reengineering products for individual marketplaces.

It helped tremendously that customer tastes were beginningto align and, for example, small cars were beginning to be muchmore important in North America, and fuel economy was beginning tobe much more important in North America. Sohaving crystallized the Ford plan and been implementing it during2007, we then went on to think about our pension plans.

We did two, I think, smart things at the time, and I amreally glad that Don [Leclair] and Neil [Schloss] in thetreasurer's office, and Kathleen Gallagher, who you'll hear talkingabout this issue later on today, took this step to change the focusof our asset management to reduce risks of funding shortfallsinstead of maximizing returns. As we werebeginning to get very worried about our liquidity, we didn't wantto have sudden unexpected needs for cash contributions to ourpension plan, so we took steps to lower the equity andinterest-rate risks. You can see that we movedour asset allocation from 70% equity to only 30% public equity, 45%in fixed income, and also started building our investments inalternatives. We also launched a derivativeoverlay strategy to hedge the interest-raterisk.

The bottom line of this is we think by derisking our pensionplan, we managed to avoid about a $7 billion increase in unfundedstatus of our pension plans around the world, so a very, veryimportant piece of derisking, and a really nice job by the treasuryteam.

And then into 2008, we thought the plan was beginning towork. We made money in the first quarter, andthen after the first quarter things began to go pretty sour as theindustry starts falling down. As you canimagine, we're a capital-intensive business with very, very highfixed costs. If you take the industry down by asmuch as 50%, we start burning a huge amount of cash, not justbecause of our high breakeven, but also our payables were runningoff very fast as we stopped buying parts from oursuppliers.

So this is why we were beginning to feel slightly betterin the first quarter. We'd sort of muddled ourway through 2007 at just about breakeven, and we were profitable inthe first quarter. And then this is what happened to our cash flowin 2008. A $1.6 billion cash outflow—this is onan operating basis—A $1.6 billion cash outflow in the firstquarter, $3.1 billion in the second quarter and $7.7 billion cashoutflow in the third quarter.

Actually the first thing I did when I became CFO of thecompany was announce the third-quarter earnings, with a $7.7billion outflow. I knew this was a bitscary. I knew how much liquidity we had at theend of the third quarter, we had $30 billion of liquidity, and Icould multiply out 7-1/2 times whatever number it was to get to30. And I thought perhaps the third quarter wasgoing to be the absolute worst of our cashoutflow. It just about was, but frankly thefourth quarter was pretty scary too, at $7.2 billion.

If I turn to the next slide, you can see that ourliquidity by the end of 2006, with the home improvement loan, we'dgot up to $46 billion. Our liquidity had now run down to $23.5billion at the end of the year. You can see thelittle callout box. We'd already lost some ofour revolver capacity, our revolving credit line capacity, becausewhen Lehman Brothers went bankrupt, the capacity went with it, anduntil the bankruptcy was sorted out, we couldn't get our securitiesaway from Lehman. So we couldn't use thesecurities to go and find more liquidity. Thiswas a very difficult situation. We really didn'tknow at the end of the fourth quarter of 2008 that our cash burnhad really stopped dropping and was about at the bottom.

So at the same time this is happening, we got this tragedyof GM and Chrysler having to be bailed out by the outgoingadministration to keep them alive through the first quarter of2009. We had made the decision, we did ask thegovernment for a revolving credit line when we testified inWashington in December, and the reason we asked for a revolvingcredit line was we had no idea if the failure of GM and the failureof Chrysler was going to be controlled oruncontrolled. We were really concerned if it wasuncontrolled that it would have a major impact on our suppliers,and that we would have a substantially larger cash burn than wewere anticipating.

Unfortunately that revolving credit line nevermaterialized, but as the business improved we pretty rapidlydecided we didn't need to continue pursuing the government to askfor that.

So the first quarter of 2009 was really about protecting ourprecious liquidity. The first major decision wemade in the first quarter was to draw down our remaining revolvingline of credit. We were concerned about thisbecause again, if you can remember two years ago, the bankingsystem was under great stress. We were veryconcerned that drawing $10.1 billion out of the banking system wasgoing to put further stress on the banking system, and we spent alot of time as we drew the revolver making sure the banks knew whywe were doing it, and they had warning that it wascoming.

We didn't need the funds for day-to-dayexpenditures. We determined that we thoughtduring 2009, we could manage our internal cash flow to insure thatwe did not dip into our minimum operating cash levels, but we werealso concerned that if we waited any longer, with the fragility ofthe banking system, that we may lose more capacity if we hadanother bank go under. So this was a bigdecision to draw down the revolver, and we did that in January, andgot the cash into our accounts early in February.

We also knew because of what was going on at GM andChrysler that there were clearly going to be some major changes andcompetitiveness in labor contracts. And ratherthan wait for GM and Chrysler to negotiate with the UAW while theywere in bankruptcy, we decided we would go out to the UAW and say,we need to be more competitive if we're going to survive withoutgoing into Chapter 11. We'd already made a majorstep forward in competitiveness in the November '07-September '07negotiations, and in March we agreed to further changes thatresulted in cost savings of about half a million dollars a year ona running basis.

We also managed to work with the UAW, who were very, veryconstructive, in terms of splitting our VEBA note, the VEBA trustwe put all our retiree healthcare into. Splitting the note into two parts, the second part of which we hadthe option to pay either in cash or in stock. And that gave us some comfort that over the next five or six yearsas the payments came due on half of the VEBA note, if we didn'thave the cash available, we could pay in stock. So that was a further help to our liquidity. That was done in March.

And also in March, we decided that we really ought to tryand reduce our debt somewhat, because we were very concerned thatas we emerged out of the troubled times, that our debt burden onthe balance sheet was going to be too great. I'dsay of all the things we did in this period, this felt like themost difficult thing to do. It was perfectlytimed, because we bought this debt back at, you know, on average 40cents on the dollar. But at the time we did it,we're down to $23 billion ofliquidity.

I went to the operating team, and said, 'I want to useanother $2 billion to buy back debt,' which was going to reduce ourcushion to safety. The only way I think wemanaged to convince ourselves it was the right thing to do was as agroup, we took the balance sheet issues away from just being afinance and treasury and CEO problem. We sort ofeducated the whole operating committee on what does our balancesheet look like, and we cannot continue to fund our liquiditythrough increased debt. And the whole operatingteam committed that if we needed this couple of billion dollars tobuy back debt, they would help us by imposing further structuralreductions in their own businesses to generate the additionalcash.

Again at the time it was going on, I remember one weekendwhere I think I'd got authorization for like $2.1 or $2.2 billionof cash, and some of the opportunities came in that meant we neededto spend $2.5 billion. I remember spending aweekend worrying about spending the extra $250 or $300 million ofcash. We felt, you know, that close to ourmargin of looking after the business.

And then after the first quarter, we set about rebuilding ourliquidity. The nice thing was as soon as we'ddone our agreement with the UAW, as soon as we'd done the debtrestructuring, our stock price startedimproving. Our stock price had got down to, Ithink, a closing point on one day of about $1.28, and as soon as wegot past the debt restructuring, it popped up to sort of $5 or$6. So we began to think that our investors werebeginning to recognize the progress we weremaking. They were beginning to feel that ourbusiness was beginning to improve. So that gaveus some choices.

And the first choice was we could start raising someequity, and in May—and in an extraordinary piece of timing, thiswas the month after Chrysler had gone into Chapter 11, and themonth before General Motors went into Chapter 11, we went to marketand raised equity for a domestic auto company. And I think that really was for us the turning point in terms ofthe investors beginning to believe in the Ford story, because theywere prepared to put their money where our mouths were at thatstage.

And in August we turned on an equity dribble-out programthat we'd had approved and announced some time ago, and raisedanother $600 million. And then in November, weissued another convertible note for $2.9 billion, and at that stagethe stock was now up to about, I think about $7.

And then during this same period, we were in negotiationswith the Department of Energy. There was anobscure, but the legislation I think is Section 136 of the EnergySecurity and Independence Act, which offered loans againstexpenditures to companies that were going to improve fuel efficienttechnology for vehicles. We had about $14billion of spending in the 2009 through 2012 period that waspotentially eligible. And after a huge amount ofdiscussion with the Department of Energy about the terms andconditions of these loans, particularly because of the contractualobligations we had on our previous securitized debt, they approvedus for $5.9 billion worth of loans. And you drawit down after you've spent it, so by the end of the third quarter,we've drawn down $2.3 billion of loans. And this is relativelylow-cost, long-term debt, so it's been very helpful to again tolook after our liquidity. Mike Seneski from ourteam will take you through this a little latertoday.

And then toward the end of 2009, we were beginning toworry that the revolving credit facility would come due in December2011. We wanted to push that out a little bitlonger to give us more time to improve the business, and we wentout and offered our banking partners a 25% reduction in exposure inreturn for an extension through to December2013. As a result of that, we paid back $1.9billion. We actually converted $700 million ofthe revolving credit line into a new term loan. And I'd have to say right through this period our advisers and allthe banks were tremendously constructive in helping us stay fundedand liquid.

This is a depressing slide, because despite all that workin 2009, we finished the year in 2008 with $23.3 billion ofdebt. We finished the year at the end of 2009with $33.6 billion of debt. The really big chunk—you can see thatthe revolver draw was offset by the debt buyback—a happycoincidence of the same number. You see the DOE loans and theconvertible debt, and the restructure and therevolver. But we took our VEBA notes, theremaining notes to the VEBA trust, off the balance sheet where theywere in OPEB obligations, in as debt, and that raised our debtlevels a further $7 billion.

So as we got into this year, as our business started to operatemore profitably, and we were generating positive operating relatedcash flow, we started the journey that we've been on all year ofpaying down our debt. You will see thatpublications have noticed that the benefit for GM and Chrysler ofgoing bankrupt is they have much, much cleaner balance sheets thanwe have. And we'd already decided our balancesheet was too heavily burdened with debt, but I think the attentionthat is being paid now on comparing us with the other guys hasbrought additional attention to our debtposition. I think we've made remarkableprogress, and I'll talk about that as I go through.

And by the way we don't—I get asked this question so I'llanswer it before I get asked it again—we don't think of our debtburden as a disadvantage compared to GM orChrysler. I think none of us, including GM andChrysler, none of us think Chapter 11 is a good businessstrategy. We went through this very tough periodunder our own steam, and in return for not being able to get rid ofdebt, we have an intact management team, we have an intact businessplan, we have intact product investments, we have intactrelationships with our dealers, our suppliers, our employees, ourretirees, all the stakeholders. And I think asyou can see in our business results, we've also been able to usethis as an opportunity to encourage people to go into the Fordshowrooms and look at Ford vehicles.

I don't think customers buy Ford cars or Ford trucksbecause we didn't take the money. But I think what it has done isgiven us the opportunity to encourage customers who perhaps havenot been going into Ford showrooms, particularly not going intoFord showrooms to look at cars. As our carportfolio strengthened, customers were prepared to go into Fordshowrooms because we didn't take the money. Ithink they're now buying the cars because of the strength of theproduct portfolio.

So debt paid down this year: We've goneso far from $33.6 billion to $26.4 billion at the end of the thirdquarter, the results were announced on Tuesday. We also announced on Tuesday that we're actually going to pay offthe remaining piece of the VEBA note in cash, not instock. And that will take our debt reduction ona pro forma basis by the end of October, we will actually pay the$3.6 billion on Oct. 29, that will take our debt down to $22.8billion.

So a $10.8 billion reduction in 10 months, and that willsave us on an annualized basis about $800 million ayear. To put that in context, $800 million ayear is a pretty good car program. So if we canstop paying that to the banks, we can start investing in product,and generate more money, and work with the banks thatway. We have our banking partners here, so Ihave to be very careful what I say, but thank you for yoursupport.

And we've also announced another exchange offer on theremaining convertibles, both the stuff we issued in 2006 and thestuff we issued last year. Timing iseverything. When we bought our convertible backin March last year it was about, I think the convertible pieceitself was about 49 cents on the dollar. Ourconvertible notes now are trading well in excess of par, so youknow, it's an example of timing, and it does make a difference inthe cost of things.

And then just to summarize the metrics that I lookat. We've been managing cash very carefully; westarted at the beginning of this period at $33.5billion. We got to the low point at the end of2008 at $13 billion of cash, and after we pay back the VEBA, we'llbe at $20 billion of cash on Friday. Our debt,you can see, has gone down overall over the period, but had thisspike in 2009, and cash net of debt, we went to quite negative atthe end of 2008, down to $2.5 billion net debt at the end ofOctober, and we guided in our call on Tuesday that we expect to beabout net debt neutral at the end of the year. And our liquidity was started very high, because of the homeimprovement loan of $46 billion, and now is still at $26billion. We still have some more work to do onreducing debt, but I think this has been just a magic year thisyear.

So that's our turbulent times. You cansee the stock price at the end of 2005 was$8.58. You can see in November 2008, it got downto into day trading at $1, I can't tell you how demoralizing thatwas to work for a company that had a stock at a value of a dollarand a penny, and it closed yesterday at $14.23. And the other message of this is, we've been watching ourliquidity, and at times our liquidity has given us chances to dothings where the timing opportunity opened up, we had enoughliquidity to do it.

Let me just talk a little bit about the rest of thebusiness plan. We'll talk about our aggressivelyrestructuring. We've taken out $15 billiondollars of cost in the last five years, structuralcost. When we've completed our final plantclosures, we'll have taken out between 40% and 50% of our NorthAmerican salary out of head count. That's atraumatic thing to have to do. I think that willalways, always teach us to keep our costs under control, becauselaying people off at that rate is an awful thing to have todo.

And you can see our profitability has beenimproving. We turned the corner in the thirdquarter of 2009, and we're now, you know, we've had a decent yearthis year. We would never have imagined franklythat we could make $7 billion year-to-date in an industry that'sgoing to close at 11.5 or 11.6 million units, 40% down onhistorical levels. And that, I think, indicatesthat we took advantage of the crisis to permanently restructure ourbusiness.

I actually tend to forget our profit numbers; I don'tforget our cash numbers. Well, this is, I think,a lesson for all of us that, you know, you never go bankruptbecause of your profit-and-loss statement. Yougo bankrupt because you can't pay your suppliers, or you can't payyour employees, and it's easy to forget that in a largecompany. In a large company, liquidity hasalways been available to people. There hasn'tbeen a particularly great capital allocationprocess. We've spent a huge amount of timeeducating the operators on what drives cash flow and how they canimprove it. And that it is not just a treasuryfunction; actually cash flow is driven by theoperations. If you leave a bunch of cars unsoldat the end of the quarter, that's negative cashflow. All our operators understand the physicalsbehind our cash flow now, and I think that's another importantlesson of this crisis. And within this, we'vedone a huge amount on working capital and Mike Seneski will takeyou through a presentation on our working capital actions alsolater on today.

I still look at our cash balances every day, and I share it withthe operating team once a week, and we have a projection for themonth, and we show where we are every day against thatprojection. Accelerating development of newproducts our customers want and value—this is a productbusiness. You know, you can have all the fancytreasury actions you like, but if you can't sell the cars you can'tmake money, and the treasury doesn't have a jobeither. So this is a product business.

So we carried on spending money on products, and this isjust an example of the number of new products we've been able tolaunch around the world in these troubled times. And I think that more than anything is the reason you see marketshare growth from Ford in North America. Andwe're doing it much more efficiently as a result of OneFord. In the past, we used to develop cars thatlooked pretty similar, but shared very little in the way ofparts.

So the South American Fiesta and the Europe andAsia-Pacific Fiesta looked almost identical, but for localizationreasons and local material reasons, they only shared onepart. When we launched the new Fiesta, we have65% parts commonality around the world. This onewas a little bit late to One Ford, the North American market wasn'toriginally included in the program, so the parts commonality is alittle lower than we expected. But the nextslide shows the new Focus that we're launching at the end of thisyear, simultaneously in North American and Europe, that will have80% parts commonality.

The reason there's still a 20% parts lack of commonalityis because customers still have differenttastes. For example, in Europe there's about a55% or 60% mix of diesel engines in this sizecar. Diesel engines are completely irrelevant inthe U.S., so you have to have sort of the lack of commonality thatis driven by customer requirements. What we'rereally working hard to push out of the system is the lack ofcommonality because engineers like designing newparts. We're really trying to stop thathappening, and make the changes that the customers recognize, notthat our engineers recognize.

And we're also going for scale, because these are two newproducts on the same platform as the new Focus. So by the time we finish rolling out the Focus platform, and byplatform I mean engine compartment, power train, floor plan andsuspension systems, we'll have 10 different top hats that you seeon that platform, and we'll be building two million units a yeararound the world.

That gives you a fantastic leverage in sharing engineeringcosts around the world, sharing engineering costs with oursuppliers, and managing to leverage our global suppliers around theworld. So this is really a manifestation of OneFord in physical vehicle terms.

And then just working together—you may have heard of the Fordprocess where we now, every Thursday the whole business meets as agroup, so the business unit heads in the Americas, Europe,Asia-Pacific and Ford Credit, and the skill team leaders fromproduct development through finance andcommunications. We go through the entirebusiness in two hours, with the intent on understanding what'schanged.

It's probably a deck of 300 or 400 slides that we gothrough, but they're completely consistent in a common format, andwe show changes in a separate color, so we only spend time onchanges. And the purpose of the review is toidentify where we have problems. It's not acongratulatory process; we're not interested in where things aregoing well, although we will celebrate success, but the intent isto have complete transparency of the way weoperate.

So where there are business issues, the expectation isthat whoever is struggling with that business issue will identifyit as a red item, and then collectively we will find a solution toit. And I think the really important thing forthis group is we concluded very early on, straight after I arrived,that the treasury team had to be part of this meeting, because itmade no sense for the treasury team to be operating in isolationwithout understanding what the business was driving.

And then we're moving out of the survivalmode. We started in mid-2009 thinking we reallyneed to start participating around the world more actively than wehave been doing, while we have been concentrating on survival,particularly in North America. You can see from2000 to 2009, the world changed. While we werefocused on North America and restructuring Europe, the worldchanged, and Asia-Pacific went from 23% of the total industry to39% of the total industry. And by GlobalInsight's forecast, it will be at 44% of the total industry by2019.

And you can see the two standouts and they're obviouslyChina—hard to believe that the Chinese market was only 2 millionunits in 2000, 14 million units last year, probably 18 millionunits this year, and Global Insight I think says it's going to beat 28 million units in 2019. The Chinagovernment forecast is 32 million units, and I think I'd put mymoney on the China government actually. And thesame with India, India is just also accelerating from a lowerbase. We are underrepresented in thesemarkets. If we have a total market share aroundthe world of about 7.5%, it's way down, only about 2.5%, inAsia-Pacific. So we are really working very,very hard on accelerating our growth plans.

Let me just wrap up. What have welearned about treasury and risk management? First of all, I think everybody knows liquidity isgolden. Just always assume that when you really,really need liquidity, it's not going to bethere. If you haven't got it set up when youneed it, it's not going to be there.

Secondly, transparency of data is key. I talked about thetreasury team being part of our weekly meetings. We've, for example, we use the same slides in the Ford boardmeetings that we use for our operating team meetings, exactly thesame slides, which is wonderful from an efficiency point of view,because you know I can only remember one set ofslides. So the slides that I take to theThursday meeting, I then take to the senior company meetings, andthen I take them to the board. And actually theslides are essentially the same slides that drive the earningsrelease that we do every quarter.

But every time we were thinking about doing something we'd go tothe board, and say, 'You know there's going to come a time when weneed to buy back debt or issue equity.' And wewould have maybe two runs at the board before we actually needed anapproval, and we found that by doing that, when we actually neededapproval we could get approval almost instantaneously from theboard, and that actually supports a bit further down in the page ofgood timing is vital.

When we went to the markets to buy back our debt, we didpick—actually there's an element of luck here—but we did pick whenthe debt was almost as cheap as it got. And when we went to theboard, it was a very short discussion, because we'd taken themthrough the rationale of what we wanted to and the explanationsseveral times before they actually had to make a decision aboutit.

I've talked about treasury being in all the operatingdecisions; timing is vital; good advisers; we have great advisers,and we have to be as transparent with our advisers as we are withour own management, because if our advisers don't understand whatwe're trying to achieve, they can't do their job, and we're workinghard on that. And finally, operating cash flowcontrol is a vital skill. It's not just afinance skill, because it's really about making sure the operatorsunderstand the physicals that drive cash flow, and then once theyunderstand the physicals, they can manage the physicals, andfrankly all we have to do then is add up the numbers.

Okay, so back to where I started. Sothis is the plan. I've worked for Ford for 32 or33 years, this plan has been unchanged for four years, that's arecord. I don't think it's going to change forthe foreseeable future, because it's working. And let me just close by saying this is ourambition: Profitable growth forall. Thank you very much.

Okay. I was asked to—I'd be delightedif anybody has any questions, to try and answerthem. Oh, I'mstunned.

Q Are youenjoying yourself?

BOOTH: Yeah, you knowI was running operations. I had trained as anengineer, I had 20 years in finance, and I had maybe 15 years inoperations. My dad was a car dealer, and my twinbrother is a car dealer. This stuff's in theblood, and actually I like, you know, stroking cars, and all thegoing through the plants, and taking costs out ofstuff.

But this is just such a fantastic time at Ford, because if youcan imagine at the end of 2008, when things were looking soterrible. Well, I've had all these opportunitiesthat the company has given me, and we're risking not giving thenext generation the same opportunities. And thatfelt such an enormous responsibility on us to—I think I want thenext generation of people who join Ford to have the opportunitiesand the pleasure of working for Ford that I'vehad. So that's, if you'd like, that's the higherlevel reason for it.

This is such a fantastic story. I meanwe wrote this out last week, and it was like athriller. They're galloping towards the cliff,and they're going to go over, no, no, you know, allthat. And it's really been like that, and whatyou're actually seeing is Ford operating, I think, absolutelycohesively and coherently as a team, and all our problems areshared.

I lie awake at night worrying about the balance sheet, butI know Mark Fields, who runs the Americas, also lies awake worryingabout the balance sheet, because he now understands what it meansto the company. So yeah, this is a fantastictime, and you know there are the days where you think I'd probablyprefer a proper job, but most of the time I think I've got the bestjob in the company. Thank you.

Q Goodmorning, a quick question about Cash for Clunkers, we've heard alot about it over here. Was that good for Ford,or did it just cannibalize future growth or futuresales?

BOOTH: No, we think itwas net good. We saw, we think, some genuinelyincremental sales. The month after it didn'tfeel quite so good, because I think Cash for Clunkers finished inAugust, and September was a disaster. But thatwas the pull ahead of the non-incremental sales, and people whowere, as you say, just cannibalizing next month'ssales. But we think, we believe that maybe 40%or 50% of the spike was genuinely incremental business, and stayedthere.

Q Youtalked about ways to increase access to cash through externalsources of liquidity. Did you also havesignificant initiatives internally to kind of reap the rewards ofstreamlining your processes to get at internal sources ofliquidity?

BOOTH: Yes, actuallywe're going to have a presentation from Mike Seneski later ontoday, but that's what I meant a little bit by the physicals ofcash flow. We've worked really hard on workingcapital. Every operator looks at their work inprogress, for example, they look at their finished vehicle stocks,they look at, particularly at year end they're looking verycarefully to make sure we're not leaving a bunch of cars sort oflaying around the plant for the two-weekshutdown.

So yeah, I'd say that it was an area that we weren't verygood at. I think also three or four years ago,people thought of inventory targets as things to meet at quarterend, and people now recognize that inventory targets are things youwant to meet the whole quarter. And we've beengradually reducing the minimum operating cash to run thebusiness. It's a big business, and you need abig chunk of cash as your minimum liquidity, but we've been workingthat down over the last three years.

Q Your effortsto derisk the pension fund; how did the growth of the alternativeasset investment category worked out for you? Did that contribute to diminishing the risk in the plan, did thatimpact it? Did it perform as well asequities? How's that worked out for you in termsof derisking the plan?

BOOTH: I'm going toask Kathleen Gallagher, who will be here this afternoon, who wasone of the architects of the plan, to talk about that in moredetail, but we've seen benefits fromalternatives. We've been a bit slower to getinto them than I think we originally envisioned. The allocation I showed you as our target, we're not there yet, butit has reduced the volatility of our asset base. But Kathleen will be delighted to answer all your questions, andshe is our director of asset management, and she is just a magicguardian of our—I mean this is a huge responsibility, because we'reacting as guardian for other people's benefits, and we're verypleased to have her. So she'll talk about thatthis afternoon.

We're done? Okay. Thank you very much for your timetoday.