Ford 2007 Annual Report Download - page 87

Download and view the complete annual report

Please find page 87 of the 2007 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

Notes to the Financial Statements
Ford Motor Company | 2007 Annual Report 85
NOTE 16. DEBT AND COMMITMENTS (Continued)
are commitments to FCE. These committed liquidity programs have varying maturity dates, with $21.2 billion having
maturities within the next twelve months (of which $3.4 billion relates to FCE commitments), and the balance having
maturities between February 2009 and September 2011. Ford Credit's ability to obtain funding under these programs is
subject to it having a sufficient amount of assets eligible for these programs. At December 31, 2007, $17.1 billion of these
commitments were in use. These programs are extremely liquid funding sources as Ford Credit is able to obtain funding
from available capacity generally within two days. These programs are free of material adverse change clauses, restrictive
financial covenants (for example, debt-to-equity limitations and minimum net worth requirements) and credit rating triggers
that could limit Ford Credit's ability to obtain funding. However, the unused portion of these commitments may be
terminated if the performance of the underlying assets deteriorates beyond specified levels. Based on Ford Credit's
experience and knowledge as servicer of the related assets, we do not expect any of these programs to be terminated
due to such events.
In addition, Ford Credit has a committed liquidity program for the purchase of up to $6 billion of unrated asset-backed
securities, of which $4 billion is committed through 2009 that at Ford Credit's option can be supported with various retail,
wholesale, or lease assets. Ford Credit's ability to obtain funding under this program is subject to it having a sufficient
amount of assets available to issue the securities. This program is also free of material adverse change clauses,
restrictive financial covenants (for example, debt-to-equity limitations and minimum net worth requirements), and credit
rating triggers that could limit Ford Credit's ability to obtain funding. At December 31, 2007, Ford Credit had $3.9 billion of
outstanding funding in this program.
NOTE 17. SHARE-BASED COMPENSATION
At December 31, 2007, a variety of Ford stock-based compensation grants or awards were outstanding for employees
(including officers) and members of the Board of Directors. All stock-based compensation plans are approved by the
shareholders.
We have stock-based compensation outstanding under two Long-term Incentive Plans ("LTIP"), the 1990 LTIP and the
1998 LTIP. No further grants may be made under the 1990 LTIP and all outstanding units thereunder are exercisable. All
outstanding stock-based compensation under the 1990 LTIP continues to be governed by the terms and conditions of the
existing agreements for those grants. Grants may continue to be made under the 1998 LTIP through April 2008.
Under the 1998 LTIP, 2% of our issued Common Stock as of December 31 becomes available for granting plan
awards in the succeeding calendar year. Any unused portion is available for later years. The limit may be increased up to
3% in any year, with a corresponding reduction in shares available for grants in future years. At December 31, 2007, the
number of unused shares carried forward was 88.1 million shares.
Upon stock-settled compensation exercises and awards, shares were either new issues or were issued from treasury
stock. We do not expect to repurchase a significant number of shares for treasury stock during 2008.
Stock Options
We measure the fair value of the majority of our stock options using the Black-Scholes option-pricing model, using
historical volatility and the simplified method of calculating the expected term. Our expected term is calculated by
averaging the vesting term (3 years) and the contractual term of the option (10 years). Historical data is also used to
estimate option exercise behaviors and employee termination experience within the valuation model. Based on our
assessment of employee groupings and observable behaviors, we determined that a single grouping is appropriate.
Under the 1998 LTIP, 33% of the options are generally exercisable after the first anniversary of the date of grant, 66%
after the second anniversary, and 100% after the third anniversary. Stock options expire ten years from the grant date
and are expensed in Selling, administrative, and other expenses using a three-year cliff vesting methodology.