Ford 2010 Annual Report Download - page 146

Notes to the Financial Statements
144 Ford Motor Company | 2010 Annual Report
NOTE 19. DEBT AND COMMITMENTS (Continued)
2009 Secured Term Loan Actions. In the first quarter of 2009, Ford Credit purchased from term loan lenders under
the Credit Agreement $2.2 billion principal amount of the secured term loan for an aggregate cost of $1.1 billion (including
transaction costs). Ford Credit distributed the repurchased secured term loan to its immediate parent, Ford Holdings,
whereupon the debt was forgiven. As a result of this transaction, we recorded a pre-tax gain of $1.1 billion in the first
quarter of 2009 in Automotive interest income and other non-operating income/(expense), net.
In third quarter of 2009, Ford Leasing purchased from the lenders under the Credit Agreement $45 million principal
amount of our secured term loan thereunder for an aggregate cost of $37 million. Ford Holdings elected to receive the
$37 million from Ford Leasing as a dividend, whereupon the debt was immediately forgiven. As a result of this
transaction, we recorded a pre-tax gain of $8 million in Automotive interest income and other non-operating
income/(expense), net.
Notes Due to UAW VEBA Trust
On December 31, 2009, as part of the settlement of our UAW postretirement health care obligation (as described in
our 2009 Form 10-K Report) we issued two non-interest bearing notes, $6.7 billion Amortizing Guaranteed Secured Note
maturing June 30, 2022 ("Note A") and $6.5 billion Amortizing Guaranteed Secured Note maturing June 30, 2022
("Note B"), to the UAW VEBA Trust.
2010 Actions on Note B. On June 30, 2010 we made the scheduled payment due on Note B of $610 million with cash
and on October 29, 2010 we prepaid the remaining outstanding principal amount of Note B with cash of $3.5 billion, which
fully satisfied our obligations to the UAW VEBA Trust. The prepayment amount was based on the contractual prepayment
amount reflecting an agreed-upon discount of 5%. Immediately prior to our prepayment, the carrying value of the note
was $3.6 billion ($5.3 billion par value, net of $1.7 billion unamortized discount). As a result of the purchase of Note B at a
discount, we recorded a pre-tax gain of $69 million in the second quarter of 2010 in Automotive interest income and other
non-operating income/(expense), net.
2010 Actions on Note A. On June 30, 2010 we made the scheduled payment due on Note A to the UAW VEBA Trust of
$249 million with cash. In addition, Ford and Ford Credit together purchased from the UAW VEBA Trust the remaining
outstanding principal amount of Note A with cash of $2.9 billion, of which $1.6 billion was paid by us and $1.3 billion was
paid by Ford Credit. Upon settlement, Ford Credit immediately transferred the portion of Note A it purchased to us in
satisfaction of $1.3 billion of Ford Credit's tax liabilities to us. The purchase price for Note A was based on the contractual
prepayment amount less an agreed-upon discount of 2%. Immediately prior to our payments on Note A, the carrying
value of the note was $3.2 billion ($4.7 billion par value, net of $1.5 billion unamortized discount). As a result of the
purchase of Note A at a discount, we recorded a pre-tax gain of $40 million in the second quarter of 2010 in Automotive
interest income and other non-operating income/(expense), net.
In 2010, $140 million and $308 million of discount for Note A and Note B were amortized and reported in Interest
expense.
DOE Advanced Technology Vehicles Manufacturing ("ATVM") Program
Pursuant to the Loan Arrangement and Reimbursement Agreement (the "Arrangement Agreement") with the DOE
entered into on September 16, 2009, we had outstanding $2.8 billion in loans as of December 31, 2010. Under the terms
of the Arrangement Agreement, the DOE agreed to (i) arrange a 13-year multi-draw term loan facility (the "Facility") under
the ATVM Program in the aggregate principal amount of up to $5.9 billion, (ii) designate us as a borrower under the ATVM
Program and (iii) cause the Federal Financing Bank ("FFB") to enter into the Note Purchase Agreement (the "Note
Purchase Agreement") for the purchase of notes to be issued by us evidencing such loans under the Arrangement
Agreement. Loans under the ATVM are made by and through the FFB, an instrumentality of the U.S. government that is
under the general supervision of the U.S. Secretary of the Treasury.