Ford 2010 Annual Report Download - page 45

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2010 Annual Report 43
Although not reflected in the table above, which reflects full-year data, included on a quarterly basis within operating-
related cash flows are cash flows related to changes in our working capital balances (i.e., trade receivables, trade
payables, and inventories), and receivables and payables between the Automotive and Financial Services sectors
associated primarily with the Automotive sector's vehicle wholesales. These cash flows generally are subject to
seasonal timing differences. For example, we typically experience cash flow timing differences associated with
inventories due to our annual December shutdown period, when inventories usually are at the lowest level of the year.
This drawdown of inventories creates significant cash inflows during the fourth quarter. As production resumes in
January, we replenish our inventory stocks and generally experience resulting cash outflows, reflected in "Changes in
receivables, inventories and trade payables" in the table above. This same shutdown period generally results in lower
trade payables balances and associated cash outflows in the fourth quarter due to lower production levels in the last
weeks of the year. Additionally, as a result of our December shutdown, Automotive receivables from the Financial
Services sector, reflected in "Other" during the first nine months operating-related cash flows, largely are collected by the
end of the fourth quarter with a normal increase in the receivables balance in January as production resumes.
Shown below is a reconciliation between financial statement Cash flows from operating activities of continuing
operations and operating-related cash flows (calculated as shown in the table above), for the last three years (in billions):
2010
20102010
2010 (a)
(a) (a)
(a)
2009
20092009
2009
2008 (b 2008 (b2008 (b
2008 (b)
)))
Cash flows from operating activities of continuing operations (c) ................................
................................
$ 6.4 $ 2.9 $ (12.6)
Items included in operating-related cash flows
Capital expenditures ................................................................................................
................................
(3.9) (4.0) (6.3)
Proceeds from the exercise of stock options................................
................................
0.3 — —
Net cash flows from non-designated derivatives ................................
................................
(0.2) (0.1) 1.2
Items not included in operating-related cash flows
Cash impact of personnel-reduction programs and Job Security Benefits/
Transition Assistance Plan accrual ................................................................
................................
0.2 0.7 0.7
Contributions to funded pension plans................................................................
................................
1.0 0.9 1.0
Tax refunds, tax payments, and tax receipts from affiliates................................
................................
(0.2) (0.6) (2.2)
Other (d) ................................................................................................
................................
0.8 (0.6) (1.4)
Operating-related cash flows ................................................................
................................
$ 4.4 $ (0.8) $ (19.6)
__________
(a) Except as noted (see footnotes (c) and (d) below), 2010 data exclude Volvo.
(b) Except as noted (see footnotes (c) and (d) below), 2008 data exclude Jaguar Land Rover.
(c) 2008 includes Jaguar Land Rover; 2010 includes Volvo.
(d) 2008 includes Jaguar Land Rover cash flows; 2010 includes Volvo cash flows.
Equity and Equity-Linked Issuances. On December 4, 2009, we entered into an equity distribution agreement with
certain broker-dealers pursuant to which we would offer and sell shares of Ford Common Stock from time to time for an
aggregate offering price of up to $1 billion. Sales under this agreement were completed in September 2010. Since
inception, under this agreement we issued 85.8 million shares of Common Stock for an aggregate price of $1 billion, with
75.9 million shares of Common Stock for an aggregate price of $903 million being issued in 2010.
Secured Credit Agreement. At December 31, 2010, commitments under the revolving credit facility of our Credit
Agreement totaled $8.1 billion, with $886 million maturing on December 15, 2011 and $7.2 billion maturing on
November 30, 2013. During 2010, we repaid a total of $6.7 billion of the revolving credit facility maturing in 2013. At
December 31, 2010, the utilized portion of the revolving credit facility was about $1.2 billion (including $374 million to
support letters of credit).
On August 3, 2010, as required by the terms of the Credit Agreement, we used $288 million of the net cash proceeds
from the sale of Volvo Personvagnar AB (also known as Volvo Car Corporation) to partially prepay the term loans. See
our Current Report on Form 8-K filed August 2, 2010 for a discussion of the sale of Volvo. In addition, on
December 15, 2010, we made a discretionary prepayment of about $800 million on the term loans. These payments
combined with our required quarterly payments brought total 2010 payments of the term loans to about $1.2 billion.
At December 31, 2010, term loans outstanding under the Credit Agreement totaled $4.1 billion.
The borrowings of the Company, the subsidiary borrowers, and the guarantors under the Credit Agreement are
secured by a substantial portion of our domestic Automotive assets (excluding cash). The collateral includes a majority
of our principal domestic manufacturing facilities, excluding facilities to be closed, subject to limitations set forth in
existing public indentures and other unsecured credit agreements; domestic accounts receivable; domestic inventory; up
to $4 billion of marketable securities or cash proceeds therefrom; 100% of the stock of our principal domestic
subsidiaries, including Ford Credit (but excluding the assets of Ford Credit); Ford Motor Company of Canada, Limited
intercompany notes (limited to its total tangible assets); 66% to 100% of the stock of all major first tier foreign
subsidiaries; and certain domestic intellectual property, including trademarks.