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Management’s Discussion and Analysis of Financial Condition and Results of Operations
50 Ford Motor Company | 2010 Annual Report
Through February 24, 2011, Ford Credit has completed about $3 billion of public term funding transactions, including
about $2 billion retail and wholesale asset-backed securitization transactions in the United States and $1 billion of
unsecured issuance in the United States. Ford Credit also completed about $2 billion of private term funding
transactions, primarily reflecting retail, lease, and wholesale asset-backed transactions in the United States, Europe, and
Mexico.
The cost of securitization transactions and unsecured debt funding is based on a margin or spread over a benchmark
interest rate. Spreads are typically measured in basis points. Ford Credit's asset-backed funding and unsecured long-
term debt costs are based on spreads over U.S. Treasury securities of similar maturities, a comparable London Interbank
Offered Rate ("LIBOR") or other comparable benchmark rates. Ford Credit's floating rate demand notes funding costs
change depending on market conditions. In addition to enhancing Ford Credit's liquidity, one of the main reasons that
securitization remains a primary funding source has been the cost advantage Ford Credit's securitization transactions
offer over Ford Credit's unsecured long-term debt funding. During 2010, Ford Credit's spreads on the three-year fixed
rate notes offered in its U.S. public retail securitization transactions decreased from 92 to 25 basis points over the
relevant benchmark rates. During 2010, Ford Credit's U.S. unsecured long-term debt transaction spreads ranged from
414 to 444 basis points over the relevant benchmark rates, though spreads have tightened to 231 basis points for its
2011 issuance.
Liquidity. The following table illustrates the various sources of Ford Credit's liquidity as of the dates shown (in billions):
2010
20102010
2010
2009
20092009
2009
2008
20082008
2008
Cash, cash equivalents, and marketable securities (a) ................................
................................
$ 14.6 $ 17.3 $ 23.6
Committed liquidity programs................................................................................................
................................
24.2 23.2 28.0
Asset-backed commercial paper (b)................................................................
................................
9.0 9.3 15.7
Credit facilities ................................................................................................
................................
1.1 1.3 2.0
Committed capacity ................................................................................................
................................
34.3 33.8 45.7
Committed capacity and cash 48.9 51.1 69.3
Less: Capacity in excess of eligible receivables................................................................
................................
(6.3) (6.5) (4.8)
Less: Cash and cash equivalents to support on-balance sheet securitization transactions
................................
(4.2) (5.2) (5.5)
Liquidity ................................................................................................................................
................................
38.4 39.4 59.0
Less: Utilization................................................................................................
................................
(15.8) (18.3) (37.6)
Liquidity available for use................................................................................................
................................
$ 22.6 $ 21.1 $ 21.4
__________
(a) Excludes marketable securities related to insurance activities.
(b) Ford Credit's FCAR Owner Trust retails securitization program ("FCAR").
At December 31, 2010, committed capacity and cash shown above totaled $48.9 billion, of which $38.4 billion could be
utilized (after adjusting for capacity in excess of eligible receivables of $6.3 billion and cash required to support on-balance
sheet securitization transactions of $4.2 billion). At December 31, 2010, $15.8 billion was utilized, leaving $22.6 billion
available for use (including $10.4 billion of cash, cash equivalents, and marketable securities, but excluding marketable
securities related to insurance activities and cash and cash equivalents to support on-balance sheet securitization
transactions).
At December 31, 2010, Ford Credit's liquidity available for use was higher than year-end 2009 by about $1.5 billion,
reflecting cash payments for debt maturities, repurchases and calls, distributions and tax payments that were lower than the
liquidity generated from the impact of lower receivables, profits and new debt issuances. Liquidity available for use was
27% of managed receivables. In addition to the $22.6 billion of liquidity available for use, the $6.3 billion of capacity in
excess of eligible receivables provides Ford Credit with an alternative for funding future purchases or originations and gives
Ford Credit flexibility to shift capacity among markets and asset classes.
Cash, Cash Equivalents, and Marketable Securities. At December 31, 2010, Ford Credit's cash, cash equivalents,
and marketable securities (excluding marketable securities related to insurance activities) totaled $14.6 billion, compared
with $17.3 billion at year-end 2009. In the normal course of Ford Credit's funding activities, it may generate more
proceeds than are required for its immediate funding needs. These excess amounts are maintained primarily as highly
liquid investments, which provide liquidity for Ford Credit's short-term funding needs and give it flexibility in the use of its
other funding programs.
Credit Facilities and Committed Liquidity Programs. See Note 19 of the Notes to the Financial Statements for more
information regarding credit facilities and committed liquidity programs for Ford Credit. While there is a risk of non-
renewal of some of Ford Credit's committed liquidity programs, which could lead to a reduction in the size of these
programs and/or higher costs, Ford Credit's capacity in excess of eligible receivables would enable it to absorb some
reductions. Ford Credit's ability to obtain funding under these programs is subject to having a sufficient amount of assets