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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2010 Annual Report 51
eligible for these programs as well as its ability to obtain interest rate hedging arrangements for certain securitization
transactions.
Balance Sheet Liquidity Profile. Ford Credit defines its balance sheet liquidity profile as the cumulative maturities of
its finance receivables, investment in operating leases, and cash less the cumulative debt maturities over upcoming
annual periods. The following table shows Ford Credit's balance sheet liquidity profile for the periods presented as of
December 31, 2010 (in billions):
Cumulative Maturit
Cumulative MaturitCumulative Maturit
Cumulative Maturities
iesies
ies
Through
Through Through
Through
2011
20112011
2011
Through
Through Through
Through
2012
20122012
2012
Through
Through Through
Through
2013
20132013
2013
Through
Through Through
Through
2014 and
2014 and 2014 and
2014 and
Thereafter
ThereafterThereafter
Thereafter
Finance receivables (a), investment in operating leases (b), and cash (c)
................................
$ 63.6 $ 80.5 $ 89.8 $ 97.1
Debt ................................................................................................................................
................................
(47.4) (60.8) (69.1) (83.0)
Finance receivables, investment in operating leases and cash over/(under) debt
................................
$ 16.2 $ 19.7 $ 20.7 $ 14.1
__________
(a) Finance receivables net of unearned income.
(b) Investment in operating leases net of accumulated depreciation.
(c) Cash includes cash, cash equivalents, and marketable securities (excludes marketable securities related to insurance activities) at
December 31, 2010.
Ford Credit's balance sheet is inherently liquid because of the short-term nature of its finance receivables, investment
in operating leases and cash. Maturities of investment in operating leases consist primarily of rental payments
attributable to depreciation over the remaining life of the lease and the expected residual value at lease termination. The
2011 finance receivables maturities in the table above include all of the wholesale receivables maturities that are
otherwise extending beyond 2011, and also include expected prepayments for our retail installment sale contracts and
investment in operating leases. The table above also reflects the following adjustments to debt maturities to match all of
the asset-backed debt maturities with the underlying asset maturities:
• The 2011 maturities include all of the wholesale securitization transactions that otherwise extend beyond 2011;
and
• Retail securitization transactions under certain committed liquidity programs are treated as amortizing on
January 1, 2011 instead of amortizing after the contractual maturity of those committed liquidity programs that
otherwise extend beyond January 1, 2011.
Leverage. Ford Credit uses leverage, or the debt-to-equity ratio, to make various business decisions, including
evaluating and establishing pricing for retail, wholesale, and lease financing, and assessing Ford Credit's capital
structure. Ford Credit refers to its shareholder's interest as equity. Ford Credit calculates leverage on a financial
statement basis and on a managed basis using the following formulas:
Financial Statement Leverage = Total Debt
Equity
Total Debt +
Securitized
Off-Balance
Sheet
Receivables -
Retained
Interest in
Securitized
Off-Balance
Sheet
Receivables -
Cash and Cash
Equivalents
and Marketable
Securities (a) -
Adjustments for
Derivative
Accounting on
Total Debt (b)
Managed Leverage =
Equity - Adjustments
for Derivative
Accounting
on Equity (b)
__________
(a) Excluding marketable securities related to insurance activities.
(b) Primarily related to market valuation adjustments to derivatives due to movements in interest rates. Adjustments to debt are related to designated
fair value hedges and adjustments to equity are related to retained earnings.