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Notes to the Financial Statements

Ford Motor Company | 2011 Annual Report 105

NOTE 4. FAIR VALUE MEASUREMENTS (Continued)

Reconciliation of Changes in Level 3 Balances

The following tables summarize the changes in Level 3 items measured at fair value on a recurring basis on our

balance sheet for the years ended December 31 (in millions):

Automotive Sector

Beginning balance

Realized/unrealized gains/(losses)

Cost of sales

Interest income and other non-

operating income/(expense),

net

Other comprehensive income/

(loss) (a)

Total realized/unrealized gains/

(losses)

Purchases, issues, sales, and

settlements

Purchases

Issues

Sales

Settlements

Total purchases, issues, sales,

and settlements

Transfers into Level 3 (b)

Transfers out of Level 3 (b)

Ending balance

Unrealized gains/ (losses) on

instruments still held

Financial Services Sector

Beginning balance

Realized/unrealized gains/(losses)

Other income/(loss), net

Other comprehensive income/

(loss) (a)

Interest income/(expense) (c)

Total realized/unrealized gains/

(losses)

Purchases, issues, sales, and

settlements

Purchases

Issues (d)

Sales

Settlements

Total purchases, issues, sales,

and settlements

Transfers into Level 3 (b)

Transfers out of Level 3 (b)

Ending balance

Unrealized gains/ (losses) on

instruments still held

2011

Marketable Securities

Non-U.S.

Government

Agencies

—

(1)

$—

—

(1)

$—

Corporate

Debt

$—

—

(5)

$—

—

(5)

$—

Mortgage-

Backed and

Other

Asset-

Backed

$—

—

(1)

$—

—

$—

Non-U.S.

Government

—

(1)

—

(1)

—

(1)

—

$—

—

$—

Total

Marketable

Securities

—

(1)

—

(1)

—

(1)

—

(7)

$—

—

(6)

$—

Derivative

Financial

Instruments,

Net

$38

(99)

(1)

—

(100)

—

(14)

—

$(70)

$(69)

$(89)

382

(1)

471

—

114

187

—

(432)

$137

$65

Total Level 3

Fair Value

$40

(99)

(2)

—

(101)

—

(1)

(14)

(8)

—

(1)

$(70)

$(69)

$(88)

382

(1)

471

—

114

192

—

(438)

$137

$65

__________

(a) "Other comprehensive income/(loss)" represents foreign currency translation on derivative asset and liability balances held by non-U.S. dollar

foreign affiliates.

(b) Represents transfers due to the increase in availability of observable data for $13 million of marketable securities as a result of greater market

activity for these securities and transfers for $6 million due to shorter duration of Automotive Sector derivative financial instruments. The transfer of

$432 million Financial Services derivative financial instruments was primarily the result of management's validation of the observable data and

determination that certain unobservable inputs had an insignificant impact on the valuation of these instruments. The company's policy is to

recognize transfers in and transfers out at the value at the end of the reporting period.

(d) Reflects derivative features included in the FUEL notes.