Ford 2011 Annual Report Download - page 123

Notes to the Financial Statements
Ford Motor Company | 2011 Annual Report 121
NOTE 12. SIGNIFICANT UNCONSOLIDATED AFFILIATES
We are required to measure the impact of all unconsolidated majority-owned subsidiaries and equity-method
investments to determine their significance to our financial statements. If the affiliates meet the defined thresholds of
significance, certain financial disclosure data is required. For 2011, none of the affiliates met the defined thresholds of
significance.
NOTE 13. VARIABLE INTEREST ENTITIES
A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional
subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A
VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most
significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits
from the entity that could potentially be significant to the VIE.
We have the power to direct the activities of an entity when our management has the ability to make key operating
decisions, such as decisions regarding capital or product investment or manufacturing production schedules. We have
the power to direct the activities of our special purpose entities when we have the ability to exercise discretion in the
servicing of financial assets, issue additional debt, exercise a unilateral call option, add assets to revolving structures, or
control investment decisions.
Assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to
satisfy claims against our general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not
represent additional claims on our general assets; rather, they represent claims against the specific assets of the
consolidated VIEs.
Automotive Sector
VIEs of which we are the primary beneficiary:
At December 31, 2010, we had one VIE of which we were the primary beneficiary - Cologne Precision Forge GmbH
("CPF"), formerly Tekfor Cologne GmbH. CPF was a 50/50 joint venture with Neumayer Tekfor GmbH ("Neumayer") to
which Ford transferred the operations of its Cologne forge plant in 2003. CPF produces forged components, primarily for
transmissions and chassis, for use in Ford vehicles and for sale to third parties. On December 21, 2010, Ford and
Neumayer signed an agreement pursuant to which Neumayer would withdraw from the joint venture and sell its shares in
the joint venture to Ford. The agreement became effective in March 2011 and CPF is now a wholly-owned subsidiary of
Ford.
At December 31, 2009, in addition to CPF, we also held interests in certain dealerships in North America as a part of
our Dealer Development program. Throughout 2009, we sold our ownership interest and liquidated most of these
dealerships. As at December 31, 2010, we consolidated the remaining dealerships under the voting interest model.
The total consolidated VIE assets and liabilities reflected on our December 31 balance sheet were as follows
(in millions):
Assets
Cash and cash equivalents
Other receivables, net
Inventories
Net property
Other assets
Total assets
Liabilities
Payables
Total liabilities
2010
$9
13
19
31
2
$74
$16
$16
The financial performance of the VIEs reflected on our statement of operations at December 31, 2011, 2010, and
2009 includes consolidated sales of $10 million, $58 million, and $1,907 million, respectively, and consolidated cost of
sales, selling, administrative, and interest expense of $9 million, $66 million, and $2,071 million, respectively.