Ford 2011 Annual Report Download - page 151

Notes to the Financial Statements
Ford Motor Company | 2011 Annual Report 149
NOTE 18. DEBT AND COMMITMENTS (Continued)
Notes Due to UAW VEBA Trust
On December 31, 2009, as part of the settlement of our UAW postretirement health care obligation (as described in
our 2009 Form 10-K Report) we issued two non-interest bearing notes, $6.7 billion Amortizing Guaranteed Secured Note
maturing June 30, 2022 ("Note A") and $6.5 billion Amortizing Guaranteed Secured Note maturing June 30, 2022
("Note B"), to the UAW VEBA Trust.
2010 Actions on Note A and Note B. In the second quarter of 2010, we made the scheduled payment due on Note A
and Note B to the UAW VEBA Trust of $249 million and $610 million in cash, respectively. In addition, Ford and Ford
Credit together purchased from the UAW VEBA Trust the remaining outstanding principal amount of Note A for cash of
$2.9 billion, of which $1.6 billion was paid by us and $1.3 billion was paid by Ford Credit. Upon settlement, Ford Credit
immediately transferred the portion of Note A it purchased to us in satisfaction of $1.3 billion of Ford Credit's tax liabilities
to us. The purchase price for Note A was based on the contractual pre-payment amount less an agreed-upon discount of
2%. Immediately prior to our payments on Note A, the carrying value of the note was $3.2 billion. As a result of the
purchase of Note A at a discount, we recorded a pre-tax gain of $40 million in the third quarter of 2010 in Automotive
interest income and other non-operating income/(expense), net. In relation to the combined $859 million scheduled
principal payments made under Note A and Note B on June 30, 2010, $448 million of discount was amortized and
reported in Interest expense in the first nine months of 2010.
In the fourth quarter of 2010, we pre-paid the remaining outstanding principal amount of Note B, which fully satisfied
our obligations to the UAW VEBA Trust.
DOE Advanced Technology Vehicles Manufacturing ("ATVM") Program
Pursuant to the Loan Arrangement and Reimbursement Agreement (the "Arrangement Agreement") with the DOE
entered into on September 16, 2009, we had outstanding $4.8 billion in loans as of December 31, 2011. Under the terms
of the Arrangement Agreement, the DOE agreed to (i) arrange a 13-year multi-draw term loan facility (the "Facility") under
the ATVM Program in the aggregate principal amount of up to $5.9 billion, (ii) designate us as a borrower under the ATVM
Program and (iii) cause the Federal Financing Bank ("FFB") to enter into the Note Purchase Agreement for the purchase
of notes to be issued by us evidencing such loans under the Arrangement Agreement. Loans under the ATVM are made
by and through the FFB, an instrumentality of the U.S. government that is under the general supervision of the U.S.
Secretary of the Treasury.
The proceeds of advances under the Facility may be used only to finance certain costs eligible under the ATVM
Program ("Eligible Project Costs") that are incurred through the end of 2012. Eligible Project Costs are those incurred in
the implementation of 12 advanced technology vehicle programs approved for funding by the DOE (each, a "Project").
The Arrangement Agreement limits the amount of advances that may be used to fund Eligible Project Costs for each
Project, and our ability to finance Eligible Project Costs with respect to a Project is conditioned on us meeting agreed
timing milestones and fuel economy targets for that Project. Each advance bears interest at a blended rate based on the
Treasury yield curve at the time such advance is borrowed, based on the principal amortization schedule for that advance,
with interest payable quarterly in arrears.
EIB Credit Facility
On July 12, 2010, Ford Motor Company Limited, our operating subsidiary in the United Kingdom ("Ford of Britain"),
entered into a credit facility for an aggregate amount of £450 million with the EIB. Proceeds of loans drawn under the
facility are being used to fund costs for the research and development of fuel-efficient engines and commercial vehicles
with lower emissions, and related upgrades to an engine manufacturing plant. The facility was fully drawn in the third
quarter of 2010, and Ford of Britain had outstanding $698 million of loans at December 31, 2011. The loans are five-year,
non-amortizing loans secured by a guarantee from the U.K. government for 80% of the outstanding principal amount and
cash collateral from Ford of Britain equal to 20% of the outstanding principal amount, and bear interest at a fixed rate of
approximately 3.6% per annum (excluding a commitment fee of 0.30% to the U.K. government). Ford of Britain has
pledged substantially all of its fixed assets, receivables and inventory to the U.K. government as collateral, and we have
guaranteed Ford of Britain's obligations to the U.K. government related to the government's guarantee.
Automotive Credit Facilities
Commitments under the revolving credit facility of our secured Credit Agreement totaled $8.9 billion which will mature
on November 30, 2013. Pursuant to our Credit Agreement, at December 31, 2011, we had $8.8 billion available to be
drawn under the revolving facility and had outstanding $131 million of letters of credit under the revolving facility.