Ford 2011 Annual Report Download - page 152

Notes to the Financial Statements
150 Ford Motor Company | 2011 Annual Report
NOTE 18. DEBT AND COMMITMENTS (Continued)
Covenants. The Credit Agreement requires ongoing compliance with a borrowing base covenant until the collateral
pledged under the Credit Agreement is released, and contains other restrictive covenants. Our ability to pay dividends
(other than dividends payable in stock) is subject to certain limits under the Credit Agreement. In addition, the Credit
Agreement contains a liquidity covenant requiring us to maintain a minimum of $4 billion in the aggregate of domestic
cash, cash equivalents, loaned and marketable securities and short-term VEBA assets and/or availability under the
revolving credit facility.
With respect to the borrowing base covenant, until the collateral pledged under the Credit Agreement is released, we
are required to limit the outstanding amount of debt under the Credit Agreement as well as certain permitted additional
indebtedness secured by the collateral such that the total debt outstanding does not exceed the value of the collateral as
calculated in accordance with the Credit Agreement.
At December 31, 2011, we had $817 million of local credit facilities to foreign Automotive affiliates, of which
$74 million has been utilized. Of the $817 million of committed credit facilities, $66 million expires in 2012, $165 million
expires in 2013, $223 million expires in 2014, and $363 million expires in 2015.
Financial Services Sector
Debt Repurchases and Calls
From time to time and based on market conditions, our Financial Services sector may repurchase or call some of its
outstanding unsecured and asset-backed debt. If our Financial Services sector has excess liquidity, and it is an
economically favorable use of its available cash, it may repurchase or call debt at a price lower or higher than its carrying
value, resulting in a gain or loss on extinguishment.
2011 Debt Repurchases. Through private market transactions, our Financial Services sector repurchased and called
an aggregate principal amount of $2.3 billion (including $268 million maturing in 2011) of our unsecured debt. As a result,
we recorded a pre-tax loss of $68 million, net of unamortized premiums, discounts and fees in Other income, net in 2011.
There were no repurchase or call transactions for asset-backed debt during 2011.
2010 Debt Repurchases. Through private market transactions, our Financial Services sector repurchased and called
an aggregate principal amount of $5.6 billion (including $683 million maturing in 2010) of its unsecured debt and asset-
backed debt. As a result, our Financial Services sector recorded a pre-tax loss of $139 million, net of unamortized
premiums and discounts, in Financial Services other income/(loss), net in 2010.
2009 Debt Repurchases. Through private market transactions, our Financial Services sector repurchased and called
an aggregate principal amount of $3.9 billion (including $1.6 billion maturing in 2009) of its unsecured debt and asset-
backed debt. As a result, our Financial Services sector recorded a pre-tax gain of $67 million, net of unamortized
premiums and discounts, in Financial Services other income/(loss), net in 2009.
Asset-Backed Debt
Ford Credit engages in securitization transactions to fund operations and to maintain liquidity. Ford Credit's
securitization transactions are recorded as asset-backed debt and the associated assets are not derecognized and
continue to be included in our financial statements.
The finance receivables and net investment in operating leases that have been included in securitization transactions
are only available for payment of the debt and other obligations issued or arising in the securitization transactions. They
are not available to pay Ford Credit's other obligations or the claims of its other creditors. Ford Credit does, however, hold
the right to the excess cash flows not needed to pay the debt and other obligations issued or arising in each of the
securitization transactions. The debt is the obligation of our consolidated securitization entities and not Ford Credit's legal
obligation or of its other subsidiaries.