Ford 2012 Annual Report Download - page 47

Download and view the complete annual report

Please find page 47 of the 2012 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

Ford Motor Company | 2012 Annual Report 45
Management's Discussion and Analysis of Financial Condition and Results of Operations
45
The following table shows the calculation of Ford Credit's financial statement leverage (in billions, except for ratios):
December 31,
2012
December 31,
2011
December 31,
2010
Total debt $ 89.3 $84.7 $ 82.9
Equity 9.7 8.9 10.3
Financial statement leverage (to 1) 9.2 9.5 8.0
The following table shows the calculation of Ford Credit's managed leverage (in billions, except for ratios):
December 31,
2012
December 31,
2011
December 31,
2010
Total debt $ 89.3 $84.7 $ 82.9
Adjustments for cash, cash equivalents, and marketable securities (a) (10.9)(12.1) (14.6)
Adjustments for derivative accounting (b) (0.8)(0.7) (0.3)
Total adjusted debt $ 77.6 $71.9 $ 68.0
Equity $ 9.7 $ 8.9 $ 10.3
Adjustments for derivative accounting (b) (0.3)(0.2) (0.1)
Total adjusted equity $ 9.4 $ 8.7 $ 10.2
Managed leverage (to 1) (c) 8.3 8.3 6.7
__________
(a) Excludes 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.
(c) Equals total adjusted debt over total adjusted equity.
Ford Credit believes that managed leverage is useful to its investors because it reflects the way Ford Credit
manages its business. Ford Credit deducts cash and cash equivalents, and marketable securities (excluding
marketable securities related to insurance activities) because they generally correspond to excess debt beyond the
amount required to support its operations and amounts to support on-balance sheet securitization transactions. Ford
Credit makes derivative accounting adjustments to its assets, debt, and equity positions to reflect the impact of interest
rate instruments Ford Credit uses in connection with its term-debt issuances and securitization transactions. The
derivative accounting adjustments related to these instruments vary over the term of the underlying debt and
securitized funding obligations based on changes in market interest rates. Ford Credit generally repays its debt
obligations as they mature. As a result, Ford Credit excludes the impact of these derivative accounting adjustments on
both the numerator and denominator in order to exclude the interim effects of changes in market interest rates.
Ford Credit plans its managed leverage by considering prevailing market conditions and the risk characteristics of
its business. At December 31, 2012, Ford Credit's managed leverage was 8.3:1, unchanged from December 31, 2011.
Ford Credit's guidance for managed leverage in 2013 is to be within the range of 8:1 to 9:1. In 2012, Ford Credit paid
$600 million in distributions to its parent.
Total Company
Equity. At December 31, 2012, Total equity attributable to Ford Motor Company was $15.9 billion, an increase of
about $900 million compared with December 31, 2011. The increase is more than explained by favorable changes in
Retained earnings, related to full-year 2012 net income attributable to Ford Motor Company of $5.7 billion offset partially
by cash dividends declared of $573 million. The favorable changes in Retained earnings are offset partially by
unfavorable changes in Accumulated other comprehensive income/(loss) of $4.1 billion (more than explained by
unfavorable pension and OPEB adjustments) and treasury stock purchases of $126 million.
Credit Ratings. Our short-term and long-term debt is rated by four credit rating agencies designated as nationally
recognized statistical rating organizations ("NRSROs") by the U.S. Securities and Exchange Commission:
• DBRS Limited ("DBRS");
• Fitch, Inc. ("Fitch");
• Moody's Investors Service, Inc. ("Moody's"); and
• Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P").
For more information visit www.annualreport.ford.com