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Notes to the Financial Statements
82 Ford Motor Company | 2007 Annual Report
NOTE 16. DEBT AND COMMITMENTS (Continued)
On December 7, 2007, pursuant to an agreement entered into on December 4, 2007, we issued an aggregate of
62,000,761 shares of Ford Common Stock, par value $0.01 per share, in exchange for $441,991,000 principal amount of
our 6!% Debentures due February 1, 2029 and $124,943,000 principal amount of our 6"% Debentures due
October 1, 2028 (collectively, the "Debentures"), beneficially owned by an institutional holder of the Debentures. We did
not receive any cash proceeds as a result of the exchange of Ford Common Stock for the Debentures, which have been
retired and cancelled. As a result of the exchange, we recorded a pre-tax gain of $120 million in Automotive interest
income and other non-operating income/(expense), net.
Senior Convertible Indebtedness
At December 31, 2007, we have outstanding $4.95 billion in principal amount of unsecured Senior Convertible Notes
(the "Convertible Notes") that mature in 2036. The Convertible Notes pay interest semiannually at a rate of 4.25% per
annum. The Convertible Notes are convertible into shares of Ford Common Stock, based on a conversion rate (subject to
adjustment) of 108.6957 shares per $1,000 principal amount of Convertible Notes (which is equal to a conversion price of
$9.20 per share, representing a 25% conversion premium based on the closing price of $7.36 per share on
December 6, 2006). Holders may require us to purchase all or a portion of the Convertible Notes for cash on
December 20, 2016 and December 15, 2026 or upon a change in control of the Company or for shares of Ford Common
Stock upon a designated event, in each case for a price equal to 100% of the principal amount of the Convertible Notes
being repurchased, plus any accrued and unpaid interest to, but not including, the date of repurchase. We may redeem
for cash all or a portion of the Convertible Notes at our option at any time or from time to time on or after
December 20, 2016 at a price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus
accrued and unpaid interest to, but not including, the redemption date. We also may terminate the conversion rights at
any time on or after December 20, 2013 if the closing price of Ford Common Stock exceeds 140% of the then-prevailing
conversion price for twenty trading days during any consecutive thirty trading day period.
Subordinated Convertible Indebtedness
At December 31, 2007, Ford Motor Company Capital Trust II ("Trust II"), a subsidiary trust, had outstanding
6.50% Cumulative Convertible Trust Preferred Securities with an aggregate liquidation preference of $2.9 billion (the
“Trust Preferred Securities”). The sole assets of Trust II are $3 billion of 6.50% Junior Subordinated Convertible
Debentures due 2032 of Ford Motor Company (the "Subordinated Debentures"). As of January 15, 2007, the
Subordinated Debentures had become redeemable at our option. We guarantee the payment of all distribution and other
payments of the Trust Preferred Securities to the extent not paid by Trust II, but only if and to the extent we have made a
payment of interest or principal on the Subordinated Debentures. Trust II is not consolidated by us as it is a VIE in which
we do not have a significant variable interest and of which we are not the primary beneficiary.
On August 3, 2007, pursuant to an exchange or conversion offer made by Trust II and Ford to holders of Trust
Preferred Securities, holders of 42,543,071 then-outstanding Trust Preferred Securities with an aggregate liquidation
preference of $2.1 billion elected to convert such securities into an aggregate 194,494,157 shares of Ford Common
Stock. The conversion offer provided for a premium of 1.7468 additional shares of Ford Common Stock, over the
2.8249 shares of Ford Common Stock into which each Trust Preferred Security was convertible pursuant to its conversion
terms. As a result of the exchange, we recorded a pre-tax loss of $632 million in Automotive interest income and other
non-operating income/(expense), net.