Ford 2009 Annual Report Download - page 38

Management’s Discussion and Analysis of Financial Condition and Results of Operations
36 Ford Motor Company | 2009 Annual Report
LIQUIDITY AND CAPITAL RESOURCES
Automotive Sector
Our industry has been heavily impacted by the global economic crisis that began in 2008, which included a sudden and
substantial decline in global industry sales volume. The dramatic decline in industry sales volume, combined with tight
credit markets, other economic factors, and the costs associated with transforming our business, put significant pressure
on our Automotive liquidity in the first half of 2009. While the economic environment remains uncertain, we believe that our
continued focus on delivering on our plan is the right strategy to achieve our objectives. Our Automotive liquidity strategy
includes ensuring that we have sufficient funding available with a high degree of certainty throughout the business cycle,
with the goal of improving our core Automotive operations so that they generate positive operating-related cash flow.
Gross Cash. Automotive gross cash includes cash and cash equivalents, net marketable securities, and loaned
securities. Prior to 2008, we included in Automotive gross cash those assets contained in a VEBA trust which may be
used to pre-fund certain types of company-paid benefits for U.S. employees and retirees, that were invested in shorter-
duration fixed income investments and could be used within 18 months to pay for benefits ("short-term VEBA assets").
Consistent with our Retiree Health Care Settlement Agreement dated March 28, 2008, in 2008 we reclassified out of our
Automotive gross cash calculation the short-term VEBA assets and TAA securities. Gross cash is detailed below as of the
dates shown (in billions):

'HFHPEHU
'HFHPEHU'HFHPEHU
'HFHPEHU








 

 


&DVKDQGFDVKHTXLYDOHQWV 

       
0DUNHWDEOHVHFXULWLHVD

       
/RDQHGVHFXULWLHV

ಧ ಧ    
7RWDOFDVKPDUNHWDEOHVHFXULWLHVDQGORDQHGVHFXULWLHV

       
6HFXULWLHVLQWUDQVLWE

 ಧ  ಧ    
8$:)RUG7$$2WKHUF

 ಧ    ಧ  ಧ
6KRUWWHUP9(%$DVVHWV 

ಧ ಧ    
*URVVFDVKG 

       
BBBBBBBBBB
D Included in 2009 and 2008 are Ford Credit debt securities that we purchased, which are reflected in the table at a carrying value of $646 million
and $492 million, respectively; the estimated fair value of these securities is $656 million and $437 million, respectively. Also included are
Mazda marketable securities with a fair value of $447 million and $322 million at December 31, 2009 and 2008, respectively.
E The purchase or sale of marketable securities for which the cash settlement was not made by period-end and for which there was a payable or
receivable recorded on the balance sheet at period-end.
F Amount transferred to UAW-Ford TAA that, due to consolidation, was shown in Cash, marketable securities and loaned securities.
G Pursuant to the Retiree Health Care Settlement Agreement (see Note 18 of the Notes to the Financial Statements), in January 2008 we
contributed $4.6 billion of assets and reduced our Automotive gross cash accordingly.
In managing our business, we classify changes in Automotive gross cash into two categories: operating-related and
other (which includes the impact of certain special items, contributions to funded pension plans, the net effect of the
change in the TAA and VEBA on gross cash, certain tax-related transactions, acquisitions and divestitures, capital
transactions with the Financial Services sector, dividends paid to shareholders, and other – primarily financing-related).
Our key liquidity metrics are operating-related cash flow, which best represents the ability of our Automotive operations to
generate cash, and Automotive gross cash. We believe the cash flow analysis reflected in the table below is useful to
investors because it includes in operating-related cash flow elements that we consider to be related to our Automotive
operating activities (e.g., capital spending) and excludes cash flow elements that we do not consider to be related to the
ability of our operations to generate cash. This differs from a cash flow statement presented in accordance with
U.S. GAAP and differs from Cash flows from operating activities of continuing operations, the most directly comparable
U.S. GAAP financial measure.