Ford 2009 Annual Report Download - page 54

Management’s Discussion and Analysis of Financial Condition and Results of Operations
52 Ford Motor Company | 2009 Annual Report
In addition to the specific transaction-related structural features discussed above, Ford Credit's securitization programs
may be affected by the following factors: market disruption and volatility, the market capacity for Ford Credit and Ford
Credit's sponsored investments, the general demand for the type of assets supporting the asset-backed securities, the
availability of committed liquidity facilities, the amount and credit quality of assets available, the performance of assets in
its previous securitization transactions, accounting and regulatory changes, and Ford Credit's credit ratings. In addition, a
bankruptcy of Ford, Ford Credit, or FCE would cause certain of Ford Credit's funding transactions to amortize and result in
a termination of certain liquidity commitments. If, as a result of any of these or other factors, the cost of securitization
funding were to increase significantly or funding through securitization transactions were no longer available to Ford Credit,
it would have a material adverse impact on Ford Credit's financial condition and results of operations, which could
adversely affect its ability to support the sale of Ford vehicles.
On-Balance Sheet Arrangements
Most of Ford Credit's securitization transactions do not satisfy the requirements for accounting sale treatment and,
therefore, the securitized assets and related debt are included in Ford Credit's financial statements. Ford Credit expects its
future securitization transactions to be on-balance sheet. Ford Credit believes on-balance sheet arrangements are more
transparent to its investors. Securitized assets are only available to repay the related asset-backed debt and to pay other
securitization investors and other participants. These underlying securitized assets are available only 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 holds the right to the excess cash flows not needed to pay
the debt and other obligations issued or arising in each of these securitization transactions. This debt is not Ford Credit's
legal obligation or the legal obligation of its other subsidiaries. Assets and associated liabilities related to Ford Credit's on-
balance sheet securitization transactions are as follows (in billions):
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See Note 19 of the Notes to the Financial Statements for more information regarding on-balance sheet securitization
transactions.
Off-Balance Sheet Arrangements
We have entered into various arrangements not reflected on our balance sheet that have or are reasonably likely to
have a current or future effect on our financial condition, results of operations or liquidity. These include securitizations by
Ford Credit in off-balance sheet transactions, variable interest entities ("VIEs") and guarantees. For a discussion of our
VIEs and guarantees, see Notes 13 and 31, respectively, of the Notes to the Financial Statements.
Ford Credit has not entered into any off-balance sheet arrangements (off-balance sheet securitization transactions and
whole-loan sale transactions, excluding sales of businesses and liquidating portfolios) since the first quarter of 2007, which
is consistent with Ford Credit's plan to execute on-balance sheet securitization transactions.
Total Company
Equity/(Deficit). At December 31, 2009, Total equity/(deficit) attributable to Ford Motor Company was negative
$7.8 billion, an improvement of $7.9 billion compared with December 31, 2008. The improvement is more than explained
by favorable changes in Capital in excess of par value of stock (primarily the various equity issuances ($1.9 billion), the
conversion of a portion of the 2036 Convertible Notes ($1.4 billion), the issuance of warrants related to the UAW Amended
Settlement Agreement ($1.2 billion), the equity component related to the issuance of the 2016 Convertible Notes (about
$700 million), and the debt securities exchanged for equity (about $600 million)); and favorable changes in Retained
earnings (primarily related to 2009 net income attributable to Ford ($2.7 billion)).