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Management’s Discussion and Analysis of Financial Condition and Results of Operations
42 Ford Motor Company | 2010 Annual Report
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, 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, Automotive gross cash and Automotive
liquidity, summarized below (in billions):
De
DeDe
December 31,
cember 31,cember 31,
cember 31,
2010
20102010
2010
2009
20092009
2009
Gross cash................................................................................................................................
................................
$ 20.5 $ 24.9
Available credit lines:
Secured credit facility, unutilized portion ................................................................................................
...................
6.9 0.2
Local lines available to foreign affiliates, unutilized portion ................................................................
.......................
0.5 0.5
Automotive liquidity................................................................................................
................................
$ 27.9 $ 25.6
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. generally accepted accounting principles
("GAAP") and differs from Cash flows from operating activities of continuing operations, the most directly comparable
U.S. GAAP financial measure.
Changes in Automotive gross cash are summarized below (in billions):
2010
20102010
2010 (a)
(a) (a)
(a)
2009
20092009
2009
2008 (b
2008 (b2008 (b
2008 (b)
)))
Gross cash at end of period ................................................................
................................
$ 20.5 $ 24.9 $ 13.1
Gross cash at beginning of period................................................................
................................
24.9 13.1 34.2
Total change in gross cash ................................................................
................................
$ (4.4) $ 11.8 $ (21.1)
Operating
OperatingOperating
Operating-
---related cash flows
related cash flowsrelated cash flows
related cash flows
Automotive income/(loss) before income taxes (excluding special items)
................................
$ 5.3 $ (1.9) $ (6.8)
Capital expenditures ................................................................................................
................................
(3.9) (4.0) (6.3)
Depreciation and special tools amortization ................................................................
................................
3.8 4.2 5.2
Changes in receivables, inventory and trade payables ................................
................................
(0.1) 3.7 (2.5)
Other (c)................................................................................................
................................
0.2 (0.8) (6.3)
Subtotal ................................................................................................
................................
5.3 1.2 (16.7)
Subvention payments to Ford Credit (d)................................................................
................................
(0.9) (2.0) (2.9)
Total operating-related cash flows ................................................................
................................
4.4 (0.8) (19.6)
Other changes in gross cash
Other changes in gross cashOther changes in gross cash
Other changes in gross cash
Cash impact of personnel-reduction programs and Job Security Benefits/
Transition Assistance Plan accrual ................................................................
................................
(0.2) (0.7) (0.7)
Contributions to funded pension plans ................................................................
................................
(1.0) (0.9) (1.0)
Net effect of TAA/VEBA on gross cash (e)................................................................
................................
— (0.8) (4.6)
Net receipts from Financial Services sector (f)................................
................................
2.7 1.0 2.2
Net proceeds from/(Payments on) Automotive sector debt ................................
................................
(12.1) 11.9 (0.6)
Equity issuances, net ................................................................................................
................................
1.3 2.4 0.8
Other (g) ................................................................................................
................................
0.5 (0.3) 2.4
Total change in gross cash ................................................................
................................
$ (4.4) $ 11.8 $ (21.1)
__________
(a) Except as noted (see note (g) below), Volvo's 2010 cash flows are excluded from each line item of this table and included in Other within
"Other changes in gross cash."
(b) Except for up-front subvention payments to Ford Credit, Jaguar Land Rover cash flows are excluded from each line item of this table and
included in Other within "Other changes in gross cash."
(c) Primarily expense and payment timing differences for items such as pension and OPEB, marketing, and warranty, as well as additional factors
such as the impact of tax payments.
(d) Beginning in 2008, Ford began paying all interest-rate subvention and residual value support to Ford Credit at the time of origination of new
contracts. Cash flows represented here reflect Ford's monthly support payments on contracts existing prior to 2008.
(e) As previously disclosed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K for the year ended December 31, 2008, in January 2009 we liquidated the assets in the TAA established pursuant to the
Retiree Health Care Settlement Agreement, and replaced the assets with a promissory note owning by Ford to Ford-UAW Holdings LLC.
(f) Primarily distributions received from Ford Credit, excluding proceeds from Financial Services sector divestitures paid to the Automotive sector.
(g) During the third quarter of 2010 we completed the sale of Volvo for $1.8 billion, of which $200 million was paid in the form of a note and the
balance in cash. As a result of estimated purchase price adjustments of $300 million, we received $1.3 billion in cash. The final purchase
price adjustments are expected to result in additional proceeds to Ford. Also included in 2010 are cash changes primarily reflecting the
exclusion of Volvo's cash balances as a result of the sale and Volvo's cash flows through the date of sale, offset partially by the release of cash
previously restricted as to its use.