Ford 2011 Annual Report Download - page 165

Notes to the Financial Statements
Ford Motor Company | 2011 Annual Report 163
NOTE 24. CAPITAL STOCK AND AMOUNTS PER SHARE
Capital Stock. All general voting power is vested in the holders of Common Stock and Class B Stock. Holders of our
Common Stock have 60% of the general voting power and holders of our Class B Stock are entitled to such number of
votes per share as will give them the remaining 40%. Shares of Common Stock and Class B Stock share equally in
dividends when and as paid, with stock dividends payable in shares of stock of the class held. Our ability to pay dividends
(other than dividends payable in stock) is subject to certain limits under the terms of our Credit Agreement, which is
discussed in more detail in Note 18.
If liquidated, each share of Common Stock will be entitled to the first $0.50 available for distribution to holders of
Common Stock and Class B Stock, each share of Class B Stock will be entitled to the next $1.00 so available, each share
of Common Stock will be entitled to the next $0.50 so available and each share of Common and Class B Stock will be
entitled to an equal amount thereafter.
We present both basic and diluted earnings per share ("EPS") amounts in our financial reporting. EPS is computed
independently each quarter for income from continuing operations, income/(loss) from discontinued operations, and net
income; as a result, the sum of per-share amounts from continuing operations and discontinued operations may not equal
the total per-share amount for net earnings. Basic EPS excludes dilution and is computed by dividing income available to
Common and Class B Stock holders by the weighted-average number of Common and Class B Stock outstanding for the
period. Diluted EPS, on the other hand, reflects the maximum potential dilution that could occur if all our equity-linked
securities and other share-based compensation, including stock options, warrants, and rights under our convertible notes,
were exercised. Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period.
Convertible Securities
As discussed in Note 18, 2016 Convertible Notes with a principal amount of $883 million and 2036 Convertible Notes
with a principal amount of $25 million were each outstanding at December 31, 2011.
Subject to certain limitations relating to the price of our Common Stock, at the option of the holder, each 2016
Convertible Note is convertible on or before November 16, 2016, into shares of Common Stock at a rate of 107.5269
shares per $1,000 principal amount of 2016 Convertible Note (equivalent to a conversion price of $9.30 per
share). Conversion of all remaining shares of 2016 Convertible Notes would result in the issuance of about 95 million
shares of our Common Stock.
At the option of the holder, each 2036 Convertible Note is convertible on or before December 15, 2036, into shares of
Ford Common Stock at a rate of 108.6957 shares per $1,000 principal amount of Convertible Notes (equivalent to a
conversion price of $9.20 per share). Conversion of all remaining shares of 2036 Convertible Notes would result in the
issuance of about 2.7 million shares of our Common Stock.
Warrants
In conjunction with the transfer of assets to the UAW VEBA Trust on December 31, 2009, we issued warrants to
purchase 362,391,305 shares of Ford Common Stock at an exercise price of $9.20 per share. On April 6, 2010, the UAW
VEBA Trust sold all such warrants to parties unrelated to us. In connection with the sale, the terms of the warrants were
modified to provide for, among other things, net share settlement as the only permitted settlement method thereby
eliminating full physical settlement as an option, and elimination of certain of the transfer restrictions applicable to the
underlying stock. We received no proceeds from the offering. All warrants are fully exercisable and expire
January 1, 2013. The net dilutive effect for warrants, shown below, includes approximately 111 million dilutive shares for
2011, representing the net share settlement methodology for the 362 million warrants outstanding as of
December 31, 2011.
Dividend Reinstatement
On December 8, 2011, our Board of Directors declared a dividend on our Common and Class B Stock of $0.05 per
share payable on March 1, 2012, to stockholders of record on January 31, 2012. Accordingly, we recorded a reduction to
retained earnings of $190 million in the fourth quarter of 2011.