Ford 2011 Annual Report Download - page 59

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2011 Annual Report 57
The following table provides detail of Borrowing Base values for various categories of collateral (in millions, except
percentages):
U.S. receivables
U.S. inventory
Pledge of Ford Motor Company of Canada, Limited intercompany notes
(limited to its total tangible assets)
Pledge of equity in Ford Credit and certain non-U.S. subsidiaries (net of
intercompany transactions)
U.S. property, plant, and equipment subject to indenture limitation
Other U.S. machinery and equipment
Intellectual property and U.S. trademarks (b)
Eligible value/borrowing base
Eligible Value (a)
$900
1,894
294
18,180
3,821
2,595
7,900
$35,584
Advance Rate
75%
60%
100%
75%
48%
40%
32%
Borrowing Base
$675
1,136
294
13,635
1,836
1,038
2,500
$ 21,114
__________
(a)
(b)
Based on formulas set forth in the Credit Agreement, and not necessarily indicative of fair market value (which could be materially higher or
lower); receivables, inventory, intercompany notes, and property, plant and equipment reflect net book value at December 31, 2011; equity of
Ford Credit is based on its book value at December 31, 2011, net of certain intercompany transactions, and equity in other subsidiaries is
based on a multiple of their two-year average earnings before interest, taxes, depreciation, and amortization ("EBITDA") less debt. For these
purposes, EBITDA is defined as statutorily-reported consolidated operating income plus depreciation and amortization.
Value reflects independent third-party valuation of trademarks.
As of December 31, 2011, the Borrowing Base value and the total outstanding amount of debt and letters of credit
secured by collateral were $21,114 million and $131 million, respectively, compared with $22,141 million and
$5,298 million, respectively, at December 31, 2010. This resulted in a collateral coverage ratio of 161.18 to 1 at
December 31, 2011, compared with a collateral coverage ratio of 4.18 to 1 at December 31, 2010. The borrowing base
covenant requires a collateral coverage ratio of at least 1 to 1 assuming the revolving credit facility is fully drawn. On a
basis that assumes the revolving loan facility is fully drawn, the collateral coverage ratio at December 31, 2011 (2.38 to 1)
increased from that at December 31, 2010 (1.82 to 1), reflecting prepayment in full of the term loans and termination of
the 2011 revolving commitments.
In addition to customary payment, representation, bankruptcy, and judgment defaults, the Credit Agreement contains
cross-payment and cross-acceleration defaults with respect to other debt for borrowed money, and a change-in-control
default provision.
We are in the process of seeking to extend the termination date of the revolving credit facility under our Credit
Agreement from November 30, 2013 to November 30, 2015, and to make certain other modifications to the Credit
Agreement.
U.S. Department of Energy ("DOE") Advanced Technology Vehicle Manufacturer ("ATVM") Incentive Program. We
submitted to the DOE an application dated November 18, 2008 for term loans totaling $11.4 billion pursuant to the DOE's
ATVM Program. Our application, which was deemed substantially complete on December 16, 2008, related to ATVM
Program expenditures approved by the DOE to be made by us extending beyond 2011. By mutual agreement, our
application was amended and restated on June 12, 2009 (as so amended and restated, the "Application") to request,
initially, term loans totaling $5.9 billion to fund up to 80% of the ATVM Program expenditures approved through
mid-2012. The ATVM Program was authorized by section 136 of the Energy Independence and Security Act of 2007, as
amended from time to time, to provide up to $25 billion of loans to automobile and automobile part manufacturers for the
cost of re-equipping, expanding, or establishing manufacturing facilities in the United States to produce advanced
technology vehicles or qualified components, and for associated engineering integration costs. Loans under the ATVM
Program are made by and through the Federal Financing Bank, an instrumentality of the U.S. government created by the
Federal Financing Bank Act of 1973 that is under the general supervision of the Secretary of the Treasury.
As disclosed in our Current Report on Form 8-K dated September 16, 2009 (the "September 2009 Form 8-K Report"),
we entered into a Loan Arrangement and Reimbursement Agreement ("Arrangement Agreement") with the DOE, pursuant
to which the DOE agreed to (i) arrange a 13-year multi-draw term loan facility (the "Facility") under the ATVM Program in
the aggregate principal amount of up to $5.9 billion, (ii) designate us as a borrower under the ATVM Program and (iii)
cause the Federal Financing Bank to enter into a Note Purchase Agreement (the "Note Purchase Agreement") for the
purchase of notes to be issued by us evidencing such loans. The proceeds of advances under the Facility are to be used
to finance certain costs for alternative technology vehicles eligible for financing under the ATVM Program that are incurred
through mid-2012. Advances under the existing Facility may be requested through December 31, 2012. Each advance
under the Facility bears interest at a blended rate based on the Treasury yield curve at the time such advance is