Ford 2011 Annual Report Download - page 60

Management’s Discussion and Analysis of Financial Condition and Results of Operations
58 Ford Motor Company | 2011 Annual Report
borrowed, based on the principal amortization schedule for that advance, with interest payable quarterly in arrears. The
principal amount of the loans under the Facility is payable in quarterly installments, commencing on September 15, 2012,
through June 15, 2022. Through December 31, 2011, we have received $4.8 billion in loans under the Facility and the
weighted-average interest rate on such loans is about 2.5% per annum. For additional details regarding the Arrangement
Agreement and the Note Purchase Agreement, refer to Exhibits 10.1 and 10.2 filed with the September 2009 Form 8-K
Report.
European Investment Bank ("EIB") Credit Facility. On July 12, 2010, Ford Motor Company Limited, our operating
subsidiary in the United Kingdom ("Ford of Britain"), entered into a credit facility for an aggregate amount of £450 million
with the EIB. Proceeds of loans drawn under the facility are being used for research and development of fuel-efficient
engines and commercial vehicles with lower emissions, and related upgrades to an engine manufacturing plant. The
facility was fully drawn in the third quarter of 2010, and Ford of Britain had outstanding $698 million of loans at
December 31, 2011. The loans are five-year, non-amortizing loans secured by a guarantee from the U.K. government for
80% of the outstanding principal amount and cash collateral from Ford of Britain equal to 20% of the outstanding principal
amount, and bear interest at a fixed rate of approximately 3.6% per annum (excluding a commitment fee of 0.30% to the
U.K. government). Ford of Britain has pledged substantially all of its fixed assets, receivables, and inventory to the
U.K. government as collateral, and we have guaranteed Ford of Britain's obligations to the U.K. government related to the
government's guarantee.
U.S. Ex-Im Bank and Private Export Funding Corporation ("PEFCO") Secured Revolving Loan. On
December 21, 2010, we entered into a credit agreement with PEFCO and Ex-Im Bank. Under the terms of the credit
agreement, PEFCO provided us with a $250 million revolving credit facility and Ex-Im Bank provided a guarantee to
PEFCO for 100% of the outstanding principal amount of the loan, which is secured by our in-transit vehicle inventory to
Canada and Mexico. The facility is used to finance vehicles exported for sale to Canada and Mexico that were
manufactured in our U.S. assembly plants. The facility was fully drawn in the fourth quarter of 2010 and we had
outstanding a $250 million loan at December 31, 2011. The loan matures on March 20, 2012 and bears interest at
LIBOR, at a time period that most closely parallels the advancement term, plus a margin of 1% (excluding a facility fee of
1.6%), with interest payable monthly.
Other Automotive Credit Facilities. At December 31, 2011, we had $817 million of local credit facilities to non-
U.S. Automotive affiliates, of which $74 million has been utilized. Of the $817 million of committed credit facilities,
$66 million expires in 2012, $165 million expires in 2013, $223 million expires in 2014, and $363 million expires in 2015.
Net Cash. Our Automotive sector net cash calculation at December 31 was as follows (in billions):
Gross cash
Less:
Long-term debt
Debt payable within one year
Total debt
Net cash
2011
$22.9
12.1
1.0
13.1
$9.8
2010
$20.5
17.1
2.0
19.1
$1.4
Total debt at December 31, 2011 decreased by $6 billion from December 31, 2010, reflecting the redemption of our
Trust Preferred Securities in the first quarter of 2011, resulting in a reduction of about $3 billion, and payments made
throughout the year of $4.9 billion on our term loans and revolving credit facility under the Credit Agreement, offset
partially by an increase in low-cost government loans to support advanced technology vehicle development.
See Note 18 of the Notes to the Financial Statements for our debt maturity table as of December 31, 2011 and
additional debt disclosures.
Pension Plan Contributions and Strategy. Worldwide, our defined benefit pension plans were underfunded by
$15.4 billion at December 31, 2011, compared with being underfunded by $11.5 billion at December 31, 2010. The
deterioration primarily reflects sharply lower discount rates, with the U.S. weighted-average discount rate declining to
4.64% at the end of 2011 from 5.24% at the end of 2010.