Ford 2011 Annual Report Download - page 69

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2011 Annual Report 67
On-Balance Sheet Arrangements
All of Ford Credit's securitization transactions involve sales to consolidated entities or it maintains control over the
assets and, therefore, the securitized assets and related debt remain on Ford Credit's balance sheet. The 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 the securitization
transactions. This debt is not Ford Credit's obligation nor the obligation of its other subsidiaries. Assets and associated
liabilities related to Ford Credit's on-balance sheet securitization transactions at December 31 were as follows (in billions):
Total outstanding principal amount of finance receivables and net investment in operating leases included in on-
balance sheet securitization transactions are as follows (in billions):
Cash balances to be used only to support the on-balance sheet securitizations
Debt payable only out of collections on the underlying securitized assets and related enhancements
2011
$62.2
3.7
46.7
2010
$60.7
4.2
43.6
See Note 18 of the Notes to the Financial Statements for more information regarding on-balance sheet securitization
transactions.
Total Company
Equity/(Deficit). At December 31, 2011, Total equity/(deficit) attributable to Ford Motor Company was $15 billion, an
improvement of $15.7 billion compared with December 31, 2010. The improvement is primarily explained by favorable
changes in Retained earnings, primarily related to 2011 net income attributable to Ford of $20.2 billion, offset partially by
cash dividends declared of $190 million. The changes in Retained earnings are offset partially by unfavorable changes in
Accumulated other comprehensive income/(loss), primarily related to pension and OPEB adjustments of $3.6 billion and
currency translation of $718 million.
Credit Ratings. Our short-term and long-term debt is rated by four credit rating agencies designated as NRSROs by
the U.S. Securities and Exchange Commission:
• DBRS Limited ("DBRS");
• Fitch, Inc. ("Fitch");
• Moody's Investors Service, Inc. ("Moody's"); and
• Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P").
In several markets, locally-recognized rating agencies also rate us. A credit rating reflects an assessment by the
rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity. Rating
agencies' ratings of us are based on information provided by us and other sources. Credit ratings are not
recommendations to buy, sell, or hold securities, and are subject to revision or withdrawal at any time by the assigning
rating agency. Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should
be evaluated independently for each rating agency. Lower credit ratings generally result in higher borrowing costs and
reduced access to capital markets. There have been no ratings actions taken by these NRSROs since the filing of our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. The following chart summarizes certain of the
credit ratings and the outlook presently assigned to Ford and Ford Credit by these four NRSROs:
DBRS
Fitch
Moody's
S&P
NRSRO RATINGS
Ford
Issuer Default/
Corporate/
Issuer Rating
BB
BB+
Ba1
BB+
Long-Term
Senior
Unsecured
B (high)
BB+
Ba2
BB+
Senior
Secured
BBB (low)
BBB-
Baa2
BBB
Outlook /
Trend
Stable
Positive
Positive
Stable
Ford Credit
Long-Term
Senior
Unsecured
BB (high)
BB+
Ba1
BB+ (a)
Short-Term
Unsecured
R-4
B
NP
NR
Outlook /
Trend
Stable
Positive
Positive
Stable
__________
(a) S&P assigns FCE a long-term senior unsecured rating of BBB-, maintaining a one notch differential versus Ford Credit.