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38 Ford Motor Company | 2012 Annual Report
Management's Discussion and Analysis of Financial Condition and Results of Operations
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. Automotive gross
cash and liquidity as of the dates shown were as follows (in billions):
December 31,
2012
December 31,
2011
Gross cash $ 24.3 $22.9
Available credit lines
Revolving credit facility, unutilized portion 9.5 8.8
Local lines available to foreign affiliates, unutilized portion 0.7 0.7
Automotive liquidity $ 34.5 $32.4
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 GAAP cash flow statement and differs from Net cash provided by/(used in) operating activities, the
most directly comparable GAAP financial measure.
Changes in Automotive gross cash are summarized below (in billions):
2012 2011 2010
Gross cash at end of period $ 24.3 $22.9 $20.5
Gross cash at beginning of period 22.9 20.5 24.9
Total change in gross cash $ 1.4 $ 2.4 $ (4.4)
Automotive income before income taxes (excluding special items) $ 6.3 $ 6.3 $ 5.3
Capital expenditures (5.5)(4.3) (3.9)
Depreciation and special tools amortization 3.7 3.6 3.8
Changes in working capital (a) (2.3) 0.3 (0.1)
Other/Timing differences (b) 1.2 (0.3) (0.7)
Total operating-related cash flows 3.4 5.6 4.4
Cash impact of personnel-reduction programs accrual (0.4)(0.3) (0.2)
Net receipts from Financial Services sector (c) 0.7 4.2 2.7
Other (d) 1.1 (0.2) (0.8)
Cash flow before other actions 4.8 9.3 6.1
Net proceeds from/(Payments on) Automotive sector debt 0.9 (6.0) (12.1)
Contributions to funded pension plans (3.4)(1.1) (1.0)
Dividends/Other (0.9) 0.2 2.6
Total change in gross cash $ 1.4 $ 2.4 $ (4.4)
_________
(a) Working capital comprised of changes in receivables, inventory, and trade payables.
(b) Primarily expense and payment timing differences for items such as pension and OPEB, compensation, marketing, and warranty, as well as
additional factors, such as the impact of tax payments.
(c) Primarily distributions and tax payments received from Ford Credit.
(d) 2012 includes cash and marketable securities resulting from the consolidation of AAI.
With respect to "Changes in working capital," in general we carry relatively low trade receivables compared to our
trade payables because the majority of our Automotive wholesales are financed (primarily by Ford Credit) immediately
upon sale of vehicles to dealers, which generally occurs at the time the vehicles are gate-released shortly after being
produced. In addition, our inventories are lean because we build to order, not for inventory. In contrast, our Automotive
trade payables are based primarily on industry-standard production supplier payment terms generally ranging between
30 days to 45 days. As a result, our cash flow tends to improve as wholesale volumes increase, but can deteriorate
significantly when wholesale volumes drop sharply. In addition, these working capital balances generally are subject to
seasonal changes that can impact cash flow. For example, we typically experience cash flow timing differences
associated with inventories and payables due to our annual summer and December shutdown periods, when production,
and therefore inventories and wholesale volumes, are usually at their lowest levels, while payables continue to come due
and be paid. The net impact of this typically results in cash outflows from changes in our working capital balances during
these shutdown periods.