Ford 2014 Annual Report Download - page 154

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14. REDEEMABLE NONCONTROLLING INTEREST
AutoAlliance International, Inc. (“AAI”) was a 50/50 joint venture between Ford and Mazda Motor Corporation
(“Mazda”) that owned an automobile assembly plant in Flat Rock, Michigan. On September 1, 2012, we granted to Mazda
a put option to sell and received from Mazda a call option to purchase the 50% equity interest in AAI that was held by
Mazda (“the Option”). The Option was exercisable at a price of $339 million and was recorded as a redeemable
noncontrolling interest in the mezzanine section of our balance sheet.
In January 2015, Mazda exercised its put option. Ford purchased Mazda's 50% equity interest at the exercise price
plus accrued interest and dissolved AAI.
The change in our carrying value of the redeemable noncontrolling interest for the years ended December 31 was as
follows (in millions):
2014 2013
Beginning balance $ 331 $322
Accretion to the redemption value of noncontrolling interest (a)14 9
Payments (b) (3) —
Ending balance $ 342 $331
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(a) For the years ended December 31, 2014 and 2013, respectively, $10 million and $9 million were recognized in Interest expense and $4 million and
$0 were recognized in Income/(Loss) attributable to noncontrolling interests.
(b) Represents a return of Mazda’s investment in AAI that we are contractually obligated to pay as long as Mazda retains its ownership in AAI.
NOTE 15. VARIABLE INTEREST ENTITIES
A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional
subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest.
We consolidate VIEs of which we are the primary beneficiary. We consider ourselves the primary beneficiary of a VIE
when we have both the power to direct the activities that most significantly impact the entity’s economic performance
and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to
the VIE. Assets recognized as a result of consolidating these VIEs do not represent additional assets that could be
used to satisfy claims against our general assets. Conversely, liabilities recognized as a result of consolidating these
VIEs do not represent additional claims on our general assets; rather, they represent claims against the specific assets
of the consolidated VIEs.
We have the power to direct the significant activities of an entity when our management has the ability to make key
operating decisions, such as decisions regarding capital or product investment or manufacturing production schedules.
For securitization entities, we have the power to direct significant activities when we have the ability to exercise
discretion in the servicing of financial assets (including general collection activity on current and noncurrent accounts
and loss mitigation efforts including repossession and sale of collateral), issue additional debt, exercise a unilateral call
option, add assets to revolving structures, or control investment decisions.
VIEs of Which We are Not the Primary Beneficiary
Certain of our joint ventures are VIEs, in which the power to direct economically significant activities is shared with
the joint venture partner. Our investments in these joint ventures are accounted for as equity method investments. Our
maximum exposure to any potential losses associated with these joint ventures is limited to our investment, including
loans, and was $307 million and $336 million at December 31, 2014 and December 31, 2013, respectively
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