Annual Report 2011 - Ford Motor Company

Notes to the Financial Statements
NOTE 25. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
Income Effect of Derivative Instruments
The following tables summarize by hedge designation the pre-tax gains/(losses) recorded in Other comprehensive
income/(loss) ("OCI"), reclassified from Accumulated other comprehensive income/(loss) ("AOCI") to income and/or
recognized directly in income (in millions):
Gain/
(Loss)
Recorded
in OCI
2011
Gain/(Loss)
Reclassified
from AOCI
to Income
Automotive Sector
Cash flow hedges:
Foreign currency exchange
contracts
$ (100) $ 119 (a)
Commodity contracts
— —
Total
Derivatives not designated as
hedging instruments:
Foreign currency exchange
contracts - operating
exposures
Foreign currency exchange
contracts - investment
portfolios
Commodity contracts
Other – warrants
Total
$ (100) $ 119
Gain/(Loss)
Recognized
in Income
$ (3)
—
$ (3)
$ 20
—
(423)
(1)
$ (404)
Gain/
(Loss)
Recorded
in OCI
$ (7)
—
$ (7)
2010
Gain/(Loss)
Reclassified
from AOCI
to Income
$ 17
—
$ 17
Gain/(Loss)
Recognized
in Income
$ —
—
$ —
$ (183)
—
68
2
$ (113)
Gain/
(Loss)
Recorded
in OCI
2009
Gain/(Loss)
Reclassified
from AOCI
to Income
$ (86) $ 37 (b)
— 4
$ (86) $ 41
Gain/(Loss)
Recognized
in Income
$ (1)
—
$ (1)
$ (120)
(11)
(4)
(12)
$ (147)
Financial Services Sector
Fair value hedges:
Interest rate contracts
Net interest settlements
and accruals excluded
from the assessment of
hedge effectiveness
$ 217
$ 225
$ 164
Ineffectiveness (c)
(30)
(6)
(13)
Total
Derivatives not designated as
hedging instruments:
$ 187
$ 219
$ 151
Interest rate contracts
$ (5)
$ 38
$ (63)
Foreign currency exchange
contracts
(48)
(88)
(268)
Cross-currency interest rate
swap contracts
(3)
(1)
12
Other (d)
65
—
—
Total
__________
$ 9
$ (51)
$ (319)
(a) Includes $3 million loss reclassified from AOCI to income in fourth quarter 2011 attributable to transactions no longer probable to occur, related to
Ford of Thailand.
(b) Includes $4 million gain reclassified from AOCI to income in first quarter 2009 attributable to transactions no longer probable to occur, primarily
related to Volvo.
(c) For 2011, 2010 and 2009, hedge ineffectiveness reflects change in fair value on derivatives of $433 million gain, $117 million gain, and $46 million
loss, respectively, and change in fair value on hedged debt of $463 million loss, $123 million loss, and $33 million gain, respectively.
(d) Reflects gains/(losses) for derivative features included in the FUEL notes (see Note 4).
In 2010, a net gain of $7 million of foreign currency translation on net investment hedges was transferred from
Accumulated other comprehensive income/(loss) to earnings due to the sale of investments in foreign affiliates.
Ford Motor Company | 2011 Annual Report 167