PROFITABLE GROWTH FOR ALL
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Notes to the Financial Statements<br />
NOTE 18. DEBT AND COMMITMENTS (Continued)<br />
Covenants. The Credit Agreement requires ongoing compliance with a borrowing base covenant until the collateral<br />
pledged under the Credit Agreement is released, and contains other restrictive covenants. Our ability to pay dividends<br />
(other than dividends payable in stock) is subject to certain limits under the Credit Agreement. In addition, the Credit<br />
Agreement contains a liquidity covenant requiring us to maintain a minimum of $4 billion in the aggregate of domestic<br />
cash, cash equivalents, loaned and marketable securities and short-term VEBA assets and/or availability under the<br />
revolving credit facility.<br />
With respect to the borrowing base covenant, until the collateral pledged under the Credit Agreement is released, we<br />
are required to limit the outstanding amount of debt under the Credit Agreement as well as certain permitted additional<br />
indebtedness secured by the collateral such that the total debt outstanding does not exceed the value of the collateral as<br />
calculated in accordance with the Credit Agreement.<br />
At December 31, 2011, we had $817 million of local credit facilities to foreign Automotive affiliates, of which<br />
$74 million has been utilized. Of the $817 million of committed credit facilities, $66 million expires in 2012, $165 million<br />
expires in 2013, $223 million expires in 2014, and $363 million expires in 2015.<br />
Financial Services Sector<br />
Debt Repurchases and Calls<br />
From time to time and based on market conditions, our Financial Services sector may repurchase or call some of its<br />
outstanding unsecured and asset-backed debt. If our Financial Services sector has excess liquidity, and it is an<br />
economically favorable use of its available cash, it may repurchase or call debt at a price lower or higher than its carrying<br />
value, resulting in a gain or loss on extinguishment.<br />
2011 Debt Repurchases. Through private market transactions, our Financial Services sector repurchased and called<br />
an aggregate principal amount of $2.3 billion (including $268 million maturing in 2011) of our unsecured debt. As a result,<br />
we recorded a pre-tax loss of $68 million, net of unamortized premiums, discounts and fees in Other income, net in 2011.<br />
There were no repurchase or call transactions for asset-backed debt during 2011.<br />
2010 Debt Repurchases. Through private market transactions, our Financial Services sector repurchased and called<br />
an aggregate principal amount of $5.6 billion (including $683 million maturing in 2010) of its unsecured debt and assetbacked<br />
debt. As a result, our Financial Services sector recorded a pre-tax loss of $139 million, net of unamortized<br />
premiums and discounts, in Financial Services other income/(loss), net in 2010.<br />
2009 Debt Repurchases. Through private market transactions, our Financial Services sector repurchased and called<br />
an aggregate principal amount of $3.9 billion (including $1.6 billion maturing in 2009) of its unsecured debt and assetbacked<br />
debt. As a result, our Financial Services sector recorded a pre-tax gain of $67 million, net of unamortized<br />
premiums and discounts, in Financial Services other income/(loss), net in 2009.<br />
Asset-Backed Debt<br />
Ford Credit engages in securitization transactions to fund operations and to maintain liquidity. Ford Credit's<br />
securitization transactions are recorded as asset-backed debt and the associated assets are not derecognized and<br />
continue to be included in our financial statements.<br />
The finance receivables and net investment in operating leases that have been included in securitization transactions<br />
are only available for payment of the debt and other obligations issued or arising in the securitization transactions. They<br />
are not available to pay Ford Credit's other obligations or the claims of its other creditors. Ford Credit does, however, hold<br />
the right to the excess cash flows not needed to pay the debt and other obligations issued or arising in each of the<br />
securitization transactions. The debt is the obligation of our consolidated securitization entities and not Ford Credit's legal<br />
obligation or of its other subsidiaries.<br />
150 Ford Motor Company | 2011 Annual Report