Ford 2009 Annual Report Download - page 132

Notes to the Financial Statements
130 Ford Motor Company | 2009 Annual Report
NOTE 19. DEBT AND COMMITMENTS (Continued)
Convertible Notes
Convertible Notes due December 15, 2036
At December 31, 2009, we had outstanding $579 million of 2036 Convertible Notes that were originally issued in
December 2006 with a principal amount of $4.95 billion. The 2036 Convertible Notes pay interest semiannually at a rate of
4.25% per annum. The 2036 Convertible Notes are convertible into shares of Ford Common Stock, based on a conversion
rate (subject to adjustment) of 108.6957 shares per $1,000 principal amount of 2036 Convertible Notes (which is equal to a
conversion price of $9.20 per share, representing a 25% conversion premium based on the closing price of $7.36 per share
on December 6, 2006).
Upon conversion we have the right to deliver, in lieu of shares of Ford Common Stock, cash or a combination of cash
and Ford Common Stock. Holders may require us to purchase all or a portion of the 2036 Convertible Notes for cash on
December 20, 2016 and December 15, 2026 or upon a change in control of the Company, or for shares of Ford Common
Stock upon a designated event that is not a change in control, in each case for a price equal to 100% of the principal
amount of the 2036 Convertible Notes being repurchased plus any accrued and unpaid interest to, but not including, the
date of repurchase. We may redeem for cash all or a portion of the 2036 Convertible Notes at our option at any time or from
time to time on or after December 20, 2016 at a price equal to 100% of the principal amount of the 2036 Convertible Notes
to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date. We also may terminate the
conversion rights at any time on or after December 20, 2013 if the closing price of Ford Common Stock exceeds 140% of
the then-applicable conversion price for 20 trading days during any consecutive 30-trading day period.
Liability and equity components of our 2036 Convertible Notes at December 31 are summarized as follows (in millions):
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The discount on the liability component of the 2036 Convertible Notes will amortize through December 20, 2016, the
first put date. The total effective rate on the liability component was 10.5%. If all $579 million of 2036 Convertible Notes
were converted into shares as of December 31, 2009 at a share price of $10.00, the share value would exceed the
principal value of debt by $50 million.
April 2009 Conversion Offer. Pursuant to an exchange offer we conducted, on the settlement date for such exchange
offer of April 8, 2009, $4.3 billion principal amount of 2036 Convertible Notes was exchanged for an aggregate of
467,909,227 shares of Ford Common Stock, $344 million in cash ($80 in cash per $1,000 principal amount of
2036 Convertible Notes exchanged) and the applicable accrued and unpaid interest on such 2036 Convertible Notes. As
a result of the conversion, we recorded a pre-tax gain of $1.2 billion in the second quarter of 2009.
December 2008 Conversion Request. Pursuant to a request for conversion in the fourth quarter of 2008, $67 million
principal amount of 2036 Convertible Notes was exchanged for an aggregate of 7,253,035 shares of Ford Common Stock.
As a result of the conversion we retrospectively recorded a pre-tax gain of $29 million.