Ford 2009 Annual Report Download - page 22

Management’s Discussion and Analysis of Financial Condition and Results of Operations
20 Ford Motor Company | 2009 Annual Report
Finance Our Plan and Improve Our Balance Sheet
During 2009, we completed numerous financing transactions designed to provide additional Automotive liquidity and
improve our balance sheet. These accomplishments include:
• Negotiated with the UAW to amend the VEBA agreement to provide the option of paying up to approximately 50% of
our VEBA obligations in Ford Common Stock, and to smooth payments over the 13-year payment term.
• Reduced Automotive debt by $10.1 billion principal amount, utilizing $2.6 billion in Automotive and Ford Credit cash
and 468 million shares of Ford Common Stock, through a number of separate but related transactions, including a
cash tender offer to repurchase outstanding debt securities, a cash tender offer to repurchase certain secured term
loan debt, and an induced conversion offer with respect to our convertible debt securities maturing 2036.
• Raised $1.6 billion of equity in an underwritten public offering of Ford Common Stock.
• Raised $565 million with the completion of an equity distribution program begun in 2008, pursuant to which shares of
Ford Common Stock were issued over time in market transactions.
• Entered into a U.S. Department of Energy ("DOE") loan agreement to provide us up to $5.9 billion in loans, at interest
rates generally equivalent to a 10-year U.S. Treasury rate, under the DOE's Advanced Technology Vehicles
Manufacturing Incentive Program (the "ATVM Program").
• Issued $2.875 billion of 4.25% Senior Convertible Notes due 2016.
• Amended and extended the revolving credit facility under our secured Credit Agreement – reducing the amount of the
revolving credit facility from $10.7 billion to $8.1 billion, extending the maturity date of $7.2 billion of that amount from
December 2011 to November 2013 and establishing a new term loan in the amount of $724 million maturing in
December 2013.
• Registered an additional $1 billion equity distribution program in November 2009 and commenced sales thereunder in
December 2009.
• Completed the UAW VEBA transaction on December 31, 2009 by transferring assets, consisting of cash and
marketable securities, notes and warrants valued at $14.8 billion, to the UAW VEBA Trust, thereby discharging our
$13.6 billion of UAW retiree health care obligations.
See "Liquidity and Capital Resources" and Note 19 of the Notes to the Financial Statements for additional discussion of
financing activities, available liquidity and outstanding debt.
After completion of the important steps described above (discussed further in "Liquidity and Capital Resources" and the
Notes to the Financial Statements), we ended 2009 with $34.4 billion in Automotive debt, which is significantly higher than
that of our key competitors. As a result, we continue to pursue opportunities to improve our balance sheet – with a key
priority being continuous improvement of the underlying business in order to generate operating profits and positive
Automotive cash flow with which our debt can be paid down.
We believe that our stable management team, our strong supplier and dealer relationships, the positive acceptance of
our products by customers, and our full pipeline of new products allow us to compete effectively in the global vehicle
markets while we reduce our debt to a more competitive level.
Work Together Effectively as One Team
As part of the One Team approach, we have implemented a disciplined business plan process to regularly review our
business environment, risks and opportunities, strategy, and plan, and to identify areas of our plan that need special
attention while pursuing opportunities to improve our plan. Everyone is included and contributes, openness is encouraged,
our leaders are responsible and accountable, we use facts and data to make our decisions, high performance teamwork is
a performance criteria – and we follow this process every week, every month, and every quarter, driving continuous
improvement. We believe this process gives us a clear picture of our business in real time and the ability to respond
quickly and decisively to new issues and changing conditions – as we have done in the face of rapid changes in the market
and business environment in 2009.
In addition, we are partnering with and enlisting all of our stakeholders to help us execute our plan to deal with our
business realities and create an exciting and viable Ford business going forward. We are reaching out and listening to
customers, dealers, employees, the UAW, suppliers, investors, communities, retirees, and federal, state and local
governments. Each of these constituencies is a critical part of the success of our business going forward. Realizing our
goal of profitable growth for all is as important to these stakeholders as it is to our shareholders.