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Notes to the Financial Statements
140 Ford Motor Company | 2010 Annual Report
NOTE 19. DEBT AND COMMITMENTS (Continued)
Convertible Notes
Convertible Notes due December 15, 2016
At December 31, 2010, we had outstanding $883 million principal of 4.25% Senior Convertible Notes due
December 15, 2016 ("2016 Convertible Notes"). The 2016 Convertible Notes pay interest semiannually at a rate of
4.25% per annum. The 2016 Convertible Notes are convertible into shares of Ford Common Stock, based on a conversion
rate (subject to adjustment) of 107.5269 shares per $1,000 principal amount of 2016 Convertible Notes (which is equal to a
conversion price of $9.30 per share, representing a 25% conversion premium based on the closing price of $7.44 per share
on November 3, 2009).
Upon conversion, we have the right to deliver, in lieu of shares of Ford Common Stock, either cash or a combination of
cash and Ford Common Stock. Holders may require us to purchase all or a portion of the 2016 Convertible Notes 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 2016 Convertible Notes being repurchased
plus any accrued and unpaid interest to, but not including, the date of repurchase. We also may terminate the conversion
rights at any time on or after November 20, 2014 if the closing price of Ford Common Stock exceeds 130% of the then-
applicable conversion price for 20 trading days during any consecutive 30-trading day period.
Liability and equity components of our 2016 Convertible Notes at December 31 are summarized as follows (in millions):
2010
20102010
2010
2009
20092009
2009
Liability component
Principal................................................................................................................................
................................
$ 883 $ 2,875
Unamortized discount ................................................................................................
................................
(193) (702)
Net carrying amount................................................................................................
................................
$ 690 $ 2,173
Equity component of outstanding debt (recorded in
Capital in excess of par value of stock
)
................................
$ (216) $ (702)
We recognized interest cost on our 2016 Convertible Notes as follows (in millions):
2010
20102010
2010
2009
20092009
2009
2008
20082008
2008
Contractual interest coupon ................................................................
................................
$ 115 $ 18 $ —
Amortization of discount................................................................
................................
70 10 —
Total interest cost on 2016 Convertible Notes................................
................................
$ 185 $ 28 $ —
The discount on the liability components of the 2016 Convertible Notes will amortize through November 16, 2016. The
total effective rate on the liability components of the remaining $768 million of principal from the original convertible notes
and $115 million of principal amount from the option the underwriter's exercised to purchase additional convertible notes
was 9.2% and 8.6%, respectively. If all $883 million of 2016 Convertible Notes were converted into shares as of
December 31, 2010 at a share price of $16.79, the share value would exceed the principal value of debt by $711 million.
Convertible Notes due December 15, 2036
At December 31, 2010, we had outstanding $25 million principal of 4.25% Senior Convertible Notes due
December 15, 2036 ("2036 Convertible Notes"). 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).