Ford 2010 Annual Report Download - page 143

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Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 141
NOTE 19. DEBT AND COMMITMENTS (Continued)
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 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):
2010
20102010
2010
2009
20092009
2009
Liability component
Principal................................................................................................................................
................................
$ 25 $ 579
Unamortized discount ................................................................................................
................................
(6) (175)
Net carrying amount................................................................................................
................................
$ 19 $ 404
Equity component of outstanding debt (recorded in
Capital in excess of par value of stock
)
................................
$ (9) $ (3,207)
We recognized interest cost on our 2036 Convertible Notes as follows (in millions):
2010
20102010
2010
200
200200
2009
999
200
200200
2008
888
Contractual interest coupon ................................................................
................................
$ 23 $ 74 $ 210
Amortization of discount................................................................
................................
17 49 127
Total interest cost on 2036 Convertible Notes................................
................................
$ 40 $ 123 $ 337
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 $25 million of 2036 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 $21 million.
2010 Conversion Offer. In the fourth quarter of 2010, pursuant to an exchange offer we conducted, about $2 billion
and $554 million principal amount of the 2016 Convertible Notes and 2036 Convertible Notes, respectively, were
exchanged for an aggregate of 274,385,596 shares of Ford Common Stock, $534 million in cash ($215 in cash per
$1,000 principal amount and $190 in cash per $1,000 principal amount of 2016 Convertible Notes and 2036 Convertible
Notes exchanged, respectively) and the applicable accrued and unpaid interest on such 2016 Convertible Notes and
2036 Convertible Notes. As a result of the conversion, we recorded a pre-tax loss of $962 million, net of unamortized
discounts, premiums and fees, in Automotive interest income and other non-operating income/(expense), net.
2009 Conversion Offer. In the second quarter of 2009, pursuant to an exchange offer we conducted, $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, net of unamortized discounts, premiums, and fees, in Automotive interest income and other
non-operating income/(expense), net.
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, net of unamortized discounts,
premiums, and fees, in Automotive interest income and other non-operating income/(expense), net.