Ford 2012 Annual Report Download - page 125

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Ford Motor Company | 2012 Annual Report 123
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 17. DEBT AND COMMITMENTS (Continued)
We may terminate the conversion rights related to the 2016 Convertible Notes 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. Also, 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 may terminate the conversion rights related to the 2036 Convertible Notes 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, equity, and if-converted components of our Convertible Notes are summarized as follows (in millions):
Total Effective Interest Rate
December 31,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Liability component
4.25% Debentures due November 15, 2016 $ 768 $768 9.2% 9.2%
4.25% Debentures due November 15, 2016 (underwriter option) 115 115 8.6% 8.6%
Subtotal Convertible Debt due November 15, 2016 883 883
4.25% Debentures due December 15, 2036 25 25 10.5% 10.5%
Unamortized discount (142)(172)
Net carrying amount $ 766 $736
Equity component of outstanding debt (a) $ (225) $ (225)
Share value in excess of principal value, if converted (b) $ 384 $143
__________
(a) Recorded in Capital in excess of par value of stock.
(b) Based on share price of $12.95 and $10.76 as of December 31, 2012 and 2011, respectively.
We recognized interest cost on our Convertible Notes as follows (in millions):
2012 2011 2010
Contractual interest coupon $ 38 $ 38 $ 138
Amortization of discount 30 27 87
Total interest cost on Convertible Notes $ 68 $ 65 $ 225
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 income/(expense), net.
DOE ATVM Incentive Program
In September 2009, we entered into a Loan Arrangement and Reimbursement Agreement ("Arrangement Agreement")
with the DOE, pursuant to which the DOE agreed to (i) arrange a 13-year multi-draw term loan facility (the "Facility") under
the ATVM Program in the aggregate principal amount of up to $5.9 billion, (ii) designate us as a borrower under the ATVM
Program and (iii) cause the Federal Financing Bank ("FFB") to enter into the Note Purchase Agreement for the purchase
of notes to be issued by us evidencing such loans. In August 2012, the Facility was fully drawn with $5.9 billion
outstanding after we had drawn the remaining $137 million of available funds. We began repayment in September 2012,
and at December 31, 2012 an aggregate of $5.6 billion was outstanding. The proceeds of the ATVM loan have been used
to finance certain costs for fuel efficient, advanced technology vehicles. The principal amount of the ATVM loan bears
interest at a blended rate based on the U.S. Treasury yield curve at the time each draw was made (with the weighted-
average interest rate on all such draws being about 2.3% per annum).
The ATVM loan is repayable in equal quarterly installments of $148 million, which began in September 2012 and will
end in June 2022.
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