Ford 2007 Annual Report Download - page 118

Download and view the complete annual report

Please find page 118 of the 2007 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

NOTE 28. COMMITMENTS AND CONTINGENCIES
Lease Commitments
We lease land, buildings and equipment under agreements that expire in various years. Minimum rental
commitments under non-cancellable operating leases were as follows (in millions):
!
!!
!!
!!
! "##?
"##?"##?
"##?!
!!
! "##J
"##J"##J
"##J!
!!
! "#G#
"#G#"#G#
"#G#!
!!
! "#GG
"#GG"#GG
"#GG!
!!
! "#G"
"#G""#G"
"#G"!
!!
! 5O,3,/C',3
5O,3,/C',35O,3,/C',3
5O,3,/C',3!
!!
! 5('/1
5('/15('/1
5('/1!
!!
!
%&'()('*+,!4,0'(3::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ;! >$G! ;! <>$! ;! "<F! ;! G<$! ;! $F! ! ;! "$F! ! ;G=@><!
-*./.0*/1!2,3+*0,4!4,0'(3:::::::::::::::::::::::::::::::::::::::::::::::::::::: ! G"?! ! GG#! ! ?F! ! @"! ! <@! ! J#! !!!!!!!!@#G!
Rental expense was as follows (in billions):
!
!!
! "##$
"##$"##$
"##$!
!!
! "##F
"##F"##F
"##F!
!!
! "##@
"##@"##@
"##@!
!!
!
\,.'/1!,RE,.4,:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ;!!!G:#! ! ;!!!G:#! ! ;!!!G:@!
Guarantees
The fair values of guarantees and indemnifications during 2007 and 2006 are recorded in the financial
statements. At December 31, 2007 and 2006, the following guarantees and indemnifications were issued and
outstanding:
Guarantees related to affiliates and third parties. We guarantee debt and lease obligations of certain joint
ventures, as well as certain financial obligations of outside third parties to support business and economic growth.
Expiration dates vary, and guarantees will terminate on payment and/or cancellation of the obligation. A payment
by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. In
some circumstances, we are entitled to recover from the third party amounts paid by us under the guarantee.
However, our ability to enforce these rights is sometimes stayed until the guaranteed party is paid in full, and may
be limited in the event of insolvency of the third party or other circumstances. The maximum potential payments
under these guarantees total $7.6 million for 2007 and $100 million for 2006, the majority of which relates to the
Automotive sector. The decrease in potential payments is due primarily to the expiration of guarantees related to
a joint venture.
In December 2005, we completed the sale of Hertz. As part of this transaction, we provided cash-
collateralized letters of credit in an aggregate amount of $200 million to support the asset-backed portion of the
buyer's financing for the transaction. Our commitment to provide the letters of credit expires no later than
December 21, 2011 and supports the payment obligations of Hertz Vehicle Finance LLC under one or more
series of asset-backed notes ("asset-backed notes"). The letters of credit can be drawn upon on any date funds
allocated to pay interest on the asset-backed notes are insufficient to pay scheduled interest payments, principal
amounts due on the legal final maturity date, or when the balance of assets supporting the asset-backed notes is
less than the outstanding balance of the asset-backed notes. The carrying value of our deferred gain related to
the letters of credit was $18 million for 2007 and $23 million for 2006, which represents the estimated fair value of
our guarantee.
In 1996, we issued $500 million of 7.25% Notes due October 1, 2008. In 1999, we entered into a de-
recognition transaction to defease our obligation as primary obligor with respect to the principal of these notes.
As part of this transaction, we placed certain financial assets into an escrow trust for the benefit of the
noteholders, and the trust became the primary obligor with respect to the principal (we became secondarily liable
for the entire principal amount).
We also have guarantees outstanding associated with a subsidiary trust, Ford Motor Company Capital Trust II.
On August 3, 2007, we completed a conversion offer related to our Trust Preferred Securities. For further discussion
of our Trust Preferred Securities, see Notes 16 and 21.
Notes to the Financial Statements
116 Ford Motor Company | 2007 Annual Report