Ford 2009 Annual Report Download - page 107

Notes to the Financial Statements
Ford Motor Company | 2009 Annual Report 105
NOTE 12. SIGNIFICANT UNCONSOLIDATED AFFILIATES (Continued)
Included in our Automotive equity in net income/(loss) of affiliated companies was the following income for the years
ended December 31 (in millions):


 





)RUGVVKDUHRI0D]GDVQHWLQFRPHORVV 

   
Ford's share of Mazda's net income/(loss) in the table above represents our share of Mazda's results on a U.S. GAAP
basis. For 2008, our share includes a charge as determined under U.S. GAAP representing the impact on us of a
goodwill impairment related to Mazda-owned dealerships in Japan.
NOTE 13. VARIABLE INTEREST ENTITIES
A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional
subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A
VIE is consolidated by its primary beneficiary. The primary beneficiary is the entity that absorbs the majority of the risk for
the variability in the VIE's assets. A variable interest is a contractual, ownership, or other interest that changes with
changes in the fair value of the VIE's net assets.
We use qualitative analysis to determine whether or not we need to consolidate a VIE. We consider the rights and
obligations conveyed by variable interests to determine whether we will absorb a majority of a VIE's expected losses,
receive a majority of its expected residual returns, or both. If so, we consolidate the VIE.
The liabilities recognized as a result of consolidating these VIEs do not necessarily represent additional claims on our
general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets
recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims
against our general assets.
Automotive Sector
VIEs of which we are the primary beneficiary:
We have contractual agreements with the VIEs we consolidate to purchase the majority, and in some cases
substantially all, of the entity's output under a cost-plus-margin arrangement and/or volume-dependent pricing. These
contractual arrangements may require us to absorb entity losses when production volume targets are not met and/or allow
us to receive bonuses when production volume targets are exceeded. Described below are the significant VIEs we
consolidated as of December 31, 2009:
AutoAlliance International, Inc. ("AAI") is a 50/50 joint venture with Mazda in North America, engaged in the
manufacture of automobiles on behalf of Ford and Mazda, primarily for sale in North America.
First Aquitaine operates a transmission plant in Bordeaux, France which manufactures automatic transmissions for
Ford Explorer, Ranger, and Mustang vehicles. During the second quarter of 2009, we transferred legal ownership of First
Aquitaine to HZ Holding France. We also entered into a volume-dependent pricing agreement with the new owner to
purchase transmissions through the end of the product cycle. As a result, we now consider this entity to be a VIE of which
we are the primary beneficiary. See Note 4 for discussion of the impairment of our investment in this plant.
Ford Otosan is a 41/41/18 joint venture in Turkey with the Koc Group of Turkey and public investors. Ford Otosan is a
supplier of the Ford Transit Connect model, and an assembly supplier of the Ford Transit van model, both of which we sell
primarily in Europe.
Getrag Ford Transmissions GmbH ("GFT") is a 50/50 joint venture with Getrag Deutsche Venture GmbH and Co. KG.
and is the primary supplier of manual transmissions for use in our European vehicles.