Ford 2010 Annual Report Download - page 84

Notes to the Financial Statements
82 Ford Motor Company | 2010 Annual Report
NOTE 1. PRESENTATION (Continued)
Reconciliations between Consolidated and Sector Financial Statements
Deferred Tax Assets and Liabilities. The amount of total assets and total liabilities in our sector balance sheet differ
from the amounts in our consolidated balance sheet by $1,106 million and $2,966 million at December 31, 2010 and
2009, respectively. As shown in the table below, the difference is the result of a reclassification for netting of deferred
income tax assets and liabilities (in millions):
December 31,
December 31, December 31,
December 31,
2010
20102010
2010
December 31,
December 31, December 31,
December 31,
2009
20092009
2009
Sector balance sheet presentation of deferred income tax assets:
Automotive sector current deferred income tax assets................................................................
...................
$ 359 $ 479
Automotive sector non-current deferred income tax assets ................................................................
...........
2,468 5,660
Financial Services sector deferred income tax assets* ................................................................
..................
282 306
Total................................................................................................................................
.............................
3,109 6,445
Reclassification for netting of deferred income taxes ................................................................
.......................
(1,106) (2,966)
Consolidated balance sheet presentation of deferred income tax assets................................
.......................
$ 2,003 $ 3,479
Sector balance sheet presentation of deferred income tax liabilities:
Automotive sector current deferred income tax liabilities ................................................................
...............
$ 392 $ 3,091
Automotive sector non-current deferred income tax liabilities ................................................................
........
344 561
Financial Services sector deferred income tax liabilities ................................................................
................
1,505 1,735
Total................................................................................................................................
.............................
2,241 5,387
Reclassification for netting of deferred income taxes ................................................................
.......................
(1,106) (2,966)
Consolidated balance sheet presentation of deferred income tax liabilities................................
....................
$ 1,135 $ 2,421
__________
* Financial Services deferred income tax assets are included in Financial Services other assets on our sector balance sheet.
Debt Reduction Actions
From 2008 through 2010, we completed numerous financing transactions designed to improve our balance sheet,
including the repurchase of Automotive and Financial Services debt. The transactions involved, among other things, the
repurchase of Automotive sector debt by the Financial Services sector and the repurchase of Financial Services sector
debt by the Automotive sector. Because of the intercompany impacts, the transactions have been recorded differently in
the consolidated and sector balance sheets. There also are differences in the way the transactions have been recorded
in the consolidated and sector statements of cash flows. See the table below for the reconciliation between total sector
and consolidated cash flows.
Automotive Acquisition of Financial Services Debt. During 2008 and 2009, we issued 159,913,115 shares of Ford
Common Stock through an equity distribution agreement and used the proceeds of $1 billion to purchase $1,048 million of
Ford Credit debt and related interest of $20 million. We recognized a gain on extinguishment of debt of $68 million on the
transactions, recorded in Automotive interest income and other non-operating income/(expense), net. During the second
quarter of 2010, we utilized cash of $192 million to purchase $200 million of Ford Credit debt and related interest of about
$1 million. We recorded a gain on extinguishment of debt of $9 million on the transaction, in Automotive interest income
and other non-operating income/(expense), net. As of December 31, 2010, approximately $780 million of the debt
purchased has matured, and $267 million was repurchased from us by Ford Credit.
On our consolidated balance sheet, we net the remaining debt purchased by Ford with the outstanding debt of Ford
Credit, reducing our consolidated marketable securities and debt balances by $201 million and $646 million at
December 31, 2010 and 2009, respectively. On our sector balance sheet, the debt is reported separately as Automotive
marketable securities and Financial Services debt as it has not been retired or cancelled by Ford Credit.
Financial Services Acquisition of Automotive Debt. During the second quarter of 2010, Ford Credit acquired
$1.3 billion principal amount of Note A owed by Ford (and recorded as Automotive debt) to the UAW Retiree Medical
Benefits Trust (the "UAW VEBA Trust") (see "Notes Due to UAW VEBA Trust" within the Automotive sector section of
Note 19 for further discussion) for a cost of $1.3 billion. This transaction settled on June 30, 2010, following which Ford
Credit immediately transferred the repurchased note to us in satisfaction of $1.3 billion of Ford Credit's tax liabilities to us.