Ford 2011 Annual Report Download - page 57

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2011 Annual Report 55
The average maturity of these investments ranges from 90 days to up to one year and is adjusted based on market
conditions and liquidity needs. We monitor our cash levels and average maturity on a daily basis.
In managing our business, we classify changes in Automotive gross cash into operating-related and other items
(which includes the impact of certain special items, contributions to funded pension plans, certain tax-related transactions,
acquisitions and divestitures, capital transactions with the Financial Services sector, dividends paid to shareholders, and
other - primarily financing-related). Our key liquidity metrics are operating-related cash flow (which best represents the
ability of our Automotive operations to generate cash), Automotive gross cash, and Automotive liquidity. These items at
December 31 were as follows (in billions):
Gross cash
Available credit lines:
Secured credit facility, unutilized portion
Local lines available to foreign affiliates, unutilized portion
Automotive liquidity
2011
$22.9
8.8
0.7
$32.4
2010
$20.5
6.9
0.5
$27.9
We believe the cash flow analysis reflected in the table below is useful to investors because it includes in operating-
related cash flow elements that we consider to be related to our Automotive operating activities (e.g., capital spending)
and excludes cash flow elements that we do not consider to be related to the ability of our operations to generate cash.
This differs from a cash flow statement presented in accordance with generally accepted accounting principles in the
United States ("GAAP") and differs from Net cash (used in)/provided by operating activities, the most directly comparable
GAAP financial measure.
Changes in Automotive gross cash are summarized below (in billions):
Gross cash at end of period
Gross cash at beginning of period
Total change in gross cash
Automotive income/(loss) before income taxes (excluding special items)
Capital expenditures
Depreciation and special tools amortization
Changes in working capital (b)
Other/timing differences (c)
Subvention payments to Ford Credit (d)
Total operating-related cash flows
Cash impact of personnel-reduction programs accrual
Net receipts from Financial Services sector (e)
Other
Cash flow before other actions
Net proceeds from/(Payments on) Automotive sector debt
Contributions to funded pension plans
Proceeds from the sale of Volvo/Other
Total change in gross cash
2011
$22.9
20.5
$2.4
$6.3
(4.3)
3.6
0.3
—
(0.3)
5.6
(0.3)
4.2
(0.2)
9.3
(6.0)
(1.1)
0.2
$2.4
2010 (a)
$20.5
24.9
$(4.4)
$5.3
(3.9)
3.8
(0.1)
0.2
(0.9)
4.4
(0.2)
2.7
(0.8)
6.1
(12.1)
(1.0)
2.6
$(4.4)
2009
$24.9
13.1
$11.8
$(1.9)
(4.0)
4.2
3.7
(0.8)
(2.0)
(0.8)
(0.7)
1.0
(1.1)
(1.6)
11.9
(0.9)
2.4
$11.8
__________
(a) Except as noted, Volvo's 2010 cash flows are excluded from each line item of this table and included in Other.
(b) Working capital comprised of changes in receivables, inventory and trade payables.
(c) Primarily expense and payment timing differences for items such as pension and OPEB, compensation, marketing, and warranty, as well as
additional factors, such as the impact of tax payments.
(d) Beginning in 2008, Ford began paying all interest-rate subvention and residual value support to Ford Credit at the time of origination of new
contracts. Cash flows represented here reflect Ford's monthly support payments on contracts existing prior to 2008.
(e) Primarily distributions and tax payments received from Ford Credit.
With respect to "Changes in working capital," in general we carry relatively low trade receivables compared to our
trade payables because the majority of our Automotive wholesales are financed (primarily by Ford Credit) immediately
upon sale of vehicles to dealers, which generally occurs at the time the vehicles are gate-released shortly after being
produced. In addition, our inventories are lean because we build to order, not for inventory. In contrast, our Automotive