Debt and Commitments (Notes)

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

DEBT AND COMMITMENTS

DEBT AND COMMITMENTS

Our debt consists of short-term and long-term secured and unsecured debt securities, and secured and unsecured borrowings from banks and other lenders.  Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional and retail investors.  In addition, Ford Credit sponsors securitization programs that provide short-term and long-term asset-backed financing through institutional investors in the U.S. and international capital markets.

Debt is reported on our consolidated balance sheets at par value adjusted for unamortized discount or premium, unamortized issuance costs, and adjustments related to designated fair value hedging (see Note 20). Discounts, premiums, and costs directly related to the issuance of debt are capitalized and amortized over the life of the debt or to the put date and are recorded in interest expense using the effective interest method. Gains and losses on the extinguishment of debt are recorded in Other income/(loss), net.

NOTE 19.  DEBT AND COMMITMENTS (Continued)

The carrying value of Company debt excluding Ford Credit and Ford Credit debt at December 31 was as follows (in millions):

					Interest Rates
					Average Contractual						Average Effective (a)
Company excluding Ford Credit	2020		2021		2020			2021			2020			2021
Debt payable within one year
Short-term	$	613	$	286	4.0	%		0.4	%		4.0	%		0.4	%
Long-term payable within one year
Public unsecured debt securities	180		86
U.S. Department of Energy Advanced Technology Vehicles Manufacturing (“DOE ATVM”) Incentive Program	148		953
Delayed draw term loan	—		1,500
Other debt	434		348
Unamortized (discount)/premium	(1)		2
Total debt payable within one year	1,374		3,175
Long-term debt payable after one year
Public unsecured debt securities	18,877		13,643
Convertible notes	—		2,300
Delayed draw term loan	1,500		—
DOE ATVM Incentive Program	1,064		—
U.K. Export Finance Program	854		843
Other debt	768		768
Unamortized (discount)/premium	(242)		(188)
Unamortized issuance costs	(188)		(166)
Total long-term debt payable after one year	22,633		17,200		6.3	%	(b)	4.4	%	(b)	6.5	%	(b)	4.6	%	(b)
Total Company excluding Ford Credit	$	24,007	$	20,375
Fair value of Company debt excluding Ford Credit (c)	$	27,794	$	24,044
Ford Credit
Debt payable within one year
Short-term	$	11,429	$	14,810	1.5	%		1.2	%		1.6	%		1.3	%
Long-term payable within one year
Unsecured debt	17,185		13,660
Asset-backed debt	21,345		18,049
Unamortized (discount)/premium	2		1
Unamortized issuance costs	(17)		(13)
Fair value adjustments (d)	25		10
Total debt payable within one year	49,969		46,517
Long-term debt payable after one year
Unsecured debt	54,197		44,337
Asset-backed debt	32,276		26,654
Unamortized (discount)/premium	28		28
Unamortized issuance costs	(235)		(199)
Fair value adjustments (d)	1,442		380
Total long-term debt payable after one year	87,708		71,200		2.7	%	(b)	2.6	%	(b)	2.7	%	(b)	2.6	%	(b)
Total Ford Credit	$	137,677	$	117,717
Fair value of Ford Credit debt (c)	$	139,796	$	120,204

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(a)Average effective rates reflect the average contractual interest rate plus amortization of discounts, premiums, and issuance costs.

(b)Includes interest on long-term debt payable within one year and after one year.

(c)At December 31, 2020 and 2021, the fair value of debt includes $529 million and $209 million of Company excluding Ford Credit short-term debt and $10.4 billion and $14.1 billion of Ford Credit short-term debt, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.

(d)These adjustments are related to hedging activity and include discontinued hedging relationship adjustments of $299 million and $257 million at December 31, 2020 and 2021, respectively. The carrying value of hedged debt was $45.5 billion and $37.5 billion at December 31, 2020 and 2021, respectively.

NOTE 19.  DEBT AND COMMITMENTS (Continued)

Cash paid for interest was $1 billion, $1.4 billion, and $1.9 billion in 2019, 2020, and 2021, respectively, on Company excluding Ford Credit debt. Cash paid for interest was $4.1 billion, $3.4 billion, and $2.8 billion in 2019, 2020, and 2021, respectively, on Ford Credit debt.

Maturities

Debt maturities at December 31, 2021 were as follows (in millions):

	2022		2023		2024		2025		2026		Thereafter		Adjustments		Total Debt Maturities
Company excluding Ford Credit
Public unsecured debt securities	$	86	$	—	$	—	$	1,234	$	3,972	$	10,737	$	(242)	$	15,787
DOE ATVM Incentive Program	953		—		—		—		—		—		2		955
Delayed draw term loan	1,500		—		—		—		—		—		—		1,500
Short-term and other debt	634		195		70		914		52		380		(112)		2,133
Total	$	3,173	$	195	$	70	$	2,148	$	4,024	$	11,117	$	(352)	$	20,375
Ford Credit
Unsecured debt	$	27,761	$	11,319	$	10,730	$	8,870	$	5,150	$	8,268	$	260	$	72,358
Asset-backed debt	18,758		11,791		5,207		6,736		2,220		700		(53)		45,359
Total	$	46,519	$	23,110	$	15,937	$	15,606	$	7,370	$	8,968	$	207	$	117,717

NOTE 19.  DEBT AND COMMITMENTS (Continued)

Company excluding Ford Credit Segment

Public Unsecured Debt Securities

Our public unsecured debt securities outstanding at December 31 were as follows (in millions):

	Aggregate Principal Amount Outstanding
Title of Security	2020		2021
9.215% Debentures due September 15, 2021	$	180	$	—
8 7/8% Debentures due January 15, 2022	86		86
8.500% Notes due April 21, 2023	3,500		—
9.000% Notes due April 22, 2025	3,500		1,058
7 1/8% Debentures due November 15, 2025	209		176
0.00% Notes due March 15, 2026	—		2,300
7 1/2% Debentures due August 1, 2026	193		172
4.346% Notes due December 8, 2026	1,500		1,500
6 5/8% Debentures due February 15, 2028	104		104
6 5/8% Debentures due October 1, 2028 (a)	638		446
6 3/8% Debentures due February 1, 2029 (a)	260		202
9.30% Notes due March 1, 2030	294		294
9.625% Notes due April 22, 2030	1,000		432
7.45% GLOBLS due July 16, 2031 (a)	1,794		1,070
8.900% Debentures due January 15, 2032	151		108
3.25% Notes due February 12, 2032	—		2,500
9.95% Debentures due February 15, 2032	4		4
4.75% Notes due January 15, 2043	2,000		2,000
7.75% Debentures due June 15, 2043	73		73
7.40% Debentures due November 1, 2046	398		398
5.291% Notes due December 8, 2046	1,300		1,300
9.980% Debentures due February 15, 2047	181		114
6.20% Notes due June 1, 2059	750		750
6.00% Notes due December 1, 2059	800		800
7.70% Debentures due May 15, 2097	142		142
Total public unsecured debt securities	$	19,057	$	16,029

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(a)Listed on the Luxembourg Exchange and on the Singapore Exchange.

NOTE 19.  DEBT AND COMMITMENTS (Continued)

2021 Debt Extinguishment

Pursuant to our November 2021 cash tender offer and December 2021 redemption, we repurchased or redeemed $7.6 billion principal amount of our public unsecured debt securities for an aggregate cost of $9.3 billion (including transaction costs and accrued and unpaid interest payments for such tendered securities). As a result of these transactions, we recorded a pre-tax loss of $1.7 billion (net of unamortized discounts, premiums, and fees) in Other income/(loss), net in the fourth quarter of 2021.

Environmental, Social, Governance (ESG) Bond

In November 2021, we issued $2.5 billion aggregate principal amount of green bonds with an interest rate of 3.250% under our new sustainable financing framework. We are allocating the net proceeds from this issuance to the design, development, and manufacturing of our battery electric vehicles.

Convertible Debt

In March 2021, we issued $2.3 billion aggregate principal amount of unsecured 0% Convertible Senior Notes due 2026, including $300 million aggregate principal amount of such notes pursuant to the exercise in full of the overallotment option granted to the initial purchasers. The notes will not bear regular interest and the principal amount of the notes will not accrete. The total net proceeds from the offering, after deducting debt issuance costs, were approximately $2.267 billion.

Each $1,000 principal amount of the notes will be convertible into 57.1886 shares of our Common Stock, which is equivalent to a conversion price of approximately $17.49 per share, subject to adjustment upon the occurrence of specified events. The notes are convertible, at the option of the noteholders, on or after December 15, 2025. Prior to December 15, 2025, the notes are convertible only under the following circumstances:

•During any fiscal quarter commencing after the fiscal quarter ending on September 30, 2021 (and only during such fiscal quarter), if the last reported sale price of our Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the notes on each applicable trading day;

•During the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the notes for each day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of our Common Stock and the conversion rate of the notes on such trading day;

•If we call any or all of the notes for redemption; or

•Upon the occurrence of specific corporate events such as a change in control or certain beneficial distributions to common stockholders (as set forth in the indenture governing the notes).

Upon conversion, we will pay cash up to the aggregate principal amount of the notes to be converted and cash, shares of our Common Stock, or a combination of cash and shares of our Common Stock, at our election for the remainder of our obligation in excess, if any, of the aggregate principal amount of the notes being converted.

We may not redeem the notes prior to March 20, 2024. On or after March 20, 2024, we may redeem all or any portion of the notes for cash equal to 100% of the principal amount of the notes being redeemed if the last reported sale price of our Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

If we undergo a fundamental change (e.g., change of control), subject to certain conditions, holders of the notes may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes. In addition, if specific corporate events occur prior to the maturity date or if we issue a notice of redemption, we will increase the conversion rate by pre-defined amounts for holders who elect to convert their notes in connection with such a corporate event. The conditions allowing holders of the notes to convert were not met in 2021.

NOTE 19.  DEBT AND COMMITMENTS (Continued)

The notes were issued at par and fees associated with the issuance of these notes are amortized to Interest expense on Company debt excluding Ford Credit over the contractual term of the notes. Amortization of issuance costs was $5 million in 2021. The effective interest rate of the notes is 0.3%.

The total estimated fair value of the notes as of December 31, 2021 was approximately $3.2 billion. The fair value was determined using commonly employed valuation methodologies applying observable market inputs and is classified within Level 2 of the fair value hierarchy.

The notes did not have an impact on our full year 2021 diluted EPS.

DOE ATVM Incentive Program

In September 2009, we entered into a Loan Arrangement and Reimbursement Agreement with the DOE, under which we borrowed through multiple draws $5.9 billion to finance certain costs for fuel-efficient, advanced-technology vehicles. At December 31, 2021, an aggregate $953 million was outstanding. In June 2020, the ATVM loan was modified, reducing quarterly principal payments from $148 million to $37 million. The deferred portion of the principal payments will be due upon original maturity in June 2022. As a result of our dividend payment in December 2021, the remaining quarterly principal payments revert from $37 million back to $148 million in accordance with the terms of the Loan Arrangement and Reimbursement Agreement. 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) on the principal amount, and an additional 1.45% per annum on the deferred portion of the principal amount.

U.K. Export Finance Program

In 2020, Ford Motor Company Limited (“Ford of Britain”), our operating subsidiary in the United Kingdom, entered into, and drew in full, a £625 million term loan credit facility with a syndicate of banks to support Ford of Britain’s general export activities. Accordingly, U.K. Export Finance (“UKEF”) provided a £500 million guarantee of the credit facility under its Export Development Guarantee scheme, which supports high value commercial lending to U.K. exporters. We have also guaranteed Ford of Britain’s obligations under the credit facility to the lenders. As of December 31, 2021, the full £625 million remained outstanding. This five-year, non-amortizing loan matures on June 30, 2025.

Company Excluding Ford Credit Facilities

Total Company committed credit lines, excluding Ford Credit, at December 31, 2021 were $18.3 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.5 billion of our delayed draw term loan facility, and $1.3 billion of local credit facilities. At December 31, 2021, the utilized portion of the corporate credit facility was $25 million, representing amounts utilized for letters of credit, and no portion of the supplemental revolving credit facility was utilized. The $1.5 billion delayed draw term loan facility was drawn in full in 2019 and remains outstanding. In addition, $847 million of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of December 31, 2021.

Lenders under our corporate credit facility have $3.4 billion of commitments maturing on September 29, 2024 and $10.1 billion of commitments maturing on September 29, 2026. Lenders under our supplemental revolving credit facility have $2.0 billion of commitments maturing on September 29, 2024.

NOTE 19.  DEBT AND COMMITMENTS (Continued)

In September 2021, we amended the corporate and supplemental credit agreements to remove the restrictions on our ability to repurchase shares or pay dividends. In addition, the agreements include certain sustainability-linked targets, pursuant to which the applicable margin and facility fees may be adjusted if Ford achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, renewable electricity consumption, and Ford Europe CO2 tailpipe emissions. Further, interest on any U.S. dollar borrowings under both the corporate and supplemental revolving credit facilities will be calculated using daily simple SOFR. Prior to the amendments, such interest was calculated using LIBOR.

The corporate credit facility is unsecured and free of material adverse change conditions to borrowing, restrictive financial covenants (for example, interest or fixed-charge coverage ratio, debt-to-equity ratio, and minimum net worth requirements), and credit rating triggers that could limit our ability to obtain funding or trigger early repayment. The corporate credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the facility. The terms and conditions of the delayed draw term loan (other than sustainability-linked provisions and the transition from LIBOR to SOFR) and the supplemental revolving credit facility are consistent with our corporate credit facility.

Each of the corporate credit facility, supplemental revolving credit facility, delayed draw term loan, and our Loan Arrangement and Reimbursement Agreement with the DOE include a covenant that requires us to provide guarantees from certain of our subsidiaries in the event that our senior, unsecured, long-term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P. The following subsidiaries have provided unsecured guarantees to the lenders under the credit facilities and to the DOE: Ford Component Sales, LLC; Ford European Holdings LLC; Ford Global Technologies, LLC; Ford Holdings LLC (the parent company of Ford Credit); Ford International Capital LLC; Ford Mexico Holdings LLC; Ford Motor Service Company; Ford Next LLC (formerly known as Ford Autonomous Vehicles LLC); Ford Smart Mobility LLC; and Ford Trading Company, LLC.

Ford Credit Segment

Asset-Backed Debt

At December 31, 2021, the carrying value of our asset-backed debt was $45.4 billion. This secured debt is issued by Ford Credit and includes asset-backed securities used to fund operations and maintain liquidity. Assets securing the related debt issued as part of all our securitization transactions are included in our consolidated results and are based upon the legal transfer of the underlying assets in order to reflect legal ownership and the beneficial ownership of the debt holder. The third-party investors in the securitization transactions have legal recourse only to the assets securing the debt and do not have such recourse to us, except for the customary representation and warranty provisions or when we are counterparty to certain derivative transactions of the special purpose entities (“SPEs”). In addition, the cash flows generated by the assets are restricted only to pay such liabilities; Ford Credit retains the right to residual cash flows. See Note 24 for additional information.

Although not contractually required, we regularly support our wholesale securitization programs by repurchasing receivables of a dealer from a SPE when the dealer’s performance is at risk, which transfers the corresponding risk of loss from the SPE to us. In order to continue to fund the wholesale receivables, we also may contribute additional cash or wholesale receivables if the collateral falls below required levels. The balance of cash related to these contributions was $25 million and $1,150 million at December 31, 2020 and December 31, 2021, respectively, and ranged from $0 to $524 million during 2020 and from $25 million to $3,700 million during 2021. Cash contributions were higher than a year ago primarily related to lower wholesale receivables as a result of lower dealer inventories due to the semiconductor shortage.

SPEs that are exposed to interest rate or currency risk may reduce their risks by entering into derivative transactions. In certain instances, we have entered into derivative transactions with the counterparty to protect the counterparty from risks absorbed through derivative transactions with the SPEs. Derivative income/(expense) related to the derivative transactions that support Ford Credit’s securitization programs were $(75) million, $(234) million, and $41 million for the years ended December 31, 2019, 2020, and 2021, respectively. See Note 20 for additional information regarding the accounting for derivatives.

Interest expense on securitization debt was $1.6 billion, $1.2 billion, and $0.9 billion in 2019, 2020, and 2021, respectively.

NOTE 19.  DEBT AND COMMITMENTS (Continued)

The assets and liabilities related to our asset-backed debt arrangements included in our consolidated financial statements at December 31 were as follows (in billions):

	2020		2021
Assets
Cash and cash equivalents	$	3.2	$	3.8
Finance receivables, net	59.6		50.6
Net investment in operating leases	12.8		7.5
Liabilities
Debt (a)	$	54.6	$	45.4

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(a)Debt is net of unamortized discount and issuance costs.

Committed Credit Facilities

At December 31, 2021, Ford Credit’s committed capacity totaled $39.8 billion, compared with $40.6 billion at December 31, 2020.  Ford Credit’s committed capacity is primarily comprised of committed asset-backed security facilities from bank-sponsored commercial paper conduits and other financial institutions and unsecured credit facilities with financial institutions.