form10q.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarterly period ended March 31, 2009
   
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from  ___________ to ____________
   
 
Commission File Number: 1-3950


FORD MOTOR COMPANY
(Exact name of registrant as specified in its charter)


Delaware
38-0549190
(State of Incorporation)
(IRS Employer Identification No.)
   
One American Road, Dearborn, Michigan
48126
(Address of principal executive offices)
(Zip Code)

(313) 322-3000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
   
x
Yes
 
¨
No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
   
¨
Yes
 
x
No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
   
¨
Yes
 
o
No

As of May 1, 2009, the registrant had outstanding 2,802,397,653 shares of Common Stock and 70,852,076 shares of Class B Stock.

Exhibit index located on page number 68.
 


 
 

 

PART I. FINANCIAL INFORMATION
ITEM 1.  Financial Statements

FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
For the Periods Ended March 31, 2009 and 2008
(in millions, except per share amounts)

   
First Quarter
 
   
2009
   
2008
 
   
(unaudited)
 
Sales and revenues
           
Automotive sales
  $ 21,368     $ 39,117  
Financial Services revenues
    3,410       4,175  
Total sales and revenues
    24,778       43,292  
                 
Costs and expenses
               
Automotive cost of sales
    21,662       35,456  
Selling, administrative and other expenses
    3,727       5,094  
Interest expense
    1,936       2,575  
Financial Services provision for credit and insurance losses
    402       344  
Total costs and expenses
    27,727       43,469  
                 
Automotive interest income and other non-operating income/(expense), net (Note 7)
    1,343       92  
Financial Services other income/(loss), net (Note 7)
    113       229  
Equity in net income/(loss) of affiliated companies
    (127 )     142  
Income/(Loss) before income taxes
    (1,620 )     286  
Provision for/(benefit from) income taxes
    (204 )     95  
Income/(Loss) from continuing operations
    (1,416 )     191  
Income/(Loss) from discontinued operations (Note 10)
          1  
Net income/(loss)
    (1,416 )     192  
Less: Income/(loss) attributable to noncontrolling interests
    11       122  
Net income/(loss) attributable to Ford Motor Company
  $ (1,427 )   $ 70  
                 
NET INCOME/(LOSS) ATTRIBUTABLE TO FORD MOTOR COMPANY
               
Income/(Loss) from continuing operations
  $ (1,427 )   $ 69  
Income/(Loss) from discontinued operations (Note 10)
          1  
Net income/(loss)
  $ (1,427 )   $ 70  
                 
AMOUNTS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 11)
               
Basic income/(loss)
               
Income/(Loss) from continuing operations
  $ (0.60 )   $ 0.03  
Income/(Loss) from discontinued operations
           
Net income/(loss)
  $ (0.60 )   $ 0.03  
Diluted income/(loss)
               
Income/(Loss) from continuing operations
  $ (0.60 )   $ 0.03  
Income/(Loss) from discontinued operations
           
Net income/(loss)
  $ (0.60 )   $ 0.03  
 
The accompanying notes are part of the financial statements

 
2

 

Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES

SECTOR STATEMENT OF OPERATIONS
For the Periods Ended March 31, 2009 and 2008
(in millions, except per share amounts)

   
First Quarter
 
   
2009
   
2008
 
   
(unaudited)
 
AUTOMOTIVE
           
Sales
  $ 21,368     $ 39,117  
Costs and expenses
               
Cost of sales
    21,662       35,456  
Selling, administrative and other expenses
    2,044       3,109  
Total costs and expenses
    23,706       38,565  
Operating income/(loss)
    (2,338 )     552  
                 
Interest expense
    484       558  
                 
Interest income and other non-operating income/(expense), net (Note 7)
    1,343       92  
Equity in net income/(loss) of affiliated companies
    11       136  
Income/(Loss) before income taxes — Automotive
    (1,468 )     222  
                 
FINANCIAL SERVICES
               
Revenues
    3,410       4,175  
Costs and expenses
               
Interest expense
    1,452       2,017  
Depreciation
    1,435       1,836  
Operating and other expenses
    248       149  
Provision for credit and insurance losses
    402       344  
Total costs and expenses
    3,537       4,346  
                 
Other income/(loss), net (Note 7)
    113       229  
Equity in net income/(loss) of affiliated companies
    (138 )     6  
                 
Income/(Loss) before income taxes — Financial Services
    (152 )     64  
                 
TOTAL COMPANY
               
Income/(Loss) before income taxes
    (1,620 )     286  
Provision for/(Benefit from) income taxes
    (204 )     95  
Income/(Loss) from continuing operations
    (1,416 )     191  
Income/(Loss) from discontinued operations (Note 10)
          1  
Net income/(loss)
    (1,416 )     192  
Less: Income/(loss) attributable to noncontrolling interests
    11       122  
Net income/(loss) attributable to Ford Motor Company
  $ (1,427 )   $ 70  
                 
NET INCOME/(LOSS) ATTRIBUTABLE TO FORD MOTOR COMPANY
               
Income/(Loss) from continuing operations
  $ (1,427 )   $ 69  
Income/(Loss) from discontinued operations (Note 10)
          1  
Net income/(loss)
  $ (1,427 )   $ 70  
                 
AMOUNTS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 11)
               
Basic income/(loss)
               
Income/(Loss) from continuing operations
  $ (0.60 )   $ 0.03  
Income/(Loss) from discontinued operations
           
Net income/(loss)
  $ (0.60 )   $ 0.03  
Diluted income/(loss)
               
Income/(Loss) from continuing operations
  $ (0.60 )   $ 0.03  
Income/(Loss) from discontinued operations
           
Net income/(loss)
  $ (0.60 )   $ 0.03  

The accompanying notes are part of the financial statements

 
3

 

Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(in millions)

   
March 31,
2009
   
December 31,
2008
 
   
(unaudited)
 
ASSETS
           
Cash and cash equivalents
  $ 21,093     $ 22,049  
Marketable securities
    20,363       17,411  
Finance receivables, net
    84,008       93,484  
Other receivables, net
    5,390       5,674  
Net investment in operating leases
    21,912       25,250  
Inventories (Note 2)
    6,575       6,988  
Equity in net assets of affiliated companies
    1,736       1,599  
Net property
    23,779       24,143  
Deferred income taxes
    2,818       3,108  
Goodwill and other net intangible assets (Note 4)
    227       246  
Assets of held-for-sale operations (Note 10)
    7,273       8,612  
Other assets
    7,960       9,734  
Total assets
  $ 203,134     $ 218,298  
                 
LIABILITIES
               
Payables
  $ 12,882     $ 13,145  
Accrued liabilities and deferred revenue
    54,429       59,526  
Debt (Note 5)
    145,586       152,577  
Deferred income taxes
    1,706       2,035  
Liabilities of held-for-sale operations (Note 10)
    5,008       5,542  
Total liabilities
    219,611       232,825  
                 
EQUITY
               
Capital stock
               
Common Stock, par value $0.01 per share (2,350 million shares issued)
    23       23  
Class B Stock, par value $0.01 per share (71 million shares issued)
    1       1  
Capital in excess of par value of stock
    10,985       10,875  
Accumulated other comprehensive income/(loss)
    (10,624 )     (10,085 )
Treasury stock
    (180 )     (181 )
Retained earnings/(Accumulated deficit)
    (17,782 )     (16,355 )
Total equity/(deficit) attributable to Ford Motor Company
    (17,577 )     (15,722 )
Equity/(Deficit) attributable to noncontrolling interests
    1,100       1,195  
Total equity/(deficit)
    (16,477 )     (14,527 )
Total liabilities and equity
  $ 203,134     $ 218,298  

The accompanying notes are part of the financial statements

 
4

 

Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES
SECTOR BALANCE SHEET
(in millions)
 
   
March 31, 2009
   
December 31, 2008
 
   
(unaudited)
 
ASSETS
           
Automotive
           
Cash and cash equivalents
  $ 8,102     $ 6,377  
Marketable securities
    13,483       9,296  
Total cash and marketable securities
    21,585       15,673  
Receivables, net
    2,694       3,065  
Inventories (Note 2)
    6,575       6,988  
Deferred income taxes
    306       302  
Other current assets
    2,099       3,450  
Current receivable from Financial Services
    2,871       2,035  
Total current assets
    36,130       31,513  
Equity in net assets of affiliated companies
    1,376       1,076  
Net property
    23,590       23,930  
Deferred income taxes
    6,410       7,204  
Goodwill and other net intangible assets (Note 4)
    219       237  
Assets of held-for-sale operations (Note 10)
    7,273       8,414  
Other assets
    1,454       1,441  
Total Automotive assets
    76,452       73,815  
Financial Services
               
Cash and cash equivalents
    12,991       15,672  
Marketable securities
    7,237       8,607  
Finance receivables, net
    86,713       96,101  
Net investment in operating leases
    20,765       23,120  
Equity in net assets of affiliated companies
    360       523  
Goodwill and other net intangible assets (Note 4)
    8       9  
Assets of held-for-sale operations (Note 10)
          198  
Other assets
    5,981       7,437  
Total Financial Services assets
    134,055       151,667  
Intersector elimination
    (3,237 )     (2,535 )
Total assets
  $ 207,270     $ 222,947  
                 
LIABILITIES
               
Automotive
               
Trade payables
  $ 9,614     $ 9,193  
Other payables
    1,965       1,982  
Accrued liabilities and deferred revenue
    26,561       29,584  
Deferred income taxes
    2,856       2,790  
Debt payable within one year (Note 5)
    1,428       1,191  
Total current liabilities
    42,424       44,740  
Long-term debt (Note 5)
    30,704       23,036  
Other liabilities
    22,368       23,766  
Deferred income taxes
    384       614  
Liabilities of held-for-sale operations (Note 10)
    5,008       5,487  
Total Automotive liabilities
    100,888       97,643  
Financial Services
               
Payables
    1,303       1,970  
Debt (Note 5)
    113,811       128,842  
Deferred income taxes
    2,602       3,280  
Other liabilities and deferred income
    5,509       6,184  
Liabilities of held-for-sale operations (Note 10)
          55  
Payable to Automotive
    2,871       2,035  
Total Financial Services liabilities
    126,096       142,366  
Intersector elimination
    (3,237 )     (2,535 )
Total liabilities
    223,747       237,474  
                 
EQUITY
               
Capital stock
               
Common Stock, par value $0.01 per share (2,350 million shares issued)
    23       23  
Class B Stock, par value $0.01 per share (71 million shares issued)
    1       1  
Capital in excess of par value of stock
    10,985       10,875  
Accumulated other comprehensive income/(loss)
    (10,624 )     (10,085 )
Treasury stock
    (180 )     (181 )
Retained earnings/(Accumulated deficit)
    (17,782 )     (16,355 )
Total equity/(deficit) attributable to Ford Motor Company
    (17,577 )     (15,722 )
Equity/(Deficit) attributable to noncontrolling interests
    1,100       1,195  
Total equity/(deficit)
    (16,477 )     (14,527 )
Total liabilities and equity
  $ 207,270     $ 222,947  
 
The accompanying notes are part of the financial statements.
 
5

 
Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2009 and 2008
(in millions)

   
First Quarter
 
   
2009
   
2008
 
   
(unaudited)
 
       
Cash flows from operating activities of continuing operations
     
Net cash (used in)/provided by operating activities
  $ 4,161     $ 1,027  
                 
Cash flows from investing activities of continuing operations
               
Capital expenditures
    (1,366 )     (1,490 )
Acquisitions of retail and other finance receivables and operating leases
    (6,032 )     (11,872 )
Collections of retail and other finance receivables and operating leases
    10,047       10,936  
Purchases of securities
    (22,151 )     (13,531 )
Sales and maturities of securities
    19,217       13,527  
Settlements of derivatives
    1,163       456  
Proceeds from sale of businesses
    166       44  
Other
    (339 )     165  
Net cash (used in)/provided by investing activities
    705       (1,765 )
                 
Cash flows from financing activities of continuing operations
               
Sales of Common Stock
          63  
Changes in short-term debt
    (3,863 )     (678 )
Proceeds from issuance of other debt
    15,458       11,150  
Principal payments on other debt
    (16,395 )     (11,107 )
Other
    (50 )     (129 )
Net cash (used in)/provided by financing activities
    (4,850 )     (701 )
                 
Effect of exchange rate changes on cash
    (342 )     316  
Cumulative correction of Financial Services prior period error (Note 1)
    (630 )      
                 
Net increase/(decrease) in cash and cash equivalents from continuing operations
    (956 )     (1,123 )
                 
Cash flows from discontinued operations
               
Cash flows from operating activities of discontinued operations
          29  
Cash flows from investing activities of discontinued operations
          (94 )
Cash flows from financing activities of discontinued operations
          (344 )
                 
Net increase/(decrease) in cash and cash equivalents
  $ (956 )   $ (1,532 )
                 
Cash and cash equivalents at January 1
  $ 22,049     $ 35,283  
Cash and cash equivalents of discontinued/held-for-sale operations at January 1
           
Net increase/(decrease) in cash and cash equivalents
    (956 )     (1,532 )
Less: cash and cash equivalents of discontinued/held-for-sale operations at March 31
           
Cash and cash equivalents at March 31
  $ 21,093     $ 33,751  

The accompanying notes are part of the financial statements

 
6

 

Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES

CONDENSED SECTOR STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2009 and 2008
(in millions)

   
First Quarter 2009
   
First Quarter 2008
 
   
Automotive
   
Financial
Services
   
Automotive
   
Financial
Services
 
   
(unaudited)
   
(unaudited)
 
Cash flows from operating activities of continuing operations
                       
Net cash (used in)/provided by operating activities
  $ (2,265 )   $ 1,911     $ 685     $ 2,482  
                                 
Cash flows from investing activities
                               
Capital expenditures
    (1,361 )     (5 )     (1,449 )     (41 )
Acquisitions of retail and other finance receivables and operating leases
          (6,032 )           (12,166 )
Collections of retail and other finance receivables and operating leases
          10,124             10,936  
Net (increase)/decrease of wholesale receivables
          4,438             (1,846 )
Purchases of securities
    (17,662 )     (5,544 )     (12,509 )     (1,022 )
Sales and maturities of securities
    13,498       5,854       11,329       2,198  
Settlements of derivatives
    242       921       282       174  
Proceeds from sale of businesses
    1       165       44        
Investing activity from Financial Services
                       
Investing activity to Financial Services
                       
Other
    (330 )     (9 )     15       150  
Net cash (used in)/provided by investing activities
    (5,612 )     9,912       (2,288 )     (1,617 )
                                 
Cash flows from financing activities
                               
Sales of Common Stock
                63        
Changes in short-term debt
    365       (4,228 )     93       (771 )
Proceeds from issuance of other debt
    10,186       5,272       57       11,093  
Principal payments on other debt
    (190 )     (15,285 )     (90 )     (11,017 )
Other
    (35 )     (15 )     (91 )     (38 )
Net cash (used in)/provided by financing activities
    10,326       (14,256 )     32       (733 )
 
                               
Effect of exchange rate changes on cash
    (134 )     (208 )     235       81  
Net change in intersector receivables/payables and other liabilities
    (590 )     590       (679 )     679  
Cumulative correction of prior period error (Note 1)
          (630 )            
Net increase/(decrease) in cash and cash equivalents from continuing operations
    1,725       (2,681 )     (2,015 )     892  
                                 
Cash flows from discontinued operations
                               
Cash flows from operating activities of discontinued operations
                      29  
Cash flows from investing activities of discontinued operations
                      (94 )
Cash flows from financing activities of discontinued operations
                      (344 )
                                 
Net increase/(decrease) in cash and cash equivalents
  $ 1,725     $ (2,681 )   $ (2,015 )   $ 483  
                                 
Cash and cash equivalents at January 1
  $ 6,377     $ 15,672     $ 20,678     $ 14,605  
Cash and cash equivalents of discontinued/held-for-sale operations at January 1
                       
Net increase/(decrease) in cash and cash equivalents
    1,725       (2,681 )     (2,015 )     483  
Less: cash and cash equivalents of discontinued/held-for-sale operations at March 31
                       
Cash and cash equivalents at March 31
  $ 8,102     $ 12,991     $ 18,663     $ 15,088  

The accompanying notes are part of the financial statements

 
7

 

Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Periods Ended March 31, 2009 and 2008
(in millions)
   
First Quarter
 
   
2009
   
2008
 
   
(unaudited)
 
             
Net income/(loss)
  $ (1,416 )   $ 192  
Other comprehensive income/(loss), net of tax:
               
Foreign currency translation
    (515 )     871  
Net gain/(loss) on derivative instruments
    (87 )     225  
Employee benefit-related
    (5 )     96  
Net holding gain/(loss)
    (1 )     (27 )
Total other comprehensive income/(loss), net of tax
    (608 )     1,165  
Comprehensive income/(loss)
    (2,024 )     1,357  
Less: Comprehensive income/(loss) attributable to noncontrolling interests (Note 17)
    (58 )     72  
Comprehensive income/(loss) attributable to Ford Motor Company
  $ (1,966 )   $ 1,285  
 
The accompanying notes are part of the financial statements

 
8

 

Item 1. Financial Statements (Continued)
 
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
 
Footnote
 
Page
Note 1
Principles of Presentation and Consolidation
10
Note 2
Inventories
14
Note 3
Variable Interest Entities
14
Note 4
Goodwill and Other Net Intangibles
18
Note 5
Debt and Commitments
19
Note 6
Impairments
24
Note 7
Other Income/(Loss)
24
Note 8
Employee Separation Actions and Exit and Disposal Activities
25
Note 9
Income Taxes
25
Note 10
Discontinued Operations, Held-For-Sale Operations, Other Dispositions, and Acquisitions
26
Note 11
Amounts Per Share Attributable to Ford Motor Company Common and Class B Stock
28
Note 12
Derivative Financial Instruments and Hedging Activities
28
Note 13
Retirement Benefits
32
Note 14
Fair Value Measurements
33
Note 15
Segment Information
35
Note 16
Guarantees
36
Note 17
Equity/(Deficit) Attributable to Ford Motor Company and Noncontrolling Interests
37
 
 
9

 

Item 1. Financial Statements (Continued)
 
NOTE 1.  PRINCIPLES OF PRESENTATION AND CONSOLIDATION

Our financial statements are presented in accordance with generally accepted accounting principles ("GAAP") in the United States for interim financial information, and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X.  We show certain of our financial statements on both a consolidated and a sector basis for our Automotive and Financial Services sectors.  All intercompany items and transactions have been eliminated in both the consolidated and sector basis financial statements.  Reconciliations of certain line items are explained below in this Note, where the presentation of these intercompany eliminations or consolidated adjustments differ between the consolidated and sector financial statements.

In the opinion of management, these unaudited financial statements reflect a fair statement of the results of operations and financial condition of Ford Motor Company and its consolidated subsidiaries and consolidated variable interest entities ("VIEs") of which we are the primary beneficiary for the periods and at the dates presented.  The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.  Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2008 ("2008 Form 10-K Report").  For purposes of this report, "Ford," the "Company," "we," "our," "us" or similar references mean Ford Motor Company and our consolidated subsidiaries and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise.  All held-for-sale assets and liabilities are excluded from the footnotes unless otherwise noted.  See Note 10 for details of held-for-sale operations.

In the first quarter of 2009, our wholly-owned subsidiary Ford Motor Credit Company LLC ("Ford Credit") recorded a $630 million cumulative adjustment to correct for the overstatement of Financial Services sector cash and cash equivalents and certain accounts payable that originated in prior periods.  The impact on previously-issued annual and interim financial statements was not material.

Noncontrolling Interests.  We adopted Statement of Financial Accounting Standards ("SFAS") No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51 ("SFAS No. 160") on January 1, 2009.  This standard establishes accounting and reporting requirements for the noncontrolling interest (formerly "minority interest") in a subsidiary and for the deconsolidation of a subsidiary.  SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  The presentation and disclosure requirements of this standard must be applied retrospectively for all periods.  This requirement changed the presentation of our consolidated and sector statements of operations and our consolidated and sector balance sheets.  It also required us to incorporate a consolidated statement of comprehensive income.  Beginning with this quarter, footnote disclosures for our interim financial periods will include separate reconciliations of our beginning-of-period to end-of-period equity/(deficit) for Ford and the noncontrolling interests.

Convertible Debt Instruments.  We adopted the Financial Accounting Standards Board ("FASB") Staff Position ("FSP") No. APB 14-1, Accounting for Convertible Debt Instruments that may be Settled in Cash upon Conversion (Including Partial Cash Settlement) ("FSP APB 14-1") on January 1, 2009.  FSP APB 14-1 applies to convertible debt securities that, upon conversion, may be settled in cash.  FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate resulting in higher interest expense over the life of the instrument due to amortization of the discount.  This new pronouncement applies to our 4.25% Senior Convertible Notes due December 15, 2036 ("Convertible Notes") issued in December 2006.  We have applied the pronouncement retrospectively to all periods presented.

 
10

 

Item 1. Financial Statements (Continued)
 
NOTE 1.  PRINCIPLES OF PRESENTATION AND CONSOLIDATION (Continued)

The following financial statement line items were affected by implementation of FSP APB 14-1 (in millions, except per share information):
 
 
Statement of Operations
 
Revised
First Quarter 2008
   
As Originally Reported
First Quarter 2008
   
Effect of
Change
 
Automotive interest expense
  $ 558     $ 528     $ (30 )
Income/(loss) from continuing operations attributable to Ford Motor Company
    69       99       (30 )
Net income/(loss) attributable to Ford Motor Company
    70       100       (30 )
Earnings per share attributable to Ford Motor Company
    0.03       0.05       (0.02 )

Balance Sheet (a)
 
Revised
December 31,
2008
   
As Originally Reported
December 31,
2008
   
Effect of
Change
 
Automotive other assets – noncurrent (b)
  $ 1,441     $ 1,512     $ 71  
Automotive long-term debt
    23,036       24,655       (1,619 )
Capital in excess of par value of stock (c)
    10,875       9,076       1,799  
Retained earnings/(Accumulated deficit)
    (16,355 )     (16,145 )     (210 )
__________
 
(a)
As a result of the retrospective application of FSP APB 14-1, the December 31, 2008 column on our consolidated and sector balance sheets is "unaudited."
 
(b)
Effect of Change related to FSP APB 14-1 is $30 million; the remaining $41 million relates to the assets of Volvo classified as held-for-sale operations (see Note 10 for discussion of Volvo).
 
(c)
Effect of Change represents the equity component under FSP APB 14-1 (i.e., $1,864 million), less those amounts previously recorded on conversions prior to adoption of the standard (i.e., $65 million).

The following shows the effect on the per share amounts attributable to Ford Common and Class B Stock for the first quarter of 2009 before and after the adoption of FSP APB 14-1:

   
First Quarter 2009
 
Basic income/(loss)
 
Before Adoption
   
After
Adoption
   
Change
 
Income/(Loss) from continuing operations
  $ (0.58 )   $ (0.60 )   $ (0.02 )
Income/(Loss) from discontinued operations
                 
Net income/(loss)
  $ (0.58 )   $ (0.60 )   $ (0.02 )
Diluted income/(loss)
                       
Income/(Loss) from continuing operations
  $ (0.58 )   $ (0.60 )   $ (0.02 )
Income/(Loss) from discontinued operations
                 
Net income/(loss)
  $ (0.58 )   $ (0.60 )   $ (0.02 )

Presentation of Balance Sheet

Deferred Tax Assets and Liabilities. The difference between the total assets and total liabilities as presented in our sector balance sheet and consolidated balance sheet is the result of netting of deferred income tax assets and liabilities.  The reconciliation between total sector and consolidated balance sheets is as follows (in millions):

   
March 31,
 2009
   
December 31, 2008
 
Sector balance sheet presentation of deferred income tax assets:
           
Automotive sector current deferred income tax assets
  $ 306     $ 302  
Automotive sector non-current deferred income tax assets
    6,410       7,204  
Financial Services sector deferred income tax assets*
    238       251  
Total
    6,954       7,757  
Reclassification for netting of deferred income taxes
    (4,136 )     (4,649 )
Consolidated balance sheet presentation of deferred income tax assets
  $ 2,818     $ 3,108  
                 
Sector balance sheet presentation of deferred income tax liabilities:
               
Automotive sector current deferred income tax liabilities
  $ 2,856     $ 2,790  
Automotive sector non-current deferred income tax liabilities
    384       614  
Financial Services sector deferred income tax liabilities
    2,602       3,280  
Total
    5,842       6,684  
Reclassification for netting of deferred income taxes
    (4,136 )     (4,649 )
Consolidated balance sheet presentation of deferred income tax liabilities
  $ 1,706     $ 2,035  
__________
*     Financial Services deferred income tax assets are included in Financial Services other assets on our sector balance sheet.

 
11

 

Item 1. Financial Statements (Continued)
 
NOTE 1.  PRINCIPLES OF PRESENTATION AND CONSOLIDATION (Continued)

Ford Acquisition of Ford Credit Debt.  In connection with our Registration Statement (No. 333-151355) filed on Form S-3 and the related prospectus dated June 2, 2008 and the prospectus supplements dated August 14, 2008 and October 2, 2008, we issued shares of Ford Common Stock from time to time in market transactions and used the proceeds therefrom to purchase outstanding Ford Credit debt securities maturing prior to 2012.  During 2008, we purchased $492 million of Ford Credit debt securities for $424 million in cash.  Debt securities with a face and fair value of $135 million matured on January 12, 2009.

On our consolidated balance sheet, the remaining debt is no longer reported in our Debt balances.  On our sector balance sheet, the debt is reported as outstanding as it has not been retired or cancelled by Ford Credit.  Accordingly, on our sector balance sheet, $357 million and $492 million of debt are reported as Financial Services debt at March 31, 2009 and December 31, 2008, respectively.  Likewise, included in Automotive marketable securities are $357 million and $492 million at March 31, 2009 and December 31, 2008, respectively, related to Ford's purchase of the Ford Credit debt securities.  Consolidating elimination adjustments for these debt securities and related accrued interest of $9 million and $8 million at March 31, 2009 and December 31, 2008, respectively, are included in the Intersector elimination lines on the sector balance sheet.

Presentation of Cash Flows

Wholesale and Other Finance Receivables.  The reconciliation between total sector and consolidated cash flows from operating activities of continuing operations is as follows (in millions):

   
First Quarter
 
   
2009
   
2008
 
Sum of sector cash flows from operating activities of continuing operations
  $ (354 )   $ 3,167  
Reclassification of wholesale receivable cash flows from investing to operating for consolidated presentation (a)
    4,438       (1,846 )
Reclassification of finance receivable cash flows from investing to operating for consolidated presentation (b)
    77       (294 )
Consolidated cash flows from operating activities of continuing operations
  $ 4,161     $ 1,027  
__________
(a)
In addition to vehicles sold by us, the cash flows from wholesale finance receivables being reclassified from investing to operating include financing by Ford Credit of used and non-Ford vehicles.  100% of cash flows from wholesale finance receivables have been reclassified for consolidated presentation as the portion of these cash flows from used and non-Ford vehicles is impracticable to separate.
(b)
Includes cash flows of finance receivables purchased/collected from certain divisions and subsidiaries of the Automotive sector.

Ford Credit Acquisition of Ford Debt.  During the first quarter of 2009, Ford Credit conducted a cash tender offer for our secured term loan under the secured credit agreement that we entered into with various banks and financial institutions on December 15, 2006 (the "Credit Agreement").  Pursuant to this offer, Ford Credit purchased from lenders thereof $2.2 billion principal amount of term loan for an aggregate cost of $1.1 billion (including transaction costs).  This transaction settled on March 27, 2009, following which Ford Credit distributed the term loan to its immediate parent, Ford Holdings LLC ("Ford Holdings"), whereupon the debt was forgiven.  As a result, we recorded a gain on extinguishment of debt in the amount of $1.1 billion, net of transaction costs, in Automotive interest income and other non-operating income/(expense), net.  Approximately $4.6 billion aggregate principal amount of term loans remains outstanding.

On our consolidated statement of cash flows, the $1.1 billion cash outflow related to Ford Credit's purchase of our secured term loan is presented as a principal payment on debt within Cash flows from financing activities of continuing operations.  On our sector statement of cash flows, the cash outflow is presented as a purchase of securities by our Financial Services sector within Cash flows from investing activities of continuing operations.

Ford Acquisition of Ford Credit Debt.  On our consolidated statement of cash flows, the $135 million cash payment from Ford Credit to us related to the maturity of Ford Credit's debt securities discussed in "Presentation of Balance Sheet" above is not shown as a cash outflow because the debt was not reported as outstanding on our consolidated balance sheet.  On our sector statement of cash flows, the $135 million cash payment is presented as a cash inflow from Automotive sales and maturities of securities within Cash flows from investing activities of continuing operations and a cash outflow from Financial Services principal payments on debt within Cash flows from financing activities of continuing operations.

 
12

 

Item 1. Financial Statements (Continued)
 
NOTE 1.  PRINCIPLES OF PRESENTATION AND CONSOLIDATION (Continued)

Liquidity

At March 31, 2009, our Automotive sector had total cash, cash equivalents, and marketable securities of $21.6 billion (including about $300 million of Temporary Asset Account securities ("TAA")).

We have experienced substantial negative cash flows in recent periods, and had negative equity of $16.5 billion at March 31, 2009.  Based on our current planning assumptions, we expect net Automotive operating cash flows in 2009 to be negative, but significantly improved from 2008.  The dramatic decline in industry sales volume during 2008, and our reduced production to match demand, had a substantial negative effect on cash flows.  Trade payables and other elements of working capital have improved in the first quarter of 2009 and should continue to improve as industry sales volume stabilizes and begins to grow, contributing to the expected improvement in operating cash flow.

We continue to face many risks and uncertainties, however, related to the global economy, our industry in particular, and the credit environment which could materially impact our plan.  Of these potentialities, we believe that the two risks that are reasonably possible to have a material impact on us are (i) a decline in industry sales volume to levels below our current planning assumptions, and (ii) actions necessary to ensure an uninterrupted supply of materials and components.

Our current planning assumptions forecast that industry sales volume will stabilize in the first half of 2009 and begin to improve soon thereafter, culminating in full-year 2009 U.S. industry sales volume in the lower end of the range of 10.5 million units to 12.5 million units, and industry sales volume for the 19 markets we track in Europe in the range of 13.5 million units to 14.5 million units.  Based on our analysis of the market, we believe that these assumptions are reasonable.  There is a risk, however, that industry sales volume may not stabilize in the United States in the first half of 2009 or begin to improve in the United States and Europe as soon thereafter as we forecast.

In addition to the risk related to industry sales volume, our plan also could be negatively impacted by pressures affecting our supply base.  Our suppliers have experienced increased economic distress due to the sudden and substantial drop in industry sales volume that affected all automobile manufacturers.  Dramatically lower industry sales volumes have made existing debt obligations and fixed cost levels difficult for many suppliers to manage, especially with the tight credit market, resulting in an increase in distressed suppliers and supplier bankruptcies.  As a result, it is reasonably possible that our costs to ensure an uninterrupted supply of materials and components could be higher than our present planning assumptions by a material amount.

We believe that even a combination of these two reasonably possible scenarios, however, as measured by a decline to 9.2 million units in the United States and 11.7 million units in Europe, combined with our assessment of the necessary cost to ensure an uninterrupted supply of materials and components (absent a significant industry event in 2009 such as an uncontrolled bankruptcy of a major competitor or important suppliers to Ford which we believe is remote), would not exceed our present available liquidity.  We believe that the risk of decline in industry sales volume below these levels (i.e., below 9.2 million units in the United States and 11.7 million units in Europe) is remote.  Therefore, we do not believe that these reasonably possible scenarios cause substantial doubt about our ability to continue as a going concern for the next year.

With regard to our Financial Services sector, Ford Credit expects the majority of its funding in 2009 will consist of eligible issuances pursuant to government-sponsored programs.  It is reasonably possible that credit markets could continue to constrain Ford Credit's funding or that Ford Credit will not be eligible for government-sponsored programs.  In these circumstances, Ford Credit could mitigate these funding risks by reducing the amount of finance receivables and operating leases they purchase or originate.  At our current industry sales volume assumption, this would not have a material impact on our going concern analysis.  If industry sales volume were to decline to the reduced levels described above, the risk of Ford Credit not being able to support the sale of Ford products would be remote.

Accordingly, we have concluded that there is no substantial doubt about our ability to continue as a going concern, and our financial statements have been prepared on a going concern basis.

Notwithstanding this conclusion, as previously disclosed in our 2008 Form 10-K Report and our business plan submission to Congress in December 2008, in this environment a number of scenarios could put severe pressure on our short- and long-term Automotive liquidity, including a worsening of the scenarios described above.  We presently believe that the likelihood of such an event is remote.  In such a scenario, however, or in response to other unanticipated circumstances, we could take additional mitigating actions or require additional financing to improve our liquidity.

 
13

 

Item 1. Financial Statements (Continued)
 
NOTE 2.  INVENTORIES

Inventories are summarized as follows (in millions):

   
March 31,
   
December 31,
 
   
2009
   
2008
 
Raw materials, work-in-process and supplies
  $ 2,926     $ 2,747  
Finished products
    4,493       5,091  
Total inventories under first-in, first-out method ("FIFO")
    7,419       7,838  
Less: Last-in, first-out method ("LIFO") adjustment
    (844 )     (850 )
Total inventories
  $ 6,575     $ 6,988  

Inventories are stated at lower of cost or market.  About one-fourth of inventories were determined under the LIFO method.

NOTE 3.  VARIABLE INTEREST ENTITIES

We consolidate VIEs of which we are the primary beneficiary.  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 necessarily represent additional assets that could be used to satisfy claims against our general assets.

Automotive Sector

VIEs of which we are the primary beneficiary:

Activities with the joint ventures described below include purchasing substantially all of the joint ventures' output under a cost-plus-margin arrangement and/or volume dependent pricing.  These contractual arrangements may require us to absorb joint venture losses when production volume targets are not met or allow us, in some cases, to receive bonuses when production volume targets are exceeded.  Described below are the significant VIEs that we consolidated as of March 31, 2009.

AutoAlliance International, Inc. ("AAI") is a 50/50 joint venture with Mazda Motor Corporation ("Mazda") in North America.  AAI is engaged in the manufacture of automobiles on behalf of Ford and Mazda, primarily for sale in North America.

Ford Otomotiv Sanayi Anonim Sirketi ("Ford Otosan") is a 41/41/18 joint venture in Turkey with the Koc Group of Turkey and public investors.  Ford Otosan is the single-source 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.  GFT is the primary supplier of manual transmissions for use in our European vehicles.

Getrag All Wheel Drive AB is a 40/60 joint venture between Volvo Cars and Getrag Dana Holding GmbH.  The joint venture produces all-wheel-drive components.  The assets and liabilities associated with this joint venture that were classified during the first quarter of 2009 as held for sale are shown in the table below and are included in the assets and liabilities of Volvo classified as held-for-sale operations in Note 10.

Tekfor Cologne GmbH ("Tekfor") is a 50/50 joint venture with Neumayer Tekfor GmbH.  Tekfor produces transmission and chassis components for use in our vehicles.

Pininfarina Sverige, AB is a 40/60 joint venture between Volvo Cars and Pininfarina, S.p.A.  The joint venture was established to engineer and manufacture niche vehicles.  The assets and liabilities associated with this joint venture that were classified during the first quarter of 2009 as held for sale are shown in the table below and are included in the assets and liabilities of Volvo classified as held-for-sale operations in Note 10.

We also hold interests in certain dealerships, and at March 31, 2009 there were approximately 64 dealerships that were part of our Dealer Development program that are consolidated.  We supply and finance the majority of vehicles and parts of these dealerships, and the operators have a contract to buy our equity interest over a period of time.  See Note 6 for discussion of the impairment of our investment in these assets.
 
 
14

 

Item 1. Financial Statements (Continued)
 
NOTE 3.  VARIABLE INTEREST ENTITIES (Continued)

The total consolidated VIE assets and liabilities reflected on our March 31, 2009 and December 31, 2008 balance sheets are as follows (in millions):
 
   
March 31,
   
December 31,
 
Assets
 
2009
   
2008
 
Cash and cash equivalents
  $ 519     $ 665  
Receivables
    440       518  
Inventories
    910       1,117  
Net property
    2,220       2,136  
Assets of held-for-sale operations
    294       318  
Other assets
    184       297  
Total assets
  $ 4,567     $ 5,051  
                 
Liabilities
               
Trade payables
  $ 413     $ 516  
Accrued liabilities
    281       324  
Debt
    980       972  
Liabilities of held-for-sale operations
    87       97  
Other liabilities
    189       167  
Total liabilities
  $ 1,950     $ 2,076  
                 
Equity attributable to noncontrolling interests
  $ 1,073     $ 1,168  

The financial performance of the consolidated VIEs reflected on our statements of operations for the first quarters of 2009 and 2008 are as follows (in millions):
 
   
First Quarter
 
   
2009
   
2008
 
Sales
  $ 926     $ 2,054  
Costs and expenses
               
Cost of sales
    847       1,666  
Selling, administrative and other expenses
    109       192  
Total costs and expenses
    956       1,858  
Operating income/(loss)
    (30 )     196  
                 
Interest expense
    15       17  
                 
Interest income and other non-operating income/(expense), net
    16       20  
Equity in net income/(loss) of affiliated companies
    (3 )     1  
Income/(Loss) before income taxes - Automotive
    (32 )     200  
                 
Provision for/(Benefit from) income taxes
    22       68  
Income/(Loss) from continuing operations
    (54 )     132  
                 
Income/(Loss) from discontinued operations
           
Net income/(loss)
    (54 )     132  
                 
Less: Income/(loss) attributable to noncontrolling interests
    12       120  
Net income/(loss) attributable to Ford Motor Company
  $ (66 )   $ 12  

VIEs of which we are not the primary beneficiary:

In 2005, as part of the transaction to sell our interest in The Hertz Corporation ("Hertz"), we provided cash-collateralized letters of credit to support the payment obligations of Hertz Vehicle Financing LLC, a VIE which is wholly owned by Hertz and of which we are not the primary beneficiary.  The fair value of our obligation related to these letters of credit, which will expire no later than December 31, 2011, was approximately $12 million at March 31, 2009.  For additional discussion of these letters of credit, see Note 16.

We also have investments in unconsolidated subsidiaries determined to be VIEs of which we are not the primary beneficiary.  These investments, described below, are accounted for as equity-method investments and are included in Equity in net assets of affiliated companies.

Formed in 1995, AutoAlliance (Thailand) Co., Ltd ("AAT") is a 50/50 joint venture with Mazda in Thailand.  AAT is engaged in the manufacturing of automobiles on behalf of Ford and Mazda for both the Thai domestic market and for export markets through Ford and Mazda.  Ford and Mazda share equally the risks and rewards of the joint venture.

 
15

 

Item 1. Financial Statements (Continued)
 
NOTE 3.  VARIABLE INTEREST ENTITIES (Continued)

In 2002, we established the Ford Motor Company Capital Trust II ("Trust II").  We own 100% of Trust II's common stock which is equal to 5% of Trust II's total equity.  The risks and rewards associated with our interests in this entity are based primarily on ownership percentage.

Our maximum exposure to VIEs of which we are not the primary beneficiary is as follows (in millions):

               
Change in
 
   
March 31,
   
December 31,
   
Maximum
 
   
2009
   
2008
   
Exposure
 
Investments
  $ 400     $ 413     $ (13 )
Liabilities
    (35 )     (38 )     3  
Guarantees (off-balance sheet)
    365       362       3  
Total maximum exposure
  $ 730     $ 737     $ (7 )

This includes a guarantee of a line of credit on behalf of AAT for plant expansion.

Financial Services Sector

VIEs of which Ford Credit is the primary beneficiary:

Ford Credit uses special purpose entities to issue asset-backed securities in securitization transactions to public and private investors, bank conduits, and government programs.  The asset-backed securities are backed by the expected cash flows from finance receivables and our interest in net investments in operating leases that have been legally sold but continue to be recognized by us.  Ford Credit retains interests in its securitization transactions, including senior and subordinated securities issued by VIEs, rights to cash held for the benefit of the securitization investors (e.g., a reserve fund), and residual interests.

As residual interest holder, Ford Credit is exposed to underlying residual and credit risk of the collateral, and may be exposed to interest rate risk.  Ford Credit's exposure does not represent incremental risk to Ford Credit, and was $18.9 billion and $21.1 billion at March 31, 2009 and December 31, 2008, respectively.  The amount of risk absorbed by Ford Credit's residual interests is generally represented by and limited to the amount of overcollaterization of its assets securing the debt and any cash reserves funded.  For Ford Credit's wholesale transactions, this also includes cash it has contributed to excess funding accounts and its participation interests in VIEs.

Ford Credit generally has no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in payment or otherwise is in default.  Securitization investors have no recourse to Ford Credit or its other assets for credit losses on the securitized assets, and have no right to require Ford Credit to repurchase their investments.  Ford Credit does not guarantee any asset-backed securities and has no obligation to provide liquidity or contribute cash or additional assets to the VIEs.  In certain instances in the first quarter of 2009, Ford Credit elected to provide additional enhancements or repurchase specific subordinated notes in order to address challenging market conditions.

In certain transactions Ford Credit has dynamic enhancements, where it may elect to support the performance and/or product mix of the transactions by purchasing additional subordinated notes or increasing cash reserves.  Ford Credit's maximum contribution for these transactions was $491 million in the first quarter of 2009.

Although not contractually required, Ford Credit regularly supports its wholesale securitization programs by repurchasing receivables of a dealer from the VIEs when the dealer's performance is at risk, which transfers the corresponding risk of loss from the VIE to Ford Credit.  Ford Credit repurchased $41 million of such receivables in the first quarter of 2009.  In addition, from time to time, Ford Credit supports its revolving wholesale transactions by contributing cash to an excess funding account when receivables fall below the required level in order to continue to finance the receivables.  These cash enhancements ranged from $0 to $1.3 billion in the first quarter of 2009.

Ford Credit's FCAR Owner Trust retail securitization program (“FCAR”) is a VIE that issues commercial paper and Ford Credit may, on occasion, purchase the debt issued by FCAR.  In October 2008, Ford Credit registered to sell up to $16 billion of FCAR asset-backed commercial paper to the U.S. Federal Reserve's Commercial Paper Funding Facility ("CPFF").  Commercial paper sold to the CPFF is for a term of 90 days and sales can be made through October 30, 2009.  At March 31, 2009, Ford Credit had an outstanding balance of $7 billion of FCAR asset-backed commercial paper issued to the CPFF.  At March 31, 2009, the finance receivables of FCAR supported $10 billion of FCAR's asset-backed commercial paper.

 
16

 
 
Item 1. Financial Statements (Continued)
 
NOTE 3.  VARIABLE INTEREST ENTITIES (Continued)

In November 2008, the U.S. Federal Reserve announced the Term Asset-Backed Securities Loan Facility ("TALF"), pursuant to which the Federal Reserve Bank of New York was authorized to provide up to $200 billion of non-recourse loans to investors in highly-rated asset-backed securities who pledge these securities as collateral for the non-recourse loan.  Asset-backed securities backed by automotive retail, lease, and wholesale finance receivables qualify for the TALF program.  On February 10, 2009, this program was further expanded to $1 trillion by the Consumer & Business Lending Initiative as part of the Financial Stability Plan announced by the U.S. Treasury.  Ford Credit completed a TALF-eligible $3 billion retail transaction in March 2009 through a VIE.

Finance receivables and net investment in operating leases that collateralize the secured debt of the VIE remain on Ford Credit's balance sheet and therefore are not included in the VIE assets shown in the following table.  As of March 31, 2009, the carrying values of the assets were $39.5 billion of retail receivables, $16.7 billion of wholesale receivables, and $13.6 billion of net investment in operating leases.  As of December 31, 2008, the carrying values of the assets were $41.9 billion of retail receivables, $19.6 billion of wholesale receivables, and $15.6 billion of net investment in operating leases.  The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on Ford Credit's general assets; rather, they represent claims against only the specific securitized assets.  Conversely, these specific securitized assets do not represent additional assets that could be used to satisfy claims against Ford Credit's general assets.

The total consolidated VIE assets and liabilities reflected on our March 31, 2009 and December 31, 2008 balance sheets are as follows (in millions):
 
   
March 31, 2009
   
December 31, 2008
 
   
Cash & Cash Equivalents (a)
   
Debt (b)
   
Cash & Cash Equivalents (a)
   
Debt (b)
 
VIEs supporting transactions by asset class (c)
                       
Retail
  $ 2,690     $ 32,660     $ 2,673     $ 34,507  
Wholesale
    788       11,916       1,029       15,537  
Net investment in operating leases
    187       10,302       206       12,005  
Total
  $ 3,665     $ 54,878     $ 3,908     $ 62,049  
__________
 
(a)
Additional cash and cash equivalents available to support the obligations of the VIEs that are not assets of the VIEs were $1 billion and $949 million as of March 31, 2009 and December 31, 2008, respectively, and are reflected in our consolidated financial statements.
 
(b)
Certain notes issued by the VIEs to affiliated companies served as collateral for accessing the European Central Bank ("ECB)" facility.  This external funding of $246 million and $308 million at March 31, 2009 and December 31, 2008, respectively, was not reflected as a liability of the VIEs, but was included in our consolidated liabilities.
 
(c)
The derivative assets of our consolidated VIEs were $59 million and $46 million at March 31, 2009 and December 31, 2008, respectively, and the derivative liabilities were $673 million and $808 million at March 31, 2009 and December 31, 2008, respectively.

The financial performance of the consolidated VIEs reflected in our statements of operations for the first quarters of 2009 and 2008 are as follows (in millions):
 
   
First Quarter
 
   
2009
   
2008
 
   
Derivative (Income)/
Expense
   
Interest Expense
   
Derivative (Income)/
Expense
   
Interest Expense
 
VIEs supporting transactions by asset class
                       
Retail
  $ 40     $ 275     $ 270     $ 453  
Wholesale
    (3 )     79       (22 )     184  
Net investment in operating leases
    27       124       96       178  
Our financial performance related to VIEs
  $ 64     $ 478     $ 344     $ 815  

VIEs of which Ford Credit is not the primary beneficiary:

Ford Credit has investments in certain joint ventures determined to be VIEs of which it is not the primary beneficiary.  These joint ventures provide consumer and dealer financing in their respective markets.  The joint ventures are financed by external debt as well as subordinated financial support provided by the joint venture partners.  The risks and rewards associated with Ford Credit's interests in these joint ventures are based primarily on ownership percentages.  Ford Credit's investments in these joint ventures are accounted for as equity method investments and are included in Other assets.  Ford Credit's maximum exposure to any potential losses associated with these VIEs is limited to its equity investments, which amounted to $137 million and $140 million at March 31, 2009 and December 31, 2008, respectively.

 
17

 

Item 1. Financial Statements (Continued)
 
NOTE 4.  GOODWILL AND OTHER NET INTANGIBLES

Goodwill

The total carrying amount of goodwill was $38 million and $40 million at March 31, 2009 and December 31, 2008, respectively.  At March 31, 2009, $30 million of the goodwill balance related to Ford Europe, and $8 million related to Ford Credit.  At December 31, 2008, $31 million of the goodwill balance related to Ford Europe, and $9 million related to Ford Credit.  Changes in the goodwill balance are attributable to the impact of foreign currency translation.  We also have goodwill recorded within Equity in net assets of affiliated companies of $34 million at March 31, 2009 and December 31, 2008.

Other Net Intangibles

The components of net identifiable intangible assets are as follows (in millions):

   
March 31, 2009
   
December 31, 2008
 
   
Gross
 Carrying Amount
   
Less: Accumulated Amortization
   
Net Intangible Assets
   
Gross Carrying Amount
   
Less: Accumulated Amortization
   
Net Intangible Assets
 
Automotive Sector
                                   
Manufacturing and production incentive rights
  $ 229       (128 )     101       227       (113 )     114  
License and advertising agreements
    85       (25 )     60       85       (23 )     62  
Other
    70       (42 )     28       71       (41 )     30  
Total Automotive sector
    384       (195 )     189       383       (177 )     206  
Total Financial Services Sector
    3       (3 )           4       (4 )      
Total Company
  $ 387     $ (198 )   $ 189     $ 387     $ (181 )   $ 206  

Our identifiable intangible assets are comprised of manufacturing and production incentive rights acquired in 2006 with a useful life of 4 years, license and advertising agreements with amortization periods of 5 years to 25 years, and other intangibles with various amortization periods (primarily patents, customer contracts, technology, and land rights).

Pre-tax amortization expense was as follows (in millions):

   
First Quarter
 
   
2009
   
2008
 
Pre-tax amortization expense
  $ 18     $ 24  

Intangible asset amortization is forecasted to be approximately $70 million to $80 million per year for the next two years, and $10 million thereafter.

 
18

 

Item 1. Financial Statements (Continued)
 
NOTE 5.  DEBT AND COMMITMENTS

Debt at April 8, 2009 (pro forma), March 31, 2009, and December 31, 2008 are shown below.  Pro forma amounts below reflect debt repurchases that were completed on April 8, 2009; see "Subsequent Events" below for additional detail regarding these transactions.

   
Amount Outstanding
(in millions)
 
   
(Pro Forma)
April 8, 2009
   
March 31, 2009
   
December 31, 2008
 
Automotive Sector
                 
Debt payable within one year
                 
Short-term
  $ 861     $ 861     $ 543  
Long-term payable within one year
                       
Secured term loan
    70       70       70  
Other debt
    497       497       578  
Total debt payable within one year
    1,428       1,428       1,191  
                         
Long-term debt payable after one year
                       
Public unsecured debt securities
    5,594       8,983       9,148  
Convertible notes
    579       4,883       4,883  
Subordinated convertible debentures
    2,984       2,984       3,027  
Secured term loan
    4,566       4,566       6,790