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 recorded on our balance sheet at par value adjusted for unamortized discount or premium and adjustments related to designated fair value hedges (see Note 16 for policy detail). Discounts, premiums, and costs directly related to the issuance of debt are 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 Automotive interest income and other income/(loss), net and Financial Services other income/(loss), net.

NOTE 13. DEBT AND COMMITMENTS (Continued)

The carrying value of debt was $119.2 billion and $114.7 billion at December 31, 2014 and 2013, respectively. The carrying value of Automotive sector and Financial Services sector debt at December 31 was as follows (in millions):



							Interest Rates
							Average Contractual (a)				Average Effective (b)
Automotive Sector	2014			2013			2014		2013		2014		2013
Debt payable within one year
Short-term	$	373		$	562		1.9	%	1.5	%	1.9	%	1.5	%
Long-term payable within one year
U.S. Department of Energy (“DOE”) Advanced Technology Vehicles Manufacturing (“ATVM”) Incentive Program	591			591
European Investment Bank (“EIB”) loans	1,187			—
Other debt	350			104
Total debt payable within one year	2,501			1,257
Long-term debt payable after one year
Public unsecured debt securities	6,634			6,799
Unamortized (discount)/premium	(144		)	(148		)
Convertible notes	—			908
Unamortized (discount)/premium	—			(110		)
DOE ATVM Incentive Program	3,833			4,424
EIB loans	—			1,295
Other debt	1,000			1,258
Total long-term debt payable after one year	11,323			14,426			4.6	%	4.4	%	4.6	%	4.7	%
Total Automotive sector	$	13,824		$	15,683

Fair value of Automotive sector debt (c)	$	15,553		$	17,301

Financial Services Sector
Short-term debt
Unsecured debt	$	9,761		$	9,667
Asset-backed debt	1,377			5,327
Total short-term debt	11,138			14,994			1.9	%	1.5	%	1.9	%	1.5	%
Long-term debt
Unsecured debt
Notes payable within one year	8,795			4,475
Notes payable after one year	43,087			38,914
Asset-backed debt
Notes payable within one year	16,738			17,337
Notes payable after one year	25,216			23,273
Unamortized (discount)/premium	(55		)	(91		)
Fair value adjustments (d)	428			103
Total long-term debt	94,209			84,011			2.8	%	3.1	%	2.9	%	3.3	%
Total Financial Services sector	$	105,347		$	99,005

Fair value of Financial Services sector debt (c)	$	107,758		$	102,399

__________


(a)	Average contractual rates reflect the stated contractual interest rate.


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


(c)	The fair value of debt includes $131 million and $377 million of Automotive sector short-term debt and $9.8 billion and $9.7 billion of Financial Services sector short-term debt at December 31, 2014 and 2013, respectively, carried at cost which approximates fair value. All debt is categorized within Level 2 of the fair value hierarchy.


(d)	Adjustments related to designated fair value hedges of unsecured debt.

NOTE 13. DEBT AND COMMITMENTS (Continued)

The fair value of debt presented above reflects interest accrued but not yet paid. Interest accrued on Automotive debt was $180 million and $195 million at December 31, 2014 and 2013, respectively. Interest accrued on Financial Services debt was $602 million and $633 million at December 31, 2014 and 2013, respectively. Interest accrued on debt is reported in Other liabilities and deferred revenue. See Note 4 for fair value methodology.

We paid interest of $774 million, $746 million, and $693 million in 2014, 2013, and 2012, respectively, on Automotive debt. We paid interest of $2.7 billion, $2.8 billion, and $3 billion in 2014, 2013, and 2012, respectively, on Financial Services debt.

Maturities

Debt maturities at December 31, 2014 were as follows (in millions):



	2015		2016		2017		2018		2019		Thereafter		Premium/(Discount) and Fair Value Adjustments			Total Debt Maturities
Automotive Sector
Public unsecured debt securities	$	161	$	—	$	—	$	361	$	—	$	6,273	$	(144	)	$	6,651
DOE ATVM Incentive Program	591		591		591		591		591		1,469		—			4,424
Short-term and other debt (a)	1,749		280		141		148		113		318		—			2,749
Total	2,501		871		732		1,100		704		8,060		(144		)	13,824

Financial Services Sector
Unsecured debt	18,556		10,402		11,096		6,028		5,582		9,979		375			62,018
Asset-backed debt	18,115		13,115		7,678		1,063		2,760		600		(2		)	43,329
Total	36,671		23,517		18,774		7,091		8,342		10,579		373			105,347
Total Company	$	39,172	$	24,388	$	19,506	$	8,191	$	9,046	$	18,639	$	229		$	119,171

__________


(a)	Primarily non-U.S. affiliate debt and includes the EIB secured loans.

NOTE 13. DEBT AND COMMITMENTS (Continued)

Automotive Sector

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	2014		2013
4 7/8% Debentures due March 26, 2015	$	161	$	165
6 1/2% Debentures due August 1, 2018	361		361
8 7/8% Debentures due January 15, 2022	86		86
7 1/8% Debentures due November 15, 2025	209		209
7 1/2% Debentures due August 1, 2026	193		193
6 5/8% Debentures due February 15, 2028	104		104
6 5/8% Debentures due October 1, 2028 (a)	638		638
6 3/8% Debentures due February 1, 2029 (a)	260		260
7.45% GLOBLS due July 16, 2031 (a)	1,794		1,794
8.900% Debentures due January 15, 2032	151		151
9.95% Debentures due February 15, 2032	4		4
5.75% Debentures due April 2, 2035 (b)	40		40
7.75% Debentures due June 15, 2043	73		73
7.40% Debentures due November 1, 2046	398		398
9.980% Debentures due February 15, 2047	181		181
7.70% Debentures due May 15, 2097	142		142
4.75% Notes due January 15, 2043	2,000		2,000
Total public unsecured debt securities (c)	$	6,795	$	6,799

__________


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


(b)	Unregistered industrial revenue bond.


(c)	Excludes 9.215% Debentures due September 15, 2021 with an outstanding balance at December 31, 2014 of $180 million. The proceeds from these securities were on-lent by Ford to Ford Holdings to fund Financial Services activity and are reported as Financial Services debt.

Convertible Notes

On January 22, 2014, we terminated the conversion rights of holders under the 4.25% Senior Convertible Notes due December 15, 2036 (“2036 Convertible Notes”) in accordance with their terms and settled conversions occurring after notice of termination with cash. In 2014, $24 million of the 2036 Convertible Notes were converted by the holders, resulting in cash payments of $43 million and a $5 million loss recorded in Automotive interest income and other income/(loss), net.

On November 20, 2014, we terminated the conversion rights of holders under the 4.25% Senior Convertible Notes due November 15, 2016 (“2016 Convertible Notes”) in accordance with their terms and settled conversions occurring after notice of termination with shares. In 2014, $882 million of the 2016 Convertible Notes (carrying value of $805 million) was converted by the holders, resulting in the issuance of 103 million shares of Ford Common Stock held as treasury stock, a $126 million loss recorded in Automotive interest income and other income/(loss), net, and a $66 million charge to Retained earnings. On November 21, 2014, we redeemed for cash the remaining $1 million of 2016 Convertible Notes outstanding on that date, resulting in a de minimis loss recorded in Automotive interest income and other income/(loss), net.

We no longer have convertible debt outstanding.

NOTE 13. DEBT AND COMMITMENTS (Continued)

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, 2014, an aggregate $4.4 billion was outstanding. The principal amount of 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). The ATVM loan is repayable in equal quarterly installments of $148 million, which began in September 2012 and will end in June 2022.

EIB Credit Facilities

On December 21, 2009, Ford Romania, our operating subsidiary in Romania, entered into a credit facility for an aggregate amount of €400 million (equivalent to $486 million at December 31, 2014) with the EIB (the “EIB Romania Facility”), and on July 12, 2010, Ford Motor Company Limited, our operating subsidiary in the United Kingdom, entered into a credit facility for an aggregate amount of £450 million (equivalent to $701 million at December 31, 2014) with the EIB (the “EIB United Kingdom Facility”). The facilities were fully drawn at December 31, 2014. Loans under the EIB Romania Facility and the EIB United Kingdom Facility bear interest at a fixed rate of 4.44% and 4% per annum, respectively, and mature on March 31, 2015 and September 11, 2015, respectively.

Automotive Credit Facilities

Lenders under our Second Amended and Restated Credit Agreement dated as of April 30, 2014 (the “revolving credit facility”) have commitments to us totaling $12.2 billion, with about $9 billion maturing on April 30, 2019 and about $3 billion maturing on April 30, 2017. We have allocated $2 billion of commitments to Ford Credit on an irrevocable and exclusive basis to support its liquidity. Any borrowings by Ford Credit under the revolving credit facility would be guaranteed by us.

The revolving 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. The revolving 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 revolving credit facility. If our senior, unsecured, long‑term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P, the guarantees of certain subsidiaries will be required.

At December 31, 2014, the utilized portion of the revolving credit facility was $58 million, representing amounts utilized as letters of credit.

At December 31, 2014, we had $822 million of local credit facilities available to non-U.S. Automotive affiliates, of which $175 million had been utilized.

NOTE 13. DEBT AND COMMITMENTS (Continued)

Financial Services Sector

Asset-Backed Debt

At December 31, 2014, the carrying value of our asset-backed debt was $43.3 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 15 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 balances of cash related to these contributions were $0 at December 31, 2014 and 2013, and ranged from $0 to $242 million during 2014 and $0 to $177 million during 2013.

SPEs that are exposed to interest rate or currency risk have reduced their risks by entering into derivative transactions. In certain instances, we have entered into offsetting derivative transactions with the SPE to protect the SPE from the risks that are not mitigated through the derivative transactions between the SPE and its external counterparty. In other instances, we have entered into derivative transactions with the counterparty to protect the counterparty from risks absorbed through derivative transactions with the SPEs. Derivative expense/(income) related to the derivative transactions that support Ford Credit’s securitization programs were $(4) million, $25 million, and $239 million for the years ended December 31, 2014, 2013 and 2012, respectively. See Note 16 for additional information regarding the accounting for derivatives.

Interest expense on securitization debt was $595 million, $640 million, and $854 million in 2014, 2013, and 2012, respectively.

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



	2014		2013
ASSETS
Cash and cash equivalents	$	2.4	$	4.4
Finance receivables, net	46.1		51.4
Net investment in operating leases	9.6		8.1

LIABILITIES
Debt	43.3		45.9

Committed Credit Facilities

At December 31, 2014, Ford Credit’s committed capacity totaled $37.3 billion of which $21.6 billion is available for use. Ford Credit’s committed capacity is primarily comprised of unsecured credit facilities with financial institutions, committed asset-backed security lines from bank-sponsored commercial paper conduits and other financial institutions, and allocated commitments under the revolving credit facility.