DEBT AND COMMITMENTS

Debt outstanding is shown below (in millions):



Automotive Sector	June 30, 2011			December 31, 2010
Debt payable within one year
Short-term with non-affiliates	$	388		$	478
Short-term with unconsolidated affiliates	260			382
Long-term payable within one year
Secured term loan	77			140
Secured revolving loan	—			838
Other debt	330			211
Total debt payable within one year	1,055			2,049
Long-term debt payable after one year
Public unsecured debt securities	5,260			5,260
Unamortized discount	(79		)	(81		)
Convertible notes	908			908
Unamortized discount	(186		)	(199		)
Subordinated convertible debentures	—			2,985
Secured term loan	1,703			3,946
U.S. Department of Energy ("DOE") loans	3,825			2,752
EIB loan	721			699
Other debt	795			758
Total long-term debt payable after one year	12,947			17,028
Total Automotive sector	$	14,002		$	19,077
Fair value of debt	$	13,924		$	19,260
Financial Services Sector
Short-term debt
Asset-backed commercial paper	$	6,619		$	6,634
Other asset-backed short-term debt	1,274			1,447
Ford Interest Advantage (a)	5,067			4,525
Other short-term debt	1,458			801
Total short-term debt	14,418			13,407
Long-term debt
Unsecured debt
Notes payable within one year	9,383			9,524
Notes payable after one year	24,817			26,390
Asset-backed debt
Notes payable within one year	14,197			16,684
Notes payable after one year	21,833			19,208
Unamortized discount	(246		)	(403		)
Fair value adjustment (b)	347			302
Total long-term debt	70,331			71,705
Total Financial Services sector	$	84,749		$	85,112
Fair value of debt	$	87,709		$	88,569
Total Automotive and Financial Services sectors	$	98,751		$	104,189
Intersector elimination	(201		)	(201		)
Total Company	$	98,550		$	103,988

__________


(a)	The Ford Interest Advantage program consists of Ford Credit's floating rate demand notes.


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

The fair value of debt presented above reflects interest accrued but not yet paid. Interest accrued on Automotive debt is reported in Automotive accrued liabilities and deferred revenue and was $225 million and $275 million at June 30, 2011 and December 31, 2010, respectively. Interest accrued on Financial Services debt is reported in Financial Services other liabilities and deferred income and was $804 million and about $1 billion at June 30, 2011 and December 31, 2010, respectively.

NOTE 11. DEBT AND COMMITMENTS (Continued)

Maturities

Debt maturities at June 30, 2011 were as follows (in millions):



	2011		2012			2013			2014			2015			Thereafter			Total Debt Maturities
Automotive Sector
Public unsecured debt securities	$	—	$	—		$	—		$	—		$	—		$	5,260		$	5,260
Unamortized discount (a)	—		—			—			—			—			(79		)	(79		)
Convertible notes	—		—			—			—			—			908			908
Unamortized discount (a)	—		—			—			—			—			(186		)	(186		)
Secured term loan	39		77			1,664			—			—			—			1,780
Secured revolving loan	—		—			—			—			—			—			—
U.S. DOE loans	—		192			383			383			383			2,484			3,825
Short-term and other debt (b)	749		298			333			55			781			278			2,494
Total Automotive debt	788		567			2,380			438			1,164			8,665			14,002

Financial Services Sector
Unsecured debt	10,192		7,887			5,317			3,760			5,982			7,587			40,725
Asset-backed debt	15,843		14,055			6,029			3,493			1,985			2,518			43,923
Unamortized (discount)/premium (a)	7		(55		)	(26		)	(124		)	(9		)	(39		)	(246		)
Fair value adjustments (a) (c)	13		54			78			49			80			73			347
Total Financial Services debt	26,055		21,941			11,398			7,178			8,038			10,139			84,749

Intersector elimination	—		(201		)	—			—			—			—			(201		)
Total Company	$	26,843	$	22,307		$	13,778		$	7,616		$	9,202		$	18,804		$	98,550

__________


(a)	Unamortized discount and fair value adjustments are presented based on contractual payment date of related debt.


(b)	Primarily non-U.S. affiliate debt and includes the EIB secured loan.


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

NOTE 11. DEBT AND COMMITMENTS (Continued)

Automotive Sector

Public Unsecured Debt Securities

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



	Aggregate Principal Amount Outstanding
Title of Security	June 30, 2011		December 31, 2010
6 1/2% Debentures due August 1, 2018	$	361	$	361
8 7/8% Debentures due January 15, 2022	86		86
6.55% Debentures due October 3, 2022 (a)	15		15
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 (b)	638		638
6 3/8% Debentures due February 1, 2029 (b)	260		260
5.95% Debentures due September 3, 2029 (a)	8		8
6.15% Debentures due June 3, 2030 (a)	10		10
7.45% GLOBLS due July 16, 2031 (b)	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 (a)	40		40
7.50% Debentures due June 10, 2043 (c)	593		593
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
Total public unsecured debt securities (d)	$	5,260	$	5,260

__________


(a)	Unregistered industrial revenue bonds.


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


(c)	Listed on the New York Stock Exchange.


(d)	Excludes 9 1/2% Debentures due September 15, 2011 and 9.215% Debentures due September 15, 2021 with outstanding balances at

June 30, 2011 of $165 million and $180 million, respectively. 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

At June 30, 2011, we had outstanding $883 million and $25 million principal of 4.25% Senior Convertible Notes due December 15, 2016 ("2016 Convertible Notes") and December 15, 2036 ("2036 Convertible Notes"), respectively. The 2016 Convertible Notes are convertible into shares of Ford Common Stock, based on a conversion rate (subject to adjustment) of 107.5269 shares per $1,000 principal amount of 2016 Convertible Notes (which is equal to a conversion price of $9.30 per share, representing a 25% conversion premium based on the closing price of $7.44 per share on November 3, 2009). The 2036 Convertible Notes are convertible into shares of Ford Common Stock, based on a conversion rate (subject to adjustment) of 108.6957 shares per $1,000 principal amount of 2036 Convertible Notes (which is equal to a conversion price of $9.20 per share, representing a 25% conversion premium based on the closing price of $7.36 per share on December 6, 2006).

Upon conversion, we have the right to deliver, in lieu of shares of Ford Common Stock, either cash or a combination of cash and Ford Common Stock. Holders may require us to purchase all or a portion of the Convertible Notes upon a change in control of the Company, or for shares of Ford Common Stock upon a designated event that is not a change in control, in each case for a price equal to 100% of the principal amount of the Convertible Notes being repurchased plus any accrued and unpaid interest to, but not including, the date of repurchase. Additionally, holders of the 2036 Convertible Notes may require us to purchase all or a portion for cash on December 20, 2016 and December 15, 2026.

NOTE 11. DEBT AND COMMITMENTS (Continued)

We may terminate the conversion rights related to the 2016 Convertible Notes at any time on or after November 20, 2014 if the closing price of Ford Common Stock exceeds 130% of the then-applicable conversion price for 20 trading days during any consecutive 30-trading day period. Also, we may redeem for cash all or a portion of the 2036 Convertible Notes at our option at any time or from time to time on or after December 20, 2016 at a price equal to 100% of the principal amount of the 2036 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date. We may terminate the conversion rights related to the 2036 Convertible Notes at any time on or after December 20, 2013 if the closing price of Ford Common Stock exceeds 140% of the then-applicable conversion price for 20 trading days during any consecutive 30-trading day period.

Liability, equity, and if-converted components of our Convertible Notes are summarized as follows (in millions):



							Total Effective Interest Rate
	June 30, 2011			December 31, 2010			June 30, 2011	December 31, 2010
Liability component
4.25% Debentures due December 15, 2016	$	768		$	768		9.2%	9.2%
4.25% Debentures due December 15, 2016 (underwriter option)	115			115			8.6%	8.6%
Subtotal Convertible Debt due December 15, 2016	$	883		$	883
4.25% Debentures due December 20, 2036	25			25			10.5%	10.5%
Unamortized discount	(186		)	(199		)
Net carrying amount	$	722		$	709

Equity component of outstanding debt (a)	$	(225	)	$	(225	)
Share value in excess of principal value, if converted (b)	$	438		$	732

__________


(a)	Recorded in Capital in excess of par value of stock.


(b)	Based on share price of $13.79 and $16.79 as of June 30, 2011 and December 31, 2010, respectively.

We recognized interest cost on our Convertible Notes as follows (in millions):



	Second Quarter				First Half
	2011		2010		2011		2010
Contractual interest coupon	$	10	$	37	$	19	$	73
Amortization of discount	7		23		13		45
Total interest cost on Convertible Notes	$	17	$	60	$	32	$	118

Subordinated Convertible Debentures

At December 31, 2010, we had outstanding $3 billion of 6.50% Junior Subordinated Convertible Debentures due 2032 ("Subordinated Convertible Debentures"), reported in Automotive long-term debt. The $3 billion of Subordinated Convertible Debentures were due to Trust II, an unconsolidated entity, and were the sole assets of Trust II (for additional discussion of Trust II, see Note 8). As of January 15, 2007, the Subordinated Convertible Debentures were redeemable at our option.

At December 31, 2010, Trust II had outstanding 6.50% Cumulative Convertible Trust Preferred Securities with an aggregate liquidation preference of $2.8 billion ("Trust Preferred Securities"). The Trust Preferred Securities were convertible into shares of Ford Common Stock, based on a conversion rate (subject to adjustment) of 2.8769 shares per $50 liquidation preference amount of Trust Preferred Securities (which is equal to a conversion price of $17.38 per share). We guaranteed the payment of all distribution and other payments of the Trust Preferred Securities to the extent not paid by Trust II, but only if and to the extent we had made a payment of interest or principal on the Subordinated Convertible Debentures.

On March 15, 2011, pursuant to the redemption notice provided to the property trustee of Trust II, we redeemed in whole the Subordinated Convertible Debentures due to Trust II at a price of $100.66 per $100 principal amount of such debentures, plus accrued and unpaid interest of $1.08 per debenture. The proceeds from the redemption of the Subordinated Convertible Debentures were used by Trust II to redeem in whole the Trust Preferred Securities at a price of $50.33 per $50 liquidation preference of such securities, plus accrued and unpaid distributions of $0.54 per security. Redemption of these securities resulted in a reduction of about $3 billion in Automotive debt and lower annualized interest costs of about $190 million. It also resulted in a 2011 first quarter pre-tax charge of $60 million in Automotive interest income and other non-operating income/(expense), net.

NOTE 11. DEBT AND COMMITMENTS (Continued)

Secured Term Loan and Revolving Loan

At June 30, 2011, we had outstanding $1.8 billion of term loans under our Secured Credit Agreement maturing on December 15, 2013. The aggregate principal amount of the term loans amortize at a rate of $77 million (1% of original loan) per annum and bears interest at LIBOR plus a margin of 2.75%.

2011 Secured Term Loan Actions. In the second quarter of 2011, we made optional prepayments of $2.2 billion to the term loan lenders. In addition, we also made a required payment of $67 million to the term lenders as a result of the completion of the true-up of the purchase price adjustments related to the sale of Volvo.

2011 Secured Revolver Actions. On May 17, 2011, we made an optional prepayment of $838 million on revolving loans under our Secured Credit Agreement that were scheduled to mature on December 15, 2011. Such amounts will remain available for borrowing through December 15, 2011 as the commitments of the revolving lenders were not reduced.

Commitments under the revolving credit facility of our secured Credit Agreement totaled $9.8 billion, with $886 million maturing on December 15, 2011 and $8.9 billion maturing on November 30, 2013. Pursuant to our Credit Agreement, at June 30, 2011, we had $9.4 billion available to be drawn under the revolving facility and had outstanding $330 million of letters of credit under the revolving facility.

Notes Due to UAW VEBA Trust

On December 31, 2009, as part of the settlement of our UAW postretirement health care obligation (as described in our 2009 Form 10-K Report) we issued two non-interest bearing notes, $6.7 billion Amortizing Guaranteed Secured Note maturing June 30, 2022 ("Note A") and $6.5 billion Amortizing Guaranteed Secured Note maturing June 30, 2022 ("Note B"), to the UAW VEBA Trust.

2010 Actions on Note A and Note B. On June 30, 2010 we made the scheduled payment due on Note A and Note B to the UAW VEBA Trust of $249 million and $610 million in cash, respectively. In addition, Ford and Ford Credit together purchased from the UAW VEBA Trust the remaining outstanding principal amount of Note A for cash of $2.9 billion, of which $1.6 billion was paid by us and $1.3 billion was paid by Ford Credit. Upon settlement, Ford Credit immediately transferred the portion of Note A it purchased to us in satisfaction of $1.3 billion of Ford Credit's tax liabilities to us. The purchase price for Note A was based on the contractual pre-payment amount less an agreed-upon discount of 2%. Immediately prior to our payments on Note A, the carrying value of the note was $3.2 billion. As a result of the purchase of Note A at a discount, we recorded a pre-tax gain of $40 million in the second quarter of 2010 in Automotive interest income and other non-operating income/(expense), net. In relation to the combined $859 million scheduled principal payments made under Note A and Note B on June 30, 2010, $333 million of discount was amortized and reported in Interest expense in the first half of 2010.

On October 29, 2010, we pre-paid the remaining outstanding principal amount of Note B, which fully satisfied our obligations to the UAW VEBA Trust.

DOE Advanced Technology Vehicles Manufacturing ("ATVM") Program

Pursuant to the Loan Arrangement and Reimbursement Agreement (the "Arrangement Agreement") with the DOE entered into on September 16, 2009, we had outstanding $3.8 billion in loans as of June 30, 2011. Under the terms of the Arrangement Agreement, the DOE agreed to (i) arrange a 13-year multi-draw term loan facility (the "Facility") under the ATVM Program in the aggregate principal amount of up to $5.9 billion, (ii) designate us as a borrower under the ATVM Program and (iii) cause the Federal Financing Bank ("FFB") to enter into the Note Purchase Agreement (the "Note Purchase Agreement") for the purchase of notes to be issued by us evidencing such loans under the Arrangement Agreement. Loans under the ATVM are made by and through the FFB, an instrumentality of the U.S. government that is under the general supervision of the U.S. Secretary of the Treasury.

NOTE 11. DEBT AND COMMITMENTS (Continued)

The proceeds of advances under the Facility will be used to finance certain costs eligible for financing under the ATVM Program ("Eligible Project Costs") that are incurred through the end of 2012 in the implementation of 12 advanced technology vehicle programs approved for funding by the DOE (each, a "Project"). The Arrangement Agreement limits the amount of advances that may be used to fund Eligible Project Costs for each Project, and our ability to finance Eligible Project Costs with respect to a Project is conditioned on us meeting agreed timing milestones and fuel economy targets for that Project. Each advance bears interest at a blended rate based on the Treasury yield curve at the time such advance is borrowed, based on the principal amortization schedule for that advance, with interest payable quarterly in arrears.

EIB Credit Facility

On July 12, 2010, Ford Motor Company Limited, our operating subsidiary in the United Kingdom ("Ford of Britain"), entered into a credit facility for an aggregate amount of £450 million with the EIB. Proceeds of loans drawn under the facility are being used for research and development of fuel-efficient engines and commercial vehicles with lower emissions, and related upgrades to an engine manufacturing plant. The facility was fully drawn in the third quarter of 2010, and Ford of Britain had outstanding $721 million of loans at June 30, 2011. The loans are five-year, non-amortizing loans secured by a guarantee from the U.K. government for 80% of the outstanding principal amount and cash collateral from Ford of Britain equal to 20% of the outstanding principal amount, and bear interest at a fixed rate of approximately 3.6% per annum (excluding a commitment fee of 0.30% to the U.K. government). Ford of Britain has pledged substantially all of its fixed assets, receivables and inventory to the U.K. government as collateral, and we have guaranteed Ford of Britain's obligations to the U.K. government related to the government's guarantee.

Financial Services Sector

Debt Repurchases and Calls

From time to time and based on market conditions, our Financial Services sector may repurchase or call some of its outstanding debt. If our Financial Services sector has excess liquidity, and it is an economically favorable use of its available cash, it may repurchase or call debt at a price lower or higher than its carrying value, resulting in a gain or loss on extinguishment.

In the second quarter and first half of 2011, through private market transactions, our Financial Services sector repurchased and called an aggregate principal amount of $820 million (including $152 million maturing in 2011) and $1.5 billion, respectively, of its unsecured debt. There were no repurchase or call transactions for asset-backed debt during 2011. As a result, our Financial Services sector recorded a pre-tax loss of $28 million and a pre-tax loss of $36 million, net of unamortized premiums, discounts and fees in Financial Services other income/(loss), net in the second quarter and first half of 2011, respectively.

In the second quarter and first half of 2010, through private market transactions, our Financial Services sector repurchased and called an aggregate principal amount of $2.0 billion and $2.4 billion, respectively, of its unsecured debt and asset-backed debt. As a result, our Financial Services sector recorded a pre-tax loss of $53 million and a pre-tax loss of $60 million, net of unamortized premiums, discounts and fees in Financial Services other income/(loss), net, in the second quarter and first half of 2010, respectively.

Asset-Backed Debt

Ford Credit engages in securitization transactions to fund operations and to maintain liquidity. Ford Credit's securitization transactions are recorded as asset-backed debt and the associated assets are not derecognized and continue to be included in our financial statements.

The finance receivables and net investment in operating leases that have been included in securitization transactions are only available for payment of the debt and other obligations issued or arising in the securitization transactions. They are not available to pay Ford Credit's other obligations or the claims of its other creditors. Ford Credit does, however, hold the right to the excess cash flows not needed to pay the debt and other obligations issued or arising in each of the securitization transactions. The debt is the obligation of our consolidated securitization entities and not Ford Credit's legal obligation or the legal obligation of its other subsidiaries.

NOTE 11. DEBT AND COMMITMENTS (Continued)

The following table shows the assets and liabilities related to our Financial Services sector's asset-backed debt arrangements that are included in our financial statements (in billions):



	June 30, 2011
	Cash and Cash Equivalents		Finance Receivables, Net and Net Investment in Operating Leases		Related Debt
VIEs (a)
Finance receivables	$	3.5	$	53.1	$	38.1
Net investment in operating leases	0.4		3.7		1.9
Total	$	3.9	$	56.8	$	40.0
Non-VIE
Finance receivables (b)	$	0.1	$	4.4	$	3.9
Total securitization transactions
Finance receivables	$	3.6	$	57.5	$	42.0
Net investment in operating leases	0.4		3.7		1.9
Total	$	4.0	$	61.2	$	43.9

	December 31, 2010
	Cash and Cash Equivalents		Finance Receivables, Net and Net Investment in Operating Leases		Related Debt
VIEs (a)
Finance receivables	$	3.3	$	50.5	$	37.2
Net investment in operating leases	0.8		6.1		3.0
Total	$	4.1	$	56.6	$	40.2
Non-VIE
Finance receivables (b)	$	0.2	$	4.1	$	3.7
Total securitization transactions
Finance receivables	$	3.5	$	54.6	$	40.9
Net investment in operating leases	0.8		6.1		3.0
Total	$	4.3	$	60.7	$	43.9

__________


(a)	Includes assets to be used to settle liabilities of the consolidated VIEs. See Note 8 for additional information on Financial Services sector VIEs.

(b)

Certain debt issued by the VIEs to affiliated companies served as collateral for accessing the ECB open market operations program. This external funding of $347 million and $334 million at June 30, 2011 and December 31, 2010, respectively was not reflected as a liability of the VIEs and is reflected as a non-VIE liability above. The finance receivables backing this external funding are reflected in VIE finance receivables.

Financial Services sector asset-backed debt also included $81 million and $87 million at June 30, 2011 and December 31, 2010, respectively, that is secured by property.

Automotive Acquisition of Financial Services Debt. During 2008 and 2009 we issued 159,913,115 shares of Ford Common Stock through an equity distribution agreement and used the proceeds of $1 billion to purchase $1,048 million of Ford Credit debt and related interest of $20 million. During the second quarter of 2010, we utilized cash of $192 million to purchase $200 million of Ford Credit debt and related interest of about $1 million. We recognized a gain on extinguishment of debt of $9 million on the transaction, in Automotive interest income and other non-operating income/(expense), net. As of June 30, 2011, approximately $780 million of the debt purchased has matured, and $267 million was repurchased from us by Ford Credit.

On our consolidated balance sheet, we net the remaining debt purchased by Ford with the outstanding debt of Ford Credit, reducing our consolidated marketable securities and debt balances by $201 million at June 30, 2011 and December 31, 2010, respectively. On our sector balance sheet, the debt is reported separately as Automotive marketable securities and Financial Services debt as it has not been retired or cancelled by Ford Credit.