The income statement effects of transactions with Ford and affiliated companies for the years ended December 31 were as follows (reductions to Income before income taxes are presented as negative amounts) (in millions):



	2012			2011			2010
Net financing margin
Interest supplements and other support costs earned	$	2,401		$	2,800		$	3,226
Operating lease revenue on employee leased vehicles	217			211			230
Residual value support (a)	70			152			339
Interest expense on debt	(25		)	(36		)	(27		)
Interest income on notes receivables	22			27			48
Interest income on finance receivables (b)	30			36			6
Interest expense under tax sharing agreement (c)	(7		)	(9		)	(13		)
Other revenue
Earned insurance premiums	92			99			118
Earned insurance premiums ceded	(38		)	(59		)	(86		)
Gains/(Losses) from derivative transactions (d)	(56		)	2			(22		)
Other income	11			12			13
Expenses
Advice and services expense (e)	(92		)	(107		)	(105		)
Insurance loss and loss adjustment expenses	(40		)	(47		)	(57		)
Insurance loss and loss adjustment expenses recovered	19			31			45
Retirement benefits and share-based compensation (f)	(39		)	(12		)	(12		)


(a)	These amounts are primarily included in Depreciation on vehicles subject to operating leases.


(b)	Certain entities are reported as consolidated subsidiaries of Ford; revenue from providing financing to these entities is included in Financing revenue.


(c)	Under our intercompany tax sharing agreement with Ford, we earn interest on net tax assets and pay interest on certain tax liabilities. Interest expense due to Ford under this agreement is included in Interest expense. We did not earn any interest for the periods presented.


(d)	Currency revaluation gains/(losses) primarily related to foreign denominated debt were mostly offset by gains/(losses) on derivatives. See Notes 8 and 14 for additional information.


(e)	We receive technical and administrative advice and services from Ford and its affiliates, occupy office space furnished by Ford and its affiliates, utilize data processing facilities maintained by Ford and sell returned lease and repossessed vehicles sold through Ford auction lots. These costs are charged to Operating expenses.


(f)	In the U.S., we are a participating employer in certain retirement, postretirement health care and life insurance and share-based compensation plans that are sponsored by Ford. Ford allocates costs to us based on the total number of participating or eligible employees at Ford Credit. See Note 16 for additional information.

NOTE 19. TRANSACTIONS WITH AFFILIATED COMPANIES (Continued)

Balance Sheet

The balance sheet effects of transactions with Ford and affiliated companies were as follows (in millions):



	December 31, 2012			December 31, 2011
Assets
Net finance receivables and investment in operating leases
Purchased receivables (a)	$	4,779		$	3,709
Unearned interest supplements on finance receivables (b)	(1,486		)	(1,643		)
Finance receivables (c)	816			653
Net investment in leased vehicles (d)	543			413
Notes and accounts receivables	1,173			1,152
Derivative financial instruments	5			53
Other assets
Vehicles held for resale	5			15
Investment in non-consolidated affiliates	140			141
Liabilities
Accounts payable (e)	(234		)	(773		)
Income taxes payable (f)	(549		)	(660		)
Debt (g)	(372		)	(605		)
Derivative financial instruments	(27		)	(35		)
Unearned interest supplements and residual support on operating leases (b)	(1,147		)	(962		)

(a)

We purchase certain receivables generated by divisions and affiliates of Ford, primarily in connection with the delivery of vehicle inventories from Ford, the sale of parts and accessories by Ford to dealers, and the purchase of other receivables generated by Ford. At December 31, 2012, $771 million of these assets are subject to limited guarantees by Ford. In addition, at December 31, 2012, Ford guaranteed $68 million of our finance receivables related to dealers.

(b)

Represents unearned interest supplements on finance receivables and operating leases and residual support payments for operating leases received from Ford. For contracts purchased prior to January 1, 2008, in the U.S. and Canada, Ford has pre-paid all of the interest supplement obligations during 2012 compared with $47 million of interest supplements which remained unpaid as of December 31, 2011. Unearned interest supplements relating to these contracts are now included in the December 31, 2012 ending balance.


(c)	Represents other receivables related to certain used vehicles from daily rental fleet companies where we are serving as Ford's agent and wholesale receivables with entities that are reported as consolidated subsidiaries of Ford. Consolidated subsidiaries include dealerships that are partially owned by Ford as consolidated VIEs and also certain overseas affiliates.


(d)	We have entered into a sale-leaseback agreement with Ford primarily for vehicles that Ford leases to employees of Ford and its subsidiaries. The investment in these vehicles is included in Net investment in operating leases and is guaranteed by Ford.


(e)	Includes postretirement health care and life insurance benefits due to Ford of $328 million at December 31, 2011. This was paid in full to Ford during 2012. See Note 16 for additional information.

(f)

In accordance with our intercompany tax sharing agreement with Ford, the United States income tax liabilities or credits are allocated to us generally on a separate return basis calculated as if we were taxable as a corporation. The income tax payable to Ford, recorded in Other liabilities and deferred income, does not include amounts recorded as Deferred income taxes. Refer to Note 11 for additional information. During 2012 and 2011, we paid Ford $99 million and $1.4 billion, respectively, related to the agreement.


(g)	Includes $0 million and $466 million at December 31, 2012 and 2011, respectively, for cash from Blue Oval Holdings, a Ford U.K. subsidiary, to collateralize guarantees from FCE for Ford in Romania. See Note 22 for further information.