Transfers of Receivables

9 Months Ended

Sep. 30, 2013

Transfers and Servicing [Abstract]

TRANSFERS OF RECEIVABLES

TRANSFERS OF RECEIVABLES

We securitize finance receivables and net investment in operating leases through a variety of programs using amortizing, variable funding and revolving structures. We also sell finance receivables in structured financing transactions. Due to the similarities between securitization and structured financing, we refer to structured financings as securitization transactions. Our securitization programs are targeted to many different institutional investors in both public and private transactions in capital markets primarily in North America and Europe.

We engage in securitization transactions to fund operations and to maintain liquidity. Our 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 sold for legal purposes and net investment in operating leases included in securitization transactions are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. They are not available to pay our other obligations or the claims of our other creditors. We hold the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. The debt is the obligation of our consolidated securitization entities and not the obligation of Ford Credit or our other subsidiaries.

Most of these securitization transactions utilize VIEs. See Note 6 for more information concerning VIEs. The following tables show the assets and debt related to our securitization transactions that were included in our financial statements (in billions):

	September 30, 2013
	Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt
			Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses
VIE (b)
Retail (c)	$	1.9	$	22.1	$	0.1	$	22.0	$	19.6
Wholesale	0.4		21.1		—		21.1		14.3
Finance receivables	2.3		43.2		0.1		43.1		33.9
Net investment in operating leases	0.4		7.0		—		7.0		4.6
Total VIE	$	2.7	$	50.2	$	0.1	$	50.1	$	38.5
Non-VIE
Retail (c)	$	0.2	$	3.8	$	—	$	3.8	$	3.5
Wholesale	—		1.0		—		1.0		0.8
Finance receivables	0.2		4.8		—		4.8		4.3
Net investment in operating leases	—		—		—		—		—
Total Non-VIE	$	0.2	$	4.8	$	—	$	4.8	$	4.3
Total securitization transactions
Retail (c)	$	2.1	$	25.9	$	0.1	$	25.8	$	23.1
Wholesale	0.4		22.1		—		22.1		15.1
Finance receivables	2.5		48.0		0.1		47.9		38.2
Net investment in operating leases	0.4		7.0		—		7.0		4.6
Total securitization transactions	$	2.9	$	55.0	$	0.1	$	54.9	$	42.8

__________

(a) Unearned interest supplements are excluded from securitization transactions.

(b) Includes assets to be used to settle the liabilities of the consolidated VIEs.

(c) Includes direct financing leases.

NOTE 5. TRANSFERS OF RECEIVABLES (Continued)

	December 31, 2012
	Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt
			Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses
VIE (b)
Retail (c)	$	2.2	$	26.9	$	0.2	$	26.7	$	23.2
Wholesale	0.3		20.5		—		20.5		12.8
Finance receivables	2.5		47.4		0.2		47.2		36.0
Net investment in operating leases	0.4		6.3		—		6.3		4.2
Total VIE	$	2.9	$	53.7	$	0.2	$	53.5	$	40.2
Non-VIE
Retail (c)	$	0.1	$	2.4	$	—	$	2.4	$	2.2
Wholesale	—		1.1		—		1.1		1.0
Finance receivables	0.1		3.5		—		3.5		3.2
Net investment in operating leases	—		—		—		—		—
Total Non-VIE	$	0.1	$	3.5	$	—	$	3.5	$	3.2
Total securitization transactions
Retail (c)	$	2.3	$	29.3	$	0.2	$	29.1	$	25.4
Wholesale	0.3		21.6		—		21.6		13.8
Finance receivables	2.6		50.9		0.2		50.7		39.2
Net investment in operating leases	0.4		6.3		—		6.3		4.2
Total securitization transactions	$	3.0	$	57.2	$	0.2	$	57.0	$	43.4

__________

(a) Unearned interest supplements are excluded from securitization transactions.

(b) Includes assets to be used to settle the liabilities of the consolidated VIEs.

(c) Includes direct financing leases.

Interest expense related to securitization debt for the periods ended September 30 was as follows (in millions):

	Third Quarter				First Nine Months
	2013		2012		2013		2012
VIE	$	138	$	171	$	434	$	599
Non-VIE	19		23		54		73
Total securitization transactions	$	157	$	194	$	488	$	672

Certain of our securitization entities enter into derivative transactions to mitigate interest rate exposure, primarily resulting from fixed-rate assets securing floating-rate debt and, in certain instances, currency exposure resulting from assets in one currency and debt in another currency. In many instances, the counterparty enters into offsetting derivative transactions with us to mitigate its interest rate risk resulting from derivatives with our securitization entities. See Note 7 for additional information regarding the accounting for derivatives. Our exposures based on the fair value of derivative instruments with external counterparties related to securitization programs were as follows (in millions):

	September 30, 2013				December 31, 2012
	Derivative Asset		Derivative Liability		Derivative Asset		Derivative Liability
Derivatives of the VIEs	$	4	$	76	$	4	$	134
Derivatives related to the VIEs	30		28		74		63
Other securitization related derivatives	4		11		11		22
Total exposures related to securitization	$	38	$	115	$	89	$	219

NOTE 5. TRANSFERS OF RECEIVABLES (Continued)

Derivative expense/(income) related to our securitization transactions for the periods ended September 30 was as follows (in millions):

	Third Quarter					First Nine Months
	2013			2012		2013			2012
VIEs	$	73		$	58	$	(20	)	$	209
Related to the VIEs	(2		)	8		8			(7		)
Other securitization related derivatives	7			4		6			16
Total derivative expense/(income) related to securitization	$	78		$	70	$	(6	)	$	218