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 institutional investors in both public and private transactions in capital markets including the United States, Canada, several European countries, Mexico, and China.

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):



	March 31, 2015
	Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt
	Cash and Cash Equivalents		Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses		Related Debt
VIE (b)
Retail financing	$	1.5	$	20.7	$	0.1	$	20.6	$	19.2
Wholesale financing	0.2		20.4		—		20.4		13.4
Finance receivables	1.7		41.1		0.1		41.0		32.6
Net investment in operating leases	0.6		10.1		—		10.1		6.8
Total VIE	$	2.3	$	51.2	$	0.1	$	51.1	$	39.4

Non-VIE
Retail financing	$	0.3	$	5.2	$	—	$	5.2	$	4.8
Wholesale financing	—		0.9		—		0.9		0.9
Finance receivables	0.3		6.1		—		6.1		5.7
Net investment in operating leases	—		—		—		—		—
Total Non-VIE	$	0.3	$	6.1	$	—	$	6.1	$	5.7

Total securitization transactions
Retail financing	$	1.8	$	25.9	$	0.1	$	25.8	$	24.0
Wholesale financing	0.2		21.3		—		21.3		14.3
Finance receivables	2.0		47.2		0.1		47.1		38.3
Net investment in operating leases	0.6		10.1		—		10.1		6.8
Total securitization transactions	$	2.6	$	57.3	$	0.1	$	57.2	$	45.1

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


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

NOTE 5. TRANSFERS OF RECEIVABLES (Continued)



	December 31, 2014
	Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt
	Cash and Cash Equivalents		Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses		Related Debt
VIE (b)
Retail financing	$	1.4	$	18.8	$	0.1	$	18.7	$	17.3
Wholesale financing	0.3		20.8		—		20.8		13.3
Finance receivables	1.7		39.6		0.1		39.5		30.6
Net investment in operating leases	0.4		9.6		—		9.6		6.6
Total VIE	$	2.1	$	49.2	$	0.1	$	49.1	$	37.2

Non-VIE
Retail financing	$	0.3	$	5.6	$	—	$	5.6	$	5.2
Wholesale financing	—		1.0		—		1.0		0.9
Finance receivables	0.3		6.6		—		6.6		6.1
Net investment in operating leases	—		—		—		—		—
Total Non-VIE	$	0.3	$	6.6	$	—	$	6.6	$	6.1

Total securitization transactions
Retail financing	$	1.7	$	24.4	$	0.1	$	24.3	$	22.5
Wholesale financing	0.3		21.8		—		21.8		14.2
Finance receivables	2.0		46.2		0.1		46.1		36.7
Net investment in operating leases	0.4		9.6		—		9.6		6.6
Total securitization transactions	$	2.4	$	55.8	$	0.1	$	55.7	$	43.3

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


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

Interest expense related to securitization debt for the periods ended March 31 was as follows (in millions):



	First Quarter
	2015		2014
VIE	$	130	$	126
Non-VIE	23		21
Total securitization transactions	$	153	$	147

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. These related derivatives are not the obligations of our securitization entities. See Note 7 for additional information regarding derivatives. Our exposures based on the fair value of derivative instruments with external counterparties related to securitization programs were as follows (in millions):



	March 31, 2015				December 31, 2014
	Derivative Asset		Derivative Liability		Derivative Asset		Derivative Liability
Derivatives of the VIEs	$	68	$	38	$	27	$	22
Derivatives related to the VIEs	30		16		16		7
Other securitization related derivatives	1		5		5		1
Total exposures related to securitization	$	99	$	59	$	48	$	30

NOTE 5. TRANSFERS OF RECEIVABLES (Continued)

Derivative expense/(income) related to our securitization transactions for the periods ended March 31 was as follows (in millions):



	First Quarter
	2015			2014
Derivatives of the VIEs	$	(24	)	$	20
Derivatives related to the VIEs	(5		)	(6		)
Other securitization related derivatives	13			4
Total derivative expense/(income) related to securitization	$	(16	)	$	18