VARIABLE INTEREST ENTITIES

The Company, through SCUSA, transfers retail installment contracts into newly-formed Trusts which then issue one or more classes of notes payable backed by the retail installment contracts. The Company’s continuing involvement with the credit facilities and Trusts are in the form of servicing loans held by SPEs and, except for the securitizations associated with Chrysler Capital, through holding a residual interest in the SPE. These transactions are structured without recourse. The Trusts are considered VIEs under GAAP and, except for the securitizations associated with Chrysler Capital, are consolidated because the Company has: (a) power over the significant activities of the entity as servicer of its financial assets and (b) residual interest and in some cases of debt securities held by the Company, an obligation to absorb losses or the right to receive benefits from the VIE which are potentially significant to the VIE.

The retail installment contracts, borrowings under credit facilities and securitization notes payable of the consolidated Trusts remain on the Company's Condensed Consolidated Balance Sheets. The Company recognizes finance charges and fee income on the retail installment contracts and interest expense on the debt, and records a provision for loan losses to cover probable inherent losses on the contracts. All of the Trusts are separate legal entities and the retail installment contracts and other assets held by these subsidiaries are legally owned by them and not available to other creditors.

The following table summarizes the assets and liabilities related to the above mentioned VIEs that are included in the Company's Condensed Consolidated Financial Statements as of the date indicated:



	June 30, 2014
	(in thousands)
Restricted cash	$	1,613,054
Retail installment contracts, net	19,148,951
Leased vehicles, net	3,567,546
Various other assets	898,291
Notes payable	27,192,535
Various other liabilities	49,983

Below is a summary of the cash flows received from the Trusts for the period indicated:



	Three-month period ended June 30, 2014		Period from January 28, 2014 to June 30, 2014
	(in thousands)
Receivables securitized	$	5,051,048	$	6,625,132

Net proceeds from new securitizations	4,707,336		5,945,538
Cash received for servicing fees	157,698		255,630
Cash received upon release from reserved and restricted cash accounts	60		225
Net distributions from Trusts	384,093		625,344
Total cash received from securitization trusts	$	5,249,187	$	6,826,737

The Company retains servicing responsibility for receivables transferred to the Trusts and receives a monthly servicing fee on the outstanding principal balance. Supplemental fees, such as late charges, for servicing the receivables are reflected in fees, commissions and other income. As of June 30, 2014, the Company was servicing $22.5 billion of gross retail installment contracts that have been transferred to consolidated Trusts. The remainder of the Company’s retail installment contracts are either pledged in private issuances or warehouse facilities or un-pledged.

NOTE 6. VARIABLE INTEREST ENTITIES (continued)

During the period from January 28, 2014 to June 30, 2014, the Company sold $774.2 million of gross retail installment contracts in off-balance sheet securitizations for a gain of approximately $32.5 million. As of June 30, 2014, the Company was servicing $1.5 billion of gross retail installment contracts that have been sold in these off-balance sheet Chrysler Capital securitizations, in addition to $3.6 billion of loans serviced for other unrelated third parties.

The Company also has several home equity loan securitizations. These securitization vehicles are considered VIEs because the holders of the equity investment at risk, including the Company, do not have any obligation to absorb credit losses on the loans within the securitization vehicles. Accordingly, the Company has determined that it is not the primary beneficiary of these securitization vehicles. As of June 30, 2014 and December 31, 2013, the Company had $5.1 million and $5.5 million, respectively, of receivables related to advances made by the Company on behalf of the home equity loan securitization vehicles. The Company does not hold any other assets or liabilities related to these home equity loan securitizations. The total principal amount of securitized home equity loans was $38.8 million and $41.5 million as of June 30, 2014 and December 31, 2013, respectively. As of June 30, 2014, the portion of principal 90 days past due (including foreclosures, OREO and bankruptcies) was $15.6 million, and for the six-month period ended June 30, 2014, net credit losses were 0.1 million. As of December 31, 2013, the portion of principal 90 days past due (including foreclosures, OREO and bankruptcies) was $15.3 million, and for the six-month period ended June 30, 2013 net credit losses were $0.3 million.