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Ford Motor Company Annual Report 2005 74 Ford Motor Company Annual Report 2005 75
Notes to the Financial Statements
NOTE 13. SALES OF RECEIVABLES — FINANCIAL SERVICES SECTOR
Servicing Portfolio
We retain servicing rights for receivables sold in off-balance sheet securitization and whole-loan sale transactions. The
servicing portfolio is summarized in the following table (in millions):
Retail Wholesale Total
Servicing portfolio at December 31, 2003.............................................................................................................. $ 33,921 $ 20,249 $ 54,170
Receivables sales .................................................................................................................................................. 6,933 — 6,933
Collections ............................................................................................................................................................ (20,185) (1,345) (21,530)
Servicing portfolio at December 31, 2004.............................................................................................................. 20,669 18,904 39,573
Receivables sales .................................................................................................................................................. 18,138 1,561 19,699
Collections and re-acquired receivables ............................................................................................................... (17,886) (20,465) (38,351)
Servicing portfolio at December 31, 2005.............................................................................................................. $ 20,921 $ — $ 20,921
In the fourth quarter of 2005, we consolidated our off-balance sheet wholesale securitization program as a result of certain
changes authorized in accordance with the transaction documents. The accounting consolidation did not have an impact on our
earnings, back-up credit facilities, unsecured debt programs or other securitization programs. This transaction was primarily non-
cash and increased receivables $17.9 billion and debt $15.8 billion upon consolidation.
Retained Interest
Components of retained interest in off-balance sheet securitized assets at December 31 include (in millions):
2005 2004
Residual interest in securitization transactions................................................................................................................................ $ 1,094 $ 756
Restricted cash held for benefit of securitization SPEs................................................................................................................... 199 503
Subordinated securities .................................................................................................................................................................... 127 875
Interest in sold wholesale receivables and other trust assets........................................................................................................... — 6,904
Senior securities ............................................................................................................................................................................... — 128
Retained interest in securitized assets ........................................................................................................................................... $ 1,420 $ 9,166
Investments in subordinated securities and restricted cash are senior to the residual interest in securitization transactions.
Retained interests are recorded at fair value. The fair value of subordinated and senior securities is estimated based on market
prices. In determining the fair value of residual interest in securitization transactions, we discount the present value of the
projected cash flows retained at the transaction discount rate.
Investment and Other Income
The following table summarizes the activity related to off-balance sheet sales of receivables reported in Revenues for the years
ended December 31 (in millions):
2005 2004 2003
Net gain on sales of receivables......................................................................................................................... $ 74 $ 155 $ 373
Income on interest in sold wholesale receivables and retained securities......................................................... 327 588 679
Servicing fees ..................................................................................................................................................... 376 372 618
Income on residual interest and other ................................................................................................................ 721 815 941
Investment and other income related to sales of receivables .......................................................................... $ 1,498 $ 1,930 $ 2,611
For the year ended December 31, 2005, we utilized certain point-of-sale assumptions in our retail transactions, which included
a discount rate of 11.0%, prepayment speeds of 0.9% to 1.5% (which represents expected payments earlier than scheduled maturity
dates) and credit losses of 0.1% to 2.3% over the life of sold receivables. The weighted-average life of the underlying assets was
51.9 months. For the year ended December 31, 2004, point-of-sale assumptions in our retail transactions included discount rates
of 11.0% to 13.5%, prepayment speeds of 0.8% to 1.5% and credit losses of 0.8% to 2.8% over the life of sold receivables. For the
year ended December 31, 2004, the weighted-average life of the underlying assets was 50.2 months.