Ford 2009 Annual Report Download - page 103

Notes to the Financial Statements
Ford Motor Company | 2009 Annual Report 101
NOTE 8. NET INVESTMENT IN OPERATING LEASES
Net investment in operating leases on our balance sheet consists primarily of lease contracts for vehicles with daily
rental companies, fleet customers, and retail customers. Assets subject to operating leases are depreciated on the
straight-line method over the term of the lease to reduce the asset to its estimated residual value. Estimated residual
values are based on assumptions for used vehicle prices at lease termination and the number of vehicles that are
expected to be returned.
Included in the Automotive sector on our consolidated balance sheet are vehicles sold to daily rental car companies
subject to guaranteed repurchase options. At the time of transfer, the proceeds are recorded as deferred revenue in
Accrued liabilities and deferred revenue. At December 31, 2009 and 2008, $2.5 billion and $2.3 billion, respectively, was
included in this line item for these vehicles. Also at the time of transfer, the cost of the vehicles is recorded in Other
current assets. The difference between the proceeds and the guaranteed repurchase amount is recognized in Automotive
sales over an average term of 8 months, using a straight-line method. The difference between the cost of the vehicle and
the estimated auction value is depreciated in Automotive cost of sales over the term of the lease.
Net Investment in Operating Leases
The net investment in operating leases at December 31 was as follows (in millions):
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Automotive Sector
Included in Net investment in operating leases are vehicles sold to daily rental car companies subject to guaranteed
repurchase options. Operating lease depreciation expense (which excludes gains and losses on disposal of assets) was
as follows (in millions):
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Included in Automotive sales are rents on operating leases. The amount contractually due for minimum rentals on
operating leases is $404 million for 2010.
Financial Services Sector
Included in Net investment in operating leases at December 31, 2009 and 2008 were Ford Credit's interests of
$10.4 billion and $15.6 billion, respectively, that have been included in securitizations that do not satisfy the requirements
for accounting sale treatment. These net investments in operating leases are available only for payment of the debt or
other obligations issued or arising in the securitization transactions; they are not available to pay other obligations or the
claims of other creditors.