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92 Ford Motor Company | 2012 Annual Report
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
92
NOTE 7. FINANCE RECEIVABLES (Continued)
Impaired Receivables. Impaired consumer receivables include accounts that have been re-written or modified in
reorganization proceedings pursuant to the U.S. Bankruptcy Code that are considered to be Troubled Debt
Restructurings ("TDRs"), as well as all accounts greater than 120 days past due. Impaired non-consumer receivables
represent accounts with dealers that have weak or poor financial metrics or dealer financing that have been modified in
TDRs. The recorded investment of consumer receivables that were impaired at December 31, 2012 and 2011 was
$422 million or 0.9% of consumer receivables, and $382 million or 0.8% of consumer receivables, respectively. The
recorded investment of non-consumer receivables that were impaired at December 31, 2012 and 2011 was $47 million
or 0.2% of non-consumer receivables, and $64 million or 0.2% of the non-consumer receivables, respectively.
Impaired finance receivables are evaluated both collectively and specifically. See Note 9 for additional information
related to the development of our allowance for credit losses.
Non-Accrual Receivables. The accrual of revenue is discontinued at the earlier of the time a receivable is
determined to be uncollectible, at bankruptcy status notification, or greater than 120 days past due. Accounts may be
restored to accrual status only when a customer settles all past-due deficiency balances and future payments are
reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the
extent a payment is received. Payments generally are applied first to outstanding interest and then to the unpaid
principal balance.
The recorded investment of consumer receivables in non-accrual status was $304 million or 0.6% of our consumer
receivables, at December 31, 2012, and $402 million or 0.9% of our consumer receivables, at December 31, 2011.
The recorded investment of non-consumer receivables in non-accrual status was $29 million or 0.1% of our non-
consumer receivables, at December 31, 2012, and $27 million or 0.1% of our non-consumer receivables, at
December 31, 2011.
Troubled Debt Restructurings. A restructuring of debt constitutes a TDR if we grant a concession to a customer or
borrower for economic or legal reasons related to the debtor's financial difficulties that we otherwise would not
consider. Consumer contracts that have a modified interest rate that is below the market rate and those modified in
reorganization proceedings pursuant to the U.S. Bankruptcy Code are considered to be TDRs. Non-consumer
receivables subject to forbearance, moratoriums, extension agreements, or other actions intended to minimize
economic loss and to avoid foreclosure or repossession of collateral are classified as TDRs. We do not grant
concessions on the principal balance of our loans. If a contract is modified in reorganization proceeding, all payment
requirements of the reorganization plan need to be met before remaining balances are forgiven. The outstanding
recorded investment at time of modification for consumer receivables that are considered to be TDRs were
$249 million or 0.5% and $370 million or 0.8% of our consumer receivables during the period ended
December 31, 2012 and 2011, respectively. The subsequent default rate of TDRs that were previously modified in
TDRs within the last twelve months and resulted in repossession for consumer contracts was 5.8% and 3.7% of TDRs
at December 31, 2012 and 2011, respectively. The outstanding recorded investment of non-consumer loans involved
in TDRs was de minimis during the years ended December 31, 2012 and 2011.
Finance receivables involved in TDRs are specifically assessed for impairment. An impairment charge is recorded
as part of the provision to the allowance for credit losses for the amount that the recorded investment of the receivable
exceeds its estimated fair value. Estimated fair value is based on either the present value of the expected future cash
flows of the receivable discounted at the loan's original effective interest rate, or for loans where foreclosure is probable
the fair value of the collateral adjusted for estimated costs to sell. The allowance for credit losses related to consumer
TDRs was $19 million and $16 million at December 31, 2012 and 2011, respectively. The allowance for credit losses
related to non-consumer TDRs was de minimis during the years ended December 31, 2012 and 2011.