Ford 2006 Annual Report Download - page 68
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Notes to the Financial Statements
66
NOTE 7. SALES OF RECEIVABLES — FINANCIAL SERVICES SECTOR (Continued)
On-Balance Sheet Securitizations
At December 31, 2006 and 2005, finance receivables of $56.5 billion and $44.7 billion, respectively, have been sold for
legal purposes in securitizations that do not satisfy the requirements for accounting sale treatment. In addition, at
December 31, 2006 and 2005, net investment in operating leases of $17.3 billion and $6.5 billion, respectively, have been
included in securitizations that do not satisfy the requirements for accounting sale treatment. These receivables and net
investment in operating leases are available only for payment of the debt or other obligations issued or arising in the
securitization transactions. At December 31, 2006 and 2005, associated debt of $59.6 billion and $39.8 billion,
respectively, is reported on our balance sheet for financial statement reporting purposes. This debt includes long-term
and short-term asset-backed debt that is payable only out of collections on the underlying securitized assets and related
enhancements. The cash balances to be used only to support the on-balance sheet securitizations at
December 31, 2006 and 2005, were $3.7 billion and $2.3 billion, respectively. These assets and liabilities are generally
held by VIEs of which we are the primary beneficiary.
NOTE 8. INVENTORIES
Inventories at December 31 were as follows (in millions):
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Inventories are stated at lower of cost or market. About one-fourth of inventories were determined under LIFO
method.
During 2005, inventory quantities were reduced, resulting in a liquidation of LIFO inventory quantities carried at lower
costs prevailing in prior years as compared with the cost of 2005 purchases, the effect of which decreased Automotive
cost of sales by about $12 million.
NOTE 9. SIGNIFICANT UNCONSOLIDATED AFFILIATES
Presented below is summarized financial information for Mazda Motor Corporation ("Mazda") and Blue Diamond Parts,
LLC ("Blue Diamond Parts"). These entities are accounted for under the equity method, and were considered significant
unconsolidated affiliates in 2005.
Mazda-Related Investments. At December 31, 2006, our ownership interest in Mazda was 33.6%. The carrying value
of our investment in Mazda was $1.1 billion and $928 million at December 31, 2006 and 2005, respectively. Included in
our investment in Mazda was $207 million and $171 million of goodwill at December 31, 2006 and 2005, respectively.
Dividends received from Mazda were $20 million, $11 million and $8 million for the years ended
December 31, 2006, 2005, and 2004, respectively. The market value of the shares we own of Mazda at
December 31, 2006 was $3.2 billion.
Summarized income statement information from Mazda's published financial statements for the twelve months ended
September 30, 2006, 2005, and 2004 is as follows (in millions):
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