Ford 2012 Annual Report Download - page 89

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Ford Motor Company | 2012 Annual Report 87
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
87
NOTE 7. FINANCE RECEIVABLES
Finance receivable balances were as follows (in millions):
December 31,
2012
December 31,
2011
Automotive sector (a) $ 519 $355
Financial Services sector 75,770 73,330
Reclassification of receivables purchased by Financial Services sector from Automotive sector to Other
receivables, net (4,779)(3,709)
Finance receivables, net $ 71,510 $ 69,976
__________
(a) Finance receivables are reported on our sector balance sheet in Receivables, less allowances and Other assets.
Automotive Sector
Our Automotive sector notes receivable consist primarily of amounts loaned to our unconsolidated affiliates.
Performance of this group of receivables is evaluated based on payment activity and the financial stability of the
debtor. Notes receivable initially are recorded at fair value and subsequently measured at amortized cost.
Notes receivable, net were as follows (in millions):
December 31,
2012
December 31,
2011
Notes receivable $ 542 $384
Less: Allowance for credit losses (23)(29)
Notes receivable, net $ 519 $355
Financial Services Sector
Our Financial Services sector finance receivables primarily relate to Ford Credit, but also include the Other
Financial Services segment and certain intersector eliminations.
Our Financial Services sector segments the North America and International portfolio of finance receivables into
"consumer" and "non-consumer" receivables. The receivables are secured by the vehicles, inventory, or other property
being financed.
Consumer Segment. Receivables in this portfolio segment include products offered to individuals and businesses
that finance the acquisition of Ford and Lincoln vehicles from dealers for personal or commercial use. Retail financing
includes retail installment contracts for new and used vehicles and direct financing leases with retail customers,
government entities, daily rental companies, and fleet customers.
Non-Consumer Segment. Receivables in this portfolio segment include products offered to automotive
dealers. The products include:
• Dealer financing – wholesale loans to dealers to finance the purchase of vehicle inventory, also known as
floorplan financing, and loans to dealers to finance working capital and improvements to dealership facilities,
finance the purchase of dealership real estate, and other dealer vehicle program financing. Wholesale is
approximately 95% of our dealer financing
• Other financing – purchased receivables primarily related to the sale of parts and accessories to dealers
Finance receivables are recorded at the time of origination or purchase for the principal amount financed and are
subsequently reported at amortized cost, net of any allowance for credit losses. Amortized cost is the outstanding
principal adjusted for any charge-offs, unamortized deferred fees or costs, and unearned interest supplements.
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