Ford 2005 Annual Report Download - page 34

Download and view the complete annual report

Please find page 34 of the 2005 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations
•Securitized off-balance sheet basis. Includes receivables sold in securitization transactions that are not reflected on Ford
Creditʼs balance sheet;
•Managed basis. Includes on-balance sheet and securitized off-balance sheet receivables that Ford Credit continues to service;
and
•Serviced basis. Includes managed receivables and receivables sold in whole-loan sale transactions where Ford Credit retains
no interest in the sold receivables, but which it continues to service.
Ford Credit analyzes its financial performance primarily on an on-balance sheet and managed basis. It retains interests in
receivables sold in off-balance sheet securitizations and, with respect to subordinated retained interests, has credit risk. As a result, it
evaluates credit losses, receivables and leverage on a managed basis as well as on an on-balance sheet basis. In contrast, Ford Credit
does not have the same financial interest in the performance of receivables sold in whole-loan sale transactions, and as a result, Ford
Credit generally reviews the performance of its serviced portfolio only to evaluate the effectiveness of its origination and collection
activities. To evaluate the performance of these activities, Ford Credit monitors a number of measures, such as repossession statistics,
losses on repossessions and the number of bankruptcy filings.
Ford Creditʼs operating results are impacted significantly by the level of its receivables, which are shown below (in billions):
December 31,
2005 2004
On-Balance Sheet (including on-balance sheet securitizations)
Finance receivables
Retail installment .................................................................................................................................................................................................. $ 65.7 $ 81.7
Wholesale.............................................................................................................................................................................................................. 39.6 23.8
Other...................................................................................................................................................................................................................... 4.6 5.3
Total finance receivables, net........................................................................................................................................................................... 109.9 110.8
Net investment in operating leases ......................................................................................................................................................................... 22.2 21.9
Total on-balance sheet*.................................................................................................................................................................................... $ 132.1 $ 132.7
Memo: Allowance for credit losses included above............................................................................................................................................... $ 1.6 $ 2.4
Securitized Off-Balance Sheet
Finance receivables
Retail installment .................................................................................................................................................................................................. $ 18.0 $ 16.7
Wholesale.............................................................................................................................................................................................................. — 18.9
Other...................................................................................................................................................................................................................... — —
Total finance receivables.................................................................................................................................................................................. 18.0 35.6
Net investment in operating leases ......................................................................................................................................................................... — —
Total securitized off-balance sheet .................................................................................................................................................................. $ 18.0 $ 35.6
Managed
Finance receivables
Retail installment .................................................................................................................................................................................................. $ 83.7 $ 98.4
Wholesale.............................................................................................................................................................................................................. 39.6 42.7
Other...................................................................................................................................................................................................................... 4.6 5.3
Total finance receivables, net........................................................................................................................................................................... 127.9 146.4
Net investment in operating leases ......................................................................................................................................................................... 22.2 21.9
Total managed .................................................................................................................................................................................................. $ 150.1 $ 168.3
Serviced..................................................................................................................................................................................................................... $ 153.0 $ 172.3
__________
* At December 31, 2005 and December 31, 2004, finance receivables of $44.7 billion and $16.9 billion, respectively, have been sold for legal purposes to consolidated
securitization special purpose entities ("SPEs"). In addition, at December 31, 2005, and December 31, 2004, interests in operating leases and the related vehicles of
$6.5 billion and $2.5 billion, respectively, have been transferred for legal purposes to consolidated securitization SPEs. These receivables and interests in operating
leases and the related vehicles are available only for repayment of debt issued by those entities, and to pay other securitization investors and other participants; they
are not available to pay Ford Creditʼs other obligations or the claims of Ford Creditʼs other creditors.
On-Balance Sheet Receivables. On-balance sheet receivables decreased from year-end 2004 primarily reflecting lower retail
contract placement volumes. The decrease was largely offset by the accounting consolidation of Ford Credit's off-balance sheet
wholesale securitization program as a result of certain changes made to the program in the fourth quarter of 2005, which caused the
receivables previously sold by Ford Credit to this program to be reported on-balance sheet.
Securitized Off-Balance Sheet Receivables. Total securitized off-balance sheet receivables declined primarily reflecting the
accounting consolidation discussed above.
Managed and serviced receivables decreased from year-end 2004 primarily reflecting lower retail contract placement volumes.
Ford Motor Company Annual Report 2005 32 Ford Motor Company Annual Report 2005 33