Ford 2009 Annual Report Download - page 34

Management’s Discussion and Analysis of Financial Condition and Results of Operations
32 Ford Motor Company | 2009 Annual Report
partially by lower operating costs. The change in unallocated risk management income reflected the non-recurrence of net
losses related to market valuation adjustments to derivatives primarily related to movements in interest rates.
Ford Credit reviews its business performance from several perspectives, including:
• On-balance sheet basis. Includes the receivables and leases Ford Credit owns and securitized receivables and
leases that remain on Ford Credit's balance sheet (includes other structured financings and factoring transactions
that have features similar to securitization transactions);
• Securitized off-balance sheet basis. Includes receivables sold in securitization transactions that, when sold, do not
remain on Ford Credit's balance sheet;
• Managed basis. Includes on-balance sheet receivables, excluding unearned interest supplements related to finance
receivables, and securitized off-balance sheet receivables that Ford Credit continues to service; and
• Serviced basis. Includes managed receivables and leases, 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 a managed and on-balance sheet basis. It retains interests
in receivables sold in off-balance sheet securitization transactions and, with respect to subordinated retained interests,
Ford Credit 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 delinquencies, repossession statistics, losses on
repossessions, and the number of bankruptcy filings.
Ford Credit's net finance receivables and net investment in operating leases are shown below (in billions):
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