Ford 2011 Annual Report Download - page 116

Notes to the Financial Statements
114 Ford Motor Company | 2011 Annual Report
NOTE 7. FINANCE RECEIVABLES (Continued)
Performance of non-consumer receivables is evaluated based on Ford Credit's internal dealer risk rating analysis, as
payment for wholesale receivables generally is not required until the dealer has sold the vehicle inventory. Wholesale and
dealer loan receivables with the same dealer share the same risk rating. The credit quality analysis of wholesale and
dealer loan receivables at December 31 was as follows (in millions):
North America
Group I
Group II
Group III
Group IV
Subtotal
International
Group I
Group II
Group III
Group IV
Subtotal
Total recorded investment
2011
Wholesale
$12,645
2,489
273
6
15,413
5,115
1,965
1,327
9
8,416
$23,829
Dealer Loan
$861
165
58
4
1,088
42
10
10
1
63
$1,151
2010
Wholesale
$10,540
2,372
353
8
13,273
5,135
2,189
1,527
—
8,851
$22,124
Dealer Loan
$785
208
107
17
1,117
5
15
12
1
33
$ 1,150
Non-Accrual Status. 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. Finance receivable 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 are generally applied first to outstanding interest and then to the unpaid principal
balance.
The recorded investment of consumer receivables in non-accrual status was $402 million, or 0.9% of our consumer
receivables, at December 31, 2011, and $486 million, or 1% of our consumer receivables, at December 31, 2010.
The recorded investment of non-consumer receivables in non-accrual status was $27 million, or 0.1% of our non-
consumer receivables, at December 31, 2011, and $102 million, or 0.4% of our non-consumer receivables, at
December 31, 2010.
Finance receivables greater than 90 days past due and still accruing interest at December 31, 2011 and 2010, reflect
$14 million and $7 million, respectively, of non-bankrupt retail accounts in the 91-120 days past due category, and
$1 million and $1 million, respectively, of dealer loans.
Impairment. Ford Credit's finance receivables are evaluated both collectively and specifically for impairment.
Impaired consumer receivables represent accounts that have been re-written or modified in reorganization proceedings
pursuant to the U.S. Bankruptcy Code and are considered to be TDRs as well as all accounts greater than 120 days past
due. The recorded investment of consumer receivables that were impaired as of December 31, 2011 and 2010 was
$382 million, or 0.8% of consumer receivables, and $104 million, or 0.2% of consumer receivables, respectively. Impaired
non-consumer receivables represent accounts with dealers that have weak or poor financial metrics or dealer loans that
have been modified in TDRs. The following factors (not necessarily in order of importance or probability of occurrence)
are considered in determining whether a non-consumer receivable is impaired:
• Delinquency in contractual payments of principal or interest
• Deterioration of the borrower's competitive position
• Cash flow difficulties experienced by the borrower
• Breach of loan covenants or conditions
• Initiation of dealer bankruptcy or other insolvency proceedings
• Fraud or criminal conviction