Ford 2011 Annual Report Download - page 125

Notes to the Financial Statements
Ford Motor Company | 2011 Annual Report 123
NOTE 13. VARIABLE INTEREST ENTITIES (Continued)
We have no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in
payment or otherwise is in default, except under standard representations and warranties such as good and marketable
title to the assets, or when certain changes are made to the underlying asset contracts. Securitization investors have no
recourse to our Financial Services sector or its other assets for credit losses on the securitized assets, and have no right
to require us to repurchase the investments. We generally have no obligation to provide liquidity or contribute cash or
additional assets to the VIEs and do not guarantee any asset-backed securities, although Ford Credit is the co-obligor of
the debt of a consolidated VIE up to $250 million for two of its securitization transactions. Ford Credit may be required to
support the performance of certain securitization transactions, however, by increasing cash reserves.
Although not contractually required, Ford Credit regularly supports its wholesale securitization programs by
repurchasing receivables of a dealer from the VIEs when the dealer's performance is at risk, which transfers the
corresponding risk of loss from the VIE to Ford Credit. In order to continue to fund the wholesale receivables, Ford Credit
also may contribute additional cash or wholesale receivables if the collateral falls below the required levels. The balances
of cash related to these contributions were $0 at December 31, 2011 and 2010, and ranged from $0 to $490 million during
2011 and ranged from $0 to $1.4 billion during 2010. In addition, while not contractually required, Ford Credit may
purchase the commercial paper issued by Ford Credit's FCAR Owner Trust asset-backed commercial paper program
("FCAR").
VIEs that are exposed to interest rate or currency risk have reduced their risks by entering into derivative transactions.
In certain instances, Ford Credit has entered into offsetting derivative transactions with the VIE to protect the VIE from the
risks that are not mitigated through the derivative transactions between the VIE and its external counterparty. In other
instances, Ford Credit has entered into derivative transactions with the counterparty to protect the counterparty from risks
absorbed through derivative transactions with the VIEs. See Note 4 and Note 25 for additional information regarding
derivatives.
The following table includes assets to be used to settle the liabilities of the consolidated VIEs. We may retain debt
issued by consolidated VIEs and this debt is excluded from the table below. We hold the right to the excess cash flows
from the assets that are not needed to pay liabilities of the consolidated VIEs. The assets and debt reflected on our
consolidated balance sheet at December 31 were as follows (in billions):
Finance receivables
Retail
Wholesale
Total finance receivables
Net investment in operating leases
Total (a)
2011
Cash and Cash
Equivalents
$2.5
0.5
3.0
0.4
$3.4
Finance
Receivables, Net
and
Net Investment in
Operating Leases
$31.9
17.9
49.8
6.4
$56.2
Debt
$26.0
11.2
37.2
4.2
$41.4
__________
(a) Certain notes issued by the VIEs to affiliated companies served as collateral for accessing the European Central Bank ("ECB") open market
operations program. This external funding of $246 million at December 31, 2011 was not reflected as debt of the VIEs and is excluded from the
table above, but was included in our consolidated debt. The finance receivables backing this external funding are included in the table above.