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Ford Motor Company | 2013 Annual Report 97
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 11. VARIABLE INTEREST ENTITIES
A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional
subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. A
VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most
significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits
from the entity that could potentially be significant to the VIE.
We have the power to direct the activities of an entity when our management has the ability to make key operating
decisions, such as decisions regarding capital or product investment or manufacturing production schedules. We have
the power to direct the activities of our special purpose entities when we have the ability to exercise discretion in the
servicing of financial assets, issue additional debt, exercise a unilateral call option, add assets to revolving structures, or
control investment decisions.
Assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to
satisfy claims against our general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not
represent additional claims on our general assets; rather, they represent claims against the specific assets of the
consolidated VIEs.
Automotive Sector
VIEs of Which We are Not the Primary Beneficiary
GFT is a joint venture that constitutes a significant VIE of which we are not the primary beneficiary as we do not have
the power to direct its economically-significant activities. As a result, GFT was not consolidated. GFT is a 50/50 joint
venture with Getrag International GmbH. Ford and its related parties purchase a majority of the joint venture’s output.
We also have suppliers and dealers that are VIEs of which we are not the primary beneficiary. Although we have
provided financial support, we do not have any key decision making power related to their businesses.
Our maximum exposure to loss from VIEs of which we are not the primary beneficiary was as follows (in millions):
December 31,
2013
December 31,
2012
Change in
Maximum
Exposure
Investments $ 264 $242 $ 22
Supplier and dealer arrangements 7 5 2
Total maximum exposure $ 271 $247 $ 24
Financial Services Sector
VIEs of Which We are the Primary Beneficiary
Our Financial Services sector uses special purpose entities to issue asset-backed securities in transactions to public
and private investors, bank conduits, and government-sponsored entities or others who obtain funding from government
programs. We have deemed most of these special purpose entities to be VIEs. The asset-backed securities are backed
by finance receivables and interests in net investments in operating leases. The assets continue to be consolidated by
us. We retain interests in our securitization VIEs, including subordinated securities issued by the VIEs, rights to cash held
for the benefit of the securitization investors, and rights to receive the excess cash flows not needed to pay the debt
issued by, and other obligations of the securitization entities that are parties to those securitization transactions.
The transactions create and pass along risks to the variable interest holders, depending on the assets securing the
debt and the specific terms of the transactions. We aggregate and analyze the asset-backed securitization transactions
based on the risk profile of the product and the type of funding structure, including:
• Retail - consumer credit risk and pre-payment risk
• Wholesale - dealer credit risk
• Net investments in operating lease - vehicle residual value risk, consumer credit risk, and pre-payment risk
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