F 03.31.2014 10-Q

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)
 
R
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
For the quarterly period ended March 31, 2014
 
 
 
or
 
 
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
For the transition period from  __________ to __________
 
 
 
Commission file number 1-3950
 
Ford Motor Company
(Exact name of Registrant as specified in its charter)

Delaware
38-0549190
(State of incorporation)
(I.R.S. Employer Identification No.)
 
 
One American Road, Dearborn, Michigan
48126
(Address of principal executive offices)
(Zip Code)
313-322-3000
(Registrant’s telephone number, including area code)


Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  R   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  R   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.   Large accelerated filer R     Accelerated filer o     Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o   No  R
 
As of April 24, 2014, Ford had outstanding 3,883,406,273 shares of Common Stock and 70,852,076 shares of Class B Stock.  
  


Exhibit Index begins on page


 







FORD MOTOR COMPANY
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended March 31, 2014

 
Table of Contents
 
Page
 
Part I - Financial Information
 
 
Item 1
Financial Statements
 
 
Consolidated Income Statement
 
 
Consolidated Statement of Comprehensive Income
 
 
Sector Income Statement
 
 
Consolidated Balance Sheet
 
 
Sector Balance Sheet
 
 
Condensed Consolidated Statement of Cash Flows
 
 
Condensed Sector Statement of Cash Flows
 
 
Consolidated Statement of Equity
 
 
Notes to the Financial Statements
 
 
Report of Independent Registered Public Accounting Firm
 
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
Results of Operations
 
 
Automotive Sector
 
 
Financial Services Sector
 
 
Liquidity and Capital Resources
 
 
Production Volumes
 
 
Outlook
 
 
Accounting Standards Issued But Not Yet Adopted
 
 
Other Financial Information
 
Item 3
Quantitative and Qualitative Disclosures About Market Risk
 
 
Automotive Sector
 
 
Financial Services Sector
 
Item 4
Controls and Procedures
 
 
 
 
 
 
Part II - Other Information
 
 
Item 1
Legal Proceedings
 
Item 6
Exhibits
 
 
Signature
 
 
Exhibit Index
 

i

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
(in millions, except per share amounts)
 
For the periods ended March 31,
 
2014
 
2013
 
First Quarter
 
(unaudited)
Revenues
 
 
 
Automotive
$
33,876

 
$
33,858

Financial Services
2,000

 
1,791

Total revenues
35,876

 
35,649

 
 
 
 
Costs and expenses
 

 
 

Automotive cost of sales
31,021

 
30,005

Selling, administrative, and other expenses
3,372

 
3,124

Financial Services interest expense
678

 
706

Financial Services provision for credit and insurance losses
39

 
40

Total costs and expenses
35,110

 
33,875

 
 
 
 
Automotive interest expense
208

 
206

 
 
 
 
Automotive interest income and other income/(loss), net (Note 13)
214

 
245

Financial Services other income/(loss), net (Note 13)
68

 
96

Equity in net income of affiliated companies
419

 
214

Income before income taxes
1,259

 
2,123

Provision for/(Benefit from) income taxes (Note 15)
270

 
511

Net income
989

 
1,612

Less: Income/(Loss) attributable to noncontrolling interests
—

 
1

Net income attributable to Ford Motor Company
$
989

 
$
1,611

 
 
 
 
AMOUNTS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 16)
Basic income
$
0.25

 
$
0.41

Diluted income
0.24

 
0.40

 
 
 
 
Cash dividends declared
0.125

 
0.10



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions)
 
For the periods ended March 31,
 
2014
 
2013
 
First Quarter
 
(unaudited)
Net income
$
989

 
$
1,612

Other comprehensive income/(loss), net of tax (Note 12)
 
 
 
Foreign currency translation
(235
)
 
(366
)
Derivative instruments
92

 
97

Pension and other postretirement benefits
183

 
591

Total other comprehensive income/(loss), net of tax
40

 
322

Comprehensive income
1,029

 
1,934

Less: Comprehensive income/(loss) attributable to noncontrolling interests
—

 
1

Comprehensive income attributable to Ford Motor Company
$
1,029

 
$
1,933


The accompanying notes are part of the financial statements.

1
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
SECTOR INCOME STATEMENT
(in millions)
 
For the periods ended March 31,
 
2014
 
2013
 
First Quarter
 
(unaudited)
AUTOMOTIVE
 
 
 
Revenues
$
33,876

 
$
33,858

Costs and expenses
 
 
 
Cost of sales
31,021

 
30,005

Selling, administrative, and other expenses
2,476

 
2,481

Total costs and expenses
33,497

 
32,486

 
 
 
 
Interest expense
208

 
206

 
 
 
 
Interest income and other income/(loss), net (Note 13)
214

 
245

Equity in net income of affiliated companies
412

 
209

Income before income taxes — Automotive
797

 
1,620

 
 
 
 
FINANCIAL SERVICES
 

 
 

Revenues
2,000

 
1,791

Costs and expenses
 
 
 
Interest expense
678

 
706

Depreciation on vehicles subject to operating leases
706

 
483

Operating and other expenses
190

 
160

Provision for credit and insurance losses
39

 
40

Total costs and expenses
1,613

 
1,389

 
 
 
 
Other income/(loss), net (Note 13)
68

 
96

Equity in net income of affiliated companies
7

 
5

Income before income taxes — Financial Services
462

 
503

 
 
 
 
COMPANY
 
 
 
Income before income taxes
1,259

 
2,123

Provision for/(Benefit from) income taxes (Note 15)
270

 
511

Net income
989

 
1,612

Less: Income/(Loss) attributable to noncontrolling interests
—

 
1

Net income attributable to Ford Motor Company
$
989

 
$
1,611


The accompanying notes are part of the financial statements.

2
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
 
March 31,
2014
 
December 31,
2013
 
(unaudited)
ASSETS
 
 
 
Cash and cash equivalents
$
12,983

 
$
14,468

Marketable securities
23,546

 
22,100

Finance receivables, net (Note 3)
77,773

 
77,481

Other receivables, net
12,088

 
9,828

Net investment in operating leases
20,024

 
19,984

Inventories (Note 5)
8,874

 
7,708

Equity in net assets of affiliated companies
3,982

 
3,679

Net property
28,447

 
27,616

Deferred income taxes
13,134

 
13,468

Other assets
6,231

 
5,847

Total assets
$
207,082

 
$
202,179

 
 
 
 
LIABILITIES
 

 
 

Payables
$
22,209

 
$
19,531

Other liabilities and deferred revenue (Note 7)
40,141

 
40,886

Debt (Note 9)
117,004

 
114,688

Deferred income taxes
590

 
598

Total liabilities
179,944

 
175,703

 
 
 
 
Redeemable noncontrolling interest (Note 11)
331

 
331

 
 
 
 
EQUITY
 

 
 

Capital stock
 

 
 

Common Stock, par value $.01 per share (3,924 million shares issued of 6 billion authorized)
39

 
39

Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized)
1

 
1

Capital in excess of par value of stock
21,547

 
21,422

Retained earnings
23,882

 
23,386

Accumulated other comprehensive income/(loss) (Note 12)
(18,190
)
 
(18,230
)
Treasury stock
(506
)
 
(506
)
Total equity attributable to Ford Motor Company
26,773

 
26,112

Equity attributable to noncontrolling interests
34

 
33

Total equity
26,807

 
26,145

Total liabilities and equity
$
207,082

 
$
202,179

 
The following table includes assets to be used to settle liabilities of the consolidated variable interest entities (“VIEs”).  These assets and liabilities are included in the consolidated balance sheet above.  See Note 6 for additional information on our VIEs.
 
March 31,
2014
 
December 31,
2013
 
(unaudited)
ASSETS
 
 
 
Cash and cash equivalents
$
2,768

 
$
4,198

Finance receivables, net
44,443

 
45,796

Net investment in operating leases
9,592

 
8,116

Other assets
1

 
5

LIABILITIES
 
 
 
Other liabilities and deferred revenue
$
73

 
$
88

Debt
38,983

 
40,728


The accompanying notes are part of the financial statements.

3
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
SECTOR BALANCE SHEET (in millions) 
 
March 31,
2014
 
December 31,
2013
ASSETS
(unaudited)
Automotive
 
 
 
Cash and cash equivalents
$
4,533

 
$
4,959

Marketable securities
20,729

 
20,157

Total cash and marketable securities
25,262

 
25,116

Receivables, less allowances of $133 and $132
5,742

 
5,641

Inventories (Note 5)
8,874

 
7,708

Deferred income taxes
1,582

 
1,574

Net investment in operating leases
978

 
1,384

Other current assets
1,462

 
1,034

Total current assets
43,900

 
42,457

Equity in net assets of affiliated companies
3,849

 
3,546

Net property
28,222

 
27,492

Deferred income taxes
13,312

 
13,436

Other assets
2,508

 
2,824

Non-current receivable from Financial Services
720

 
724

Total Automotive assets
92,511

 
90,479

Financial Services
 

 
 

Cash and cash equivalents
8,450

 
9,509

Marketable securities
2,817

 
1,943

Finance receivables, net (Note 3)
83,310

 
80,816

Net investment in operating leases
19,046

 
18,600

Equity in net assets of affiliated companies
133

 
133

Other assets
3,475

 
3,149

Receivable from Automotive
317

 
907

Total Financial Services assets
117,548

 
115,057

Intersector elimination
(1,037
)
 
(1,631
)
Total assets
$
209,022

 
$
203,905

LIABILITIES
 

 
 

Automotive
 

 
 

Payables
$
20,598

 
$
18,035

Other liabilities and deferred revenue (Note 7)
16,438

 
16,537

Deferred income taxes
340

 
267

Debt payable within one year (Note 9)
2,086

 
1,257

Current payable to Financial Services
317

 
907

Total current liabilities
39,779

 
37,003

Long-term debt (Note 9)
13,623

 
14,426

Other liabilities and deferred revenue (Note 7)
21,636

 
22,089

Deferred income taxes
431

 
430

Total Automotive liabilities
75,469

 
73,948

Financial Services
 

 
 

Payables
1,611

 
1,496

Debt (Note 9)
101,295

 
99,005

Deferred income taxes
1,759

 
1,627

Other liabilities and deferred income (Note 7)
2,067

 
2,260

Payable to Automotive
720

 
724

Total Financial Services liabilities
107,452

 
105,112

Intersector elimination
(1,037
)
 
(1,631
)
Total liabilities
181,884

 
177,429

 
 
 
 
Redeemable noncontrolling interest (Note 11)
331

 
331

 
 
 
 
EQUITY
 

 
 

Capital stock
 

 
 

Common Stock, par value $.01 per share (3,924 million shares issued of 6 billion authorized)
39

 
39

Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized)
1

 
1

Capital in excess of par value of stock
21,547

 
21,422

Retained earnings
23,882

 
23,386

Accumulated other comprehensive income/(loss) (Note 12)
(18,190
)
 
(18,230
)
Treasury stock
(506
)
 
(506
)
Total equity attributable to Ford Motor Company
26,773

 
26,112

Equity attributable to noncontrolling interests
34

 
33

Total equity
26,807

 
26,145

Total liabilities and equity
$
209,022

 
$
203,905

The accompanying notes are part of the financial statements.

4
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
 
For the periods ended March 31,
 
2014
 
2013
 
First Quarter
 
(unaudited)
Cash flows from operating activities of continuing operations
 
 
 
Net cash provided by/(used in) operating activities
$
2,220

 
$
211

 
 
 
 
Cash flows from investing activities of continuing operations
 
 
 
Capital spending
(1,516
)
 
(1,483
)
Acquisitions of finance receivables and operating leases
(11,646
)
 
(10,389
)
Collections of finance receivables and operating leases
8,983

 
8,255

Purchases of securities
(15,291
)
 
(38,953
)
Sales and maturities of securities
13,780

 
38,761

Cash change due to initial consolidation of businesses
—

 
9

Settlements of derivatives
(72
)
 
(217
)
Other
100

 
166

Net cash provided by/(used in) investing activities
(5,662
)
 
(3,851
)
 
 
 
 
Cash flows from financing activities of continuing operations
 

 
 

Cash dividends
(493
)
 
(392
)
Purchases of Common Stock
—

 
(10
)
Changes in short-term debt
(1,023
)
 
(1,428
)
Proceeds from issuance of other debt
11,773

 
11,242

Principal payments on other debt
(8,287
)
 
(7,548
)
Other
18

 
103

Net cash provided by/(used in) financing activities
1,988

 
1,967

 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(31
)
 
(166
)
 
 
 
 
Net increase/(decrease) in cash and cash equivalents
$
(1,485
)
 
$
(1,839
)
 
 
 
 
Cash and cash equivalents at January 1
$
14,468

 
$
15,659

Net increase/(decrease) in cash and cash equivalents
(1,485
)
 
(1,839
)
Cash and cash equivalents at March 31
$
12,983

 
$
13,820


The accompanying notes are part of the financial statements.

5
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
CONDENSED SECTOR STATEMENT OF CASH FLOWS
(in millions)
 
For the periods ended March 31,
 
2014
 
2013
 
First Quarter
 
Automotive
 
Financial Services
 
Automotive
 
Financial Services
 
(Unaudited)
Cash flows from operating activities of continuing operations
 
 
 
 
 
 
 
Net cash provided by/(used in) operating activities
$
2,026

 
$
1,698

 
$
721

 
$
1,110

 
 
 
 
 
 
 
 
Cash flows from investing activities of continuing operations
 
 
 
 
 
 
 
Capital spending
(1,506
)
 
(10
)
 
(1,471
)
 
(12
)
Acquisitions of finance receivables and operating leases (excluding wholesale and other)
—

 
(11,008
)
 
—

 
(9,947
)
Collections of finance receivables and operating leases (excluding wholesale and other)
—

 
8,983

 
—

 
8,255

Net change in wholesale and other receivables
—

 
(2,142
)
 
—

 
(2,062
)
Purchases of securities
(10,969
)
 
(4,322
)
 
(29,697
)
 
(9,256
)
Sales and maturities of securities
10,341

 
3,439

 
29,740

 
9,021

Cash change due to initial consolidation of businesses
—

 
—

 
9

 
—

Settlements of derivatives
47

 
(119
)
 
(177
)
 
(40
)
Investing activity (to)/from Financial Services
11

 
—

 
(129
)
 
—

Other
36

 
64

 
147

 
19

Net cash provided by/(used in) investing activities
(2,040
)

(5,115
)

(1,578
)

(4,022
)
 
 
 
 
 
 
 
 
Cash flows from financing activities of continuing operations
 
 
 
 
 
 
 
Cash dividends
(493
)
 
—

 
(392
)
 
—

Purchases of Common Stock
—

 
—

 
(10
)
 
—

Changes in short-term debt
140

 
(1,163
)
 
(240
)
 
(1,188
)
Proceeds from issuance of other debt
75

 
11,698

 
2,059

 
9,183

Principal payments on other debt
(190
)
 
(8,097
)
 
(823
)
 
(6,725
)
Financing activity to/(from) Automotive
—

 
(11
)
 
—

 
129

Other
53

 
(35
)
 
43

 
60

Net cash provided by/(used in) financing activities
(415
)
 
2,392

 
637

 
1,459

 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
3

 
(34
)
 
(38
)
 
(128
)
 
 
 
 
 
 
 
 
Net increase/(decrease) in cash and cash equivalents
$
(426
)

$
(1,059
)

$
(258
)

$
(1,581
)
 
 
 
 
 
 
 
 
Cash and cash equivalents at January 1
$
4,959

 
$
9,509

 
$
6,247

 
$
9,412

Net increase/(decrease) in cash and cash equivalents
(426
)
 
(1,059
)
 
(258
)
 
(1,581
)
Cash and cash equivalents at March 31
$
4,533


$
8,450


$
5,989


$
7,831


The accompanying notes are part of the financial statements.

6
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(in millions, unaudited)
 
Equity/(Deficit) Attributable to Ford Motor Company
 
 
 
 
 
Capital Stock
 
Cap. in
Excess of
Par Value 
of Stock
 
Retained Earnings/
(Accumulated Deficit)
 
Accumulated Other Comprehensive Income/(Loss) (Note 12)
 
Treasury Stock
 
Total
 
Equity/(Deficit)
Attributable
to Non-controlling Interests
 
Total
Equity/
(Deficit)
Balance at December 31, 2013
$
40

 
$
21,422

 
$
23,386

 
$
(18,230
)
 
$
(506
)
 
$
26,112

 
$
33

 
$
26,145

Net income
—

 
—

 
989

 
—

 
—

 
989

 
—

 
989

Other comprehensive income/(loss), net of tax
—

 
—

 
—

 
40

 
—

 
40

 
—

 
40

Common stock issued (including share-based compensation impacts)
—

 
143

 
—

 
—

 
—

 
143

 
—

 
143

Treasury stock/other 
—

 
(18
)
 
—

 
—

 
—

 
(18
)
 
1

 
(17
)
Cash dividends declared
—

 
—

 
(493
)
 
—

 
—

 
(493
)
 
—

 
(493
)
Balance at March 31, 2014
$
40

 
$
21,547

 
$
23,882

 
$
(18,190
)
 
$
(506
)
 
$
26,773

 
$
34

 
$
26,807

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2012
$
40

 
$
20,976

 
$
17,778

 
$
(22,858
)
 
$
(292
)
 
$
15,644

 
$
42

 
$
15,686

Net income
—

 
—

 
1,611

 
—

 
—

 
1,611

 
1

 
1,612

Other comprehensive income/(loss), net of tax
—

 
—

 
—

 
322

 
—

 
322

 
—

 
322

Common stock issued (including share-based compensation impacts)
—

 
118

 
—

 
—

 
—

 
118

 
—

 
118

Treasury stock/other 
—

 
—

 
—

 
—

 
(10
)
 
(10
)
 
—

 
(10
)
Cash dividends declared
—

 
—

 
(392
)
 
—

 
—

 
(392
)
 
—

 
(392
)
Balance at March 31, 2013
$
40

 
$
21,094

 
$
18,997

 
$
(22,536
)
 
$
(302
)
 
$
17,293

 
$
43

 
$
17,336


The accompanying notes are part of the financial statements.

7
ITEM 1. Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

Table of Contents
Footnote
 
Page
Note 1
Presentation
Note 2
Fair Value Measurements
Note 3
Financial Services Sector Finance Receivables
Note 4
Financial Services Sector Allowance for Credit Losses
Note 5
Inventories
Note 6
Variable Interest Entities
Note 7
Other Liabilities and Deferred Revenue
Note 8
Retirement Benefits
Note 9
Debt
Note 10
Derivative Financial Instruments and Hedging Activities
Note 11
Redeemable Noncontrolling Interest
Note 12
Accumulated Other Comprehensive Income/(Loss)
Note 13
Other Income/(Loss)
Note 14
Employee Separation Actions and Exit and Disposal Activities
Note 15
Income Taxes
Note 16
Amounts Per Share Attributable to Ford Motor Company Common and Class B Stock
Note 17
Segment Information
Note 18
Commitments and Contingencies



8
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 1.  PRESENTATION

Our financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. We show certain of our financial statements on both a consolidated and a sector basis for our Automotive and Financial Services sectors. Intercompany items have been eliminated in both the consolidated and sector balance sheets. Where the presentation of these intercompany eliminations or consolidated adjustments differs between the consolidated and sector financial statements, reconciliations of certain line items are explained below in this Note or in related footnotes.

In the opinion of management, these unaudited financial statements reflect a fair statement of the results of operations and financial condition of Ford Motor Company, its consolidated subsidiaries, and consolidated VIEs of which we are the primary beneficiary for the periods and at the dates presented.  The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.  Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K Report”).  For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us” or similar references mean Ford Motor Company, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise. 

We reclassified certain prior year amounts in our consolidated financial statements to conform to current year presentation.

Change in accounting. We provide medical, life, and income benefits to hourly and salary employees when they become disabled. As of January 1, 2014, we changed our accounting policy for these benefits from an event-driven model to a service-accrual model, such that our obligation now includes an estimated cost to be incurred for individuals who are disabled at the time of measurement (which was the amount recorded under our previous policy) as well as an amount that considers the probability that active employees will become disabled in the future. We believe this change in accounting method is preferable because it better aligns the recognition of expense with the periods in which the Company receives the benefit of the employees’ services, and will allow for better comparability with the method used by other companies in our industry.
We have retroactively applied this change in accounting method to all prior period amounts. As of December 31, 2012, the cumulative effect of the change decreased Total equity by $303 million and increased Other liabilities and deferred revenue by $468 million, as well as increased Deferred income taxes by $165 million. As of December 31, 2013, the cumulative effect of the change decreased Total equity by $271 million and increased Other liabilities and deferred revenue by $424 million, as well as increased Deferred income taxes by $153 million. The effect of this change was immaterial on income statement and statement of cash flow amounts for the interim period ended March 31, 2014, and had no impact for the interim period ended March 31, 2013.
 
Adoption of New Accounting Standards

Income Taxes - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. On January 1, 2014, we adopted the new accounting standard that requires an unrecognized tax benefit to be presented as a decrease in a deferred tax asset where a net operating loss, a similar tax loss, or a tax credit carryforward exists and certain criteria are met. The new accounting standard is consistent with our prior practice, thus the adoption did not impact our consolidated financial statements.

Foreign Currency Matters - Parent's Accounting for Cumulative Translation Adjustment. On January 1, 2014, we adopted the new accounting standard that clarifies the applicable guidance for a parent company's accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The new accounting standard is consistent with our prior practice, thus the adoption did not impact our consolidated financial statements.

Liabilities - Obligations Resulting from Joint and Several Liability Arrangements. On January 1, 2014, we adopted the new accounting standard that provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements. The adoption of this accounting standard did not impact our consolidated financial statements or financial statement disclosures.



9
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 1.  PRESENTATION (Continued)

Reconciliations between Consolidated and Sector Financial Statements

Sector to Consolidated Deferred Tax Assets and Liabilities. The difference between the total assets and total liabilities as presented on our sector balance sheet and consolidated balance sheet is the result of netting deferred income tax assets and liabilities. The reconciliation between the totals for the sector and consolidated balance sheets was as follows (in millions):
 
March 31,
2014
 
December 31,
2013
Sector balance sheet presentation of deferred income tax assets
 
 
 
Automotive sector current deferred income tax assets
$
1,582

 
$
1,574

Automotive sector non-current deferred income tax assets
13,312

 
13,436

Financial Services sector deferred income tax assets (a)
180

 
184

Total
15,074

 
15,194

Reclassification for netting of deferred income taxes
(1,940
)
 
(1,726
)
Consolidated balance sheet presentation of deferred income tax assets
$
13,134

 
$
13,468

 
 
 
 
Sector balance sheet presentation of deferred income tax liabilities
 

 
 

Automotive sector current deferred income tax liabilities
$
340

 
$
267

Automotive sector non-current deferred income tax liabilities
431

 
430

Financial Services sector deferred income tax liabilities
1,759

 
1,627

Total
2,530

 
2,324

Reclassification for netting of deferred income taxes
(1,940
)
 
(1,726
)
Consolidated balance sheet presentation of deferred income tax liabilities
$
590

 
$
598

__________
(a)
Financial Services deferred income tax assets are included in Financial Services Other assets on our sector balance sheet.


10
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 1.  PRESENTATION (Continued)

Sector to Consolidated Cash Flow. We present certain cash flows from wholesale and other receivables, interest supplements and residual support, and the acquisition of intersector debt differently on our sector and consolidated statements of cash flows. The reconciliation between totals for the sector and consolidated cash flows for the periods ended March 31 was as follows (in millions):
 
First Quarter
 
2014
 
2013
Automotive net cash provided by/(used in) operating activities
$
2,026

 
$
721

Financial Services net cash provided by/(used in) operating activities
1,698

 
1,110

Total sector net cash provided by/(used in) operating activities
3,724

 
1,831

Reclassifications between investing and operating cash flows
 

 
 

Purchases/Collections of wholesale receivables (a)
(2,028
)
 
(1,844
)
Purchases/Collections of other receivables (b)
(114
)
 
(218
)
Payments of interest supplements and residual support (c)
638

 
442

Consolidated net cash provided by/(used in) operating activities
$
2,220

 
$
211

 
 
 
 
Automotive net cash provided by/(used in) investing activities
$
(2,040
)
 
$
(1,578
)
Financial Services net cash provided by/(used in) investing activities
(5,115
)
 
(4,022
)
Total sector net cash provided by/(used in) investing activities
(7,155
)
 
(5,600
)
Reclassifications between investing and operating cash flows
 

 
 

Purchases/Collections of wholesale receivables (a)
2,028

 
1,844

Purchases/Collections of other receivables (b)
114

 
218

Payments of interest supplements and residual support (c)
(638
)
 
(442
)
Reclassifications between investing and financing cash flows
 
 
 
Elimination of investing activity to/(from) Financial Services in consolidation
(11
)
 
129

Consolidated net cash provided by/(used in) investing activities
$
(5,662
)
 
$
(3,851
)
 
 
 
 
Automotive net cash provided by/(used in) financing activities
$
(415
)
 
$
637

Financial Services net cash provided by/(used in) financing activities
2,392

 
1,459

Total sector net cash provided by/(used in) financing activities
1,977

 
2,096

Reclassifications between investing and financing cash flows
 

 
 

Elimination of investing activity to/(from) Financial Services in consolidation
11

 
(129
)
Consolidated net cash provided by/(used in) financing activities
$
1,988

 
$
1,967

 __________
(a)
In addition to the cash flow from vehicles sold by us, the cash flow from wholesale finance receivables (being reclassified between investing and operating) includes dealer financing by Ford Credit of used and non-Ford vehicles. One hundred percent of cash flows from these wholesale finance receivables have been reclassified for consolidated presentation as the portion of these cash flows from used and non-Ford vehicles is impracticable to separate.
(b)
Includes cash flows of other receivables purchased/collected by the Financial Services sector from certain divisions and subsidiaries of the Automotive sector.
(c)
Payments from Automotive sector to Ford Credit on behalf of the retail customer that represent interest supplements and residual support.














11
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 1.  PRESENTATION (Continued)

Venezuelan Operations

On February 13, 2013, the Venezuelan government effected a devaluation of the bolivar, from an exchange rate of 4.3 bolivars to the U.S. dollar to an exchange rate of 6.3 bolivars to the U.S. dollar. This resulted in a remeasurement loss of $186 million in the first quarter of 2013.

Based on changes to Venezuelan currency exchange rate mechanisms in the first quarter of 2014, we changed the exchange rate we used to remeasure our Venezuelan subsidiary’s financial statements in U.S. dollars. At March 31, 2014, we used the exchange rate determined by periodic auctions for U.S. dollars conducted under Venezuela’s Complementary System of Foreign Currency Administration (“SICAD I”). At March 31, 2014, the SICAD I exchange rate we used was 10.8 bolivars to the U.S. dollar.

Requests for U.S. dollars by our Venezuelan subsidiary for previously imported materials and spare parts will continue through the Commission for the Administration of Foreign Exchange (“CADIVI”) and the National Center for Foreign Commerce (“CENCOEX”) system, where the contracted rate is presently 6.3 bolivars to the U.S. dollar. However, as a result of a recent exchange agreement between the Central Bank of Venezuela and the Venezuelan government, we believe any future remittances for dividend payments that occur would be transacted at the SICAD I exchange rate. Accordingly, because the equity of our Venezuelan subsidiary would be realized through dividends, the SICAD I exchange rate represents a more realistic exchange rate at which to remeasure the U.S. dollar value of the assets, liabilities, and results of our Venezuelan subsidiary in our consolidated financial statements.

This change in exchange rates resulted in a remeasurement loss of $316 million in the first quarter of 2014 ($310 million related to our Automotive sector and $6 million related to our Financial Services sector). As indicated, the SICAD I exchange rate is determined by periodic auctions and therefore the potential exists for it to change significantly in future quarters. The SICAD I exchange rate has ranged between 10 and 11.8 bolivars to the U.S. dollar since the beginning of 2014.
 
At March 31, 2014, we had a bolivar denominated net monetary position of $415 million, including $433 million of bolivar denominated cash and cash equivalents. A further devaluation from an exchange rate of 10.8 bolivars to the U.S. dollar would result in an additional balance sheet remeasurement loss.

At March 31, 2014, our investment in our Venezuelan subsidiary (which includes undistributed earnings) was $552 million. Also, at March 31, 2014, it had $307 million of U.S. dollar currency exchange requests pending with and in transit to the governmental controlled currency exchanges, including $296 million payable to other Ford consolidated affiliates.

In March 2014, the Venezuelan government introduced an additional auction-based foreign exchange system
(SICAD II). The Venezuelan government has indicated that all industry sectors will be able to access SICAD II and its use will not be restricted as to purpose. The SICAD II exchange rate is expected to be published daily and has ranged between 49 and 51.9 bolivars to the U.S. dollar since being introduced.

The operating environment in Venezuela continues to be challenging. Foreign exchange control regulations have affected our Venezuelan operation’s ability to pay dividends and obligations denominated in U.S. dollars and are constraining parts availability and our ability to maintain normal production. Price controls and a very limited and uneven supply of foreign currency to support production, have adversely affected our business and results of operations. These and other restrictions could limit our ability to benefit from our investment and maintain a controlling interest in our Venezuelan subsidiary.



12
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 2.  FAIR VALUE MEASUREMENTS

Cash equivalents, marketable securities, and derivative financial instruments are presented on our financial statements on a recurring basis at fair value, while other assets and liabilities are measured at fair value on a nonrecurring basis, such as when we have an asset impairment.

Fair Value Measurements

In measuring fair value, we use various valuation methodologies and prioritize the use of observable inputs. The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our fair value hierarchy assessment.

•
Level 1 - inputs include quoted prices for identical instruments and are the most observable
•
Level 2 - inputs include quoted prices for similar instruments and observable inputs such as interest rates, currency exchange rates, and yield curves
•
Level 3 - inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the instruments

We review the inputs to the fair value measurements to ensure they are appropriately categorized within the fair value hierarchy. Transfers into and transfers out of the hierarchy levels are recognized as if they had taken place at the end of the reporting period.

Valuation Methodologies

Cash and Cash Equivalents. Included in Cash and cash equivalents are highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of change in value due to interest rate, quoted price, or penalty on withdrawal. A debt security is classified as a cash equivalent if it meets these criteria and if it has a remaining time to maturity of three months or less from the date of acquisition. Amounts on deposit and available upon demand, or negotiated to provide for daily liquidity without penalty, are classified as Cash and cash equivalents. Time deposits, certificates of deposit, and money market accounts that meet the above criteria are reported at par value on our balance sheet and are excluded from the tables below.

Marketable Securities. Investments in securities with a maturity date greater than three months at the date of purchase and other securities for which there is more than an insignificant risk of change in value due to interest rate, quoted price, or penalty on withdrawal are classified as Marketable securities. We generally measure fair value using prices obtained from pricing services. Pricing methodologies and inputs to valuation models used by the pricing services depend on the security type (i.e., asset class). Where possible, fair values are generated using market inputs including quoted prices (the closing price in an exchange market), bid prices (the price at which a buyer stands ready to purchase), and other market information. For fixed income securities that are not actively traded, the pricing services use alternative methods to determine fair value for the securities, including quotes for similar fixed-income securities, matrix pricing, discounted cash flow using benchmark curves, or other factors. In certain cases, when market data are not available, we may use broker quotes to determine fair value.

An annual review is performed on the security prices received from our pricing services, which includes discussion and analysis of the inputs used by the pricing services to value our securities. We also compare the price of certain securities sold close to the quarter end to the price of the same security at the balance sheet date to ensure the reported fair value is reasonable.  

Realized and unrealized gains and losses and interest income on our marketable securities are recorded in Automotive interest income and other income/(expense), net and Financial Services other income/(loss), net. Realized gains and losses are measured using the specific identification method. 

We have entered into repurchase agreements with certain counterparties where we are the transferee. These agreements allow us to offset our entire gross exposure in the event of default or breach of contract.  The gross value of these assets and liabilities reflected on our balance sheet at March 31, 2014 and December 31, 2013 was $312 million and $228 million, respectively.



13
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 2.  FAIR VALUE MEASUREMENTS (Continued)

Derivative Financial Instruments. Our derivatives are over-the-counter customized derivative transactions and are not exchange traded. We estimate the fair value of these instruments using industry-standard valuation models such as a discounted cash flow. These models project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, foreign exchange rates, commodity prices, and the contractual terms of the derivative instruments. The discount rate used is the relevant interbank deposit rate (e.g., LIBOR) plus an adjustment for non-performance risk. The adjustment reflects the full credit default swap (“CDS”) spread applied to a net exposure, by counterparty, considering the master netting agreements and any posted collateral. We use our counterparty’s CDS spread when we are in a net asset position and our own CDS spread when we are in a net liability position. In certain cases, market data is not available and we use broker quotes and models (e.g., Black-Scholes) to determine fair value. This includes situations where there is lack of liquidity for a particular currency or commodity or when the instrument is longer dated.

Finance Receivables. We measure finance receivables at fair value for purposes of disclosure (see Note 3) using internal valuation models. These models project future cash flows of financing contracts based on scheduled contract payments (including principal and interest). The projected cash flows are discounted to present value based on assumptions regarding credit losses, pre-payment speed, and applicable spreads to approximate current rates. Our assumptions regarding pre-payment speed and credit losses are based on historical performance. The fair value of finance receivables is categorized within Level 3 of the hierarchy.

On a nonrecurring basis, we also measure at fair value retail contracts greater than 120 days past due or deemed to be uncollectible, and individual dealer loans probable of foreclosure. We use the fair value of collateral, adjusted for estimated costs to sell, to determine the fair value of our receivables. The collateral for a retail receivable is the vehicle financed, and for dealer loans is real estate or other property.

The fair value of collateral for retail receivables is calculated based on the number of contracts multiplied by the loss severity and the probability of default percentage, or the outstanding receivable balances multiplied by the average recovery value percentage to determine the fair value adjustment.

The fair value of collateral for dealer loans is determined by reviewing various appraisals, which include total adjusted appraised value of land and improvements, alternate use appraised value, broker's opinion of value, and purchase offers. The fair value adjustment is calculated by comparing the net carrying value of the dealer loan and the estimated fair value of collateral.

The fair value of retail and dealer loans measured on a non-recurring basis was $55 million and $61 million at March 31, 2014 and December 31, 2013, respectively. Changes in the significant unobservable inputs will not materially affect the fair value of these loans. The fair value adjustment recorded to expense for these receivables was $19 million and $25 million for the periods ended March 31, 2014 and 2013, respectively.

Debt. We measure debt at fair value for purposes of disclosure (see Note 9) using quoted prices for our own debt with approximately the same remaining maturities, where possible. Where quoted prices are not available, we estimate fair value using discounted cash flows and market-based expectations for interest rates, credit risk, and the contractual terms of the debt instruments. For certain short-term debt with an original maturity date of one year or less, we assume that book value is a reasonable approximation of the debt’s fair value. The fair value of debt is categorized within Level 2 of the hierarchy.


14
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 2.  FAIR VALUE MEASUREMENTS (Continued)

Input Hierarchy of Items Measured at Fair Value on a Recurring Basis

The following tables categorize the fair values of items measured at fair value on a recurring basis on our balance sheet (in millions):
 
March 31, 2014
 
December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Automotive Sector
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents – financial instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
9

 
$
—

 
$
9

U.S. government-sponsored enterprises
—

 
109

 
—

 
109

 
—

 
24

 
—

 
24

Non-U.S. government
—

 
—

 
—

 
—

 
—

 
200

 
—

 
200

Non-U.S. government agencies (a)
—

 
165

 
—

 
165

 
—

 
—

 
—

 
—

Total cash equivalents – financial instruments (b)
—

 
274

 
—

 
274

 
—

 
233

 
—

 
233

Marketable securities
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
U.S. government
4,029

 
—

 
—

 
4,029

 
3,752

 
—

 
—

 
3,752

U.S. government-sponsored enterprises
—

 
5,311

 
—

 
5,311

 
—

 
6,596

 
—

 
6,596

Non-U.S. government agencies (a)
—

 
6,848

 
—

 
6,848

 
—

 
5,423

 
—

 
5,423

Corporate debt
—

 
2,634

 
—

 
2,634

 
—

 
2,623

 
—

 
2,623

Mortgage-backed and other asset-backed
—

 
296

 
—

 
296

 
—

 
295

 
—

 
295

Equities
294

 
—

 
—

 
294

 
341

 
—

 
—

 
341

Non-U.S. government
—

 
1,284

 
—

 
1,284

 
—

 
1,115

 
—

 
1,115

Other liquid investments (c)
—

 
33

 
—

 
33

 
—

 
12

 
—

 
12

Total marketable securities
4,323

 
16,406

 
—

 
20,729

 
4,093

 
16,064

 
—

 
20,157

Derivative financial instruments
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Foreign currency exchange contracts
—

 
517

 
—

 
517

 
—

 
557

 
—

 
557

Commodity contracts
—

 
24

 
3

 
27

 
—

 
22

 
1

 
23

Total derivative financial instruments (d)
—

 
541

 
3

 
544

 
—

 
579

 
1

 
580

Total assets at fair value
$
4,323

 
$
17,221

 
$
3

 
$
21,547

 
$
4,093

 
$
16,876

 
$
1

 
$
20,970

Liabilities
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Derivative financial instruments
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Foreign currency exchange contracts
$
—

 
$
329

 
$
—

 
$
329

 
$
—

 
$
399

 
$
—

 
$
399

Commodity contracts
—

 
12

 
—

 
12

 
—

 
17

 
2

 
19

Total derivative financial instruments (d)
—

 
341

 
—

 
341

 
—

 
416

 
2

 
418

Total liabilities at fair value
$
—

 
$
341

 
$
—

 
$
341

 
$
—

 
$
416

 
$
2

 
$
418

 __________
(a)
Includes notes issued by non-U.S. government agencies, as well as notes issued by supranational institutions.
(b)
Excludes time deposits, certificates of deposit, money market accounts, and other cash equivalents reported at par value on our balance sheet totaling $2.6 billion and $2.7 billion at March 31, 2014 and December 31, 2013, respectively, for the Automotive sector. In addition to these cash equivalents, our Automotive sector also had cash on hand totaling $1.6 billion and $2 billion at March 31, 2014 and December 31, 2013, respectively.
(c)
Includes certificates of deposit and time deposits subject to changes in value.
(d)
See Note 10 for additional information regarding derivative financial instruments.

15
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 2.  FAIR VALUE MEASUREMENTS (Continued)
 
March 31, 2014
 
December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial Services Sector
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents – financial instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. government
$
—

 
$
75

 
$
—

 
$
75

 
$
—

 
$
24

 
$
—

 
$
24

Total cash equivalents – financial instruments (a)
—

 
75

 
—

 
75

 
—

 
24

 
—

 
24

Marketable securities
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
U.S. government
794

 
—

 
—

 
794

 
418

 
—

 
—

 
418

U.S. government-sponsored enterprises
—

 
340

 
—

 
340

 
—

 
25

 
—

 
25

Non-U.S. government agencies (b)
—

 
303

 
—

 
303

 
—

 
128

 
—

 
128

Corporate debt
—

 
1,246

 
—

 
1,246

 
—

 
1,273

 
—

 
1,273

Mortgage-backed and other asset-backed
—

 
41

 
—

 
41

 
—

 
43

 
—

 
43

Non-U.S. government
—

 
93

 
—

 
93

 
—

 
56

 
—

 
56

Total marketable securities
794

 
2,023

 
—

 
2,817

 
418

 
1,525

 
—

 
1,943

Derivative financial instruments
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Interest rate contracts
—

 
663

 
—

 
663

 
—

 
584

 
—

 
584

Foreign currency exchange contracts
—

 
4

 
—

 
4

 
—

 
1

 
—

 
1

Cross-currency interest rate swap contracts
—

 
1

 
—

 
1

 
—

 
—

 
—

 
—

Total derivative financial instruments (c)
—

 
668

 
—

 
668

 
—

 
585

 
—

 
585

Total assets at fair value
$
794

 
$
2,766

 
$
—

 
$
3,560

 
$
418

 
$
2,134

 
$
—

 
$
2,552

Liabilities
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Derivative financial instruments
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Interest rate contracts
$
—

 
$
284

 
$
—

 
$
284

 
$
—

 
$
305

 
$
—

 
$
305

Foreign currency exchange contracts
—

 
21

 
—

 
21

 
—

 
25

 
—

 
25

Cross-currency interest rate swap contracts
—

 
165

 
—

 
165

 
—

 
176

 
—

 
176

Total derivative financial instruments (c)
—

 
470

 
—

 
470

 
—

 
506

 
—

 
506

Total liabilities at fair value
$
—

 
$
470

 
$
—

 
$
470

 
$
—

 
$
506

 
$
—

 
$
506

 __________
(a)
Excludes time deposits, certificates of deposit, and money market accounts reported at par value on our balance sheet totaling $6.2 billion and $6.7 billion at March 31, 2014 and December 31, 2013, respectively. In addition to these cash equivalents, we also had cash on hand totaling $2.1 billion and $2.8 billion at March 31, 2014 and December 31, 2013, respectively.
(b)
Includes notes issued by non-U.S. government agencies, as well as notes issued by supranational institutions.
(c)
See Note 10 for additional information regarding derivative financial instruments.
 
 
 
 

16
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 3.  FINANCIAL SERVICES SECTOR FINANCE RECEIVABLES

Our Financial Services sector finance receivables primarily relate to Ford Credit, but also include the Other Financial Services segment and certain intersector eliminations.

Our Financial Services sector segments our finance receivables into North America and International "consumer" and "non-consumer" portfolios.  The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.
Consumer Portfolio.  Receivables in this portfolio include products offered to individuals and businesses that finance the acquisition of Ford and Lincoln vehicles from dealers for personal or commercial use.  Retail financing includes retail installment contracts for new and used vehicles and direct financing leases with retail customers, government entities, daily rental companies, and fleet customers.

Non-Consumer Portfolio. Receivables in this portfolio include products offered to automotive dealers.  The products include:

•
Dealer financing – wholesale loans to dealers to finance the purchase of vehicle inventory, also known as floorplan financing, and loans to dealers to finance working capital and improvements to dealership facilities, finance the purchase of dealership real estate, and finance other dealer programs. Wholesale financing is approximately 95% of our dealer financing
•
Other – primarily related to the sale of parts and accessories to dealers

17
Item 1. Financial Statements (Continued)    

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS

NOTE 3.  FINANCIAL SERVICES SECTOR FINANCE RECEIVABLES (Continued)
Finance receivables, net were as follows (in millions):
 
March 31, 2014
 
December 31, 2013
 
North
America
 
International
 
Total Finance Receivables
 
North
America
 
International
 
Total Finance Receivables
Consumer
 
 
 
 
 
 
 
 
 
 
 
Retail financing, gross
$
40,687

 
$
11,354

 
$
52,041

 
$
40,902

 
$
10,797

 
$
51,699

Less: Unearned interest supplements
(1,252
)
 
(249
)
 
(1,501
)
 
(1,255
)
 
(247
)
 
(1,502
)
Consumer finance receivables
39,435

 
11,105

 
50,540

 
39,647

 
10,550

 
50,197

Non-Consumer
 

 
 

 
 

 
 

 
 

 
 

Dealer financing
23,110

 
8,820

 
31,930

 
22,072

 
7,833

 
29,905

Other
810

 
364

 
1,174

 
732

 
339

 
1,071

Non-Consumer finance receivables
23,920

 
9,184

 
33,104

 
22,804

 
8,172

 
30,976

Total recorded investment
$
63,355

 
$
20,289

 
$
83,644

 
$
62,451

 
$
18,722

 
$
81,173

 
 
 
 
 
 
 
 
 
 
 
 
Recorded investment in finance receivables
$
63,355

 
$
20,289

 
$
83,644

 
$
62,451

 
$
18,722

 
$
81,173

Less:  Allowance for credit losses
(258
)
 
(76
)
 
(334
)
 
(280
)
 
(77
)
 
(357
)
Finance receivables, net (a)
$
63,097

 
$
20,213

 
$
83,310

 
$
62,171

 
$