Ford Credit Earns $401 Million in Second Quarter
DEARBORN, Mich., July 16 -- Ford Motor Credit Company reported net income of $401 million in the second quarter of 2003, up $71 million from earnings of $330 million in the same period a year earlier. On a pre-tax basis, Ford Credit earned $661 million in the second quarter of 2003 compared with $519 million in the second quarter of 2002. The increase in earnings primarily reflects higher income related to securitizations and a lower provision for credit losses, offset partially by the impact of lower receivables.
Compared with the first quarter of 2003, earnings were down $41 million, reflecting primarily lower gains on sales of finance receivables, offset partially by higher financing margins.
"In this challenging environment, Ford Credit continues to provide stable performance," said Greg Smith, Chairman and CEO. "We have made progress on several fronts this quarter, and we continue to focus on the basics of our business by providing support for our dealers and positive results for Ford Motor Company."
On June 30, 2003, receivables on Ford Credit's balance sheet totaled $134 billion, down $8 billion from June 30, 2002. The reduction primarily reflects lower retail and lease placement volumes, and higher sales of receivables in whole-loan sale transactions, offset partially by the accounting consolidation of a Ford Credit asset-backed commercial paper program. Managed receivables were $190 billion on June 30, 2003, compared with $207 billion on June 30, 2002, and $193 billion on March 31, 2003.
In June 2003, Ford Credit paid a dividend of $900 million, resulting in managed leverage of 12.9 to 1 on June 30, 2003.
Ford Credit is a wholly owned subsidiary of Ford Motor Company. Now in its 44th year, Ford Credit provides vehicle financing in 36 countries to more than 11 million customers and more than 12,500 automotive dealers. More information can be found at www.fordcredit.com and at Ford Credit's investor center, www.fordcredit.com/investorcenter/.
Ford Motor Credit Company and Consolidated Subsidiaries
OPERATING HIGHLIGHTS
Net Income Second Quarter First Half
2003 2002 2003 2002
(in millions)
Income from continuing operations $401 $326 $843 $575
Income from discontinued operations 0 4 0 11
Net Income $401 $330 $843 $586
Memo: SFAS No. 133 included above $68 $(13) $82 $1
Financial statement return
on equity 12% 10% 13% 9%
Income before income taxes $661 $519 $1,388 $916
Balance Sheet Summary June 30, March 31, December 31,
2003 2002 2003 2002
Assets (in billions)
Finance receivables
Retail installment $76.8* $78.9 $62.7 $68.4
Wholesale 20.7 16.5 18.1 16.4
Other 9.4 10.7 9.6 9.8
Total net finance
receivables $106.9 $106.1 $90.4 $94.6
Net investment in
operating leases 26.9 35.5 29.0 31.6
Total net finance
receivables and
operating
leases $133.8 $141.6 $119.4 $126.2
Retained interest in
securitized assets 14.5 11.5 18.1 17.6
All other assets 26.7 19.5 28.3 26.4
Total assets $175.0 $172.6 $165.8 $170.2
Liabilities and Stockholder's Equity
Debt - short-term $29.2* $15.6 $16.1 $16.2
Debt - long-term (includes
notes payable within
1 year) 117.0 126.5 121.2 124.1
Total debt $146.2 $142.1 $137.3 $140.3
All other liabilities 15.9 16.8 15.3 16.3
Total liabilities $162.1 $158.9 $152.6 $156.6
Stockholder's equity 12.9 13.7 13.2 13.6
Total liabilities and
stockholder's equity $175.0 $172.6 $165.8 $170.2
Memo: Financial statement
leverage (to 1)* 11.3 10.4 10.4 10.3
Managed Receivables*
Finance receivables
Retail installment $111.0 $123.5 $112.2 $117.3
Wholesale 42.5 37.6 41.9 38.9
Other 9.4 10.7 9.6 9.8
Total net finance
receivables $162.9 $171.8 $163.7 $166.0
Net investment in
operating leases 26.9 35.5 29.0 31.6
Total managed $189.8 $207.3 $192.7 $197.6
Memo:
Managed leverage (to 1)* 12.9 13.3 12.8 12.8
Serviced-only receivables
(receivables sold in
whole-loan sales
transactions) $6.6 $0.0 $6.4 $5.0
*See page 4 for additional information
Ford Motor Credit Company and Consolidated Subsidiaries
OPERATING HIGHLIGHTS
Select Operating & Financial Metrics Second Quarter First Half
2003 2002 2003 2002
Financing Shares
Ford & Lincoln/Mercury
retail installment & lease
United States 34% 37% 35% 40%
Europe 32 35 31 34
Ford & Lincoln/Mercury
wholesale United States 83 85 83 85
Europe 96 96 97 96
Contract volume - New
and used retail/lease
(in thousands)
United States 491 631 963 1,294
Europe 223 246 444 484
Other international 160 189 315 341
Total contract volume 874 1,066 1,722 2,119
Borrowing Cost Rate 4.3% 5.1% 4.4% 5.2%
Credit losses (in millions)
On-balance sheet
Retail installment & lease $421 $524 $915 $1,094
Wholesale 17 8 17 16
Other 14 14 13 21
Total $452 $546 $945 $1,131
Loss-to-receivables (LTR)
Retail installment & lease 1.81%* 1.86% 1.92%* 1.91%
Wholesale 0.35 0.19 0.19 0.21
Total including other 1.50%* 1.58% 1.54%* 1.62%
Allowance for credit losses
(in billions) $3.2 $3.1 $3.2 $3.1
Allowance as a pct. of
end-of-period receivables 2.42% 2.19% 2.42% 2.19%
Managed**
Retail installment & lease $608 $614 $1,293 $1,282
Wholesale 19 8 20 16
Other 14 14 13 21
Total $641 $636 $1,326 $1,319
Loss-to-receivables (LTR)
Retail installment & lease 1.75% 1.56% 1.81% 1.60%
Wholesale 0.18 0.09 0.10 0.09
Total including other 1.35% 1.25% 1.37% 1.29%
Memo: Ford Credit U.S.
retail & lease 1.72% 1.23% 1.77% 1.32%
Sales of Receivables
Income related to securitizations
and whole-loan sales:
Gain-on-sale of finance receivables $51 $18 $284 $231
Interest income, excess spread,
servicing fees 621 501 1,279 926
Total income related to
securitizations and whole
loan sales $672 $519 $1,563 $1,157
Impact of securitizations on net
financing margin:
Impact of current-period
securitizations $(12) $(12) $(300) $(244)
Impact of prior-period
securitizations (853) (633) (1,470) (1,152)
Total impact of securitizations
on financing margin $(865) $(645) $(1,770) $(1,396)
Pre-tax impact of securitizations
and whole-loan sales $(193) $(126) $(207) $(239)
Tax 72 47 77 89
After-tax impact of securitizations
and whole-loan sales $(121) $(79) $(130) $(150)
* Includes credit losses on reacquired receivables
Total excluding credit
losses on reacquired
receivables 1.44% 1.58% 1.51% 1.62%
** See page 4 for additional information
Ford Motor Credit Company and Consolidated Subsidiaries
OPERATING HIGHLIGHTS
In evaluating Ford Credit's financial performance, Ford Credit management uses financial statements in accordance with Generally Accepted Accounting Principles (GAAP) and other financial measures. Included below are brief definitions of key terms, information about the impact of on-balance sheet securitization and a reconciliation of other measures.
KEY TERMS:
* Managed receivables: receivables reported on Ford Credit's balance sheet and receivables Ford Credit sold in
off-balance sheet securitizations and continues to service.
* Serviced-only receivables: receivables that Ford Credit sold in whole- loan sale transactions where Ford Credit
retained no interest, but continues to service.
* Managed credit losses: credit losses associated with receivables reported on Ford Credit's balance sheet plus
credit losses associated with receivables that Ford Credit sold in off- balance sheet securitizations and continues
to service.
IMPACT OF ON-BALANCE SHEET SECURITIZATION: retail installment receivables reported on Ford Credit's balance sheet includes receivables sold in securitizations. These receivables are available only to pay securitization investors and other participants and are not available to pay the obligations of Ford Credit or the claims of Ford Credit's creditors. Debt reported on Ford Credit's balance sheet includes debt issued to securitization investors, which is payable solely out of collections on the receivables supporting the securitization and is not the obligation of Ford Credit.
RECONCILIATION OF MEASURES:
Finance Receivables and Operating Leases Managed Receivables
On-Balance Off-Balance
Sheet Sheet Total
June 30, 2003 (in billions)
Retail installment contracts $76.8 $34.2 $111.0
Wholesale 20.7 21.8 42.5
Other finance receivables 9.4 0.0 9.4
Net investment in operating leases 26.9 0.0 26.9
Total $133.8 $56.0 $189.8
December 31, 2002
Retail installment contracts $68.4 $48.9 $117.3
Wholesale 16.4 22.5 38.9
Other finance receivables 9.8 0.0 9.8
Net investment in operating leases 31.6 0.0 31.6
Total $126.2 $71.4 $197.6
June 30, 2002
Retail installment contracts $78.9 $44.6 $123.5
Wholesale 16.5 21.1 37.6
Other finance receivables 10.7 0.0 10.7
Net investment in operating leases 35.5 0.0 35.5
Total $141.6 $65.7 $207.3
Leverage Calculation June 30, March 31, December 31,
2003 2002 2003 2002
(in billions)
Total debt $146.2 $142.1 $137.3 $140.3
Total securitized
receivables
outstanding 56.0 65.7 73.3 71.4
Retained interest in
securitized receivables (14.5) (11.5) (18.1) (17.6)
Adjustments for cash
and cash equivalents (9.7) (4.2) (11.7) (6.8)
Adjustments for
SFAS No. 133 (6.6) (3.3) (6.1) (6.2)
Total adjusted
debt $171.4 $188.8 $174.7 $181.1
Total stockholder's
equity $12.9 $13.7 $13.2 $13.6
Adjustments for
SFAS No. 133 0.4 0.5 0.5 0.5
Adjustments for
minority interest * * * *
Total adjusted
equity $13.3 $14.2 $13.7 $14.1
Managed leverage =
adjusted debt /
adjusted equity 12.9 13.3 12.8 12.8
Memo: Financial
statement leverage =
total debt /
stockholder's equity 11.3 10.4 10.4 10.3
- - - - -
* Less than $50 million