Ford Credit Earns $504 Million in Third Quarter
DEARBORN, Mich., Oct. 16, 2003 -- Ford Motor Credit Company reported record net income of $504 million for the third quarter of 2003, up $210 million from earnings of $294 million in the same period a year earlier. On a pre-tax basis, Ford Credit earned $809 million in the third quarter of 2003 compared with $460 million in the third quarter of 2002. The increase in earnings primarily reflected a lower provision for credit losses, the favorable impact of the interest rate environment on borrowing costs, and the favorable market valuation of derivative instruments.
Compared with the second quarter of 2003, net income was up $103 million, primarily reflecting a lower provision for credit losses and improved net financing margin.
"While I am pleased we have been able to maintain positive earnings performance this year, the future will pose challenges as our asset base shrinks," said Greg C. Smith, Chairman and CEO. "We will continue to concentrate on supporting our dealers, maintaining liquidity, reducing costs, and providing solid results for Ford Motor Company."
On September 30, 2003, receivables on Ford Credit's balance sheet totaled $132 billion, down $4 billion from September 30, 2002. The reduction primarily reflected lower lease and retail placement volumes, and receivables sold in securitizations and whole-loan sale transactions, offset partially by the accounting consolidation of a Ford Credit asset-backed commercial paper program in May 2003. Managed receivables were $181 billion on September 30, 2003, compared with $202 billion on September 30, 2002, and $190 billion on June 30, 2003. The decrease from September 2002 primarily reflected lower retail and lease placement volumes and receivables sold in whole-loan sale transactions.
In September 2003, Ford Credit paid a dividend of $1 billion, resulting in managed leverage of 12.7 to 1 on September 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 Third Quarter First Nine Months
2003 2002 2003 2002
(in millions)
Income from continuing
operations $504 $288 $1,347 $863
Income from discontinued
operations 0 6 0 17
Net Income $504 $294 $1,347 $880
Memo: SFAS No. 133
(valuation of derivative
instruments) included above $28 $(114) $110 $(113)
Financial statement
return on equity 16% 9% 14% 9%
Income before income
taxes $809 $460 $2,197 $1,375
Balance Sheet Summary September 30, June 30, December 31,
2003 2002 2003 2002
Assets (in billions)
Finance receivables
Retail installment $80.0* $77.3 $76.8* $68.4
Wholesale 18.6 15.8 20.7 16.4
Other 8.9 9.1 9.4 9.8
Total net finance
receivables $107.5 $102.2 $106.9 $94.6
Net investment in
operating leases 24.8 33.5 26.9 31.6
Total net finance
receivables and
operating
leases $132.3 $135.7 $133.8 $126.2
Retained interest in
securitized assets 10.2 9.7 14.5 17.6
All other assets 35.9 24.0 26.7 26.4
Total assets $178.4 $169.4 $175.0 $170.2
Liabilities and Stockholder's Equity
Debt - short-term $27.3* $16.0 $29.2* $16.2
Debt - long-term (includes
notes payable within
1 year) 122.3 124.3 117.0 124.1
Total debt $149.6 $140.3 $146.2 $140.3
All other liabilities 16.3 15.4 15.9 16.3
Total
liabilities $165.9 $155.7 $162.1 $156.6
Stockholder's equity 12.5 13.7 12.9 13.6
Total
liabilities
and
stockholder's
equity $178.4 $169.4 $175.0 $170.2
Memo: Financial statement
leverage (to 1)** 12.0 10.3 11.3 10.3
Managed Receivables**
Finance receivables
Retail installment $111.0 $124.4 $111.0 $117.3
Wholesale 36.4 34.5 42.5 38.9
Other 8.9 9.1 9.4 9.8
Total net finance
receivables $156.3 $168.0 $162.9 $166.0
Net investment in
operating leases 24.8 33.5 26.9 31.6
Total managed $ 181.1 $201.5 $189.8 $197.6
Memo:
Managed leverage (to 1)** 12.7 12.9 12.9 12.8
Serviced-only receivables
(receivables sold in
whole-loan sales
transactions) $5.8 $0.0 $6.6 $5.0
* See appendix for impact of on-balance sheet securitization
** See appendix for additional information
Ford Motor Credit Company and Consolidated Subsidiaries
OPERATING HIGHLIGHTS
Select Operating & Financial Metrics
Third Quarter First Nine Months
2003 2002 2003 2002
Financing Shares
Ford & Lincoln/Mercury
retail installment & lease
United States 48% 47% 39% 42%
Europe 31 33 31 34
Ford & Lincoln/Mercury
wholesale
United States 82 85 83 85
Europe 96 98 96 97
Contract volume - New and
used retail/lease (in thousands)
United States 588 729 1,551 2,022
Europe 205 220 649 705
Other international 162 170 477 511
Total contract
volume 955 1,119 2,677 3,238
Borrowing Cost Rate 4.1% 5.1% 4.3% 5.2%
Credit losses (in millions)
On-balance sheet
Retail installment & lease $443 $584 $1,357 $1,678
Wholesale 21 7 38 23
Other 2 0 15 22
Total $466 $591 $1,410 $1,723
Loss-to-receivables (LTR)
Retail installment & lease 1.83%* 2.06% 1.89%* 1.96%
Wholesale 0.44 0.18 0.28 0.20
Total including
other 1.52%* 1.71% 1.54%* 1.65%
Allowance for credit losses
(in billions) $3.2 $3.2 $3.2 $3.2
Allowance as a pct. of
end-of-period receivables 2.43% 2.33% 2.43% 2.33%
Managed **
Retail installment & lease $658 $699 $1,951 $1,980
Wholesale 19 7 39 23
Other 2 0 16 22
Total $679 $706 $2,006 $2,025
Loss-to-receivables (LTR)
Retail installment & lease 1.91% 1.75% 1.85% 1.66%
Wholesale 0.21 0.08 0.13 0.09
Total including
other 1.47% 1.39% 1.41% 1.33%
Memo: Ford Credit U.S.
retail & lease 1.86% 1.51% 1.80% 1.38%
Sales of Receivables (in millions)
Income related to securitizations
and whole-loan sales:
Gain-on-sale of finance
receivables $45 $57 $329 $289
Interest income, excess
spread, servicing fees 530 538 1,810 1,463
Total income
related to
securitizations
and whole loan
sales $575 $595 $2,139 $1,752
Impact of securitizations on
net financing margin:
Impact of current-period
securitizations $(27) $(82) $(457) $(547)
Impact of prior-period
securitizations (648) (637) (1,988) (1,568)
Total impact of
securitizations
on financing
margin $(675) $(719) $(2,445) $(2,115)
Pre-tax impact of
securitizations and
whole-loan sales $(100) $(124) $(306) $(363)
Tax 37 46 114 135
After-tax impact of
securitizations and
whole-loan sales $(63) $(78) $(192) $(228)
* Includes credit losses on reacquired receivables
Total excluding credit
losses on reacquired
receivables 1.40% 1.71% 1.48% 1.65%
** See appendix for additional information
Ford Motor Credit Company and Consolidated Subsidiaries
APPENDIX
In evaluating Ford Credit's financial performance, Ford Credit management uses financial statements and other financial measures in accordance with Generally Accepted Accounting Principles (GAAP). 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 in which 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 include receivables sold for legal purposes to Ford Credit-sponsored special purpose entities 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 Sheet Off-Balance Sheet Total
September 30, 2003 (in billions)
Retail installment contracts $80.0 $31.0 $111.0
Wholesale 18.6 17.8 36.4
Other finance receivables 8.9 0.0 8.9
Net investment in operating
leases 24.8 0.0 24.8
Total $132.3 $48.8 $181.1
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
September 30, 2002
Retail installment contracts $77.3 $47.1 $124.4
Wholesale 15.8 18.7 34.5
Other finance receivables 9.1 0.0 9.1
Net investment in operating
leases 33.5 0.0 33.5
Total $135.7 $65.8 $201.5
Leverage Calculation September 30, June 30, December 31,
2003 2002 2003 2002
(in billions)
Total debt $149.6 $140.3 $146.2 $140.3
Total securitized
receivables outstanding 48.8 65.8 56.0 71.4
Retained interest in
securitized receivables (10.2) (9.7) (14.5) (17.6)
Adjustments for cash and
cash equivalents (20.3) (7.1) (9.7) (6.8)
Adjustments for SFAS No. 133 (5.4) (6.0) (6.6) (6.2)
Total adjusted debt $162.5 $183.3 $171.4 $181.1
Total stockholder's equity
(including
minority interest) $12.5 $13.7 $12.9 $13.6
Adjustments for SFAS No. 133 0.3 0.5 0.4 0.5
Total adjusted equity $12.8 $14.2 $13.3 $14.1
Managed leverage = adjusted
debt / adjusted equity 12.7 12.9 12.9 12.8
Memo: Financial statement
leverage = total debt /
stockholder's equity 12.0 10.3 11.3 10.3