FORD CREDIT EARNS RECORD $1.8 BILLION IN 2003
Fourth Quarter Earnings of $470 Million Reported
DEARBORN, Mich., Jan. 22 -- Ford Motor Credit Company reported record net income of $1.8 billion in 2003, up $583 million from earnings of $1.2 billion a year earlier. On a pre-tax basis from continuing operations, Ford Credit earned $3.0 billion in 2003 compared with $2.0 billion in 2002. The increase in earnings primarily reflected a lower provision for credit losses, the favorable market valuation of derivative instruments and associated exposures, offset partially by the impact of lower average net receivables.
In the fourth quarter of 2003, Ford Credit's net income was $470 million, up $116 million from $354 million in the same period a year earlier. On a pre-tax basis from continuing operations, Ford Credit earned $839 million in the fourth quarter of 2003 compared with $594 million in 2002. The increase in earnings primarily reflected a lower provision for credit losses, the favorable market valuation of derivative instruments and associated exposures, offset partially by lower sales of receivables.
"Ford Credit has excellent liquidity and diversified funding sources, and we continue to deliver solid earnings and dividends to Ford Motor Company," said Greg C. Smith, chairman and CEO. "We are focused on supporting Ford and its dealers by delivering high levels of customer and dealer satisfaction and loyalty."
On December 31, 2003, receivables on Ford Credit's balance sheet totaled $132 billion, up $6 billion from December 31, 2002. The increase primarily reflected the accounting consolidation of a Ford Credit asset-backed commercial paper program in May 2003, offset partially by lower lease and retail placement volumes, and receivables sold in securitizations and whole- loan sale transactions. Managed receivables were $182 billion on December 31, 2003, compared with $197 billion on December 31, 2002, reflecting primarily lower retail and lease placement volumes.
In December 2003, Ford Credit paid a dividend of $800 million resulting in full year dividends of $3.7 billion. At December 31, 2003, managed leverage was 13.0 to 1.
Ford Credit is a wholly owned subsidiary of Ford Motor Company. Now in its 45th 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 Fourth Quarter Full Year
2003 2002 2003 2002
(in millions)
Income from continuing operations $523 $371 $ 1,869 $1,232
(Loss)/income from discontinued
operations (53) (17) (52) 2
Net income $470 $354 $1,817 $1,234
Memo: SFAS No. 133 included above $72 $(28) $182 $(141)
Financial statement return
on equity 15% 10% 14% 9%
Income before income taxes
from continuing operations $839 $594 $3,035 $1,965
Balance Sheet Summary December 31, Sept 30,
2003 2002 2003
Assets (in billions)
Finance receivables
Retail installment $77.8* $68.4 $80.0*
Wholesale 22.5 16.4 18.6
Other 8.6 9.8 8.8
Total net finance receivables $108.9 $94.6 $107.4
Net investment in operating leases 23.2 31.3 24.5
Total net finance receivables
and operating leases $132.1 $125.9 $131.9
Retained interest in securitized
assets 13.0 17.6 10.2
All other assets 33.7 26.7 36.3
Total assets $178.8 $170.2 $178.4
Liabilities and Stockholder's Equity
Debt - short-term $24.7* $16.2 $27.3*
Debt - long-term (includes notes
payable within 1 year) 125.0 124.1 122.3
Total debt $149.7 $140.3 $149.6
All other liabilities 16.6 16.3 16.3
Total liabilities $166.3 $156.6 $165.9
Stockholder's equity 12.5 13.6 12.5
Total liabilities and
stockholder's equity $178.8 $170.2 $178.4
Memo: Financial statement leverage
(to 1)** 12.0 10.3 12.0
Managed Receivables**
Finance receivables
Retail installment $106.9 $117.3 $111.0
Wholesale 42.8 38.9 36.4
Other 8.6 9.8 8.8
Total net finance receivables $158.3 $166.0 $156.2
Net investment in operating leases 23.2 31.3 24.5
Total managed $181.5 $197.3 $180.7
Memo:
Managed leverage (to 1)** 13.0 12.8 12.7
Receivables sold in whole-loan
sales transactions $7.3 $5.0 $5.8
* 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 Fourth Quarter Full Year
2003 2002 2003 2002
Financing Shares
Ford & Lincoln/Mercury
retail installment & lease United States 39% 36% 39% 42%
Europe 33 34 31 34
Ford & Lincoln/Mercury
wholesale United States 82 86 82 85
Europe 99 99 97 97
Contract Volume - New and used
retail/lease (in thousands)
United States 429 490 1,980 2,512
Europe 187 211 836 917
Other international 154 157 631 668
Total contract volume 770 858 3,447 4,097
Borrowing Cost Rate 3.8% 4.7% 4.2% 5.1%
Credit Losses (in millions)
On-balance sheet
Retail installment & lease $515 $614 $1,871 $2,292
Wholesale 110 17 148 40
Other 9 8 25 30
Total $634 $639 $2,044 $2,362
Loss-to-receivables (LTR)
Retail installment & lease 2.15%* 2.29% 1.97%* 2.05%
Wholesale 2.21 0.42 0.79 0.25
Total including other 2.04%* 1.92% 1.67%* 1.72%
Provision for credit losses (in millions) $489 $709 $1,998 $2,971
Allowance for credit losses (in billions) 3.0 3.2 3.0 3.2
Allowance as a pct. of end-of-period
receivables 2.28% 2.51% 2.28% 2.51%
Managed **
Retail installment & lease $718 $760 $2,640 $2,740
Wholesale 109 23 148 46
Other 9 8 25 30
Total $836 $791 $2,813 $2,816
Loss-to-receivables (LTR)
Retail installment & lease 2.17% 1.95% 1.91% 1.73%
Wholesale 1.09 0.25 0.37 0.13
Total including other 1.85% 1.56% 1.50% 1.39%
Memo: Ford Credit U.S. retail & lease 2.15% 1.87% 1.89% 1.50%
Sales of Receivables (in millions)
Investment and other income related to
receivable sales:
Net gain-on-sale of finance
receivables $108 $241 $436 $529
Servicing fees 149 186 677 700
Interest income from retained
securities 133 157 679 606
Excess spread and other 236 274 973 775
Investment and other income
related to receivables sales $626 $858 $2,765 $2,610
Less: Whole-loan income (90) (79) (234) (79)
Income related to off-balance
sheet securitizations $536 $779 $2,531 $2,531
Memo: Income related to off-balance
sheet securitizations if reported
on-balance sheet
Financing revenue $1,049 $1,319 $4,660 $5,141
Borrowing cost (293) (497) (1,491) (2,205)
Net financing margin $756 $822 $3,169 $2,936
Credit losses (166) (152) (677) (454)
Income before taxes $590 $670 $2,492 $2,482
* Includes credit losses on reacquired
receivables
Total excluding credit losses on
reacquired receivables 1.93% 1.92% 1.60% 1.72%
** 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.
* 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 in securitizations. These receivables have been legally sold to Ford Credit sponsored special purpose entities and 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 legal obligation of Ford Credit.
RECONCILIATION OF MEASURES:
Finance Receivables and Operating Leases Managed Receivables
On-Balance Off-Balance
Sheet Sheet Total
(in billions)
December 31, 2003
Retail installment contracts $77.8 $29.1 $106.9
Wholesale 22.5 20.3 42.8
Other finance receivables 8.6 0.0 8.6
Net investment in operating leases 23.2 0.0 23.2
Total $132.1 $49.4 $181.5
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 31.3 0.0 31.3
Total $125.9 $71.4 $197.3
September 30, 2003
Retail installment contracts $80.0 $31.0 $111.0
Wholesale 18.6 17.8 36.4
Other finance receivables 8.8 0.0 8.8
Net investment in operating leases 24.5 0.0 24.5
Total $131.9 $48.8 $180.7
Managed Leverage Calculation December 31, Sept 30,
2003 2002 2003
(in billions)
Total debt $149.7 $140.3 $149.6
Total off-balance sheet securitized
receivables outstanding 49.4 71.4 48.8
Retained interest in off-balance sheet
securitized receivables (13.0) (17.6) (10.2)
Adjustments for cash and cash
equivalents (15.7) (6.8) (20.3)
Adjustments for SFAS No. 133 (4.7) (6.2) (5.4)
Total adjusted debt $165.7 $181.1 $162.5
Total stockholder's equity (including
minority interest) $12.5 $13.6 $12.5
Adjustments for SFAS No. 133 0.2 0.5 0.3
Total adjusted equity $12.7 $14.1 $12.8
Managed leverage (to 1) =
adjusted debt / adjusted equity 13.0 12.8 12.7
Memo: Financial statement leverage
(to 1) = total debt / stockholder's equity 12.0 10.3 12.0