FORD CREDIT EARNS $897 MILLION IN SECOND QUARTER
DEARBORN, Mich., July 20 -- Ford Motor Credit Company reported record net income of $897 million in the second quarter of 2004, up $496 million from $401 million a year earlier. On a pre-tax basis from continuing operations, Ford Credit earned $1.4 billion in the second quarter, compared with $661 million in the previous year. The increase in earnings primarily reflected continued improved credit loss performance, higher used vehicle prices and the favorable impact of the low interest rate environment.
"Results were very strong for the quarter, with significant improvements in credit losses," said Mike Bannister, Chairman and CEO. "Improvement in the U.S. economy helped, but much of the success is due to our dedicated Ford Credit team and the support we receive from Ford Motor Company sales and marketing groups and from our dealers."
On June 30, 2004, receivables on Ford Credit's balance sheet totaled $129 billion, compared with $132 billion on December 31, 2003. Managed receivables were $175 billion on June 30, down $7 billion from $182 billion on December 31, primarily reflecting lower retail and lease placement volumes.
Ford Credit paid a dividend of $1 billion during the quarter. On June 30, managed leverage was 12.7 to 1.
Ford Credit is an indirect, wholly owned subsidiary of Ford Motor Company. Now in its 45th year, Ford Credit provides vehicle financing in 36 countries to more than 10 million customers and 12,500 automotive dealers. More information can be found at http://www.fordcredit.com/ and at Ford Credit's investor center, http://www.fordcredit.com/investorcenter/.
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended June 30, 2004 and 2003
(in millions)
Second Quarter First Half
2004 2003 2004 2003
(Unaudited) (Unaudited)
Financing revenue
Operating leases $1,463 $1,876 $3,023 $3,938
Retail 1,117 1,126 2,241 2,205
Interest supplements
and other support costs
earned from affiliated
companies 866 855 1,672 1,739
Wholesale 223 227 462 423
Other 60 72 109 161
Total financing
revenue 3,729 4,156 7,507 8,466
Depreciation on operating
leases (1,242) (1,822) (2,549) (3,950)
Interest expense (1,295) (1,479) (2,624) (2,998)
Net financing margin 1,192 855 2,334 1,518
Other revenue
Investment and other
income related to sales
of receivables 581 672 1,130 1,563
Insurance premiums
earned, net 61 61 121 125
Other income 290 249 515 506
Total financing
margin and revenue 2,124 1,837 4,100 3,712
Expenses
Operating expenses 552 539 1,103 1,123
Provision for
credit losses 76 542 377 1,063
Insurance expenses 74 95 111 138
Total expenses 702 1,176 1,591 2,324
Income from continuing
operations before
income taxes 1,422 661 2,509 1,388
Provision for income taxes 520 258 918 542
Income from continuing
operations before
minority interests 902 403 1,591 846
Minority interests in
net income of subsidiaries 1 2 1 3
Income from continuing
operations 901 401 1,590 843
Loss from discontinued/
held-for-sale operations (4) - (5) -
Net income $897 $401 $1,585 $843
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, December 31,
2004 2003
(Unaudited)
ASSETS
Cash and cash equivalents $8,832 $15,688
Investments in securities 641 611
Finance receivables, net 107,607 108,912
Net investment in operating leases 21,638 23,164
Retained interest in securitized assets 16,396 13,017
Notes and accounts receivable
from affiliated companies 1,438 1,653
Derivative financial instruments 5,782 9,866
Assets of discontinued/
held-for-sale operations 385 388
Other assets 4,401 5,530
Total assets $167,120 $178,829
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits,
and dealer reserves $1,531 $1,535
Affiliated companies 1,456 1,258
Total accounts payable 2,987 2,793
Debt 138,270 149,652
Deferred income taxes, net 7,073 6,334
Derivative financial instruments 636 987
Liabilities of discontinued/
held-for-sale operations 92 37
Other liabilities and deferred income 5,905 6,533
Total liabilities 154,963 166,336
Minority interests in net assets
of subsidiaries 11 19
Stockholder's equity
Capital stock, par value $100 a share,
250,000 shares authorized, issued
and outstanding 25 25
Paid-in surplus
(contributions by stockholder) 5,117 5,117
Accumulated other comprehensive income 407 420
Retained earnings 6,597 6,912
Total stockholder's equity 12,146 12,474
Total liabilities and
stockholder's equity $167,120 $178,829
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS
Second Quarter First Half
Financing Shares 2004 2003 2004 2003
United States
Financing share - Ford, Lincoln
and Mercury
Retail installment and lease 39% 34% 38% 35%
Wholesale 78 83 79 83
Europe
Financing share - Ford
Retail installment and lease 28% 32% 28% 31%
Wholesale 97 96 97 97
Contract Volume - New and used retail/
lease (in thousands)
North America Segment
United States 472 491 900 963
Canada 52 60 88 101
Total North America Segment 524 551 988 1,064
International Segment
Europe 209 223 422 444
Other international 65 65 139 144
Total International Segment 274 288 561 588
Total financing volume 798 839 1,549 1,652
Borrowing Cost Rate* 3.7% 4.3% 3.7% 4.4%
Credit Losses (in millions)
On-Balance sheet
Retail installment & lease $326 $421 $659 $915
Wholesale 6 16 9 17
Other 0 14 (1) 13
Total on-balance sheet
credit losses $332 $451 $667 $945
Total Loss-to-receivables Ratios** 1.07% 1.50% 1.09% 1.56%
Managed***
Retail installment & lease $440 $590 $931 $1,276
Wholesale 6 19 9 20
Other 0 14 (1) 13
Total managed credit losses $446 $623 $939 $1,309
Total Loss-to-receivables Ratios 1.02% 1.32% 1.06% 1.37%
- - - - -
* Includes the effect of interest rate swap agreements
** Includes credit losses on reacquired receivables
Total excluding credit losses
on reacquired receivables 1.03% 1.44% 1.03% 1.53%
*** See appendix for additional information
FORD MOTOR CREDIT COMPANY AND 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:
Managed Leverage Calculation June 30, December 31,
2004 2003
(in billions)
Total debt $138.3 $149.7
Securitized off-balance sheet
receivables outstanding 45.8 49.4
Retained interest in securitized off-balance
sheet receivables (16.4) (13.0)
Adjustments for cash and cash equivalents (8.8) (15.7)
Adjustments for SFAS No. 133 (3.2) (4.7)
Total adjusted debt $155.7 $165.7
Total stockholder's equity
(including minority interest) $12.1 $12.5
Adjustments for SFAS No. 133 0.1 0.2
Total adjusted equity $12.2 $12.7
Managed leverage (to 1) = adjusted debt /
adjusted equity 12.7 13.0
Memo: Financial statement leverage
(to 1) = total debt / stockholder's equity 11.4 12.0
Net Finance Receivables and Operating Leases Managed Receivables
On-Balance Off-Balance
Sheet Sheet Total
June 30, 2004 (in billions)
Retail installment $77.7 $23.9 $101.6
Wholesale 22.2 21.9 44.1
Other finance receivables 7.7 0.0 7.7
Net investment in operating leases 21.6 0.0 21.6
Total net finance receivables
and operating leases $129.2 $45.8 $175.0
December 31, 2003
Retail installment $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 net finance receivables
and operating leases $132.1 $49.4 $181.5