FORD MOTOR CREDIT EARNS RECORD $2.9 BILLION IN 2004
Fourth Quarter Earnings of $543 Million Reported
DEARBORN, Mich., Jan. 20 -- Ford Motor Credit Company reported record net income of $2.9 billion in 2004, up $1.1 billion from earnings of $1.8 billion a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $4.4 billion in 2004, compared with $3.0 billion in the previous year. The increase in earnings primarily reflected improved credit loss performance and leasing results.
In the fourth quarter of 2004, Ford Motor Credit's net income was $543 million, up $73 million from $470 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $859 million in the fourth quarter, compared with $794 million in the previous year. The increase in earnings primarily reflected improved credit loss performance.
"Thanks to good progress on a number of key business drivers, especially credit loss and lease residual performance, we posted record earnings for the second consecutive year," said Mike Bannister, chairman and CEO. "We expect to generate strong earnings in 2005; however, the record pace of 2004 will not continue."
On December 31, 2004, Ford Motor Credit's on-balance sheet receivables totaled $133 billion, compared with $128 billion on December 31, 2003. Managed receivables were $168 billion, down $7 billion from $175 billion in 2003, primarily reflecting lower retail and operating lease financing.
Ford Motor Credit paid dividends of $900 million during the fourth quarter and $4.3 billion for the full year. On December 31, managed leverage was 13.7 to 1.
Ford Motor Credit Company is one of the world's largest automotive finance companies and has supported the sale of Ford products since 1959. With more than 16,000 employees, Ford Motor Credit operates in 36 countries and manages $168 billion in receivables. Ford Motor Credit is an indirect, wholly owned subsidiary of Ford Motor Company. It provides automotive financing for Ford, Lincoln, Mercury, Aston Martin, Jaguar, Land Rover, Mazda and Volvo dealers and customers. More information can be found at http://www.fordcredit.com/ and at Ford Motor Credit's investor center, http://www.fordcredit.com/investorcenter/.
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions)
Fourth Quarter Full Year
------------------- -------------------
2004 2003 2004 2003
-------- --------- -------- ---------
(Unaudited) (Unaudited)
Financing revenue
Operating leases $1,410 $1,638 $5,880 $7,423
Retail 1,154 1,062 4,459 4,296
Interest supplements and
other support costs earned
from affiliated companies 769 799 3,285 3,347
Wholesale 266 206 871 797
Other 37 51 200 247
-------- --------- -------- ---------
Total financing revenue 3,636 3,756 14,695 16,110
Depreciation on vehicles subject
to operating leases (1,227) (1,444) (4,909) (7,009)
Interest expense (1,371) (1,403) (5,333) (5,831)
-------- --------- -------- ---------
Net financing margin 1,038 909 4,453 3,270
Other revenue
Investment and other income
related to sales of
receivables 420 575 1,930 2,611
Insurance premiums earned,
net 49 53 216 232
Other income 245 371 1,041 1,137
-------- --------- -------- ---------
Total financing margin
and revenue 1,752 1,908 7,640 7,250
Expenses
Operating expenses 575 589 2,142 2,195
Provision for credit losses 298 493 900 1,888
Insurance expenses 20 32 167 211
-------- --------- -------- ---------
Total expenses 893 1,114 3,209 4,294
-------- --------- -------- ---------
Income from continuing
operations before
income taxes 859 794 4,431 2,956
Provision for income taxes 334 299 1,648 1,134
-------- --------- -------- ---------
Income from continuing
operations before minority
interests 525 495 2,783 1,822
Minority interests in net
income of subsidiaries 1 - 2 2
-------- --------- -------- ---------
Income from continuing
operations 524 495 2,781 1,820
Income from discontinued/
held-for-sale operations 19 30 81 52
Loss on disposal of
discontinued/held-for-sale
operations - (55) - (55)
-------- --------- -------- ---------
Net income $543 $470 $2,862 $1,817
======== ========= ======== =========
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
--------------------------
2004 2003
---------- ----------
ASSETS (Unaudited)
Cash and cash equivalents $12,668 $15,698
Investments in securities 653 611
Finance receivables, net 110,851 105,376
Net investment in operating leases 21,866 23,164
Retained interest in securitized assets 9,166 12,569
Notes and accounts receivable from
affiliated companies 1,780 1,983
Derivative financial instruments 6,930 9,842
Assets of discontinued/held-for-sale
operations 2,186 1,810
Other assets 6,521 8,082
---------- ----------
Total assets $172,621 $179,135
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $1,645 $1,534
Affiliated companies 819 1,258
---------- ----------
Total accounts payable 2,464 2,792
Debt 144,274 149,652
Deferred income taxes, net 7,593 6,352
Derivative financial instruments 911 1,293
Liabilities of discontinued/
held-for-sale operations 93 82
Other liabilities and deferred income 5,802 6,471
---------- ----------
Total liabilities 161,137 166,642
Minority interests in net assets of
subsidiaries 13 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 855 420
Retained earnings 5,474 6,912
---------- ----------
Total stockholder's equity 11,471 12,474
---------- ----------
Total liabilities and stockholder's
equity $172,621 $179,135
========== ==========
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS*
Fourth Quarter Full Year
------------------- -------------------
Financing Shares 2004 2003 2004 2003
-------- --------- -------- ---------
United States
Financing share - Ford,
Lincoln and Mercury
Retail installment and lease 48% 39% 45% 39%
Wholesale 83 84 84 85
Europe
Financing share - Ford
Retail installment and lease 35% 33% 29% 31%
Wholesale 97 99 97 97
Contract Volume - New and used
retail/lease (in thousands)
North America Segment
United States 455 406 1,842 1,883
Canada 38 41 172 197
-------- --------- -------- ---------
Total North America Segment 493 447 2,014 2,080
International Segment
Europe 192 187 806 836
Other international 70 65 277 279
-------- --------- -------- ---------
Total International Segment 262 252 1,083 1,115
-------- --------- -------- ---------
Total financing volume 755 699 3,097 3,195
======== ========= ======== =========
Borrowing Cost Rate** 4.0% 3.9% 3.8% 4.2%
Charge-offs (in millions)
On-Balance sheet
Retail installment & lease $357 $486 $1,281 $1,718
Wholesale 24 110 43 148
Other 5 10 3 25
--------- --------- --------- ---------
Total on-balance sheet
charge-offs $386 $606 $1,327 $1,891
========= ========= ========= =========
Total Loss-to-receivables
Ratios*** 1.23% 1.99% 1.10% 1.60%
Managed****
Retail installment & lease $425 $648 $1,599 $2,361
Wholesale 23 108 43 148
Other 5 10 3 25
--------- --------- --------- ---------
Total managed charge-offs $453 $766 $1,645 $2,534
========= ========= ========= =========
Total Loss-to-receivables
Ratios 1.09% 1.73% 0.97% 1.40%
- - - - -
* Continuing operations
** Includes the effect of
interest rate swap agreements
*** Includes charge-offs on
reacquired receivables
Total excluding charge-offs
on reacquired receivables 1.18% 1.88% 1.04% 1.52%
**** See appendix for additional
information
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
APPENDIX
In evaluating Ford Motor Credit's financial performance, Ford Motor 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 Motor Credit's
balance sheet and receivables Ford Motor Credit sold in off-balance
sheet securitizations and continues to service.
-- Charge-offs on managed receivables: charge-offs associated with
receivables reported on Ford Motor Credit's balance sheet plus charge-
offs associated with receivables that Ford Motor Credit sold in off-
balance sheet securitizations and continues to service.
IMPACT OF ON-BALANCE SHEET SECURITIZATION: retail installment receivables reported on Ford Motor Credit's balance sheet include receivables sold in securitizations. These receivables have been legally sold to Ford Motor 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 Motor Credit or the claims of Ford Motor Credit's creditors. Debt reported on Ford Motor 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 Motor Credit.
RECONCILIATION OF MEASURES:
Managed Leverage Calculation December 31,
--------------------------
2004 2003
---------- ----------
(in billions)
Total debt $144.3 $149.7
Securitized off-balance sheet receivables
outstanding* 37.7 49.4
Retained interest in securitized off-balance
sheet receivables** (9.5) (13.0)
Adjustments for cash and cash equivalents (12.7) (15.7)
Adjustments for SFAS No. 133 (3.2) (4.7)
---------- ----------
Total adjusted debt $156.6 $165.7
========== ==========
Total stockholder's equity (including
minority interest) $11.5 $12.5
Adjustments for SFAS No. 133 (0.1) 0.2
---------- ----------
Total adjusted equity $11.4 $12.7
========== ==========
Managed leverage (to 1) = adjusted debt /
adjusted equity 13.7 13.0
Memo: Financial statement leverage (to 1)
= total debt / stockholder's equity 12.6 12.0
Net Finance Receivables and
Operating Leases Managed Receivables
---------------------------------
On-Balance Off-Balance
Sheet Sheet Total
---------- ---------- ---------
December 31, 2004 (in billions)
Retail installment $81.7 $16.7 $98.4
Wholesale 23.8 18.9 42.7
Other finance receivables 5.3 0.0 5.3
Net investment in operating leases 21.9 0.0 21.9
---------- ---------- ---------
Total net finance receivables and
operating leases $132.7 $35.6 $168.3
========== ========== =========
December 31, 2003
Retail installment $77.0 $26.6 $103.6
Wholesale 22.4 20.3 42.7
Other finance receivables 5.9 0.0 5.9
Net investment in operating leases 23.2 0.0 23.2
---------- ---------- ---------
Total net finance receivables and
operating leases $128.5 $46.9 $175.4
========== ========== =========
- - - - -
* Includes securitized funding from discontinued operations
** Includes retained interest in securitized receivables from
discontinued operations