Ford Motor Credit Earns $710 Million in the First Quarter
DEARBORN, Mich., April 20 -- Ford Motor Credit Company reported net income of $710 million in the first quarter of 2005, up $22 million from earnings of $688 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $1,061 million in the first quarter, compared with $1,047 million in the previous year. The increase in earnings primarily reflected improved credit loss performance, offset partially by the impact of lower receivable levels and higher borrowing costs.
"Our strong results this quarter, aided by lower credit losses, reflect our ongoing commitment to strengthening our operations," said Mike Bannister, chairman and CEO. "We will continue to support Ford Motor Company with solid profits and dividends in 2005."
On March 31, 2005, Ford Motor Credit's on-balance sheet net receivables totaled $125 billion, compared with $133 billion on December 31, 2004. Managed receivables were $165 billion on March 31, down from $168 billion on December 31. The lower managed receivables primarily reflected lower retail and lease placement volumes and the impact of receivables sold in a whole-loan sale transaction during the first quarter of 2005.
Ford Motor Credit paid cash dividends of $450 million during the quarter. On March 31, managed leverage was 13.0 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 17,000 employees, Ford Motor Credit has operations in 36 countries and manages $165 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
For the Periods Ended March 31, 2005 and 2004
(in millions)
First Quarter
----------------------
2005 2004
--------- ------------
(Unaudited)
Financing revenue
Operating leases $ 1,358 $ 1,574
Retail 1,070 1,071
Interest supplements and other
support costs earned
from affiliated companies 843 856
Wholesale 251 189
Other 56 49
------ ------
Total financing revenue 3,578 3,739
Depreciation on vehicles subject to
operating leases (1,077) (1,307)
Interest expense (1,426) (1,329)
------ ------
Net financing margin 1,075 1,103
Other revenue
Investment and other income related
to sales of receivables 445 492
Insurance premiums earned, net 52 60
Other income 170 228
------ ------
Total financing margin and
other revenue 1,742 1,883
Expenses
Operating expenses 528 517
Provision for credit losses 117 282
Insurance expenses 36 37
------ ------
Total expenses 681 836
------ ------
Income from continuing operations
before income taxes 1,061 1,047
Provision for income taxes 387 383
------ ------
Income from continuing operations
before minority interests 674 664
Minority interests in net income of
subsidiaries 1 -
------ ------
Income from continuing operations 673 664
Income from discontinued/held-for-sale
operations 37 24
------ ------
Net income $ 710 $ 688
====== ======
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
March 31, December 31,
2005 2004
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 13,091 $ 12,668
Investments in securities 663 653
Finance receivables, net 103,494 110,851
Net investment in operating leases 21,741 21,866
Retained interest in securitized assets 8,028 9,166
Notes and accounts receivable from
affiliated companies 1,423 1,780
Derivative financial instruments 4,543 6,930
Assets of discontinued/held-for-sale
operations 2,456 2,186
Other assets 6,114 6,521
------- -------
Total assets $ 161,553 $ 172,621
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Customer deposits, dealer
reserves and other $ 1,628 $ 1,645
Affiliated companies 1,489 819
------- -------
Total accounts payable 3,117 2,464
Debt 132,744 144,274
Deferred income taxes, net 7,926 7,593
Derivative financial instruments 863 911
Liabilities of discontinued/
held-for-sale operations 112 93
Other liabilities and deferred income 5,173 5,802
------- -------
Total liabilities 149,935 161,137
Minority interests in net assets of
subsidiaries 14 13
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 736 855
Retained earnings 5,726 5,474
------- -------
Total stockholder's equity 11,604 11,471
------- -------
Total liabilities and
stockholder's equity $ 161,553 $ 172,621
======= =======
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS*
First Quarter
-------------------
Financing Shares 2005 2004
--------- ---------
United States
Financing share - Ford, Lincoln and Mercury
Retail installment and lease 43% 38%
Wholesale 82 84
Europe
Financing share - Ford
Retail installment and lease 26% 26%
Wholesale 97 96
Contract Volume - New and used retail/lease (in thousands)
North America Segment
United States 410 398
Canada 31 36
----- -----
Total North America Segment 441 434
International Segment
Europe 186 202
Other international 74 74
----- -----
Total International Segment 260 276
----- -----
Total financing volume 701 710
----- -----
Borrowing Cost Rate** 4.1% 3.7%
Charge-offs (in millions)
On-Balance sheet
Retail installment & lease $ 167 $ 313
Wholesale 17 3
Other (3) (1)
----- -----
Total on-balance sheet charge-offs $ 181 $ 315
===== =====
Total Loss-to-receivables Ratio 0.56% 0.97%
Managed***
Retail installment & lease $ 215 $ 427
Wholesale 17 3
Other (3) (1)
----- -----
Total managed charge-offs $ 229 $ 429
===== =====
Total Loss-to-receivables Ratio 0.55% 0.98%
-----
* Continuing operations
** Includes the effect of interest rate swap agreements
*** 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: finance receivables (retail and wholesale) and investments in operating leases reported on Ford Motor Credit's balance sheet include assets transferred in securitizations that do not qualify for accounting sale treatment. These assets have been legally transferred to Ford Motor Credit sponsored special purpose entities and are available only to pay the obligations of the special purpose entities 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 by these special purpose entities to securitization investors which is payable out of collections on the assets supporting the securitizations and is not the legal obligation of Ford Motor Credit or its other subsidiaries.
RECONCILIATION OF MEASURES:
Managed Leverage Calculation March 31, December 31,
2005 2004
-------------- --------------
(in billions)
Total debt $ 132.7 $ 144.3
Securitized off-balance sheet
receivables outstanding* 41.1 37.7
Retained interest in securitized
off-balance sheet receivables** (8.3) (9.5)
Adjustments for cash and cash equivalents (13.1) (12.7)
Adjustments for SFAS No. 133 (2.2) (3.2)
------ ------
Total adjusted debt $ 150.2 $ 156.6
====== ======
Total stockholder's equity (including
minority interest) $ 11.6 $ 11.5
Adjustments for SFAS No. 133 (0.1) (0.1)
------ ------
Total adjusted equity $ 11.5 $ 11.4
====== ======
Managed leverage (to 1) = adjusted
debt / adjusted equity 13.0 13.7
Memo: Financial statement leverage
(to 1) = total debt / stockholder's equity 11.4 12.6
Net Finance Receivables and Operating Leases
Managed Receivables
-----------------------------------
On-Balance Off-Balance
Sheet Sheet Total
------------ ------------- --------
March 31, 2005 (in billions)
Retail installment $ 73.1 $ 20.1 $ 93.2
Wholesale 25.1 19.2 44.3
Other finance receivables 5.3 0.0 5.3
Net investment in operating leases 21.7 0.0 21.7
------ ------ ------
Total net finance receivables and
operating leases $ 125.2 $ 39.3 $ 164.5
====== ====== ======
December 31, 2004
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
====== ====== ======
-----
* Includes securitized funding from discontinued operations
** Includes retained interest in securitized receivables from
discontinued operations