Ford Motor Credit Earns $577 Million in the Third Quarter
DEARBORN, Mich., Oct. 20, 2005 -- Ford Motor Credit Company reported net income of $577 million in the third quarter of 2005, down $157 million from a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $901 million in the third quarter, compared with $1.1 billion in the previous year. The decrease in earnings primarily reflected higher borrowing costs and the impact of lower receivable levels, offset partially by improved credit loss performance.
"We continue to make good progress on a number of key business drivers, especially credit loss performance," said Mike Bannister, chairman and CEO. "Despite the challenging business environment, Ford Motor Credit generated solid results."
On September 30, 2005, Ford Motor Credit's on-balance sheet net receivables totaled $114 billion, compared with $133 billion on December 31, 2004. Managed receivables were $149 billion on September 30, down from $168 billion on December 31. The lower receivables primarily reflected lower retail placement volumes and wholesale inventory levels.
Ford Motor Credit paid dividends of $1.1 billion during the quarter. On September 30, managed leverage was 12.5 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 about 16,000 employees, Ford Motor Credit operates in 37 countries and manages approximately $150 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 September 30, 2005 and 2004
(in millions)
Third Quarter Nine Months
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Financing revenue
Operating leases $1,316 $1,419 $4,013 $4,470
Retail 1,026 1,153 3,108 3,305
Interest supplements and
other support costs earned
from affiliated companies 796 802 2,434 2,539
Wholesale 268 200 795 582
Other 53 54 164 163
------ ------ ------ ------
Total financing revenue 3,459 3,628 10,514 11,059
Depreciation on vehicles
subject to operating leases (1,125) (1,133) (3,297) (3,682)
Interest expense (1,444) (1,338) (4,256) (3,962)
------ ------ ------ ------
Net financing margin 890 1,157 2,961 3,415
Other revenue
Investment and other income
related to sales
of receivables 334 476 1,222 1,510
Insurance premiums earned,
net 48 46 152 167
Other income 315 277 628 796
------ ------ ------ ------
Total financing margin
and other revenue 1,587 1,956 4,963 5,888
Expenses
Operating expenses 557 534 1,607 1,567
Provision for credit losses 81 252 87 602
Insurance expenses 48 36 145 147
------ ------ ------ ------
Total expenses 686 822 1,839 2,316
------ ------ ------ ------
Income from continuing
operations before income
taxes 901 1,134 3,124 3,572
Provision for income taxes 324 423 1,137 1,314
------ ------ ------ ------
Income from continuing
operations before minority
interests 577 711 1,987 2,258
Minority interests in net
income of subsidiaries - - 1 1
------ ------ ------ ------
Income from continuing
operations 577 711 1,986 2,257
Income from discontinued
operations - 23 37 62
Gain on disposal of discontinued
operations - - 4 -
------ ------ ------ ------
Net income $ 577 $ 734 $2,027 $2,319
====== ====== ====== ======
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
September 30, December 31,
2005 2004
-------------- --------------
(Unaudited)
ASSETS
Cash and cash equivalents $18,952 $12,668
Investments in securities 712 653
Finance receivables, net 92,188 110,851
Net investment in operating leases 22,260 21,866
Retained interest in securitized assets 4,415 9,166
Notes and accounts receivable from
affiliated companies 1,415 1,780
Derivative financial instruments 3,076 6,930
Assets of discontinued operations - 2,186
Other assets 6,148 6,521
-------- --------
Total assets $149,166 $172,621
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Customer deposits, dealer reserves
and other $ 1,533 $ 1,645
Affiliated companies 1,032 819
-------- --------
Total accounts payable 2,565 2,464
Debt 121,642 144,274
Deferred income taxes, net 8,572 7,593
Derivative financial instruments 964 911
Liabilities of discontinued operations - 93
Other liabilities and deferred income 4,846 5,802
-------- --------
Total liabilities 138,589 161,137
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 478 855
Retained earnings 4,943 5,474
-------- --------
Total stockholder's equity 10,563 11,471
-------- --------
Total liabilities and stockholder's
equity $149,166 $172,621
======== ========
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS*
Third Quarter Nine Months
------------------ ------------------
Financing Shares 2005 2004 2005 2004
-------- -------- -------- --------
United States
Financing share - Ford, Lincoln
and Mercury
Retail installment and lease 28% 55% 37% 44%
Wholesale 81 84 81 84
Europe
Financing share - Ford
Retail installment and lease 28% 29% 28% 28%
Wholesale 94 97 96 97
Contract Volume - New and used
retail/lease (in thousands)
North America segment
United States 335 549 1,169 1,387
Canada 52 46 134 134
---- ---- ----- -----
Total North America segment 387 595 1,303 1,521
International segment
Europe 179 186 571 596
Other international 74 67 212 203
---- ---- ----- -----
Total International segment 253 253 783 799
---- ---- ----- -----
Total contract volume 640 848 2,086 2,320
==== ==== ===== =====
Borrowing Cost Rate** 4.7% 4.0% 4.4% 3.8%
Charge-offs (in millions)
On-Balance Sheet
Retail installment & lease $181 $325 $488 $923
Wholesale (6) 10 10 19
Other 0 0 (5) (1)
---- ---- ---- ----
Total on-balance sheet
charge-offs $175 $335 $493 $941
==== ==== ==== ====
Total loss-to-receivables ratio 0.58% 1.04% 0.53% 0.97%
Managed***
Retail installment & lease $217 $384 $604 $1,173
Wholesale (6) 11 10 20
Other 0 0 (5) (1)
---- ---- ---- ------
Total managed charge-offs $211 $395 $609 $1,192
==== ==== ==== ======
Total loss-to-receivables ratio 0.55% 0.94% 0.50% 0.92%
- - - - -
* Continuing operations
** On-balance sheet debt, 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 and
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 other obligations of
Ford Motor Credit or the claims of Ford Motor Credit's other 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 September 30, December 31,
2005 2004
------------- -------------
(in billions)
Total debt $121.6 $144.3
Securitized off-balance sheet receivables
outstanding 35.0 37.7*
Retained interest in securitized off-balance
sheet receivables (4.4) (9.5)**
Adjustments for cash and cash equivalents (19.0) (12.7)
Adjustments for SFAS No. 133 (2.0) (3.2)
------ ------
Total adjusted debt $131.2 $156.6
====== ======
Total stockholder's equity (including
minority interest) $ 10.6 $ 11.5
Adjustments for SFAS No. 133 (0.1) (0.1)
------ ------
Total adjusted equity $ 10.5 $ 11.4
====== ======
Managed leverage (to 1) = adjusted debt/
adjusted equity 12.5 13.7
Memo: Financial statement leverage
(to 1) = total debt / stockholder's equity 11.5 12.6
Net Finance Receivables and
Operating Leases Managed Receivables
----------------------------------
On-Balance Off-Balance
Sheet Sheet Total
----------- ------------- -----------
September 30, 2005 (in billions)
Retail installment $ 68.2 $18.8 $ 87.0
Wholesale 19.1 16.2 35.3
Other finance receivables 4.9 0.0 4.9
Net investment in operating leases 22.2 0.0 22.2
------ ----- ------
Total net finance receivables
and operating leases $114.4 $35.0 $149.4
====== ===== ======
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