Ford Motor Credit Earns $479 Million in the First Quarter
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DEARBORN, Mich., April 21 -- Ford Motor Credit Company reported net income of $479 million in the first quarter of 2006, down $231 million from earnings of $710 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $751 million in the first quarter, compared with $1.1 billion in the previous year. The decrease in earnings primarily reflected higher borrowing costs, the impact of lower receivable levels and higher depreciation expense, offset partially by improved credit loss performance.
"These results are in line with expectations as we continue to focus on profitably supporting the sale of Ford vehicles worldwide," said Mike Bannister, chairman and CEO.
On March 31, 2006, Ford Motor Credit's on-balance sheet net receivables totaled $132 billion, unchanged from year-end 2005. Managed receivables were $149 billion, compared with $150 billion on December 31.
Ford Motor Credit paid dividends of $250 million during the quarter. On March 31, managed leverage was 11.8 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 14,000 employees, Ford Motor Credit operates in 36 countries and manages approximately $149 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, 2006 and 2005
(in millions)
First Quarter
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2006 2005
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(Unaudited)
Financing revenue
Operating leases $ 1,330 $ 1,358
Retail 907 1,070
Interest supplements and other support costs
earned from affiliated companies 776 843
Wholesale 599 251
Other 54 56
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Total financing revenue 3,666 3,578
Depreciation on vehicles subject to
operating leases (1,181) (1,077)
Interest expense (1,677) (1,426)
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Net financing margin 808 1,075
Other revenue
Investment and other income related to sales
of receivables 210 445
Insurance premiums earned, net 51 52
Other income 237 170
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Total financing margin and other revenue 1,306 1,742
Expenses
Operating expenses 519 528
Provision for credit losses (6) 117
Insurance expenses 42 36
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Total expenses 555 681
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Income from continuing operations before
income taxes 751 1,061
Provision for income taxes 272 387
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Income from continuing operations
before minority interests 479 674
Minority interests in net income of subsidiaries - 1
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Income from continuing operations 479 673
Income from discontinued operations - 37
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Net income $ 479 $ 710
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FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
March 31, December 31,
2006 2005
------------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 10,949 $ 14,798
Marketable securities 5,686 3,810
Finance receivables, net 108,067 109,876
Net investment in operating leases 23,679 22,213
Retained interest in securitized assets 1,399 1,420
Notes and accounts receivable from
affiliated companies 1,131 1,235
Derivative financial instruments 2,236 2,547
Other assets 6,090 6,256
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Total assets $ 159,237 $ 162,155
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LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Customer deposits, dealer reserves
and other $ 1,668 $ 1,890
Affiliated companies 966 794
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Total accounts payable 2,634 2,684
Debt 131,445 134,500
Deferred income taxes, net 8,852 8,772
Derivative financial instruments 634 680
Other liabilities and deferred income 4,653 4,781
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Total liabilities 148,218 151,417
Minority interests in net assets
of subsidiaries 3 3
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 437 385
Retained earnings 5,437 5,208
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Total stockholder's equity 11,016 10,735
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Total liabilities and
stockholder's equity $ 159,237 $ 162,155
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Prior year amounts have been revised to reflect a reclassification between
Cash and cash equivalents and Marketable securities as of December 31,
2005.
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS*
First Quarter
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Financing Shares 2006 2005
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United States
Financing share -- Ford, Lincoln and Mercury
Retail installment and lease 43% 43%
Wholesale 81 82
Europe
Financing share -- Ford
Retail installment and lease 25% 26%
Wholesale 96 97
Contract Volume -- New and used retail/lease
(in thousands)
North America segment
United States 398 410
Canada 35 31
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Total North America segment 433 441
International segment
Europe 185 186
Other international 65 73
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Total International segment 250 259
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Total contract volume 683 700
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Borrowing Cost Rate** 5.0% 4.1%
Charge-offs (in millions)
On-Balance Sheet Receivables
Retail installment & lease $ 111 $ 167
Wholesale 0 17
Other 0 (3)
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Total charge-offs -- on-balance
sheet receivables $ 111 $ 181
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Total loss-to-receivables ratio 0.34% 0.56%
Managed Receivables***
Retail installment & lease $ 136 $ 215
Wholesale 0 17
Other 0 (3)
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Total charge-offs -- managed receivables $ 136 $ 229
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Total loss-to-receivables ratio 0.37% 0.55%
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* 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 March 31, December 31,
2006 2005
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(in billions)
Total debt $ 131.4 $ 134.5
Securitized off-balance sheet
receivables outstanding 17.0 18.0
Retained interest in securitized
off-balance sheet receivables (1.4) (1.4)
Adjustments for cash and cash equivalents,
and marketable securities * (15.9) (17.9)
Fair value hedge accounting adjustments (1.1) (1.6)
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Total adjusted debt $ 130.0 $ 131.6
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Total stockholder's equity
(including minority interest) $ 11.0 $ 10.7
Fair value hedge accounting adjustments (0.0) (0.0)
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Total adjusted equity $ 11.0 $ 10.7
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Managed leverage (to 1)
= adjusted debt / adjusted equity 11.8 12.3
Memo: Financial statement leverage (to 1)
= total debt / stockholder's equity 11.9 12.5
Net Finance Receivables and Operating Leases
Managed Receivables
---------------------------------
On-Balance Off-Balance
Sheet Sheet Total
---------- ----------- -----
March 31, 2006 (in billions)
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Retail installment $ 63.5 $ 17.0 $ 80.5
Wholesale 40.1 - 40.1
Other finance receivables 4.4 - 4.4
Net investment in operating leases 23.7 - 23.7
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Total net finance receivables
and operating leases $ 131.7 $ 17.0 $ 148.7
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December 31, 2005
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Retail installment $ 65.7 $ 18.0 $ 83.7
Wholesale 39.6 - 39.6
Other finance receivables 4.6 - 4.6
Net investment in operating leases 22.2 - 22.2
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Total net finance receivables
and operating leases $ 132.1 $ 18.0 $ 150.1
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*Excluding marketable securities related to insurance activities