Ford Motor Credit Earns $193 Million in the First Quarter*
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DEARBORN, Mich., April 26 -- Ford Motor Credit Company reported net income of $193 million in the first quarter of 2007, down $55 million from earnings of $248 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $294 million in the first quarter, compared with $382 million in the previous year. The decrease in earnings was more than explained by higher borrowing costs and higher depreciation expense for leased vehicles. The non-recurrence of losses related to market valuation adjustments from non-designated derivatives was a partial offset.
"Our first quarter results, which reflect costs associated with transforming our North American operations, are in line with our expectations," said Mike Bannister, chairman and CEO.
"By month's end, we will have integrated nearly half of our branch offices into our regional business centers, which are originating new contracts consistent with our non-integrated branches. At the same time, our collection efforts within the regional business centers continue to perform well."
On March 31, 2007, Ford Motor Credit's on-balance sheet net receivables totaled $136 billion, compared with $135 billion at year-end 2006. Managed receivables were $147 billion, compared with $148 billion on December 31.
On March 31, managed leverage was 11.2 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. 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/.
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* The financial results discussed herein are presented on a preliminary
basis; final data will be included in our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2007.
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended March 31, 2007 and 2006
(in millions)
First Quarter
-------------------
2007 2006
-------- --------
(Unaudited)
Financing revenue
Operating leases $ 1,495 $ 1,330
Retail 859 907
Interest supplements and other support costs
earned from affiliated companies 1,067 776
Wholesale 540 599
Other 47 54
-------- --------
Total financing revenue 4,008 3,666
Depreciation on vehicles subject to operating
leases (1,475) (1,181)
Interest expense (2,149) (1,793)
-------- --------
Net financing margin 384 692
Other revenue
Investment and other income related to sales
of receivables 109 183
Insurance premiums earned, net 44 51
Other income 376 22
-------- --------
Total financing margin and other revenue 913 948
Expenses
Operating expenses 556 519
Provision for credit losses 46 5
Insurance expenses 17 42
-------- --------
Total expenses 619 566
-------- --------
Income from continuing operations before income
taxes 294 382
Provision for income taxes 101 134
-------- --------
Income from continuing operations before minority
interests 193 248
Minority interests in net income of subsidiaries 0 0
-------- --------
Net income $ 193 $ 248
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FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
March 31, December 31,
2007 2006
------------ -----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 9,938 $ 12,331
Marketable securities 5,677 10,161
Finance receivables, net 109,755 109,405
Net investment in operating leases 26,512 25,939
Retained interest in securitized assets 936 990
Notes and accounts receivable from affiliated
companies 1,160 950
Derivative financial instruments 1,821 1,804
Other assets 5,845 5,752
------------ -----------
Total assets $161,644 $167,332
============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Customer deposits, dealer reserves and other $ 1,503 $ 1,509
Affiliated companies 2,669 3,648
------------ -----------
Total accounts payable 4,172 5,157
Debt 134,905 139,740
Deferred income taxes 6,298 6,783
Derivative financial instruments 323 296
Other liabilities and deferred income 4,014 3,588
------------ -----------
Total liabilities 149,712 155,564
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) 5,124 5,124
Accumulated other comprehensive income 847 825
Retained earnings 5,933 5,791
------------ -----------
Total stockholder's equity 11,929 11,765
------------ -----------
Total liabilities and stockholder's equity $161,644 $167,332
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FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS*
First Quarter
----------------------
Financing Shares 2007 2006
-------- --------
United States
Financing share - Ford, Lincoln and Mercury
Retail installment and lease 36 % 43 %
Wholesale 79 81
Europe
Financing share - Ford
Retail installment and lease 25 % 25 %
Wholesale 96 96
Contract Volume - New and used retail/lease
(in thousands)
North America segment
United States 305 398
Canada 35 35
-------- --------
Total North America segment 340 433
International segment
Europe 185 185
Other international 59 65
-------- --------
Total International segment 244 250
-------- --------
Total contract volume 584 683
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Borrowing Cost Rate** 6.0 % 5.0 %
Charge-offs (in millions)
On-Balance Sheet Receivables
Retail installment & lease $102 $111
Wholesale 4 0
Other 1 -
-------- --------
Total charge-offs - on-balance sheet
receivables $107 $111
======== ========
Total loss-to-receivables ratio 0.32 % 0.34 %
Managed Receivables***
Retail installment & lease $120 $136
Wholesale 4 0
Other 1 -
-------- --------
Total charge-offs - managed receivables $125 $136
======== ========
Total loss-to-receivables ratio 0.34 % 0.37 %
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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 to GAAP.
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 net investment in operating leases reported on Ford
Motor Credit's balance sheet include assets included in securitizations
that do not qualify for accounting sale treatment. These assets are
available only for repayment of the debt or other obligations issued or
arising in the securitization transactions; they 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 obligations issued or arising in securitizations that are
payable only out of collections on the underlying securitized assets and
related enhancements.
RECONCILIATION OF MEASURES TO GAAP:
Managed Leverage Calculation March 31, December 31,
2007 2006
---------- ----------
(in billions)
Total debt $134.9 $139.7
Securitized off-balance sheet
receivables outstanding 11.1 12.2
Retained interest in securitized
off-balance sheet receivables (0.9) (1.0)
Adjustments for cash and cash
equivalents, and marketable securities* (15.6) (21.8)
Fair value hedge accounting adjustments (0.2) (0.1)
---------- ----------
Total adjusted debt $129.3 $129.0
========== ==========
Total stockholder's equity (including
minority interest) $11.9 $11.8
Fair value hedge accounting adjustments (0.4) (0.5)
---------- ----------
Total adjusted equity $11.5 $11.3
========== ==========
Managed leverage (to 1) = adjusted debt
/ adjusted equity 11.2 11.4
Memo: Financial statement leverage (to 1) =
total debt / stockholder's equity 11.3 11.9
Net Finance Receivables and Operating Managed Receivables
Leases -----------------------------------
On-Balance Off-Balance
Sheet Sheet Total
----------- ----------- ---------
March 31, 2007 (in billions)
Retail installment $69.9 $11.1 $81.0
Wholesale 36.2 - 36.2
Other finance receivables 3.7 - 3.7
Net investment in operating leases 26.5 - 26.5
----------- ----------- ---------
Total net finance receivables and
operating leases $136.3 $11.1 $147.4
=========== =========== =========
December 31, 2006
Retail installment $70.4 $12.2 $82.6
Wholesale 35.2 - 35.2
Other finance receivables 3.8 - 3.8
Net investment in operating leases 25.9 - 25.9
----------- ----------- ---------
Total net finance receivables and
operating leases $135.3 $12.2 $147.5
=========== =========== =========
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* Excludes about $700 million of marketable securities related to
insurance activities and at March 31, 2007 includes about $700
million of restricted cash related to on-balance sheet
securitizations reported in Other assets on our financial statements.