Ford Motor Credit Earns $775 Million in 2007*
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Fourth Quarter 2007 Earnings of $186 Million Reported
DEARBORN, Mich., Jan. 24 -- Ford Motor Credit Company reported net income of $775 million in 2007, down $508 million from earnings of $1,283 million a year earlier. On a pre-tax basis, Ford Motor Credit earned $1,215 million in 2007, down $738 million from 2006. The decrease in full year earnings primarily reflected the non-recurrence of credit loss reserve reductions, higher borrowing costs, higher depreciation expense for leased vehicles and higher costs due to our North American business transformation initiative. These were offset partially by lower net losses related to market valuation adjustments from derivatives and lower expenses primarily reflecting improved operating costs.
In the fourth quarter of 2007, Ford Motor Credit's net income was $186 million, down $93 million from a year earlier. On a pre-tax basis, Ford Motor Credit earned $263 million in the fourth quarter, compared with $406 million in the previous year. The decrease in fourth quarter earnings primarily reflected the non-recurrence of credit loss reserve reductions, higher borrowing costs and higher depreciation expense for leased vehicles, offset partially by lower expenses and the non-recurrence of losses related to market valuation adjustments from derivatives.
"We had a good year in 2007 with a business that performed consistently and predictably," said Mike Bannister, chairman and CEO. "With our sound business fundamentals, we have a strong foundation for the future."
Ford Motor Credit expects its earnings in 2008 to be about equal to its earnings in 2007.
On December 31, 2007, Ford Motor Credit's on-balance sheet net receivables totaled $141 billion, compared with $135 billion at year-end 2006. Managed receivables were $147 billion, down from $148 billion a year ago.
On December 31, 2007, managed leverage was 9.8 to 1. Ford Motor Credit Company LLC is one of the world's largest automotive finance companies and has supported the sale of Ford Motor Company products since 1959. Ford Motor Credit is an indirect, wholly owned subsidiary of Ford. It provides automotive financing for Ford, Lincoln, Mercury, 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/. - - - - -
* The financial results discussed herein are presented on a preliminary basis; final data will be included in our Annual Report on Form 10-K for the year ended December 31, 2007.
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED STATEMENT OF INCOME
(in millions)
Fourth Quarter Full Year
------------------- ----------------
2007 2006 2007 2006
--------- --------- ------- --------
(Unaudited) (Unaudited)
Financing revenue
Operating leases $1,680 $1,465 $6,343 $5,608
Retail 895 879 3,475 3,649
Interest supplements and other
support costs earned from
affiliated companies 1,214 1,004 4,592 3,487
Wholesale 525 571 2,132 2,419
Other 41 52 174 215
------ ------ ------ ------
Total financing revenue 4,355 3,971 16,716 15,378
Depreciation on vehicles
subject to operating leases (1,667) (1,370) (6,188) (5,189)
Interest expense (2,166) (2,096) (8,630) (7,818)
------ ------ ------ ------
Net financing margin 522 505 1,898 2,371
Other revenue
Investment and other income
related to sales of receivables 83 126 391 668
Insurance premiums earned, net 39 40 169 182
Other income, net 398 330 1,362 1,019
------ ------ ------ ------
Total financing margin and
other revenue 1,042 1,001 3,820 4,240
Expenses
Operating expenses 478 547 1,929 2,038
Provision for credit losses 287 31 588 95
Insurance expenses 14 17 88 154
------ ------ ------ ------
Total expenses 779 595 2,605 2,287
------ ------ ------ ------
Income before income taxes 263 406 1,215 1,953
Provision for income taxes 83 127 446 670
------ ------ ------ ------
Income before minority interests 180 279 769 1,283
Minority interests in net income
of subsidiaries 0 0 0 0
------ ------ ------ ------
Income from continuing operations 180 279 769 1,283
Gain on disposal of discontinued
operations 6 - 6 -
------ ------ ------ ------
Net income $ 186 $ 279 $ 775 $1,283
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
---------------------
2007 2006
-------- --------
(Unaudited)
ASSETS
Cash and cash equivalents $ 14,137 $ 12,331
Marketable securities 3,155 10,161
Finance receivables, net 111,468 109,405
Net investment in operating leases 29,663 25,939
Retained interest in securitized assets 653 990
Notes and accounts receivable from
affiliated companies 906 950
Derivative financial instruments 2,811 2,445
Other assets 6,230 5,752
-------- --------
Total assets
$169,023 $167,973
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LIABILITIES AND SHAREHOLDER'S INTEREST/EQUITY
Liabilities
Accounts payable
Customer deposits, dealer reserves and other $ 1,837 $ 1,509
Affiliated companies 2,308 3,648
-------- --------
Total accounts payable 4,145 5,157
Debt 139,411 139,740
Deferred income taxes 5,380 6,783
Derivative financial instruments 1,376 937
Other liabilities and deferred income 5,314 3,588
-------- --------
Total liabilities 155,626 156,205
Minority interests in net assets of subsidiaries 3 3
Shareholder's interest/equity
Capital stock and paid in surplus - 5,149
Shareholder's interest 5,149 -
Accumulated other comprehensive income 1,730 825
Retained earnings 6,515 5,791
-------- --------
Total shareholder's interest/equity 13,394 11,765
-------- --------
Total liabilities and shareholder's
interest/equity $169,023 $167,973
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
OPERATING HIGHLIGHTS
Fourth Quarter Full Year
------------------ ----------------
2007 2006 2007 2006
------ ------ ------ ------
Financing Shares
United States
Financing share - Ford, Lincoln
and Mercury
Retail installment and lease 32% 33% 38% 44%
Wholesale 78 80 78 80
Europe
Financing share - Ford
Retail installment and lease 27% 30% 26% 27%
Wholesale 96 95 96 95
Contract Volume - New and used
retail/lease (in thousands)
North America segment
United States 248 262 1,256 1,574
Canada 38 43 186 189
----- ----- ----- -----
Total North America segment 286 305 1,442 1,763
International segment
Europe 155 171 696 711
Other international 48 52 207 233
----- ----- ----- -----
Total International segment 203 223 903 944
----- ----- ----- -----
Total contract volume 489 528 2,345 2,707
===== ===== ===== =====
Borrowing Cost Rate* 6.2% 5.9% 6.1% 5.5%
Charge-offs (in millions)
On-Balance Sheet Receivables
Retail installment & lease $220 $158 $608 $465
Wholesale (8) 19 17 44
Other 4 12 7 14
----- ----- ----- -----
Total charge-offs - on-
balance sheet receivables $216 $189 $632 $523
===== ===== ===== =====
Total loss-to-receivables ratio 0.61% 0.56% 0.46% 0.39%
Managed Receivables**
Retail installment & lease $237 $179 $673 $551
Wholesale (8) 19 17 44
Other 4 12 7 14
----- ----- ----- -----
Total charge-offs - managed
receivables $233 $210 $697 $609
===== ===== ===== =====
Total loss-to-receivables ratio 0.62% 0.56% 0.47% 0.41%
- - - - -
* On-balance sheet debt, includes the effects of derivatives and
facility fees
** See appendix for additional information
FORD MOTOR CREDIT COMPANY LLC 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 non-GAAP measures to GAAP.
NON-GAAP MEASURES AND 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
-- Equity: shareholder's interest and historical stockholder's equity
reported on Ford Motor Credit's balance sheet
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 NON-GAAP MEASURES TO GAAP:
Managed Leverage Calculation December 31, December 31,
2007 2006
-------------- -------------
(in billions)
Total debt $139.4 $139.7
Securitized off-balance sheet
receivables outstanding 6.0 12.2
Retained interest in securitized off-
balance sheet receivables (0.7) (1.0)
Adjustments for cash and cash
equivalents, and marketable securities* (16.7) (21.8)
Adjustments for hedge accounting on total debt 0.0 (0.1)
------ ------
Total adjusted debt $128.0 $129.0
====== ======
Total shareholder's equity (including minority
interest) $ 13.4 $ 11.8
Adjustments for hedge accounting on equity (0.3) (0.5)
------ ------
Total adjusted equity $ 13.1 $ 11.3
====== ======
Managed leverage (to 1) = adjusted debt / adjusted
equity 9.8 11.4
Memo: Financial statement leverage (to 1) =
total debt / total shareholder's equity 10.4 11.9
Net Finance Receivables and
Operating Leases Managed Receivables
---------------------------------
On-Balance Off-Balance
Sheet Sheet Total
------------ ------------- --------
December 31, 2007 (in billions)
Retail installment $ 73.3 $ 6.0 $ 79.3
Wholesale 34.7 - 34.7
Other finance receivables 3.4 - 3.4
Net investment in operating leases 29.7 - 29.7
------ ------ ------
Total net finance receivables and
operating leases $141.1 $ 6.0 $147.1
====== ====== ======
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 marketable securities related to insurance activities.