Ford Credit Earns $427 Million in the Third Quarter of 2009*
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DEARBORN, Mich., Nov. 2, 2009 -- Ford Motor Credit Company reported net income of $427 million in the third quarter of 2009, an increase of $332 million from earnings of $95 million a year earlier. On a pre-tax basis, Ford Credit earned $677 million in the third quarter, compared with $161 million in the previous year. On a pre-tax basis, Ford Credit earned $1.3 billion in the first nine months of 2009.
The increase in pre-tax earnings primarily reflected lower depreciation expense for leased vehicles due to higher auction values, a lower provision for credit losses, and lower operating costs. These factors were offset partially by lower volume.
"We always adapt our operations to changing business conditions and had the additional benefit in the third quarter of improved used vehicle auction markets. We continue to profitably support Ford Motor Company sales," Chairman and CEO Mike Bannister said.
On September 30, 2009, Ford Credit's on-balance sheet net receivables totaled $93 billion, compared with $116 billion at year-end 2008. Managed receivables were $94 billion on September 30, 2009, down from $118 billion on December 31, 2008. The lower receivables primarily reflected lower industry volumes, lower dealer stocks, and the transition of Jaguar, Land Rover and Mazda financing to other finance providers.
On September 30, 2009, managed leverage was 7.7 to 1. During the third quarter of 2009, Ford Credit distributed $431 million to its immediate parent, Ford Holdings LLC.
Ford Credit expects to be profitable in the fourth quarter of 2009 and end the year with managed receivables between $90 billion and $95 billion. Ford Credit expects reduced profits in 2010 based on lower average receivables and non-recurrence of favorable 2009 factors.
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 Credit is an indirect, wholly owned subsidiary of Ford. It provides automotive financing for Ford, Lincoln, Mercury and Volvo dealers and customers. More information can be found at http://www.fordcredit.com/ and at Ford 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 September 30, 2009.
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the Periods Ended September 30, 2009 and 2008
(in millions)
Third Quarter Nine Months
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2009 2008 2009 2008
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Financing revenue
Operating leases $ 1,168 $ 1,598 $ 3,854 $ 5,000
Retail 750 866 2,266 2,504
Interest supplements and
other support costs earned 917 1,189 2,813 3,682
from affiliated companies
Wholesale 188 425 709 1,340
Other 18 32 60 103
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Total financing revenue 3,041 4,110 9,702 12,629
Depreciation on vehicles
subject to operating leases (842) (1,573) (3,200) (7,477)
Interest expense (1,259) (1,888) (3,969) (5,781)
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Net financing margin 940 649 2,533 (629)
Other revenue
Insurance premiums earned,
net 20 28 76 110
Other income, net 144 294 574 832
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Total financing margin and
other revenue 1,104 971 3,183 313
Expenses
Operating expenses 306 415 956 1,161
Provision for credit losses 111 377 893 1,249
Insurance expenses 10 18 47 90
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Total expenses 427 810 1,896 2,500
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Income/(Loss) before income
taxes 677 161 1,287 (2,187)
Provision for/(Benefit from)
income taxes 250 66 462 (870)
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Income/(Loss) from
continuing operations 427 95 825 (1,317)
Gain on disposal of
discontinued operations - - 2 9
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Net income/(loss) $ 427 $ 95 $ 827 $(1,308)
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
September 30, December 31,
2009 2008
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ASSETS
Cash and cash equivalents $ 15,296 $ 15,473
Marketable securities 8,641 8,606
Finance receivables, net 76,163 93,331
Net investment in operating leases 16,320 22,506
Notes and accounts receivable from
affiliated companies 846 1,047
Derivative financial instruments 2,328 3,791
Assets held-for-sale 911 214
Other assets 4,287 5,159
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Total assets $ 124,792 $ 150,127
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LIABILITIES AND SHAREHOLDER'S INTEREST
Liabilities
Accounts payable
Customer deposits, dealer reserves and
other $ 1,060 $ 1,781
Affiliated companies 1,685 1,015
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Total accounts payable 2,745 2,796
Debt 103,368 126,458
Deferred income taxes 2,078 2,668
Derivative financial instruments 1,481 2,145
Liabilities held-for-sale - 56
Other liabilities and deferred income 4,628 5,438
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Total liabilities 114,300 139,561
Shareholder's interest
Shareholder's interest 5,149 5,149
Accumulated other comprehensive income 1,016 432
Retained earnings 4,327 4,985
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Total shareholder's interest 10,492 10,566
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Total liabilities and shareholder's
interest $ 124,792 $ 150,127
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
OPERATING HIGHLIGHTS
Third Quarter First Nine Months
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2009 2008 2009 2008
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Financing Shares
United States
Financing share - Ford,
Lincoln and Mercury
Retail installment and lease 30% 46% 30% 40%
Wholesale 80 77 79 77
Europe
Financing share - Ford
Retail installment and lease 27% 31% 27% 28%
Wholesale 99 98 99 98
Contract Volume - New and used
retail/lease (in thousands)
North America segment
United States 161 277 449 864
Canada 15 43 68 122
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Total North America segment 176 320 517 986
International segment
Europe 112 149 358 504
Other international 11 27 37 105
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Total International segment 123 176 395 609
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Total contract volume 299 496 912 1,595
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Borrowing Cost Rate* 4.9% 5.7% 4.9% 5.5%
Charge-offs - On-Balance
Sheet (in millions)
Retail installment and lease $ 204 $ 299 $ 774 $ 757
Wholesale 33 (3) 73 10
Other 3 - 10 4
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Total charge-offs - on-
balance sheet $ 240 $ 296 $ 857 $ 771
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Total loss-to-receivables
ratio - on-balance sheet 0.97% 0.89% 1.10% 0.74%
Memo :
Total charge-offs - managed
(in millions)** $ 241 $ 303 $ 862 $ 800
Total loss-to-receivables
ratio - managed** 0.97% 0.89% 1.10% 0.75%
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* 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 Credit's financial performance, Ford Credit management uses financial measures based on Generally Accepted Accounting Principles ("GAAP"), as well as financial measures that include adjustments from 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:
-- Managed receivables: receivables reported on Ford Credit's balance
sheet, excluding unearned interest supplements related to finance
receivables, and securitized off-balance sheet receivables that Ford
Credit continues to service
-- Charge-offs on managed receivables: charge-offs associated with
receivables reported on Ford Credit's balance sheet and charge-offs
associated with receivables that Ford Credit sold in off-balance sheet
securitizations and continues to service
-- Equity: shareholder's interest reported on Ford Credit's balance
sheet
IMPACT OF ON-BALANCE SHEET SECURITIZATION: Finance receivables (retail and wholesale) and net investment in operating leases reported on Ford Credit's balance sheet include assets that have been sold for legal purposes in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables are available only for payment of the debt and other obligations issued or arising in the securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit's other creditors. Debt reported on Ford Credit's balance sheet includes obligations issued or arising in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements. Ford Credit holds the right to the excess cash flows not needed to pay the debt and other obligations issued or arising in each of these securitization transactions.
RECONCILIATION OF NON-GAAP MEASURES TO GAAP:
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Managed Leverage Calculation September 30, December 31,
2009 2008
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(in billions)
Total debt $ 103.4 $ 126.5
Securitized off-balance sheet receivables
outstanding 0.1 0.6
Retained interest in securitized off-balance
sheet receivables - (0.1)
Adjustments for cash, cash equivalents, and
marketable securities* (23.4) (23.6)
Adjustments for derivative accounting** (0.4) (0.4)
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Total adjusted debt $ 79.7 $ 103.0
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Equity $ 10.5 $ 10.6
Adjustments for derivative accounting** (0.1) (0.2)
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Total adjusted equity $ 10.4 $ 10.4
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Managed leverage (to 1) = Total adjusted
debt / Total adjusted equity 7.7 9.9
Memo: Financial statement leverage (to 1) =
Total debt / Equity 9.9 12.0
Net Finance Receivables and Operating
Leases September 30, December 31,
2009 2008
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Receivables - On-Balance Sheet (in billions)
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Retail installment $ 58.4 $ 65.5
Wholesale 18.6 27.7
Other finance receivables 2.5 2.8
Unearned interest supplements (1.8) (1.3)
Allowance for credit losses (1.5) (1.4)
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Finance receivables, net 76.2 93.3
Net investment in operating leases 16.3 22.5
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Total receivables - on-balance sheet $ 92.5 $ 115.8
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Memo: Total receivables - managed*** $ 94.4 $ 117.7
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* Excludes marketable securities related to insurance activities.
** Primarily related to market valuation adjustments to derivatives due
to movements in interest rates. Adjustments to debt are related to
designated fair value hedges and adjustments to equity are related to
retained earnings.
*** Includes on-balance sheet receivables, excluding unearned interest
supplements related to finance receivables of $1.8 billion and $1.3
billion at September 30, 2009 and December 31, 2008, respectively;
and includes off-balance sheet retail receivables of about
$100 million and about $600 million at September 30, 2009 and
December 31, 2008, respectively.