DEARBORN, Mich., April 24, 2008 – Ford Motor Credit Company reported net income of $24 million in the first quarter of 2008, down $169 million from earnings of $193 million a year earlier. On a pre-tax basis, Ford Motor Credit earned $36 million in the first quarter, compared with $293 million in the previous year.
The decrease in earnings primarily reflected higher provision for credit losses, higher depreciation expense for leased vehicles and higher net losses related to market valuation adjustments from derivatives. These were offset partially by lower expenses primarily related to the non-recurrence of costs associated with our North American business transformation initiative and higher financing margin.
“We had a challenging first quarter due to market conditions and the slowing economy,” said Chairman and CEO Mike Bannister. “However, our strong underwriting and risk management practices continue to generate high-quality assets. Our global transformation begun a decade ago has laid a solid foundation to help us weather challenging business conditions.”
On March 31, 2008, Ford Motor Credit’s on-balance sheet net receivables totaled $141 billion, compared with $140billion at year-end 2007. As a result of our sale of the majority interest in PRIMUS Financial Services Inc., our operation in Japan, and the reclassification of the entity as a discontinued operation, the receivables in each year were reduced by about $2 billion. Managed receivables were $146 billion on March 31, 2008, compared with $145 billion on December31,2007.
On March 31, 2008, managed leverage was 9.4 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.
# # #
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended March 31, 2008 and 2007
(in millions)
First Quarter |
|||
2008 |
|
2007 |
|
(Unaudited) |
|||
Financing revenue |
|||
Operating leases |
$ 1,707 |
|
$ 1,495 |
Retail |
845 |
|
849 |
Interest supplements and other support costs earned |
1,246 |
|
1,066 |
Wholesale |
476 |
|
539 |
Other |
35 |
|
47 |
Total financing revenue |
4,309 |
|
3,996 |
Depreciation on vehicles subject to operating leases |
(1,814) |
|
(1,475) |
Interest expense |
(1,981) |
|
(2,144) |
Net financing margin |
514 |
|
377 |
Other revenue |
|
|
|
Investment and other income related to sales |
67 |
|
107 |
Insurance premiums earned, net |
40 |
|
44 |
Other income, net |
120 |
|
376 |
Total financing margin and other revenue |
741 |
|
904 |
Expenses |
|
|
|
Operating expenses |
359 |
|
550 |
Provision for credit losses |
327 |
|
44 |
Insurance expenses |
19 |
|
17 |
Total expenses |
705 |
|
611 |
Income before income taxes |
36 |
|
293 |
Provision for income taxes |
11 |
|
101 |
Income before minority interests |
25 |
|
192 |
Minority interests in net income of subsidiaries |
0 |
|
0 |
Income from continuing operations |
25 |
|
192 |
Income from discontinued operations |
(2) |
|
1 |
Gain on disposal of discontinued operations |
1 |
|
— |
Net income |
$ 24 |
|
$ 193 |
|
|
|
|
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
March 31, |
|
December 31, |
|
2008 |
|
2007 |
|
(Unaudited) |
|||
ASSETS |
|||
Cash and cash equivalents |
$ 14,597 |
|
$ 14,137 |
Marketable securities |
1,990 |
|
3,155 |
Finance receivables, net |
111,573 |
|
109,897 |
Net investment in operating leases |
29,355 |
|
29,663 |
Retained interest in securitized assets |
474 |
|
593 |
Notes and accounts receivable from affiliated companies |
1,148 |
|
905 |
Derivative financial instruments |
3,711 |
|
2,808 |
Assets of discontinued/held-for-sale operations |
1,948 |
|
1,684 |
Other assets |
5,360 |
|
6,181 |
Total assets |
$ 170,156 |
|
$ 169,023 |
|
|
|
|
LIABILITIES AND SHAREHOLDER'S INTEREST |
|
|
|
Liabilities |
|
|
|
Accounts payable |
|
|
|
Customer deposits, dealer reserves and other |
$ 1,821 |
|
$ 1,800 |
Affiliated companies |
2,032 |
|
2,298 |
Total accounts payable |
3,853 |
|
4,098 |
Debt |
140,046 |
|
138,842 |
Deferred income taxes |
4,794 |
|
5,380 |
Derivative financial instruments |
1,878 |
|
1,371 |
Liabilities of discontinued/held-for-sale operations |
348 |
|
634 |
Other liabilities and deferred income |
5,542 |
|
5,301 |
Total liabilities |
156,461 |
|
155,626 |
|
|
|
|
Minority interests in net assets of subsidiaries |
3 |
|
3 |
|
|
|
|
Shareholder's interest |
|
|
|
Shareholder's interest |
5,149 |
|
5,149 |
Accumulated other comprehensive income |
1,998 |
|
1,730 |
Retained earnings |
6,545 |
|
6,515 |
Total shareholder's interest |
13,692 |
|
13,394 |
Total liabilities and shareholder's interest |
$ 170,156 |
|
$ 169,023 |
|
|
|
|
|
|
|
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
OPERATING HIGHLIGHTS
| First Quarter | |||
|
2008 |
2007 |
|
Financing Shares |
|||
United States |
|||
Financing share – Ford, Lincoln and Mercury |
|||
Retail installment and lease |
37% |
36% |
|
Wholesale |
77 |
79 |
|
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 |
275 |
305 |
|
Canada |
31 |
35 |
|
Total North America segment |
306 |
340 |
|
International segment |
|||
Europe |
178 |
185 |
|
Other international |
32 |
43 |
|
Total International segment |
210 |
228 |
|
Total contract volume |
516 |
568 |
|
|
|||
Borrowing Cost Rate* |
5.6% |
|
6.0% |
|
|||
Charge-offs (in millions) |
|
||
On-Balance Sheet Receivables |
|
||
Retail installment and lease |
$ 224 |
$ 100 |
|
Wholesale |
1 |
4 |
|
Other |
2 |
1 |
|
Total charge-offs – on-balance sheet receivables |
$ 227 |
$ 105 |
|
|
|
||
Total loss-to-receivables ratio |
0.65% |
|
0.32% |
|
|||
Managed Receivables** |
|
||
Retail installment and lease |
$ 239 |
$ 118 |
|
Wholesale |
1 |
4 |
|
Other |
2 |
1 |
|
Total charge-offs – managed receivables |
$ 242 |
$ 123 |
|
|
|
||
Total loss-to-receivables ratio |
0.66% |
|
0.34% |
|
|||
|
|||
|
|||
— — — — — |
|
||
* On-balance sheet debt includes the effects of derivatives and facility fees. |
|||
** See appendix for additional information. |
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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, excluding unearned interest supplements related to finance receivables, 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 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 |
March 31, |
December 31, |
|||
|
2008 |
|
2007 |
||
|
(in billions) |
||||
Total debt |
$ 140.0 |
|
$ 138.8 |
||
Securitized off-balance sheet receivables outstanding |
4.3 |
|
5.7 |
||
Retained interest in securitized off-balance sheet receivables |
(0.5) |
|
(0.6) |
||
Adjustments for cash, cash equivalents and marketable securities* |
(15.9) |
|
(16.7) |
||
Adjustments for hedge accounting** |
(0.3) |
|
0.0 |
||
Total adjusted debt |
$ 127.6 |
|
$ 127.2 |
||
|
|
|
|||
Total equity (including minority interest) |
$ 13.7 |
|
$ 13.4 |
||
Adjustments for hedge accounting** |
(0.2) |
|
(0.3) |
||
Total adjusted equity |
$ 13.5 |
|
$ 13.1 |
||
|
|
|
|||
Managed leverage (to 1) = Total adjusted debt / Total adjusted equity |
9.4 |
|
9.7 |
||
Memo: Financial statement leverage (to 1) = Total debt / Total equity |
10.2 |
|
10.4 |
||
Net Finance Receivables and Operating Leases |
March 31, |
December 31, |
|||
|
|
2008 |
|
2007 |
|
On-Balance Sheet Receivables |
(in billions) |
||||
Retail installment |
$ 71.8 |
|
$ 71.9 |
||
Wholesale |
37.2 |
|
34.6 |
||
Other finance receivables |
3.3 |
|
3.4 |
||
Investment in operating leases |
29.3 |
|
29.7 |
||
Unearned interest supplements |
(0.7) |
|
— |
||
Total net finance receivables and operating leases |
$ 140.9 |
|
$ 139.6 |
||
|
|
|
|||
Off-Balance Sheet Receivables – Retail |
$ 4.3 |
|
$ 5.7 |
||
|
|
|
|||
Managed Receivables |
|
|
|
||
Retail installment |
$ 76.1 |
|
$ 77.6 |
||
Wholesale |
37.2 |
|
34.6 |
||
Other finance receivables |
3.3 |
|
3.4 |
||
Investment in operating leases |
29.3 |
|
29.7 |
||
Unearned interest supplements |
— |
|
— |
||
Total net finance receivables and operating leases |
$ 145.9 |
|
$ 145.3 |
||
|
|
|
|||
— — — — — |
|
|
|
||
| * Excludes marketable securities related to insurance activities. | |||||
| ** Primarily related to market valuation adjustments from derivatives due to movements in interest rates. | |||||