Ford Motor Credit Earns $2.5 Billion In 2005
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Fourth Quarter Earnings of $465 Million Reported
DEARBORN, Mich., Jan. 23 -- Ford Motor Credit Company reported net income of $2.5 billion in 2005, down $370 million from earnings of $2.9 billion a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $3.9 billion in 2005, down $570 million from 2004.
In the fourth quarter of 2005, Ford Motor Credit's net income was $465 million, down $78 million from a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $737 million in the fourth quarter, compared with $859 million in the previous year.
The decrease in full year and fourth quarter earnings primarily reflected higher borrowing costs and the impact of lower retail receivable levels, offset partially by improved credit loss performance.
"We had a strong year in 2005, producing earnings second only to our record results of 2004," said Mike Bannister, chairman and CEO. "In 2006, we expect our results to moderate."
On December 31, 2005, Ford Motor Credit's on-balance sheet net receivables totaled $132 billion, compared with $133 billion at year-end 2004. Managed receivables were $150 billion, down from $168 billion a year ago. The lower receivables primarily reflected lower retail placement volumes.
Ford Motor Credit paid dividends of $2.75 billion in 2005. On December 31, managed leverage was 12.3 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 more than 14,000 employees, Ford Motor Credit operates in 37 countries and manages approximately $150 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
(in millions)
Fourth Quarter Full Year
------------------------- ---------------------
2005 2004 2005 2004
-------- -------- -------- --------
(Unaudited) (Unaudited)
Financing revenue
Operating leases $1,291 $1,410 $5,304 $5,880
Retail 921 1,154 4,029 4,459
Interest supplements
and other support
costs earned
from affiliated
companies 825 821 3,259 3,360
Wholesale 437 214 1,232 796
Other 57 37 221 200
------ ------ ------ ------
Total financing
revenue 3,531 3,636 14,045 14,695
Depreciation on
vehicles subject to
operating leases (1,133) (1,227) (4,430) (4,909)
Interest expense (1,586) (1,371) (5,842) (5,333)
------ ------ ------ ------
Net financing
margin 812 1,038 3,773 4,453
Other revenue
Investment
and other
income related
to sales
of receivables 276 420 1,498 1,930
Insurance premiums
earned, net 40 49 192 216
Other income 281 245 909 1,041
------ ------ ------ ------
Total financing
margin and
other revenue 1,409 1,752 6,372 7,640
Expenses
Operating expenses 578 575 2,185 2,142
Provision for
credit losses 79 298 166 900
Insurance expenses 15 20 160 167
------ ------ ------ ------
Total expenses 672 893 2,511 3,209
------ ------ ------ ------
Income from
continuing
operations before
income taxes 737 859 3,861 4,431
Provision for
income taxes 272 334 1,409 1,648
------ ------ ------ ------
Income from
continuing
operations
before
minority
interests 465 525 2,452 2,783
Minority interests
in net income
of subsidiaries -- 1 1 2
------ ------ ------ ------
Income from
continuing
operations 465 524 2,451 2,781
Income from
discontinued
operations -- 19 37 81
Gain on disposal
of discontinued
operations -- -- 4 --
------ ------ ------ ------
Net income $ 465 $ 543 $2,492 $2,862
====== ====== ====== ======
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
-------------------------
2005 2004
------------ ----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 17,888 $ 12,668
Investments in securities 720 653
Finance receivables, net 109,876 110,851
Net investment in operating leases 22,213 21,866
Retained interest in securitized assets 1,420 9,166
Notes and accounts receivable
from affiliated companies 1,235 1,780
Derivative financial instruments 2,547 6,930
Assets of discontinued operations --- 2,186
Other assets 6,256 6,521
--------- ---------
Total assets $ 162,155 $ 172,621
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Customer deposits, dealer
reserves and other $ 1,890 $ 1,645
Affiliated companies 794 819
--------- ---------
Total accounts payable 2,684 2,464
Debt 134,500 144,274
Deferred income taxes, net 8,772 7,593
Derivative financial instruments 680 911
Liabilities of discontinued operations --- 93
Other liabilities and deferred income 4,781 5,802
--------- ---------
Total liabilities 151,417 161,137
Minority interests in net assets
of subsidiaries 3 13
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 385 855
Retained earnings 5,208 5,474
--------- ---------
Total stockholder's equity 10,735 11,471
--------- ---------
Total liabilities and
stockholder's equity $ 162,155 $ 172,621
========= =========
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
OPERATING HIGHLIGHTS*
Fourth Quarter Full Year
------------------- ------------------
Financing Shares 2005 2004 2005 2004
-------- --------- ------ -------
United States
Financing share --
Ford, Lincoln and Mercury
Retail installment
and lease 37% 48% 37% 45%
Wholesale 80 83 81 84
Europe
Financing share -- Ford
Retail installment and lease 29% 35% 28% 29%
Wholesale 95 97 96 97
Contract Volume - New and used
retail/lease (in thousands)
North America segment
United States 329 455 1,498 1,842
Canada 35 38 169 172
---- ---- ----- -----
Total North
America segment 364 493 1,667 2,014
International segment
Europe 163 186 734 782
Other international 64 68 276 271
---- ---- ----- -----
Total International segment 227 254 1,010 1,053
---- ---- ----- -----
Total contract volume 591 747 2,677 3,067
==== ==== ===== =====
Borrowing Cost Rate** 5.1% 4.0% 4.5% 3.8%
Charge-offs (in millions)
On-Balance Sheet
Retail installment
& lease $ 193 $ 357 $ 681 $1,281
Wholesale 13 24 23 43
Other 7 5 2 3
---- ---- ----- -----
Total on-balance sheet
charge-offs $ 213 $ 386 $ 706 $1,327
==== ==== ===== =====
Total loss-to-receivables
ratio 0.68% 1.16% 0.57% 1.02%
Managed***
Retail installment & lease $ 226 $ 425 $ 830 $1,599
Wholesale 13 23 23 43
Other 7 5 2 3
---- ---- ----- -----
Total managed charge-offs $ 246 $ 453 $ 855 $1,645
==== ==== ===== =====
Total loss-to-receivables
ratio 0.65% 1.07% 0.54% 0.96%
---------
* 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 December 31, December 31,
2005 2004
------------ -------------
(in billions)
Total debt $ 134.5 $ 144.3
Securitized off-balance sheet
receivables outstanding 18.0 37.7(*)
Retained interest in
securitized off-balance
sheet receivables (1.4) (9.5)(**)
Adjustments for cash
and cash equivalents (17.9) (12.7)
Adjustments for SFAS No. 133 (1.6) (3.2)
-------- ----------
Total adjusted debt $ 131.6 $ 156.6
======== =========
Total stockholder's equity
(including minority interest) $ 10.7 $ 11.5
Adjustments for SFAS No. 133 (0.0) (0.1)
-------- ---------
Total adjusted equity $ 10.7 $ 11.4
======== =========
Managed leverage (to 1) =
adjusted debt/adjusted equity 12.3 13.7
Memo: Financial statement
leverage (to 1) = total
debt/stockholder's equity 12.5 12.6
Net Finance Receivables Managed Receivables
and Operating Leases
-------------------------------------
On-Balance Off-Balance Total
Sheet Sheet
----------- ------------ ------
December 31, 2005 (in billions)
-----------------
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
----------- ----------- ------
Total net finance
receivables and
operating leases $ 132.1 $ 18.0 $150.1
=========== =========== ======
December 31, 2004
-----------------
Retail installment $ 81.7 $ 16.7 $ 98.4
Wholesale 23.8 18.9 42.7
Other finance receivables 5.3 ---- 5.3
Net investment in operating leases 21.9 ---- 21.9
----------- ----------- ------
Total net finance
receivables and
operating leases $ 132.7 $ 35.6 $168.3
=========== =========== ======
- - - - -
* Includes securitized funding from discontinued operations
** Includes retained interest in securitized receivables from discontinued operations