DEARBORN, Mich., April 24 /PRNewswire-FirstCall/ -- 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 $140 billion 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 December 31, 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/
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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, 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
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(Unaudited)
Financing revenue
Operating leases $ 1,707 $ 1,495
Retail 845 849
Interest supplements and other support
costs earned from affiliated companies 1,246 1,066
Wholesale 476 539
Other 35 47
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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
of receivables 67 107
Insurance premiums earned, net 40 44
Other income, net 120 376
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Total financing margin and other revenue 741 904
Expenses
Operating expenses 359 550
Provision for credit losses 327 44
Insurance expenses 19 17
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Total expenses 705 611
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Income before income taxes 36 293
Provision for income taxes 11 101
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Income before minority interests 25 192
Minority interests in net income of subsidiaries 0 0
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Income from continuing operations 25 192
Income from discontinued operations (2) 1
Gain on disposal of discontinued operations 1 -
---------- ----------
Net income $ 24 $ 193
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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
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Total assets $ 170,156 $ 169,023
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LIABILITIES AND SHAREHOLDER'S INTEREST
Liabilities
Accounts payable
Customer deposits, dealer reserves and
other $ 1,821 $ 1,800
Affiliated companies 2,032 2,298
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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
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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
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Total shareholder's interest 13,692 13,394
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Total liabilities and shareholder's
interest $ 170,156 $ 169,023
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
OPERATING HIGHLIGHTS
First Quarter
------------------------
2008 2007
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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
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Total North America segment 306 340
International segment
Europe 178 185
Other international 32 43
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Total International segment 210 228
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Total contract volume 516 568
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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
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Total charge-offs - on-balance sheet
receivables $ 227 $ 105
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Total loss-to-receivables ratio 0.65% 0.32%
Managed Receivables**
Retail installment and lease $ 239 $ 118
Wholesale 1 4
Other 2 1
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Total charge-offs - managed receivables $ 242 $ 123
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Total loss-to-receivables ratio 0.66% 0.34%
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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 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
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(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
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Total adjusted debt $ 127.6 $ 127.2
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Total equity (including minority interest) $ 13.7 $ 13.4
Adjustments for hedge accounting** (0.2) (0.3)
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Total adjusted equity $ 13.5 $ 13.1
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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
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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) -
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Total net finance receivables and
operating leases $ 140.9 $ 139.6
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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 - -
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Total net finance receivables and
operating leases $ 145.9 $ 145.3
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* Excludes marketable securities related to insurance activities.
** Primarily related to market valuation adjustments from derivatives
due to movements in interest rates.
Ford Motor Credit Company
