2014

Ford Credit Earns $295 Million Net Income In The First Quarter Of 2012*

DEARBORN, Mich., April 27, 2012 /PRNewswire/ -- Ford Motor Credit Company reported net income of $295 million in the first quarter of 2012, compared with $451 million a year earlier.  On a pre-tax basis, Ford Credit earned $452 million in the first quarter, compared with $713 million in the previous year.  The decrease in pre-tax earnings is primarily explained by fewer lease terminations, which resulted in fewer vehicles sold at a gain, lower financing margin, and lower credit loss reserve reductions.

"Once again, we are reporting a solid result for Ford Credit," Chairman and CEO Mike Bannister said. "As a dedicated partner to Ford, we continue to be a consistent source of strong support for our dealers and exceptional service for our customers." 

On March 31, 2012, Ford Credit's net receivables totaled $85 billion, compared with $83 billion at year-end 2011.  Managed receivables were $86 billion on March 31, 2012, up from $85 billion on December 31, 2011.

On March 31, 2012, managed leverage was 8.1 to 1, compared with 8.3 to 1 at December 31, 2011.  In the first quarter of 2012, Ford Credit distributed $200 million to its parent.

For full-year 2012, Ford Credit expects to be solidly profitable but at a lower level than 2011, with a projected full year pre-tax profit of about $1.5 billion.  In addition, Ford Credit expects to pay total distributions of between $500 million and $1 billion to its parent in 2012.  At year-end 2012, managed receivables are anticipated to be in the range of $85 billion to $95 billion. 

# # #

About Ford Motor Credit Company
Ford Motor Credit Company LLC has provided dealer and customer financing to support the sale of Ford Motor Company products since 1959.  Ford Credit is an indirect, wholly owned subsidiary of Ford.  For more information, visit www.fordcredit.com or www.lincolnafs.com.

— — — — —

*  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, 2012.

Cautionary Statement Regarding Forward Looking Statements

Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on expectations, forecasts and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

Automotive Related:

  • Decline in industry sales volume, particularly in the United States or Europe, due to financial crisis, recession, geopolitical events or other factors;
  • Decline in Ford's market share or failure to achieve growth;
  • Lower-than-anticipated market acceptance of new or existing Ford products;
  • Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States; 
  • An increase in fuel prices, continued volatility of fuel prices, or reduced availability of fuel;
  • Continued or increased price competition resulting from industry excess capacity, currency fluctuations or other factors;
  • Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase Ford's costs, affect Ford's liquidity, or cause production constraints or disruptions;
  • Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, information technology issues, production constraints or difficulties, or other factors);
  • Single-source supply of components or materials;
  • Restriction on use of tax attributes from tax law "ownership change";
  • The discovery of defects in Ford vehicles resulting in delays in new model launches, recall campaigns, reputational damage or increased warranty costs;
  • Increased safety, emissions, fuel economy or other regulation resulting in higher costs, cash expenditures and/or sales restrictions;
  • Unusual or significant litigation, governmental investigations or adverse publicity arising out of alleged defects in Ford products, perceived environmental impacts, or otherwise;
  • A change in Ford's requirements for parts where it has entered into long-term supply arrangements that commit it to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-or-pay contracts");
  • Adverse effects on Ford's results from a decrease in or cessation or clawback of government incentives related to capital investments;

Ford Credit Related:

  • Inability to access debt, securitization or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements or other factors;
  • Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles;
  • Higher-than-expected credit losses, lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;
  • Cybersecurity risks to operational systems, security systems, or infrastructure owned by us or a third-party vendor, or at a supplier facility;
  • New or increased credit, consumer or data protection or other laws and regulations resulting in higher costs and/or additional financing restrictions;
  • Changes in Ford's operations or changes in Ford's marketing programs could result in a decline in our financing volumes;

General:

  • Fluctuations in foreign currency exchange rates and interest rates;
  • Adverse effects on Ford's or our operations resulting from economic, geopolitical, or other events;
  • Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
  • Labor or other constraints on Ford's or our ability to maintain competitive cost structure;
  • Substantial pension and postretirement healthcare and life insurance liabilities impairing Ford's or our liquidity or financial condition;
  • Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns); and
  • Inherent limitations of internal controls impacting financial statements and safeguarding of assets.

We cannot be certain that any expectations, forecasts, or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized.  It is to be expected that there may be differences between projected and actual results.  Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.  For additional discussion of these risk factors, see Item 1A of Part I of our 2011 10-K Report and Item 1A of Part I of Ford's 2011 10-K Report.

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

PRELIMINARY

 

 

CONSOLIDATED STATEMENT OF OPERATIONS

For the Periods Ended March 31, 2012 and 2011

(in millions)

 


First Quarter


2012


2011


(unaudited)

Financing revenue




Operating leases

$          601


$          647

Retail

487


529

Interest supplements and other support costs earned

from affiliated companies

628


712

Wholesale

247


225

Other

13


14

Total financing revenue

1,976


2,127

Depreciation on vehicles subject to operating leases

(585)


(411)

Interest expense

(803)


(893)

Net financing margin

588


823

Other revenue




Insurance premiums earned

26


23

Other income, net

65


77

Total financing margin and other revenue

679


923

Expenses




Operating expenses

243


266

Provision for credit losses

(24)


(64)

Insurance expenses

8


8

Total expenses

227


210

Income/(Loss) before income taxes

452


713

Provision for income taxes

157


262

Net income/(loss)

$          295


$          451

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the Periods Ended March 31, 2012 and 2011

(in millions)

 


First Quarter


2012


2011


(unaudited)

Net income/(loss)

$          295


$          451

Other comprehensive income/(loss), net of tax:




Foreign currency translation

208


333

Total other comprehensive income/(loss), net of tax

208


333

Comprehensive income/(loss)

$          503


$          784

 


 

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

PRELIMINARY

 

CONSOLIDATED BALANCE SHEET

(in millions)

 


March 31,


December 31,


2012


2011

 

ASSETS

(unaudited)



Cash and cash equivalents

$         7,747


$         8,713

Marketable securities

4,982


3,835

Finance receivables, net

72,583


71,907

Net investment in operating leases

11,945


11,098

Notes and accounts receivable from affiliated companies

984


1,152

Derivative financial instruments

1,233


1,365

Other assets

2,208


2,172

Total assets

$     101,682


$     100,242





LIABILITIES




Accounts payable




Customer deposits, dealer reserves and other

$         1,019


$            901

Affiliated companies

1,240


773

Total accounts payable

2,259


1,674

Debt

85,170


84,659

Deferred income taxes

1,285


1,134

Derivative financial instruments

387


286

Other liabilities and deferred income

3,382


3,593

Total liabilities

92,483


91,346





SHAREHOLDER'S INTEREST




Shareholder's interest

5,274


5,274

Accumulated other comprehensive income

808


600

Retained earnings

3,117


3,022

Total shareholder's interest

9,199


8,896

Total liabilities and shareholder's interest

$     101,682


$     100,242





 

The following table includes assets to be used to settle the liabilities of the consolidated variable interest entities
("VIEs"). These assets and liabilities are included in the consolidated balance sheet above.

 


March 31,


December 31,


2012


2011


(unaudited)

 



ASSETS




Cash and cash equivalents

$         3,852


$         3,356

Finance receivables, net

49,526


49,329

Net investment in operating leases

5,695


6,354

Derivative financial instruments

113


157





LIABILITIES




Debt

$       42,325


$       41,421

Derivative financial instruments

128


97

 

 

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.

 


RECONCILIATION OF NON-GAAP MEASURES TO GAAP:

 




Net Finance Receivables and Operating Leases

March 31,


December 31,


2012


2011

Receivables (a)

(in billions)

Finance Receivables – North America Segment




Consumer




Retail installment and direct financing leases

$         38.3


$         38.4

Non-Consumer




Wholesale

15.7


15.5

Dealer loan and other

2.1


2.1

Total North America Segment – finance receivables             

56.1


56.0

Finance Receivables – International Segment




Consumer




Retail installment and direct financing leases

9.3


9.1

Non-Consumer




Wholesale

8.7


8.5

Dealer loan and other

0.5


0.4

Total International Segment – finance receivables

18.5


18.0

Unearned interest supplements

(1.6)


(1.6)

Allowance for credit losses

(0.4)


(0.5)

Finance receivables, net

72.6


71.9

Net investment in operating leases

11.9


11.1

Total receivables

$         84.5


$         83.0





Memo:  Total managed receivables (b)

$         86.1


$         84.6






Managed Leverage Calculation

March 31,


December 31,


2012


2011


(in billions)

Total debt (c)

$         85.2


$         84.7

Adjustments for cash, cash equivalents, and marketable securities (d)

(12.3)


(12.1)

Adjustments for derivative accounting (e)

(0.6)


(0.7)

Total adjusted debt

$         72.3


$         71.9





Equity (f)

$           9.2


$           8.9

Adjustments for derivative accounting (e)

(0.3)


(0.2)

Total adjusted equity

$           8.9


$           8.7





Managed leverage (to 1) = Total adjusted debt / Total adjusted equity

8.1


8.3

Memo:  Financial statement leverage (to 1) = Total debt / Equity

9.3


9.5





— — — — —


(a)     Includes finance receivables (retail and wholesale) and net investment in operating leases reported on Ford Credit's balance sheet 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. 

(b)     Equals total receivables, excluding unearned interest supplements of $(1.6) billion at March 31, 2012 and December 31, 2011.

(c)     Includes debt reported on Ford Credit's balance sheet including 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.

(d)     Excludes marketable securities related to insurance activities.

(e)     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.

(f)     Shareholder's interest reported on Ford Credit's balance sheet.


SOURCE Ford Motor Credit Company



RELATED LINKS
http://www.fordcredit.com

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