Ford Credit Earns $1.3 Billion in 2009*
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Fourth Quarter 2009 Earnings of $440 Million Reported
DEARBORN, Mich., Jan. 28 -- Ford Motor Credit Company reported net income of $1.3 billion in 2009, an improvement of $2.8 billion from a net loss of $1.5 billion a year earlier. On a pre-tax basis, Ford Credit earned $2 billion in 2009, compared with a loss of $2.6 billion in the previous year. Excluding the $2.1 billion impairment charge for North America operating leases in the second quarter of 2008, Ford Credit incurred a pre-tax loss of $473 million in 2008. The improvement in full year pre-tax earnings primarily reflected the non-recurrence of the impairment charge, lower depreciation expense for leased vehicles due to higher auction values, and a lower provision for credit losses, offset partially by lower volume. Ford Credit also significantly reduced its operating costs in 2009 compared with the previous year.
In the fourth quarter of 2009, Ford Credit's net income was $440 million, an improvement of $668 million from a year earlier. On a pre-tax basis, Ford Credit earned $696 million in the fourth quarter of 2009, compared with a loss of $372 million in the previous year. The improvement in pre-tax earnings primarily reflected lower depreciation expense for leased vehicles due to higher auction values and a lower provision for credit losses, offset partially by lower volume.
"Our profit and consistent, solid support of Ford Motor Company dealers and customers in a very challenging economy demonstrate our unique value as Ford's financial services company," Ford Credit Chairman and CEO Mike Bannister said. "We remain well-positioned to help put people behind the wheels of Ford products as the economy improves."
On December 31, 2009, Ford Credit's on-balance sheet net receivables totaled $93 billion, compared with $116 billion at year-end 2008. Managed receivables were $95 billion on December 31, 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 December 31, 2009, managed leverage was 7.3 to 1. In 2009, Ford Credit distributed $1.5 billion to its immediate parent, Ford Holdings LLC.
Ford Credit expects to be profitable in 2010, but lower than 2009 based on lower average receivables and non-recurrence of certain favorable 2009 factors.
Ford Motor Credit Company LLC is one of the world's largest automotive finance companies and 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.
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* The financial results discussed herein are presented on a preliminary basis; final data will be
included in our Annual Report on Form 10-K for the year ended December 31, 2009.
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the Periods Ended December 31, 2009 and 2008
(in millions)
Fourth Quarter Full Year
------------------ ------------------
2009 2008 2009 2008
------ ------ ------ ------
Financing revenue
Operating leases $ 1,025 $ 1,519 $ 4,879 $ 6,519
Retail 674 766 2,940 3,270
Interest supplements and
other support costs
earned from affiliated
companies 912 1,092 3,725 4,774
Wholesale 212 381 921 1,721
Other 16 30 76 133
------ ------ ------ ------
Total financing revenue 2,839 3,788 12,541 16,417
Depreciation on vehicles
subject to operating
leases (657) (1,542) (3,857) (9,019)
Interest expense (1,193) (1,853) (5,162) (7,634)
------ ------ ------ ------
Net financing margin 989 393 3,522 (236)
Other revenue
Insurance premiums
earned, net 24 30 100 140
Other income, net 70 125 644 957
------ ------ ------ ------
Total financing margin
and other revenue 1,083 548 4,266 861
Expenses
Operating expenses 306 387 1,262 1,548
Provision for credit
losses 73 520 966 1,769
Insurance expenses 8 13 55 103
------ ------ ------ ------
Total expenses 387 920 2,283 3,420
------ ------ ------ ------
Income/(Loss) before
income taxes 696 (372) 1,983 (2,559)
Provision for/(Benefit
from) income taxes 256 (144) 718 (1,014)
------ ------ ------ ------
Income/(Loss) from
continuing operations 440 (228) 1,265 (1,545)
Gain on disposal of
discontinued operations - - 2 9
------ ------ ------ ------
Net income/(loss) $ 440 $ (228) $ 1,267 $(1,536)
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
-----------------------
2009 2008
-------- --------
ASSETS
Cash and cash equivalents $ 10,882 $ 15,473
Marketable securities 6,864 8,606
Finance receivables, net 77,968 93,331
Net investment in operating leases 14,578 22,506
Notes and accounts receivable from
affiliated companies 1,090 1,047
Derivative financial instruments 1,862 3,791
Assets held-for-sale - 214
Other assets 4,100 5,159
-------- --------
Total assets $117,344 $150,127
======== ========
LIABILITIES AND SHAREHOLDER'S INTEREST
Liabilities
Accounts payable
Customer deposits, dealer reserves and
other $ 1,082 $ 1,781
Affiliated companies 1,145 1,015
-------- --------
Total accounts payable 2,227 2,796
Debt 96,351 126,458
Deferred income taxes 1,810 2,668
Derivative financial instruments 1,179 2,145
Liabilities held-for-sale - 56
Other liabilities and deferred income 4,808 5,438
-------- --------
Total liabilities 106,375 139,561
Shareholder's interest
Shareholder's interest 5,149 5,149
Accumulated other comprehensive income 1,053 432
Retained earnings 4,767 4,985
-------- --------
Total shareholder's interest 10,969 10,566
-------- --------
Total liabilities and shareholder's
interest $117,344 $150,127
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FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
OPERATING HIGHLIGHTS
Fourth Quarter Full Year
--------------------- ----------------------
2009 2008 2009 2008
------ ------ ------ ------
Financing Shares
United States
Financing share - Ford,
Lincoln and Mercury
Retail installment
and lease 28% 34% 29% 39%
Wholesale 80 78 79 77
Europe
Financing share - Ford
Retail installment
and lease 31% 30% 28% 28%
Wholesale 99 98 99 98
Contract Volume - New
and used retail/lease
(in thousands)
North America Segment
United States 142 179 591 1,043
Canada 17 27 85 149
------ ------ ------ ------
Total North
America Segment 159 206 676 1,192
International Segment
Europe 110 125 468 629
Other international 12 24 49 129
------ ------ ------ ------
Total
International
Segment 122 149 517 758
------ ------ ------ ------
Total contract
volume 281 355 1,193 1,950
====== ====== ====== ======
Borrowing Cost Rate* 4.8% 5.8% 4.9% 5.6%
Charge-offs - On-Balance
Sheet (in millions)
Retail installment
and lease $ 215 $ 332 $ 989 $1,089
Wholesale 21 19 94 29
Other 2 13 12 17
------ ------ ------ ------
Total charge-
offs - on-
balance sheet $ 238 $ 364 $1,095 $1,135
====== ====== ====== ======
Total loss-to-
receivables
ratio - on-
balance sheet 0.98% 1.18% 1.07% 0.84%
Memo :
Total charge-
offs - managed
(in millions)** $ 238 $ 366 $1,100 $1,166
Total loss-to-
receivables
ratio - managed** 0.98% 1.18% 1.07% 0.84%
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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:
-------------------------------------------
Managed Leverage Calculation December 31, December 31,
2009 2008
------------ ------------
(in billions)
Total debt $ 96.4 $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* (17.3) (23.6)
Adjustments for derivative accounting** (0.3) (0.4)
--------- --------
Total adjusted debt $ 78.9 $103.0
========= ========
Equity $ 11.0 $ 10.6
Adjustments for derivative accounting** (0.2) (0.2)
--------- --------
Total adjusted equity $ 10.8 $ 10.4
========= ========
Managed leverage (to 1) = Total adjusted
debt / Total adjusted equity 7.3 9.9
Memo: Financial statement leverage (to
1) = Total debt / Equity 8.8 12.0
Net Finance Receivables and Operating Leases
December 31, December 31,
2009 2008
------------ ------------
Receivables - On-Balance Sheet (in billions)
------------------------------
Retail installment $ 56.3 $ 65.5
Wholesale 22.4 27.7
Other finance receivables 2.4 2.8
Unearned interest supplements (1.9) (1.3)
Allowance for credit losses (1.3) (1.4)
-------- --------
Finance receivables, net 77.9 93.3
Net investment in operating leases 14.6 22.5
-------- --------
Total receivables - on-balance
Sheet $ 92.5 $115.8
======== ========
Memo: Total receivables - managed*** $ 94.5 $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 $1.9 billion and $1.3
billion at December 31, 2009 and December 31, 2008, respectively; and
includes off-balance sheet retail receivables of about $100 million and
about $600 million at December 31, 2009 and December 31, 2008,
respectively.
