FORD MOTOR COMPANY 
By DEARBORN, Mich., Jan. 28, 2011 /PRNewswire/ -- Ford Motor Credit Company reported net income of $2 billion in 2010, an improvement of $0.7 billion from earnings of $1.3 billion a year earlier. On a pre-tax basis, Ford Credit earned $3.1 billion in 2010, compared with $2 billion in the previous year. The full year increase in pre-tax earnings is primarily explained by a lower provision for credit losses and lower depreciation expense for leased vehicles related to higher auction values, offset partially by lower volume and the non-recurrence of net gains related to unhedged currency exposure primarily from cross-border intercompany lending.
In the fourth quarter of 2010, Ford Credit's net income was $367 million, a decrease of $85 million from a year earlier. On a pre-tax basis, Ford Credit earned $572 million in the fourth quarter of 2010, compared with $714 million in the previous year. The decrease in pre-tax earnings primarily reflected lower volume and the non-recurrence of lower lease depreciation expense related to lower gains as fewer leases terminated and the vehicles were sold.
"We are pleased with our 2010 performance, which enabled us to increase our planned distributions," Ford Credit Chairman and CEO Mike Bannister said. "We expect results to be solid though more moderate in 2011 as we continue to provide strong support for Ford, our dealers and customers."
On December 31, 2010, Ford Credit's on-balance sheet net receivables totaled $81 billion, compared with $93 billion at year-end 2009. Managed receivables were $83 billion on December 31, 2010, down from $95 billion at year-end 2009. The lower receivables primarily reflected the discontinuation of Jaguar, Land Rover, Mazda, and Volvo financing and lower industry volumes in recent years.
On December 31, 2010, managed leverage was 6.7 to 1. Ford Credit distributed $1 billion to its parent in the fourth quarter of 2010 for a total of $2.5 billion of distributions in 2010.
For full-year 2011, Ford Credit expects to be solidly profitable but at a lower level than in 2010, reflecting primarily the non-recurrence of lease depreciation expenses and credit loss reserve reductions of the same magnitude as 2010. At year-end 2011, managed receivables are anticipated to be in the range of $80 billion to $85 billion. Ford Credit expects to pay distributions to its parent of about $2 billion in 2011.
###
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.
-- -- -- -- --
* 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, 2010.
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, geo-political events or
other factors;
-- Decline in or failure to grow Ford's market share;
-- Lower-than-anticipated market acceptance of new or existing Ford
products;
-- An increase in or acceleration of market shift beyond Ford's current
planning assumptions from sales of trucks, medium- and large-sized
utilities, or other more profitable vehicles, particularly in the United
States;
-- Continued volatility of fuel prices or reduced availability of fuel;
-- Continued or increased price competition resulting from industry
overcapacity, currency fluctuations or other factors;
-- Adverse effects from the bankruptcy, insolvency, or government-funded
restructuring of, change in ownership or control of, or alliances
entered into by a major competitor;
-- Economic distress of suppliers 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 interruptions of
production;
-- 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 or materials where it has
entered into long-term supply arrangements that commit it to purchase
minimum or fixed quantities of certain parts or materials, 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;
-- Adverse effects on Ford's operations resulting from certain
geo-political or other events;
-- Substantial levels of indebtedness adversely affecting Ford's financial
condition or preventing Ford from fulfilling its debt obligations;
Ford Credit Related:
-- A prolonged disruption of the debt and securitization markets;
-- 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;
-- Higher-than-expected credit losses;
-- Adverse effects from the government-supported restructuring of, change
in ownership or control of, or alliances entered into by a major
competitor;
-- Increased competition from banks or other financial institutions seeking
to increase their share of retail installment financing Ford vehicles;
-- Collection and servicing problems related to our finance receivables and
net investment in operating leases;
-- Lower-than-anticipated residual values or higher-than-expected return
volumes for leased vehicles;
-- New or increased credit, consumer or data protection or other laws and
regulations resulting in higher costs and/or additional financing
restrictions;
-- The Dodd-Frank Wall Street Reform and Consumer Protection Act, and the
rules and regulations promulgated pursuant to it, could impose
significant costs on us and adversely affect our ability to fund or
conduct our business;
-- Changes in Ford's operations or changes in Ford's marketing programs
could result in a decline in our financing volumes;
-- Inability to obtain competitive funding;
General:
-- Fluctuations in foreign currency exchange rates and interest rates;
-- 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;
and
-- Worse-than-assumed economic and demographic experience for
postretirement benefit plans (e.g., discount rates or investment
returns).
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 2009 10-K Report and Item 1A of Part I of Ford's 2009 10-K Report.
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the Periods Ended December 31, 2010 and 2009
(in millions)
Fourth Quarter Full Year
-------------- ---------
2010 2009 2010 2009
---- ---- ---- ----
Financing revenue
Operating leases $719 $1,025 $3,312 $4,879
Retail 557 674 2,335 2,940
Interest supplements and other support
costs earned 712 912 3,226 3,725
from affiliated companies
Wholesale 233 212 894 921
Other 12 16 59 76
--- --- --- ---
Total financing revenue 2,233 2,839 9,826 12,541
Depreciation on vehicles subject to
operating leases (425) (657) (1,945) (3,857)
Interest expense (984) (1,193) (4,222) (5,162)
---- ------ ------ ------
Net financing margin 824 989 3,659 3,522
Other revenue
Insurance premiums earned, net 23 24 98 100
Other income, net 13 88 223 662
--- --- --- ---
Total financing margin and other
revenue 860 1,101 3,980 4,284
Expenses
Operating expenses 298 306 1,149 1,262
Provision for credit losses (14) 73 (269) 966
Insurance expenses 4 8 46 55
--- --- --- ---
Total expenses 288 387 926 2,283
--- --- --- -----
Income before income taxes 572 714 3,054 2,001
Provision for income taxes 205 262 1,106 724
--- --- ----- ---
Income from continuing operations 367 452 1,948 1,277
Gain on disposal of discontinued
operations - - - 2
--- --- --- ---
Net income $367 $452 $1,948 $1,279
==== ==== ====== ======
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
------------
2010 2009
---- ----
ASSETS
Cash and cash equivalents $8,347 $10,882
Marketable securities 6,759 6,864
Finance receivables, net 71,302 77,968
Net investment in operating leases 9,956 14,578
Notes and accounts receivable from
affiliated companies 1,095 1,090
Derivative financial instruments 1,246 1,862
Other assets 2,991 4,100
----- -----
Total assets $101,696 $117,344
======== ========
LIABILITIES AND SHAREHOLDER'S INTEREST
Liabilities
Accounts payable
Customer deposits, dealer reserves
and other $1,272 $1,082
Affiliated companies 884 1,145
--- -----
Total accounts payable 2,156 2,227
Debt 82,879 96,333
Deferred income taxes 1,494 1,816
Derivative financial instruments 534 1,179
Other liabilities and deferred income 4,311 4,809
----- -----
Total liabilities 91,374 106,364
Shareholder's interest
Shareholder's interest 5,274 5,149
Accumulated other comprehensive
income 821 1,052
Retained earnings 4,227 4,779
----- -----
Total shareholder's interest 10,322 10,980
------ ------
Total liabilities and shareholder's
interest $101,696 $117,344
======== ========
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.
December December
31, 31,
2010 2009
---- ----
Cash and cash equivalents $4,031 $4,895
Finance receivables, net 50,001 57,353
Net investment in operating leases 6,121 10,246
Derivative financial instruments -
assets 26 55
Debt 40,247 46,153
Derivative financial instruments -
liabilities 222 528
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
OPERATING HIGHLIGHTS
Fourth Quarter Full Year
-------------- ---------
2010 2009 2010 2009
---- ---- ---- ----
Financing Shares
United States
Financing share - Ford and Lincoln*
Retail installment and lease 32% 28% 32% 29%
Wholesale 81 80 81 79
Europe
Financing share - Ford
Retail installment and lease 31% 31% 26% 28%
Wholesale 99 99 99 99
Contract Volume - New and used retail/
lease (in thousands)
North America Segment
United States 179 142 713 591
Canada 34 17 113 85
--- --- --- ---
Total North America Segment 213 159 826 676
International Segment
Europe 92 110 354 468
Other international 12 12 38 49
--- --- --- ---
Total International Segment 104 122 392 517
--- --- --- ---
Total contract volume 317 281 1,218 1,193
=== === ===== =====
Borrowing Cost Rate** 4.2% 4.8% 4.5% 4.9%
Charge-offs - On-Balance Sheet (in
millions)
Retail installment and lease $104 $215 $416 $989
Wholesale (6) 21 (5) 94
Other 3 2 4 12
--- --- --- ---
Total charge-offs - on-balance sheet $101 $238 $415 $1,095
==== ==== ==== ======
Total loss-to-receivables ratio - on-
balance sheet 0.47% 0.98% 0.47% 1.07%
Memo :
Total charge-offs - managed (in
millions)*** $101 $238 $415 $1,100
Total loss-to-receivables ratio -
managed*** 0.47% 0.98% 0.47% 1.07%
- - - - -
* Includes Mercury
** The rate includes the effects of derivatives and facility fees
and the amortization of discounts,
premiums and direct issuance 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.
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RECONCILIATION OF NON-GAAP MEASURES TO GAAP:
December December
Managed Leverage Calculation 31, 31,
2010 2009
---- ----
(in billions)
Total debt $82.9 $96.3
Securitized off-balance sheet receivables
outstanding - 0.1
Retained interest in securitized off-
balance sheet receivables - 0.0
Adjustments for cash, cash equivalents, and
marketable securities* (14.6) (17.3)
Adjustments for derivative accounting** (0.3) (0.2)
---- ----
Total adjusted debt $68.0 $78.9
===== =====
Equity $10.3 $11.0
Adjustments for derivative accounting** (0.1) (0.2)
---- ----
Total adjusted equity $10.2 $10.8
===== =====
Managed leverage (to 1) = Total adjusted
debt /Total adjusted equity 6.7 7.3
Memo: Financial statement leverage (to 1)
= Total debt /Equity 8.0 8.8
Net Finance Receivables and Operating December December
Leases 31, 31,
2010 2009
---- ----
Receivables - On-Balance Sheet (in billions)
Retail installment $49.7 $56.3
Wholesale 22.0 22.4
Other finance receivables 2.3 2.4
Unearned interest supplements (1.9) (1.9)
Allowance for credit losses (0.8) (1.3)
---- ----
Finance receivables, net 71.3 77.9
Net investment in operating leases 10.0 14.6
---- ----
Total receivables - on-balance sheet $81.3 $92.5
===== =====
Memo: Total receivables - managed*** $83.2 $94.5
- - - - -
* 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 about $1.9 billion at December 31, 2010 and December
31, 2009; and includes
off-balance sheet retail receivables of about $100 million at
December 31, 2009.
SOURCE Ford Motor Credit Company
