<PAGE> 1
Pursuant to Rule 424(b)(5)
PROSPECTUS SUPPLEMENT Registration No. 33-50295
(To Prospectus dated June 15, 1994)
FORD MOTOR CREDIT COMPANY
$500,000,000
7 1/2% Notes due June 15, 2004
Interest payable June 15 and December 15
ISSUE PRICE: 99.143%
The Notes will bear interest from June 29, 1994, at the rate of 7 1/2% per
annum, payable semi-annually on June 15 and December 15, commencing December 15,
1994. The Notes will not be redeemable prior to maturity and will not be subject
to any sinking fund.
The Notes will be represented by one or more Global Notes registered in the name
of the Depository's nominee. Interests in the Global Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository and its participants. Except as described herein, Notes in definitive
form will not be issued. Settlement for the Notes will be made in immediately
available funds. The Notes will trade in the Depository's Same-Day Funds
Settlement System until maturity, and secondary market trading activity for the
Notes will therefore settle in immediately available funds. All payments of
principal and interest will be made by Ford Credit in immediately available
funds. See "Description of Notes -- Same-Day Settlement and Payment".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.143% .600% 98.543%
- --------------------------------------------------------------------------------------------------
Total $495,715,000 $3,000,000 $492,715,000
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from June 29, 1994.
(2) Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by Ford Credit estimated at $200,000.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters by Shearman &
Sterling, counsel for the Underwriters. It is expected that delivery of the
Global Notes will be made through the facilities of The Depository Trust
Company, on or about June 29, 1994, against payment therefor in immediately
available funds.
J.P. MORGAN SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
June 15, 1994
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus Supplement or the
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized. This Prospectus Supplement and the
Prospectus do not constitute an offer to sell or a solicitation of an offer to
buy any securities other than the securities offered by this Prospectus
Supplement and the Prospectus or an offer to sell or a solicitation of an offer
to buy such securities in any jurisdiction to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made thereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of Ford Motor Credit Company ("Ford Credit"), or Ford
Motor Company ("Ford") since the date of this Prospectus Supplement or the
Prospectus, or that the information herein or therein is correct as of any time
since such date.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Description of Notes................................................................. S-3
Underwriting......................................................................... S-5
PROSPECTUS
Available Information................................................................ 2
Incorporation of Certain Documents by Reference...................................... 2
Information Concerning Ford Credit................................................... 3
Ford Motor Credit Company and Subsidiaries -- Selected Financial Data................ 4
Information Concerning Ford.......................................................... 6
Selected Financial Data and Other Data of Ford....................................... 7
Financial Review of Ford............................................................. 8
Industry Data and Market Share of Ford............................................... 10
Use of Proceeds...................................................................... 10
Ratio of Earnings to Fixed Charges................................................... 11
Description of Debt Securities....................................................... 11
Plan of Distribution................................................................. 15
Legal Opinions....................................................................... 16
Experts.............................................................................. 16
</TABLE>
S-2
<PAGE> 3
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus. The Notes are part of the Debt Securities registered by Ford
Credit in September 1993 to be issued on terms to be determined at the time of
sale. In addition to the Notes offered hereby, Debt Securities in the aggregate
principal amount of $2,700,000,000 previously have been sold.
GENERAL
The Notes will be limited to $500,000,000 aggregate principal amount. The
Notes will be unsecured obligations of Ford Credit and will mature on June 15,
2004. The Notes will rank pari passu with all other unsecured and unsubordinated
indebtedness of Ford Motor Credit Company (parent company only).
The Notes will bear interest from June 29, 1994 at the rate per annum set
forth on the cover page of this Prospectus Supplement, payable on June 15 and
December 15 of each year, commencing December 15, 1994, to the person in whose
name the Note was registered at the close of business on the preceding June 1
and December 1, respectively, subject to certain exceptions. The Notes are not
subject to redemption prior to maturity.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered Global
Notes (the "Global Notes") which will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depository") and registered
in the name of Cede & Co., the Depository's nominee. Except as set forth below,
the Global Notes may be transferred, in whole and not in part, only to another
nominee of the Depository or to a successor of the Depository or its nominee.
The Depository has advised as follows: It is a limited-purpose trust
company which holds securities for its participating organizations (the
"Participants") and facilitates the settlement among Participants of securities
transactions in such securities through electronic book-entry changes in its
Participants' accounts. Participants include securities brokers and dealers
(including certain of the Underwriters), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depository's system
is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("indirect participants"). Persons who are not
Participants may beneficially own securities held by the Depository only through
Participants or indirect participants.
The Depository advises that its established procedures provide that (i)
upon issuance of the Notes by Ford Credit the Depository will credit the
accounts of Participants designated by the Underwriters with the principal
amounts of the Notes purchased by the Underwriters, and (ii) ownership of
interests in the Global Notes will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depository,
the Participants and the indirect participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
which they own. Consequently, the ability to transfer beneficial interests in
the Global Notes is limited to such extent.
So long as a nominee of the Depository is the registered owner of the
Global Notes, such nominee for all purposes will be considered the sole owner or
holder of such Notes under the Indenture. Except as provided below, owners of
beneficial interests in the Global Notes will not be entitled to have Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form, and will not be considered the owners or
holders thereof under the Indenture.
S-3
<PAGE> 4
Neither Ford Credit, the Trustee, any Paying Agent nor the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Principal and interest payments on the Notes registered in the name of the
Depository's nominee will be made by the Trustee to the Depository. Under the
terms of the Indenture, Ford Credit and the Trustee will treat the persons in
whose names the Notes are registered as the owners of such Notes for the purpose
of receiving payment of principal and interest on the Notes and for all other
purposes whatsoever. Therefore, neither Ford Credit, the Trustee nor any Paying
Agent has any direct responsibility or liability for the payment of principal or
interest on the Notes to owners of beneficial interests in the Global Notes. The
Depository has advised Ford Credit and the Trustee that its present practice is
to credit the accounts of the Participants on the appropriate payment date in
accordance with their respective holdings in principal amount of beneficial
interests in the Global Notes as shown on the records of the Depository, unless
the Depository has reason to believe that it will not receive payment on such
payment date. Payments by Participants and indirect participants to owners of
beneficial interests in the Global Notes will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the Participants or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by Ford Credit within 90
days, Ford Credit will issue Notes in definitive form in exchange for the Global
Notes. In addition, Ford Credit may at any time determine not to have the Notes
represented by Global Notes and, in such event, will issue Notes in definitive
form in exchange for the Global Notes. In either instance, an owner of a
beneficial interest in the Global Notes will be entitled to have Notes equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Notes in definitive form. Notes so issued
in definitive form will be issued in denominations of $5,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by Ford
Credit in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
will trade in the Depository's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Notes will therefore be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
S-4
<PAGE> 5
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement relating to the Notes, Ford Credit has agreed to sell
to each of the underwriters named below (the "Underwriters") and each of the
Underwriters, for whom J.P. Morgan Securities Inc. is acting as representative,
has severally agreed to purchase the principal amount of Notes set forth
opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
------------- -------------
<S> <C>
J.P. Morgan Securities Inc. ............................. $ 125,000,000
Goldman, Sachs & Co. .................................... 125,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................ 125,000,000
Salomon Brothers Inc .................................... 125,000,000
-------------
Total....................................... $ 500,000,000
=============
</TABLE>
In the event of default by one or more Underwriters, the Underwriting
Agreement provides that in certain circumstances other Underwriters may be
substituted or the commitment of each non-defaulting Underwriter may be
increased up to 10%. However, if the default involves more than one-eleventh of
the aggregate principal amount of the Notes, the Pricing Agreement relating to
the Notes may be terminated by Ford Credit or by 50% or more in interest of
non-defaulting Underwriters, or, if not so terminated, less than all the Notes
may be sold.
Ford Credit has been advised by J.P. Morgan Securities Inc., as
representative of the Underwriters, that the Underwriters propose to offer the
Notes directly to the public at the initial public offering price set forth on
the cover page of this Prospectus Supplement, and to certain securities dealers
at such price less a concession of .375% of the principal amount of the Notes.
The Underwriters may allow and such dealers may reallow to certain brokers and
dealers a concession not in excess of .250% of the principal amount of the
Notes. After the Notes are released for sale to the public, the offering price
and other selling terms may from time to time be varied by the Underwriters.
Ford Credit does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they intend
to make a market in the Notes. The Underwriters are not obligated, however, to
make a market in the Notes and may discontinue market-making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Notes.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of Notes -- Same-Day Settlement and Payment."
Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. J.P. Morgan
Securities Inc. has agreed to reimburse Ford Credit for certain of Ford Credit's
expenses in connection with the offering of the Notes.
In the ordinary course of their respective businesses, affiliates of J.P.
Morgan Securities Inc. have engaged, and may in the future engage, in commercial
banking and investment banking transactions with Ford and Ford Credit.
------------------------
The following information, which is being disclosed pursuant to Florida
law, is accurate as of the date of this Prospectus Supplement:
Autolatina-Comercio, Negocios e Participacoes Ltda., a Brazilian company
("Autolatina"), is a joint venture between Ford and Volkswagen AG in which Ford
has a 49% ownership interest. Autolatina occasionally sells vehicles to persons
located in Cuba. Each such sale is made pursuant to a specific license granted
to Ford by the U.S. Department of Treasury. The last such sale, which involved
one medical supply vehicle, was made to Cubanacan in April 1991. Current
information concerning Autolatina's or its Ford-related affiliates' business
dealings with the government of Cuba or with persons located in Cuba may be
obtained from the State of Florida Department of Banking and Finance at The
Capitol Building, Suite 1401, Tallahassee, Florida 32399-0350 (telephone number
940-488-0545).
S-5
<PAGE> 6
FORD MOTOR CREDIT COMPANY
DEBT SECURITIES
Ford Credit, in September 1993, registered with the Securities and Exchange
Commission $4,000,000,000 aggregate principal amount of its Debt Securities
consisting of notes and/or debentures denominated in United States dollars or
any other currency or currencies, to be offered from time to time in one or more
series, on terms to be determined at or prior to the time of sale. The
Prospectus Supplement accompanying this Prospectus sets forth, with respect to
the particular series of Debt Securities for which this Prospectus and the
Prospectus Supplement are being delivered, the specific title, the aggregate
principal amount, the authorized denominations, the currencies of issue and
payment, the initial public offering price, the maturity, the interest rate or
rates (which may be either fixed or variable), if any, and/or method of
determination thereof, the time of payment of any interest, any redemption,
extension or early repayment terms, any provision for sinking fund payments, the
net proceeds to Ford Credit, the form of Debt Securities and other specific
terms relating to such series of Debt Securities.
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to other purchasers or through
agents. See "Plan of Distribution". In addition, the Debt Securities may be sold
to dealers at the applicable price to the public set forth in the Prospectus
Supplement relating to a particular series of Debt Securities who later resell
to investors. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). If any agents
of Ford Credit, or any underwriters, are involved in the sale of any Debt
Securities, the names of such agents or underwriters and any applicable
commissions or discounts are set forth in the accompanying Prospectus
Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE 15, 1994
<PAGE> 7
AVAILABLE INFORMATION
FORD MOTOR CREDIT COMPANY ("FORD CREDIT") AND FORD MOTOR COMPANY ARE
SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934
AND IN ACCORDANCE THEREWITH FILE REPORTS AND OTHER INFORMATION WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"). AS USED HEREIN OR IN THE
PROSPECTUS SUPPLEMENT, "FORD" REFERS TO FORD MOTOR COMPANY AND ITS SUBSIDIARIES
UNLESS THE CONTEXT OTHERWISE REQUIRES. SUCH REPORTS AND OTHER INFORMATION CAN BE
INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE
COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549 AND AT THE
FOLLOWING REGIONAL OFFICES OF THE COMMISSION: 7 WORLD TRADE CENTER, 13TH FLOOR,
NEW YORK, NEW YORK 10048 AND NORTHWEST ATRIUM CENTER, 500 WEST MADISON STREET,
SUITE 1400, CHICAGO, ILLINOIS 60661. COPIES OF SUCH MATERIAL CAN BE OBTAINED
FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT 450 FIFTH STREET, N.W.,
WASHINGTON, D.C. 20549 AT PRESCRIBED RATES. SUCH REPORTS AND OTHER INFORMATION
CONCERNING FORD CREDIT AND FORD CAN ALSO BE INSPECTED AT THE OFFICES OF THE NEW
YORK STOCK EXCHANGE, INC., 20 BROAD STREET, NEW YORK, NEW YORK 10005, ON WHICH
CERTAIN OF FORD CREDIT'S DEBT SECURITIES ARE LISTED.
Ford Credit has filed with the Commission a Registration Statement under
the Securities Act with respect to the Debt Securities offered hereby. This
Prospectus and the Prospectus Supplement do not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. The information so omitted may be obtained from
the Commission's principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford Credit's Annual Report on Form 10-K for the year ended December 31,
1993 (the "1993 10-K Report"), Ford Credit's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994 (the "First Quarter 10-Q Report"), and Ford
Credit's Current Reports on Form 8-K dated January 11, 1994, February 11, 1994,
February 25, 1994, March 18, 1994, April 14, 1994 and May 11, 1994 are
incorporated in this Prospectus by reference. All documents filed by Ford Credit
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this Prospectus and prior to the termination of the
offering of the Debt Securities shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing such
documents. Such reports include, and such documents may include, information
concerning Ford, as well as Ford Credit.
FORD CREDIT UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT HAVE BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN
OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT, OTHER THAN EXHIBITS TO SUCH DOCUMENTS. WRITTEN OR TELEPHONIC
REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO FORD MOTOR CREDIT COMPANY, THE
AMERICAN ROAD, DEARBORN, MICHIGAN 48121, ATTENTION: PUBLIC AFFAIRS DEPARTMENT
(TELEPHONE 313-594-1096).
------------------------
2
<PAGE> 8
INFORMATION CONCERNING FORD CREDIT
Ford Credit was incorporated in Delaware in 1959 and is a wholly-owned
subsidiary of Ford. As used herein "Ford Credit" refers to Ford Motor Credit
Company and its subsidiaries unless the context otherwise requires.
Ford Credit provides wholesale financing and capital loans to franchised
Ford Motor Company vehicle dealers and other dealers associated with such
dealers and purchases retail installment sale contracts and retail leases from
them. Ford Credit also makes loans to vehicle leasing companies, the majority of
which are affiliated with such dealers. In addition, a wholly-owned subsidiary
of Ford Credit provides these financing services in the U.S. to other vehicle
dealers. More than 85% of all new vehicles financed by Ford Credit are
manufactured by Ford or its affiliates. In addition to vehicle financing, Ford
Credit makes loans to affiliates of Ford, finances certain receivables of Ford
and its subsidiaries, and offers diversified financing services which are
managed by USL Capital Corporation ("USL Capital"), a wholly-owned subsidiary of
Ford Holdings, Inc. ("Ford Holdings"). Ford Credit also manages the insurance
business of The American Road Insurance Company ("American Road"), a
wholly-owned subsidiary of Ford Holdings. Ford Credit also is a significant
equity participant in Ford Holdings whose primary activities are consumer and
commercial financing operations, insurance underwriting and equipment leasing.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.
------------------------
THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED
INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH
SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED
IN THE INCORPORATED DOCUMENTS.
------------------------
3
<PAGE> 9
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
---------------------- YEARS ENDED DECEMBER 31
-----------------------------------
1994 1993 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total revenue.................. $ 2,257.2 $ 1,960.1 $ 8,338.4 $ 7,073.3 $ 7,002.3
Interest expense............... 760.2 718.2 2,919.3 3,076.5 3,791.8
Provision for credit losses.... 71.1 84.4 270.2 418.0 577.9
Income before income taxes and
cumulative effects of
changes in accounting
principles.................. 457.0 477.6 1,875.0 1,323.2 1,075.1
Cumulative effects of changes
in accounting principles.... -- -- -- 146.5 --
Net income..................... 298.8 315.1 1,193.8 1,038.7 748.8
Dividends
Cash........................ -- -- (250.0) (600.0) (650.0)
Stock of Ford Holdings...... -- -- -- (200.0) (316.0)
Memo:
Net credit losses amount....... $ 49.4 $ 62.1 $ 228.4 $ 342.6 $ 528.9
As percentage of average total
finance receivables
outstanding (annualized)*... 0.27% 0.41% 0.35% 0.60% 0.92%
BALANCE SHEET DATA
Net investment, operating
leases...................... $14,132.8 $ 8,698.1 $12,600.9 $ 7,747.2 $ 4,345.5
========= ========= ========= ========= =========
Finance receivables, net....... $54,769.4 $47,260.3 $51,162.1 $46,602.5 $46,481.4
========= ========= ========= ========= =========
Capital
Short-term debt............. $27,638.2 $23,565.5 $25,507.1 $22,995.7 $19,873.7
Long-term debt (including
current portion).......... 34,849.4 29,283.8 33,363.1 26,913.7 28,160.2
Stockholder's equity........ 6,022.1 5,207.5 5,774.7 4,882.9 4,689.9
--------- --------- --------- --------- ---------
Total capital............. $68,509.7 $58,056.8 $64,644.9 $54,792.3 $52,723.8
========= ========= ========= ========= =========
</TABLE>
- ---------------
* Includes net investment in operating leases.
FIRST QUARTER 1994 RESULTS OF OPERATIONS
Ford Credit's consolidated net income for the first quarter of 1994 was
$299 million, down $16 million or 5% compared with $315 million in the first
quarter of 1993. Income from financing operations was $245 million, down $21
million or 8% from the same period a year ago. Equity in net income of
affiliated companies, primarily Ford Holdings, was $54 million compared with $49
million in 1993.
Compared with results from a year ago, financing profits in the first
quarter of 1994 primarily reflected lower net interest margins and the
non-recurrence of a gain on the sale of receivables, partially offset by higher
levels of earning assets and favorable credit loss performance. The lower net
interest margins reflected primarily the effect of lower interest rates on
finance receivables and operating leases, partially offset by a decline in net
average U.S. borrowing rates from 5.6% in the first quarter of 1993 to 5% in the
first quarter of 1994. The higher level of earning assets reflected primarily an
increase in short-term operating leases and retail installment sale financing.
Lower credit losses reflected primarily fewer repossessions and lower losses per
repossessed unit.
4
<PAGE> 10
The increase in equity in net income of affiliated companies primarily
reflected higher earnings from Ford Holdings. At March 31, 1994, Ford Credit
owned about 45% of Ford Holdings common stock, representing about 34% of the
voting power.
Total gross finance receivables and net investment in operating leases at
March 31, 1994 were $74.8 billion, up $13.2 billion (21%) from a year earlier.
The increase primarily reflected higher levels of operating leases and retail
installment sale receivables. Depreciation expense on operating leases in the
first quarter of 1994 was $810 million, up $260 million or 47% compared with the
first quarter of 1993. The increase reflected the higher levels of operating
leases and was more than offset by higher revenue earned on the lease contracts.
During the first quarter of 1994, Ford Credit financed 38.7% of all new
cars and trucks sold by Ford Motor Company dealers in the United States,
compared with 39.3% in the first quarter of 1993. Ford Credit provided retail
financing for 584,000 new and used vehicles in the United States, up 17% from a
year ago. Ford Credit also provided wholesale financing for 79.7% of Ford Motor
Company factory sales to U.S. car and truck dealers during the quarter, compared
with 79.1% in the same period in 1993.
1993 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in 1993 was $1,194 million, up $155
million or 15% from 1992. Excluding a one-time gain resulting from the net
effect of the adoption of new accounting standards for income taxes and
postretirement benefits in 1992, net income was up $302 million or 34% from a
year ago. The following comparison of 1993 results with 1992 results excludes
the one-time net gain associated with the accounting changes.
Net income from financing operations was $996 million, up $259 million or
35% from the prior year. The increase in financing profits was more than
accounted for by higher financing volumes, lower credit losses and higher net
income from gains on sales of retail automotive receivables, partially offset by
the increase in U.S. income taxes and lower net interest margins.
Lower credit losses reflect lower losses per repossession and fewer
repossessions. Actual credit losses were $228 million (0.35% of average finance
receivables including net investment in operating leases) compared with $343
million (0.60%) last year. Ford Credit released a portion of the loss reserves
reflecting the continued improvement in actual credit loss experience. The
credit loss coverage ratio for 1993 was 4.0 compared with 2.7 in the prior year.
The decline in net interest margins, including depreciation on operating leases,
reflects primarily the decline in net U.S. borrowing rates from 6.3% in 1992 to
5.3% in 1993, more than offset by lower yields on finance receivables and net
investment in operating leases.
For 1993, equity in net income of affiliated companies (primarily Ford
Holdings) was $198 million, up $43 million from 1992. The increase reflected
higher Ford Holdings net income available to common shareholders, partially
offset by a reduction in Ford Credit's ownership of Ford Holdings common stock
in 1992. At December 31, 1993, Ford Credit owned about 45% of Ford Holdings
common stock, representing about 34% of the voting power.
Total gross finance receivables and net investment in operating leases at
December 31, 1993 were $69.6 billion, up $9.4 billion (16%) from a year earlier.
The higher financing volume reflects primarily an increase in short-term
operating leases and higher wholesale receivables. Depreciation expense on
operating leases in 1993 was $2,676 million, up $1,023 million or 62% from 1992.
The increase reflected the higher levels of operating leases and was more than
offset by higher revenue earned on the lease contracts.
For 1993, Ford Credit financed 38.5% of all new cars and trucks sold by
Ford Motor Company dealers in the U.S. compared with 37.7% in 1992. Ford Credit
provided retail financing for 2,246,000 new and used vehicles in the United
States. Ford Credit provided wholesale financing for 81.4% of Ford Motor Company
U.S. factory sales in 1993 compared with 77.6% in 1992.
5
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Ford Credit relies heavily on its ability to raise substantial amounts of
funds. These funds are obtained primarily by sales of commercial paper and
issuance of term debt. Funds also are provided by retained earnings and sales of
receivables. The level of funds can be affected by certain transactions with
Ford, such as capital contributions, interest supplements and other support
costs from Ford for vehicles financed and leased by Ford Credit under Ford
sponsored special financing and leasing programs, and dividend payments, and the
timing of payments for the financing of dealers' wholesale inventories and for
income taxes. Ford Credit's ability to obtain funds is affected by its debt
ratings, which are closely related to the outlook for, and financial condition
of, Ford, and the nature and availability of support facilities, such as
revolving credit and receivables sales agreements. In addition, Ford Credit from
time to time sells its receivables in public offerings or private placements.
For additional information regarding liquidity and capital resources, see Item
1--Business--"Business of Ford Credit--Borrowings and Other Sources of Funds" in
the 1993 10-K Report, and see the First Quarter 10-Q Report. For additional
information regarding Ford Credit's association with Ford, see Item
1--Business--"Certain Transactions with Ford and Affiliates" in the 1993 10-K
Report.
INFORMATION CONCERNING FORD
Ford is the second-largest producer of cars and trucks in the world, and
ranks among the largest providers of financial services in the United States.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the manufacture,
assembly and sale of cars and trucks and related parts and accessories. The
Financial Services segment is comprised of the following subsidiaries: Ford
Credit, Ford Credit Europe plc, Ford Holdings, Associates First Capital
Corporation ("The Associates"), American Road, First Nationwide Financial
Corporation, The Hertz Corporation and USL Capital. The activities of these
subsidiaries include financing operations, insurance operations, savings and
loan operations and vehicle and equipment leasing.
6
<PAGE> 12
SELECTED FINANCIAL DATA AND OTHER DATA OF FORD
The following table sets forth selected financial data and other data
concerning Ford:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEARS ENDED OR AT DECEMBER 31
--------------------- ------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------- -------- ---------
(IN MILLIONS EXCEPT PER SHARE AND UNIT SALES AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
INFORMATION
Automotive
Sales.................................... $ 26,070 $ 22,686 $ 91,568 $ 84,407 $ 72,051 $ 81,844 $ 82,879
Operating income/(loss).................. 1,559 505 1,432 (1,775) (3,769) 316 4,252
Income/(loss) before cumulative effects
of changes in accounting principles.... 955 176 940 (1,534) (3,186) 99 3,175
Financial Services
Revenues................................. 4,332 4,077 16,953 15,725 16,235 15,806 13,267
Income before income taxes and
cumulative effects of changes in
accounting principles.................. 196 670 2,712 1,825 1,465 1,221 874
Income before cumulative effects of
changes in accounting principles....... (51)*** 396 1,589 1,032 928 761 660
Total Ford
Income/(loss) before cumulative effects
of changes in accounting principles.... 904 572 2,529 (502) (2,258) 860 3,835
Cumulative effects of changes in
accounting principles.................. -- -- -- (6,883) -- -- --
Net income/(loss)........................ 904 572 2,529 (7,385) (2,258) 860 3,835
Amounts Per Share of Common Stock and Class
B Stock After Preferred Stock Dividends
Income/(loss) before cumulative effects
of changes in accounting principles...... 1.66 1.02 4.55 (1.46) (4.79) 1.86 8.22
Cumulative effects of changes in
accounting principles.................. -- -- -- (14.15) -- -- --
-------- -------- -------- -------- --------- -------- ---------
Income/(loss) assuming no dilution....... 1.66 1.02 4.55 (15.61) (4.79) 1.86 8.22
Income/(loss) assuming full dilution..... 1.51 0.95 4.20 (15.61) (4.79) 1.84 8.12
Cash dividends........................... 0.40 0.40 1.60 1.60 1.95 3.00 3.00
CONSOLIDATED BALANCE SHEET INFORMATION
Automotive
Total assets............................. 64,794 59,164 61,737 57,170 52,397 50,823 45,819
Debt payable within one year............. 835 1,050 932 1,249 2,580 2,849 2,537
Long-term debt--noncurrent portion....... 7,084 7,065 7,084 7,068 6,539 4,553 1,137
Financial Services
Total assets............................. 133,639 127,369 137,201 123,375 122,032 122,839 115,074
Debt..................................... 109,296 92,755 103,960 90,188 88,295 88,117 81,734
Deposit accounts*........................ 0 13,150 10,549 14,030 16,882 17,893 17,642
Total Ford
Total assets............................. 198,433 186,533 198,938 180,545 174,429 173,663 160,893
Debt (incl. deposit accounts)............ 117,215 114,020 122,525 112,535 114,295 113,412 103,050
Stockholders' equity**................... 16,633 15,258 15,574 14,753 22,690 23,238 22,728
Cash dividends........................... 272 276 1,086 977 927 1,389 1,404
OTHER DATA
Total Ford
Capital expenditures..................... 1,700 1,289 6,814 5,790 5,847 7,258 6,767
Depreciation and amortization of special
tools.................................. 2,026 1,818 7,468 6,756 5,778 4,880 4,229
Worldwide factory unit sales of cars,
trucks and tractors (in thousands)..... 1,672 1,531 5,964 5,764 5,359 5,872 6,408
</TABLE>
- ------------
* Deposit accounts relate to First Nationwide.
** The cumulative effects of changes in accounting principles reduced equity by
$6,883 million in 1992.
*** Includes a charge of $440 million related to the disposition of First
Nationwide Financial Corporation.
7
<PAGE> 13
FINANCIAL REVIEW OF FORD
FIRST QUARTER 1994 RESULTS OF OPERATIONS
Overview
Ford earned $904 million, or $1.66 per share of Common and Class B Stock,
in the first quarter of 1994. Results included a charge to net income of $440
million related to the sale of First Nationwide Bank to First Madison Bank
(discussed below). In the first quarter of 1993, Ford earned $572 million, or
$1.02 per share. Worldwide sales and revenues in the first quarter of 1994 were
$30.4 billion, up $3.6 billion from the first quarter of 1993. Worldwide factory
unit sales of cars and trucks were 1,672,000, up 141,000 units, or 9%, from a
year ago. Stockholders' equity was $16.6 billion at the end of the first quarter
of 1994.
Sale of First Nationwide Bank
On April 14, 1994, an agreement was entered into between First Nationwide
Bank, a Federal Savings Bank (the "Bank") and First Madison Bank, FSB ("First
Madison") for the sale of substantially all of the Bank's assets to, and the
assumption of substantially all of the Bank's liabilities by, First Madison. The
Bank is a wholly owned subsidiary of First Nationwide Financial Corporation
("FNFC"), which in turn is a wholly owned subsidiary of Ford. The transaction,
which is subject to federal regulatory approvals, is expected to be completed in
the latter part of the third quarter or in the fourth quarter of 1994.
The stated sale price for the Bank is $1.1 billion, slightly higher than
tangible net book value at December 31, 1993. The final settlement, depending on
the actual closing date, is expected to consist of about $750 million of cash
and retention of about $350 million of assets and tax benefits that are not
included in the sale. In total, Ford will retain, through FNFC, approximately
$1.2 billion of commercial real estate and other assets as of the closing date.
These retained assets generally are of lower quality than those included in the
sale. In addition, for the three-year period ending in November 1996, First
Madison has the option of requiring FNFC to repurchase up to $500 million of the
loans included in the sale that become nonperforming. This repurchase obligation
will be guaranteed by Ford.
The sale resulted in an after-tax charge of $440 million against Ford's
earnings in the first quarter of 1994, reflecting the non-recovery of goodwill
and reserves for estimated losses on the assets to be retained or repurchased by
FNFC. These assets will be liquidated over time as market conditions permit.
Historically, FNFC (including the Bank) has not had a significant effect on
Ford's operating results.
Automotive Operations
Ford's worldwide Automotive operations earned $955 million in the first
quarter of 1994 on sales of $26.1 billion, compared with $176 million on sales
of $22.7 billion a year ago.
In the U.S., Ford's Automotive operations earned $835 million, compared
with $113 million a year ago. The increase reflected primarily higher unit
volume resulting from higher industry sales.
In the first quarter of 1994, the seasonally-adjusted annual selling rate
for the U.S. car and truck industry was 15.8 million units (9.3 million cars and
6.5 million trucks), compared with 13.4 million (8.1 million cars and 5.3
million trucks) in the first quarter of 1993. Ford's car share was 21.6% in the
first quarter of 1994, down 1.9 points from the first quarter of 1993. The
decline from a year ago reflected lower shares for Tempo and Topaz. Ford's truck
share was 29.4% in the first quarter of 1994, up 3/10 of a point from the first
quarter of 1993. Higher shares for F-Series, Villager and Aerostar contributed
to the improvement. The combined car and truck share in the first quarter of
1994 was 24.8%, down 9/10 of a point from a year ago.
8
<PAGE> 14
Outside the U.S., Automotive operations earned $120 million in the first
quarter of 1994, compared with $63 million a year ago. Ford's European
Automotive operations (excluding Jaguar) earned $108 million in the first
quarter of 1994, compared with $19 million in the first quarter of 1993. The
increase from a year ago reflected primarily improved margins.
In the first quarter of 1994, the seasonally-adjusted annual selling rate
for the European car and truck industry was 13.2 million units, compared with
12.6 million in the first quarter of 1993. The increase from a year ago
reflected primarily higher industry sales in Britain (up 17%). Ford's car share
was 12.0% in the first quarter of 1994, up 1/10 of a point from the first
quarter of 1993. Ford's truck share was 14.4% in the first quarter of 1994, down
8/10 of a point from the first quarter of 1993.
Financial Services Operations
Ford's Financial Services operations lost $51 million in the first quarter
of 1994, including the charge to net income of $440 million related to the sale
of First Nationwide Bank (discussed above). In the first quarter of 1993,
Financial Services operations earned $396 million.
For a discussion of Ford Credit's results of operations in the first
quarter of 1994, see "Ford Motor Credit Company and Subsidiaries -- Selected
Financial Data -- First Quarter 1994 Results of Operations." In addition,
international operations managed by Ford Credit earned $63 million in the first
quarter of 1994, compared with $47 million a year ago.
The Associates earned $128 million in the U.S. in the first quarter of
1994, up $17 million from the first quarter of 1993. The improvement resulted
primarily from higher levels of earning assets and improved net interest
margins. In addition, international operations managed by The Associates earned
$18 million in the first quarter of 1994, compared with $10 million a year ago.
First Nationwide incurred a loss of $484 million in the first quarter of
1994, compared with a loss of $17 million in the first quarter of 1993. The
decline reflected primarily the charge to net income of $440 million related to
the sale of First Nationwide Bank.
American Road earned $17 million in the first quarter of 1994, compared
with $24 million in the first quarter of 1993. The decrease resulted primarily
from lower investment income, partially offset by improved underwriting
experience in extended service plan, floorplan and dealer plan products. USL
Capital earned $21 million in the first quarter of 1994, compared with $17
million a year ago. The improvement resulted primarily from higher earning
assets and continued operating cost reductions.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
Cash and marketable securities of Ford's Automotive operations were $11.6
billion at March 31, 1994, up $1.8 billion from December 31, 1993. Ford paid
$272 million in cash dividends on its Common Stock, Class B Stock, and Preferred
Stock during the first three months of 1994.
Automotive capital expenditures were $1.6 billion in the first three months
of 1994, compared with $1.3 billion for the same period a year ago.
At March 31, 1994, Automotive debt totaled $7.9 billion, which was 32% of
total capitalization (stockholders' equity and Automotive debt), compared with
$8 billion or 34% of total capitalization at year-end 1993. The decrease in
total debt is primarily the result of lower levels of short-term borrowings.
At March 31, 1994, Ford had long-term contractually committed credit
agreements in the U.S. under which $4.8 billion is available from various banks
at least through June 30, 1998. The entire
9
<PAGE> 15
$4.8 billion may be used, at Ford's option, by either Ford or Ford Credit. As of
March 31, 1994, these facilities were unused.
Outside the U.S., Ford has additional long-term contractually committed
credit-line facilities of approximately $2.4 billion. These facilities are
available in varying amounts from 1994 through 1998; less than 1% had been
utilized at March 31, 1994.
Financial Services Operations
During the first quarter of 1994, Financial Services' cash and investments
in securities decreased by $3.8 billion, primarily reflecting the
reclassification of the net assets of FNFC to "other assets" as a result of the
pending sale of First Nationwide Bank. Total debt in the first quarter of 1994
increased by $5.3 billion, primarily to fund higher receivables levels at Ford
Credit.
At March 31, 1994, Financial Services had approximately $26.7 billion of
support facilities (including $4.8 billion of Ford bank lines that may be used
by Ford Credit at Ford's option) available for use in the U.S., all of which
were contractually committed; less than 2% of these facilities were in use at
that date. At March 31, 1994, an additional $17 billion of support facilities
were available outside the U.S., 48% of which were contractually committed;
approximately $6.4 billion of these support facilities were in use at March 31,
1994.
INDUSTRY DATA AND MARKET SHARE OF FORD
The following table shows the U.S. industry retail deliveries of cars and
trucks for the periods indicated:
<TABLE>
<CAPTION>
U.S. INDUSTRY RETAIL DELIVERIES
(MILLIONS OF UNITS)
----------------------------------------------------------
THREE MONTHS
ENDED MARCH
31* YEARS ENDED DECEMBER 31
------------- ----------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars....................................... 9.4 8.1 8.5 8.2 8.2 9.3 9.8
Trucks..................................... 6.4 5.3 5.7 4.9 4.3 4.8 5.1
</TABLE>
- ------------
* Seasonally adjusted annual rates.
The following table shows Ford's U.S. car and truck market shares for the
periods indicated:
<TABLE>
<CAPTION>
FORD U.S. CAR AND TRUCK MARKET SHARES
----------------------------------------------------------
THREE MONTHS
ENDED MARCH
31 YEARS ENDED DECEMBER 31
------------- ----------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars*................................... 21.6% 23.5% 22.3% 21.8% 20.1% 21.1% 22.3%
Trucks.................................. 29.4 29.1 30.4 29.7 28.9 29.3 28.8
</TABLE>
- ------------
* Includes Jaguar sales since 1990.
For additional information regarding Ford, see the 1993 10-K Report and the
First Quarter 10-Q Report.
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the general funds of Ford
Credit and will be available for the purchase of receivables, for loans and for
use in connection with the retirement of debt. Such proceeds initially may be
used to reduce short-term borrowings (commercial paper, borrowings under bank
lines of credit and borrowings under agreements with bank trust departments) or
may be invested temporarily in short-term securities.
10
<PAGE> 16
Ford Credit expects to issue additional long-term and short-term debt from
time to time. The nature and amount of Ford Credit's long-term and short-term
debt and the proportionate amount of each can be expected to vary from time to
time, as a result of business requirements, market conditions and other factors.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for Ford Credit and Ford were as
follows for the first three months of 1994 and 1993 and each of the years
1989-1993:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
31 YEARS ENDED DECEMBER 31
------------- ----------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ford Motor Credit Company................ 1.52 1.59 1.56 1.37 1.23 1.14 1.13
Ford Motor Company....................... 1.9 1.5 1.5 * ** 1.2 1.7
</TABLE>
- ------------
* Earnings were inadequate to cover fixed charges by $237 million.
** Earnings were inadequate to cover fixed charges by $2,664 million.
For purposes of the Ford Credit ratio, "earnings" consist of income before
income taxes and cumulative effects of changes in accounting principles and
fixed charges. Income before income taxes and cumulative effects of changes in
accounting principles of Ford Credit excludes the equity in net income of all
unconsolidated affiliates and minority interest in net income of subsidiaries.
"Fixed charges" consist of interest on borrowed funds, amortization of debt
discount, premium, and issuance expense and one-third of all rental expense (the
proportion deemed representative of the interest factor).
For purposes of the Ford ratio, "earnings" include the profit/(loss) before
income taxes and cumulative effects of changes in accounting principles of Ford
and its majority-owned subsidiaries, whether or not consolidated, its
proportionate share of any fifty-percent-owned companies, and any income
received from less-than-fifty-percent-owned companies. "Fixed charges" consist
of interest on borrowed funds, preferred stock dividend requirements of
majority-owned subsidiaries, amortization of debt discount, premium, and
issuance expense, and one-third of all rental expense (the proportion deemed
representative of the interest factor).
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued in one or more series under an
Indenture dated as of November 1, 1987, as supplemented from time to time (the
"Indenture"), between Ford Credit and Continental Bank, National Association
("Continental"), Trustee. The term "Trustee", as used herein, shall mean
Continental and, if at any time there is more than one Trustee acting under the
Indenture, the term "Trustee" as used herein with respect to Indenture
Securities (as defined below) of any particular series shall mean the Trustee
with respect to the Indenture Securities of such series. The following
statements with respect to the Debt Securities are subject to the detailed
provisions of the Indenture, the form of which is filed as an exhibit to the
Registration Statement. Parenthetical references below are to the Indenture or
the Form of Security contained therein and, whenever any particular provision of
the Indenture or any term used therein is referred to, such provision or term is
incorporated by reference as a part of the statement in connection with which
such reference is made, and the statement in connection with which such
reference is made is qualified in its entirety by such reference.
The particular terms of each series of Debt Securities, as well as any
modification or addition to the general terms of the Debt Securities as herein
described, which may be applicable to a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities and will be set forth in a filing with the Commission. Accordingly,
for a description of the terms of a particular series of Debt Securities,
reference must be made to the Prospectus
11
<PAGE> 17
Supplement relating to such series and to the description of Debt Securities set
forth in this Prospectus.
GENERAL
The Debt Securities offered hereby will be limited to $4,000,000,000
aggregate principal amount or the equivalent thereof in any currency, although
the Indenture provides that additional debt securities may be issued thereunder
up to the aggregate principal amount, which is not limited by the Indenture,
authorized from time to time by Ford Credit's Board of Directors. So long as a
single Trustee is acting for the benefit of the holders of all the Debt
Securities offered hereby and any such additional debt securities issued under
the Indenture, the Debt Securities and any such additional debt securities are
herein collectively referred to as the "Indenture Securities". The Indenture
also provides that there may be more than one Trustee under the Indenture, each
with respect to one or more different series of Indenture Securities. See also
"Trustee" herein. At any time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture Securities" as used herein
shall mean the one or more series with respect to which each respective Trustee
is acting and the powers and trust obligations of each such Trustee as described
herein shall extend only to the one or more series of Indenture Securities for
which it is acting as Trustee. The effect of the provisions contemplating that
there might be more than one Trustee acting for different series of Indenture
Securities is that, in that event, those Indenture Securities (whether of one or
more than one series) for which each Trustee is acting would be treated as if
issued under a separate indenture.
The Prospectus Supplement which accompanies this Prospectus sets forth a
description of the particular series of Debt Securities being offered thereby,
including: (1) the designation or title of such Debt Securities; (2) the
aggregate principal amount of such Debt Securities; (3) the percentage of their
principal amount at which such Debt Securities will be offered; (4) the date or
dates on which the principal of such Debt Securities will be payable; (5) the
rate or rates (which may be either fixed or variable) and/or the method of
determination of such rate or rates at which such Debt Securities shall bear
interest, if any; (6) the date or dates from which any such interest shall
accrue, or the method of determination of such date or dates, and the date or
dates on which any such interest shall be payable; (7) the terms for redemption,
extension or early repayment of such Debt Securities, if any; (8) the
denominations in which such Debt Securities are authorized to be issued; (9) the
currencies or currency units in which such Debt Securities are issued or
payable; (10) the provisions for a sinking fund, if any; (11) any additional
restrictive covenants included for the benefit of the holders of such Debt
Securities; (12) any additional Event of Default with respect to such Debt
Securities; (13) whether such Debt Securities are issuable as a Global Security;
and (14) any other term or provision relating to such Debt Securities which is
not inconsistent with the provisions of the Indenture.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement relating to any such series of Debt Securities.
The Debt Securities will be unsecured obligations of Ford Credit and will
rank prior to all subordinated indebtedness of Ford Motor Credit Company (parent
company only) and pari passu with all other unsecured and unsubordinated
indebtedness of Ford Motor Credit Company (parent company only).
Except as otherwise provided in the Prospectus Supplement, principal,
premium, if any, and interest, if any, will be payable at an office or agency to
be maintained by Ford Credit in New York City, except that at the option of Ford
Credit interest may be paid by check mailed to the person entitled thereto.
(Form of Security and Sections 10.01 and 10.02).
Except as otherwise provided in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and may
be presented for registration of transfer or
12
<PAGE> 18
exchange at the corporate trust office of the Trustee. No service charge will be
made for any transfer or exchange of the Debt Securities, but Ford Credit may
require payment of a sum to cover any tax or other governmental charge payable
in connection therewith. (Section 3.05).
SUBSIDIARIES
The term "subsidiary of the Company" is defined in the Indenture as a
corporation a majority of the outstanding voting stock of which is owned,
directly or indirectly, by Ford Credit or by one or more subsidiaries of Ford
Credit, or by Ford Credit and one or more subsidiaries of Ford Credit. The term
"Restricted Subsidiary" is defined in the Indenture as a subsidiary of the
Company, incorporated in or conducting the major part of its business in the
United States, any of the activities of which includes insurance underwriting or
which had, at the end of its last quarterly accounting period preceding the date
of computation, assets with a value in excess of $1 million representing
accounts or notes receivable resulting from the financing of new cars, trucks,
tractors and farm and industrial equipment manufactured or sold by Ford or from
the financing of used cars, trucks, tractors and farm and industrial equipment
of the same types, whether manufactured by Ford or others. (Section 1.01). Ford
Holdings, which owns American Road and the other insurance businesses formerly
owned by Ford Credit, is not a subsidiary of the Company and therefore not a
Restricted Subsidiary, as such terms are defined in the Indenture. So long as
stock of Ford Holdings is directly owned by Ford Credit or by a Restricted
Subsidiary, such stock will be subject to the "Limitation on Liens" provision
described below. Ford Credit currently owns its stock in Ford Holdings directly
but is under no obligation to continue to do so.
LIMITATION ON LIENS
If Ford Credit or any Restricted Subsidiary shall pledge or otherwise
subject to any lien (such a pledge or lien is defined in the Indenture as a
"Mortgage") any of its property or assets, Ford Credit will secure or cause such
Restricted Subsidiary to secure the Indenture Securities equally and ratably
with (or prior to) the indebtedness secured by such Mortgage. This restriction
does not apply to Mortgages securing such indebtedness which shall not exceed $5
million in the aggregate at any one time outstanding and does not apply to (a)
certain Mortgages created or incurred to secure financing of the export or
marketing of goods outside the United States, (b) Mortgages on accounts
receivable payable in foreign currencies securing indebtedness incurred and
payable outside the United States, (c) Mortgages in favor of Ford Credit or any
Restricted Subsidiary, (d) Mortgages in favor of governmental bodies to secure
progress, advance or other payments, or deposits with any governmental body
required in connection with the business of Ford Credit or a Restricted
Subsidiary, (e) deposits made in connection with pending litigation, (f)
Mortgages existing at the time of acquisition of the assets secured thereby
(including acquisition through merger or consolidation) and certain purchase
money Mortgages, and (g) any extension, renewal or replacement of any Mortgage
or Mortgages referred to in the foregoing clauses (a) through (f), inclusive.
(Section 10.04).
MERGER AND CONSOLIDATION
The Indenture provides that no consolidation or merger of Ford Credit with
or into any other corporation shall be permitted, and no sale or conveyance of
its property as an entirety, or substantially as an entirety, may be made to
another corporation, if, as a result thereof, any asset of Ford Credit or a
Restricted Subsidiary would become subject to a Mortgage, unless the Indenture
Securities shall be equally and ratably secured with (or prior to) the
indebtedness secured by such Mortgage, or unless such Mortgage could be created
pursuant to Section 10.04 (see "Limitation on Liens" above) without equally and
ratably securing the Indenture Securities. (Section 8.03).
13
<PAGE> 19
EVENTS OF DEFAULT AND NOTICE THEREOF
Except as may otherwise be provided in an indenture supplemental to the
Indenture, the following events in respect of a particular series of Indenture
Securities are defined in the Indenture as "Events of Default": (a) failure to
pay interest for 30 days after becoming due; (b) failure to pay the principal or
premium, if any, for five business days after becoming due at maturity, on
redemption or otherwise; (c) failure to make a sinking fund payment for five
days after becoming due; (d) failure to perform any other covenants for 90 days
after notice; and (e) certain events of bankruptcy, insolvency or
reorganization. (Section 5.01).
If an Event of Default in respect of a particular series of Indenture
Securities outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of the Indenture
Securities outstanding of such series may declare the principal amount (or, if
the Indenture Securities of such series are Original Issue Discount Securities
(as defined in the indenture), such portion of the principal amount as may be
specified in the terms of such series) of all of the Indenture Securities of
such series to be due and payable immediately. At any time after such a
declaration of acceleration in respect of a particular series of Indenture
Securities has been made, but before a judgment or decree for the payment of
money due upon acceleration has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of the Indenture Securities outstanding
of such series may, under certain circumstances, waive all defaults and rescind
and annul such declaration and its consequences if all Events of Default in
respect of the Indenture Securities of such series, other than the non-payment
of principal due solely by such declaration of acceleration, have been cured or
waived as provided in the Indenture. (Section 5.02).
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of a particular series of Indenture
Securities, give the holders of such series notice of all uncured defaults known
to it (the term "default" to include the events specified above without grace
periods); provided that, except in the case of default in the payment of the
principal of, or premium, if any, on, or interest on any of the Indenture
Securities of such series, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of such series. (Section 6.02).
Pursuant to the terms of the Indenture, Ford Credit is required to furnish
to the Trustee annually a statement of certain officers of Ford Credit stating
whether or not to the best of their knowledge Ford Credit is in default in
respect of any series of Indenture Securities in the performance and observance
of the terms of the Indenture and, if Ford Credit is in default, specifying such
default and that or those series affected thereby. (Section 10.05).
The Indenture provides that the holders of a majority in aggregate
principal amount of all Indenture Securities of a particular series then
outstanding will have the right to waive certain defaults in respect of such
series and, subject to certain limitations, to direct the time, method and place
of conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (Sections 5.12 and
5.13). The Indenture provides that, in case an Event of Default in respect of a
particular series of Indenture Securities shall occur (which shall not have been
cured or waived), the Trustee will be required to exercise such of its rights
and powers under the Indenture, and to use the degree of care and skill in their
exercise, that a prudent man would exercise or use in the conduct of his own
affairs, but otherwise need only perform such duties as are specifically set
forth in the Indenture. (Section 6.01). Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of such series unless they shall
have offered to the Trustee reasonable security or indemnity. (Section 6.03).
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture, the rights and obligations of Ford
Credit and the rights of the holders of a particular series may be modified by
Ford Credit with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of the Indenture Securities of such series then
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outstanding; but no such modification may be made which would (i) extend the
fixed maturity of any Indenture Security of such series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, without the consent of the holder of each Indenture Security of such
series so affected; or (ii) reduce the above-stated percentage of Indenture
Securities of such series, the consent of the holders of which is required to
modify or alter the Indenture, without the consent of the holders of all
Indenture Securities of such series then outstanding. (Section 9.02).
TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Indenture Securities and a successor Trustee may be appointed to act with
respect to such one or more series. (Section 6.10). In the event that there
shall be two or more persons acting as Trustee with respect to different series
of Indenture Securities, each such Trustee shall be a trustee of a trust or
trusts under the Indenture separate and apart from the trust or trusts
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Indenture Securities for
which it is acting as Trustee. (Section 6.11).
CONCERNING CONTINENTAL
Continental Bank, National Association, Trustee under the Indenture, is a
depositary of Ford Credit and Ford, has from time to time made loans to Ford
Credit, Ford and its subsidiaries, has from time to time purchased receivables
from Ford Credit and has performed other services for such companies in the
normal course of its business.
REPORTS
Ford Credit publishes annual reports, containing certified financial
statements, and quarterly reports, containing interim unaudited financial
statements. Copies of such reports will be available upon request.
PLAN OF DISTRIBUTION
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to one or more other purchasers or
through agents.
The Prospectus Supplement sets forth the terms of the offering of the
particular series of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
Ford Credit has entered into arrangements with respect to the sale of such
series of Debt Securities, (ii) the initial public offering or purchase price of
such series of Debt Securities, (iii) any underwriting discounts, commissions
and other items constituting underwriters' compensation from Ford Credit and any
other discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to Ford Credit, and (vi) the securities exchanges, if any, on which
such series of Debt Securities will be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Debt Securities, the obligations of the underwriters to
purchase such series of Debt Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of Debt
Securities will be obligated to purchase all of the Debt Securities of such
series allocated to it if any such Debt Securities are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Debt Securities may be offered and sold by Ford Credit directly or
through agents designated by Ford Credit from time to time. Unless otherwise
indicated in the Prospectus Supplement, any such agent or agents will be acting
on a best efforts basis for the period of its or their appointment. Any agent
participating in the distribution of the Debt Securities may be deemed
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to be an "underwriter", as that term is defined in the Securities Act, of the
Debt Securities so offered and sold. The Debt Securities also may be sold to
dealers at the applicable price to the public set forth in the Prospectus
Supplement relating to a particular series of Debt Securities who later resell
to investors. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act.
If so indicated in the Prospectus Supplement relating to a particular
series of Debt Securities, Ford Credit will authorize underwriters or agents to
solicit offers by certain institutions to purchase Debt Securities of such
series from Ford Credit pursuant to delayed delivery contracts providing for
payment and delivery at a future date. Such contracts will be subject only to
those conditions set forth in the Prospectus Supplement and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Underwriters and agents may be entitled, under agreements entered into with
Ford Credit, to indemnification by Ford Credit against certain civil
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
The legality of the Debt Securities offered hereby will be passed on for
Ford Credit by J. D. Bringard, Esq., Vice President--General Counsel of Ford
Credit, or other counsel satisfactory to any underwriters or agents, and for any
underwriters or agents by Shearman & Sterling, 599 Lexington Avenue, New York,
N.Y. Mr. Bringard is a full-time employee of Ford Credit and owns and holds
options to purchase shares of Common Stock of Ford. Shearman & Sterling act as
counsel to the Compensation and Option Committee and the Audit Committee of the
Board of Directors of Ford and occasionally act as counsel to Ford and Ford
Credit in connection with certain transactions.
EXPERTS
The financial statements which are incorporated in this Prospectus by
reference to the 1993 10-K Report have been audited by Coopers & Lybrand, 400
Renaissance Center, Detroit, Michigan 48243, independent certified public
accountants, to the extent indicated in their report therein, and have been so
incorporated in reliance upon the report of that firm, which includes an
explanatory paragraph indicating Ford Credit changed its methods of accounting
for postretirement health care benefits and income taxes in 1992, and upon their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information of Ford Credit
for the periods ended March 31, 1994 and 1993, included in the First Quarter
10-Q Report, incorporated by reference in this Prospectus, Coopers & Lybrand
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their report
included in the First Quarter 10-Q Report states that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim financial information
because such report is not a "report" or a "part" of the registration statement
prepared or certified by the accountants within the meaning of Sections 7 and 11
of such Act.
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