Pricing Supplement No. 12 Dated January 19, 1994
(To Prospectus and Prospectus Supplement
Dated December 1, 1993)
Rule 424(b)(3)
Registration Statement
No. 33-51075
U. S. $3,000,000,000
FORD MOTOR CREDIT COMPANY
Medium-Term Notes Due from 9 Months
to 30 Years from Date of Issue
Ford Motor Credit Company has designated $47,000,000 Face Amount of its
Medium-Term Notes Due from 9 Months to 30 Years from Date of Issue having the
specific terms set forth below. Goldman, Sachs & Co. have agreed to purchase
the Notes at a price of 100% of the Face Amount for resale at an initial
public offering price of 100% of the Face Amount thereof. After the initial
public offering, the public offering price may be changed.
The Notes may not be redeemed by Ford Credit prior to their Stated
Maturity on February 2, 1995. The Face Amount of the Notes will bear
interest from February 2, 1994 at the rate of 3.52% per annum, payable on
March 15, 1994, September 15, 1994 and at Stated Maturity.
The principal amount of the Notes payable by Ford Credit at Stated
Maturity shall be an amount equal to the Principal Redemption Amount. The
Principal Redemption Amount shall be determined by the Reference Agent in
accordance with the following formula:
Principal Redemption Amount = 90% of the Face Amount of the Notes
plus the Additional Redemption Amount.
For purposes of calculating the Principal Redemption Amount, "Additional
Redemption Amount" means (i) zero if the Yield Curve is 0.60% (60 basis
points) or more, (ii) 5.667% of the Face Amount of the Notes if the Yield
Curve is less than 0.60% (60 basis points) but not less than 0.55% (55 basis
points), (iii) 11.334% of the Face Amount of the Notes if the Yield Curve is
less than 0.55% (55 basis points) but not less than 0.50% (50 basis points),
or (iv) 17% of the Face Amount of the Notes if the Yield Curve is less than
0.50% (50 basis points). The maximum Principal Redemption Amount, therefore,
is 107% of the Face Amount of the Notes, and the minimum Principal Redemption
Amount is 90% of the Face Amount of the Notes.
"Yield Curve" means the excess, if any, of the Bond Yield over the Note
Yield.
"Bond Yield" means the yield to maturity corresponding to the bid side
price of $100,000,000 principal amount of the 7.125% U. S. Government
Treasury Bond due February, 2023 (the "Treasury Bond"), as such yield to
maturity appears on Telerate Page 500 at approximately 3:00 p.m., New York
City time, on the Determination Date, as determined by the Reference Agent,
and "Note Yield" means the yield to maturity corresponding to the offer side
price of $100,000,000 principal amount of the most recently announced non-
callable U. S. Government Treasury Note which is not a zero coupon security
(regardless of whether such security has been issued as of the Determination
Date), and which has a maturity equal to approximately ten years from the
date of issuance (the "Treasury Note"), as such yield to maturity appears on
Telerate Page 500 at approximately 3:00 p.m., New York City time, on the
Determination Date, as determined by the Reference Agent. If the Reference
Agent shall determine that no such price or prices appear on Telerate Page
500 at approximately 3:00 p.m., New York City time, on the Determination
Date, the Bond Yield or the Note Yield, as the case may be, will be
determined by the Reference Agent based on the arithmetic mean of the
secondary market bid or offer prices, as the case may be, of three leading
primary United States government securities dealers selected by the Reference
Agent in its sole discretion, for the Treasury Bond or the Treasury Note, as
the case may be, as of approximately 3:00 p.m. New York City time, on the
Determination Date. "Determination Date" means the Business Day five
Business Days prior to the Stated Maturity. "Business Day" means any day
that is not a Saturday or Sunday and that, in The City of New York, is not a
day on which banking institutions are generally authorized or obligated by
law to close. "Telerate Page 500" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page
on that service, or such other service as may be nominated as the information
vendor, for the purpose of displaying comparable prices and yields).
If an Event of Default which results in an acceleration of the principal
amount the of Notes occurs prior to the Stated Maturity, the Principal
Redemption Amount due and payable by Ford Credit as a result of such
acceleration will be calculated pursuant to the formula set forth above,
except that, for this purpose, "Determination Date" will mean the Business
Day five Business Days prior to the date of acceleration.
Determination of the Principal Redemption Amount will be made by
Chemical Bank, acting as Reference Agent, using its good faith judgment.
See the accompanying Prospectus and Prospectus Supplement for further
information regarding the Notes described in the Pricing Supplement.
<PAGE>
HISTORICAL INFORMATION
The table below sets forth the difference between the yield to maturity of
the Treasury Bond and the yield to maturity corresponding to the then current
U. S. Government Treasury Note having a maturity of approximately ten years
as of the last day of each calendar week for the period from the date of
issuance of the Treasury Bond through January 14, 1994, calculated in the
manner described above. The data presented in this table are furnished
solely for informational purposes, and no representation is made that the
actual Yield Curve on the Determination Date will be equal to, less than or
greater than any of the levels indicated.
DATE DIFFERENCE DATE DIFFERENCE
05-Feb-93 0.825% 30-Jul-93 0.756%
12-Feb-93 0.776% 06-Aug-93 0.698%
19-Feb-93 0.860% 13-Aug-93 0.712%
26-Feb-93 0.867% 20-Aug-93 0.756%
05-Mar-93 0.858% 27-Aug-93 0.757%
12-Mar-93 0.742% 03-Sep-93 0.785%
19-Mar-93 0.852% 10-Sep-93 0.759%
26-Mar-93 0.847% 17-Sep-93 0.806%
02-Apr-93 0.902% 24-Sep-93 0.812%
09-Apr-93 0.890% 01-Oct-93 0.830%
16-Apr-93 0.867% 08-Oct-93 0.836%
23-Apr-93 0.908% 15-Oct-93 0.802%
30-Apr-93 0.907% 22-Oct-93 0.764%
07-May-93 0.939% 29-Oct-93 0.770%
14-May-93 0.931% 05-Nov-93 0.725%
21-May-93 0.882% 12-Nov-93 0.734%
28-May-93 0.832% 19-Nov-93 0.699%
04-Jun-93 0.813% 26-Nov-93 0.678%
11-Jun-93 0.845% 03-Dec-93 0.621%
18-Jun-93 0.863% 10-Dec-93 0.671%
25-Jun-93 0.878% 17-Dec-93 0.671%
02-Jul-93 0.921% 23-Dec-93 0.694%
09-Jul-93 0.891% 31-Dec-93 0.699%
16-Jul-93 0.850% 07-Jan-94 0.701%
23-Jul-93 0.771% 14-Jan-94 0.684%
THE FOREGOING TABLE IS ILLUSTRATIVE ONLY. NO REPRESENTATION IS MADE, AND
THERE CAN BE NO ASSURANCE, AS TO THE ACTUAL PRINCIPAL REDEMPTION AMOUNT
PAYABLE AT MATURITY IN RESPECT OF THE NOTES.
<PAGE>
RISK FACTORS
Regardless of changes in the Yield Curve over the term of the Notes, the
Principal Redemption Amount of the Notes payable at Stated Maturity will
depend only on the Yield Curve as determined by the Reference Agent at
approximately 3:00 p.m., New York City time, on the Determination Date.
Investors in the Notes will receive less than the Face Amount of the Notes at
Stated Maturity if the Yield Curve is more than 0.55% (55 basis points).
The Yield Curve will be affected by numerous factors beyond Ford Credit's
control, the effect of which cannot be accurately predicted, including,
without limitation, expectations regarding levels of interest rates,
inflation, and the demand for, and supply of U. S. Government Securities.
Trading of securities may be temporarily influenced by conditions of
illiquidity, the participation of speculators, government regulations and
intervention, market disruptions, equipment failure, natural and other
catastrophes and other factors.
TAXATION
The following summary of the principal United States Federal income tax
consequences of the ownership and disposition of the Notes supplements, and,
to the extent inconsistent therewith, replaces the discussion under the
heading "United States Taxation" in the accompanying Prospectus Supplement.
Persons considering the purchase of the Notes should consult their own
tax advisers concerning the application of United States Federal, state,
local and any other income and estate tax laws to their particular situations
as well as any consequences arising under the laws of any other taxing
jurisdiction.
Ownership and Disposition of Notes by U. S. Holders
In General
There are no effective regulations, published rulings or judicial
decisions involving the characterization for United States Federal income tax
purposes of instruments with terms substantially the same as the Notes.
Thus, the proper treatment of the Notes is unclear.
Current Law
Under current law, including general principals of United States Federal
income tax law and the Internal Revenue Code of 1986, as amended (the
"Code"), interest on a Note is included in income when it is paid or accrued
depending on a taxpayer's method of accounting for tax purposes, and, in the
case of accrual basis taxpayers, would not be accrued prior to the time that
it becomes fixed. Interest attributable to the Principal Redemption Amount
would not become fixed for these purposes until the amount thereof was
finally determined and would equal the excess of the Principal Redemption
Amount over the U. S. Holder's investment in the Note. If the Principal
Redemption Amount was less than the amount of the U. S. Holder's investment
in the Note, the U. S. Holder generally would recognize a short-term capital
loss. Upon disposition of a Note, except to the extent of accrued but unpaid
interest, a U. S. Holder would generally recognize short-term capital gain or
loss equal to the difference between the amount realized on such disposition
and the U. S. Holder's tax basis in the Note.
Proposed regulations for Contingent Principal
There are currently outstanding proposed regulations relating to debt
obligations providing for contingent payments (the "Proposed Regulations")
that, if adopted, would by their terms apply retroactively to all debt issued
after the date on which the Proposed Regulations were originally issued,
including the Notes.
Under the Proposed Regulations, unless the contingent amounts
represented an insubstantial discount below the U. S. Holder's investment in
the Note (as described below), a Note would be treated as a "contingent
principal obligation", and amounts received or accrued by a U. S. Holder
would not be included in income until the sum of the scheduled interest
payments and the Principal Redemption Amount equalled the amount of the U. S.
Holder's investment in the Note, and thereafter would be included in income
as interest. If the sum of the scheduled interest payments and the Principal
Redemption Amount was less than the amount of the U. S. Holder's investment
in the Note, the U. S. Holder generally would recognize a short-term capital
loss. Upon disposition of a Note, except to the extent of accrued but unpaid
interest, a U. S. Holder would generally recognize gain or short-term capital
loss equal to the difference between the amount realized on such disposition
and the U. S. Holder's tax basis in the Note, although it is unclear whether
gain from the disposition of a Note would be ordinary income or short-term
capital gain.
Proposed Regulations for Contingent Interest
The Notes provide for total noncontingent payments equal to 93.52% of a
U. S. Holder's investment in the Note. The Internal Revenue Service may take
the position that this represents an insubstantial discount and therefore
that the rules in the Proposed Regulations governing "contingent interest
obligations" apply to the Notes. These rules would require a U. S. Holder to
bifurcate the Note into its contingent and noncontingent components. The
noncontingent component would be treated as a separate debt obligation
subject to treatment under the original issue discount rules and other rules
as described in the accompanying Prospectus Supplement. The contingent
component would be treated in accordance with its economic substance,
probably as a stepped cash settlement option on the spread between the Bond
Yield and the Note Yield, subject to a cap and a floor.
Short-term Notes
Finally, in lieu of treatment under any of the above-mentioned rules,
the Notes could be subject to the rules governing short-term Notes as
described in the accompanying Prospectus Supplement.
GOLDMAN, SACHS & CO.
