SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------
FORM 10-Q
(Mark One)
/X/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-6368
Ford Motor Credit Company
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(Exact name of registrant as specified in its charter)
Incorporated in Delaware 38-1612444
- ---------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of Incorporation Identification
or organization) Number)
The American Road, Dearborn, Michigan 48121
-------------------------------------- --------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: 313-322-3000
Indicate by checkmark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No .
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number
of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 250,000 shares
of common stock as of July 31, 1994.
The registrant meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing
this Form in reduced disclosure format.
<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements - The interim financial data presented herein
are unaudited, but in the opinion of management reflect all adjustments
necessary for a fair presentation of such information. Results for interim
periods should not be considered indicative of results for a full year.
Reference should be made to the financial statements contained in the
registrant's Annual Report on Form 10-K for the year ended December 31,
1993 (the "10-K Report"). Information relating to earnings a share is not
presented because the registrant, Ford Motor Credit Company ("Ford
Credit"), is a wholly owned subsidiary of Ford Motor Company ("Ford").
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Statement of Income
and of Earnings Retained for Use in the Business
For the Periods Ended June 30, 1994 and 1993
(in millions)
<TABLE>
<CAPTION>
Second Quarter First Half
1994 1993 1994 1993
--------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Financing Revenue
Operating leases $ 1,261.3 $ 860.5 $ 2,371.5 $ 1,639.9
Retail 794.5 831.2 1,589.6 1,621.0
Wholesale 248.9 184.9 435.3 343.6
Diversified 27.4 35.1 52.7 73.5
Other 66.6 53.6 124.0 108.6
---------- ---------- ---------- ----------
Total financing revenue 2,398.7 1,965.3 4,573.1 3,786.6
Investment and other income 194.7 88.3 277.5 227.1
---------- ---------- ---------- ----------
Total revenue 2,593.4 2,053.6 4,850.6 4,013.7
Expenses
Depreciation on operating leases 934.9 633.0 1,744.4 1,183.0
Interest expense 845.4 725.0 1,605.6 1,443.2
Operating expenses 230.4 198.2 443.4 376.7
Provision for credit losses 61.2 68.1 132.3 152.5
---------- ---------- ---------- ----------
Total expenses 2,071.9 1,624.3 3,925.7 3,155.4
---------- ---------- ---------- ----------
Equity in net income of affiliated
companies 51.2 38.8 104.8 87.4
Income before income taxes 572.7 468.1 1,029.7 945.7
Provision for income taxes 201.2 158.8 357.1 320.2
---------- ---------- ---------- ----------
Income before minority interest 371.5 309.3 672.6 625.5
Minority interest in net income of
subsidiaries 2.9 3.1 5.2 4.2
---------- ---------- ---------- ----------
Net income 368.6 306.2 667.4 621.3
Earnings retained for use in
the business
Beginning of period 5,198.7 4,271.2 4,899.9 3,956.1
Dividends 0 0 0 0
---------- ---------- ---------- ----------
End of period $ 5,567.3 $ 4,577.4 $ 5,567.3 $ 4,577.4
========== ========== ========== ==========
<FN>
Certain amounts for Second Quarter and First Half 1993 have been reclassified to conform
with presentations adopted in subsequent periods.
The accompanying notes are part of the financial statements.
</TABLE>
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<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(in millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
----------- ----------- -----------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 1,094.6 $ 992.3 $ 1,162.5
Investments in securities 1,930.0 1,889.3 1,942.2
Finance receivables, net (Note 1) 55,167.8 50,714.1 49,867.5
Accounts and notes receivable from
affiliated companies 381.4 385.0 379.1
Equity in net assets of affiliated companies 1,253.7 1,201.9 1,095.8
Net investment, operating leases 16,567.9 12,600.9 10,015.8
Other assets 1,489.3 1,816.8 1,388.6
----------- ----------- -----------
Total assets $ 77,884.7 $ 69,600.3 $ 65,851.5
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $ 1,103.2 $ 953.2 $ 822.4
Affiliated companies 764.1 261.9 466.7
----------- ----------- -----------
Total accounts payable 1,867.3 1,215.1 1,289.1
Debt (Note 2) 65,621.3 58,870.2 55,701.4
Deferred income taxes 2,210.6 2,048.7 1,689.3
Other liabilities and deferred income 1,421.1 1,394.6 1,334.7
----------- ----------- -----------
Total liabilities 71,120.3 63,528.6 60,014.5
Minority interest in net assets of
subsidiaries 400.4 297.0 352.1
Stockholder's Equity
Capital stock, par value $100 a share,
250,000 shares authorized, issued and
outstanding 25.0 25.0 25.0
Paid-in surplus (contributions by stockholder) 917.3 917.3 917.3
Unrealized (loss)/gain on marketable equity
securities, net of taxes (34.9) 17.8 22.2
Foreign-currency translation adjustments (110.7) (85.3) (57.0)
Earnings retained for use in the business 5,567.3 4,899.9 4,577.4
----------- ----------- -----------
Total stockholder's equity 6,364.0 5,774.7 5,484.9
----------- ----------- -----------
Total liabilities and stockholder's
equity $ 77,884.7 $ 69,600.3 $ 65,851.5
=========== =========== ===========
<FN>
Certain amounts for December and June 1993 have been reclassified to conform with
presentations adopted in subsequent periods.
The accompanying notes are part of the financial statements.
</TABLE>
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<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended June 30, 1994 and 1993
(in millions)
<TABLE>
<CAPTION>
First Half
1994 1993
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 667.4 $ 621.3
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 132.3 152.5
Depreciation and amortization 1,772.7 1,215.0
Gain on sales of finance receivables (19.3) (52.6)
Gain on sale of investment (58.3) 0
Equity in net income of affiliates (104.8) (87.4)
Deferred income taxes 81.6 206.6
Changes in the following items
Other assets 196.6 159.1
Other liabilities 697.0 250.3
Other 25.1 10.0
---------- ----------
Net cash provided by operating activities 3,390.3 2,474.8
---------- ----------
Cash flows from investing activities
Purchase of finance receivables (67,191.7) (56,671.7)
Collection of finance receivables 61,580.6 51,238.3
Proceeds from sales of finance receivables 1,013.3 1,426.7
Proceeds from sale of investment 142.1 0
Purchase of operating lease vehicles (6,987.8) (4,733.6)
Liquidation of operating lease vehicles 1,245.5 1,256.3
Other 9.5 20.5
---------- ----------
Net cash used in investing activities (10,188.5) (7,463.5)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 6,573.9 7,509.3
Principal payments on long-term debt (4,345.2) (3,267.2)
Change in short-term debt, net 4,579.3 1,662.4
Other 93.1 (46.4)
---------- ----------
Net cash provided by financing activities 6,901.1 5,858.1
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (0.6) (1.9)
---------- ----------
Net change in cash and cash equivalents 102.3 867.5
Cash and cash equivalents, beginning of period 992.3 295.0
---------- ----------
Cash and cash equivalents, end of period $ 1,094.6 $ 1,162.5
========== ==========
Supplementary cash flow information
Interest paid $ 1,560.8 $ 1,178.4
Taxes paid 223.0 171.9
<FN>
Certain amounts for First Half 1993 have been reclassified to conform with presentations
adopted in subsequent periods.
The accompanying notes are part of the financial statements.
</TABLE>
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<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 1. Finance Receivables (in millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Retail $ 39,799.7 $ 38,609.3 $ 36,897.1
Wholesale 14,684.9 11,698.5 12,647.2
Diversified 2,595.5 2,636.0 2,817.8
Other 3,943.6 3,625.9 3,334.5
----------- ----------- -----------
Total finance receivables 61,023.7 56,569.7 55,696.6
Add loan origination costs 141.3 125.4 107.4
Less
Unearned income (5,259.8) (5,263.3) (5,170.6)
Allowance for credit losses (737.4) (717.7) (765.9)
----------- ----------- -----------
Finance receivables, net $ 55,167.8 $ 50,714.1 $ 49,867.5
=========== =========== ===========
</TABLE>
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<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements (continued)
Note 2. Debt (in millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
PAYABLE WITHIN ONE YEAR:
Commercial paper $ 29,021.5 $ 24,506.1 $ 22,960.1
Borrowing agreements with
bank trust departments 12.0 0 0
Other short-term debt* 1,020.0 1,001.0 1,678.5
----------- ----------- -----------
Total short-term debt 30,053.5 25,507.1 24,638.6
Senior and subordinated
notes and debentures
payable within one year 6,319.5 7,882.6 6,816.8
----------- ----------- -----------
Total payable within
one year 36,373.0 33,389.7 31,455.4
----------- ----------- -----------
June 30, 1994
----------------------------
Weighted Average
Interest Rates** Maturities
---------------- ----------
PAYABLE AFTER ONE YEAR:
Unsecured senior notes
Notes 6.66% 1995-2048 29,301.9 25,526.8 24,288.9
Unamortized discount (53.6) (46.8) (44.8)
----------- ----------- -----------
Total unsecured
senior notes 29,248.3 25,480.0 24,244.1
----------- ----------- -----------
Unsecured subordinated
convertible debentures 0 0.5 1.9
----------- ----------- -----------
Total payable
after one year 29,248.3 25,480.5 24,246.0
----------- ----------- -----------
Total debt $ 65,621.3 $ 58,870.2 $ 55,701.4
=========== =========== ===========
<FN>
* Includes $2.3 million, $150 million, and $800 million with affiliated companies at
June 30, 1994, December 31, 1993, and June 30, 1993, respectively.
** Rates were variable on about 28.6% of the debt payable after one year including the
effects of interest rate swap agreements.
</TABLE>
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<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Ford Credit Second Quarter 1994 Results of Operations
Ford Credit's consolidated net income for the second quarter of 1994 was
$368 million, up $62 million or 20% compared with $306 million in the
second quarter of 1993. Income from financing operations was $317 million,
up $49 million or 18% from the same period a year ago. Equity in net
income of affiliated companies, primarily Ford Holdings, Inc. ("Ford
Holdings"), was $51 million compared with $38 million in the same period a
year ago.
Compared with results from a year ago, financing profits in the second
quarter of 1994 primarily reflected a higher level of earning assets, gains
($43 million) from the sale of Ford Credit's investment in Manheim
Auctions, Inc. and from the sale of receivables, as well as favorable
credit loss performance, partially offset by lower net interest margins.
The higher level of earning assets reflected an increase in operating
leases, and retail and wholesale financing. Lower credit losses primarily
reflected lower losses per repossessed unit and fewer repossessions. The
lower net interest margins primarily reflected the effect of lower interest
rates on finance receivables and operating leases.
Total gross finance receivables and net investment in operating leases at
June 30, 1994 were $77.6 billion, up $11.9 billion (18%) 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 second quarter of 1994 was $935 million, up $302
million or 48% compared with the second 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 second quarter of 1994, Ford Credit financed 35.8% of all new
cars and trucks sold by Ford Motor Company dealers in the United States,
compared with 37.7% in the second quarter of 1993. The decrease primarily
resulted from lower levels of daily rental car financing. Ford Credit
provided retail financing for 626,000 new and used vehicles in the United
States, up 5% from a year ago. Ford Credit also provided wholesale
financing for 82.3% of Ford Motor Company factory sales to U.S. car and
truck dealers during the quarter, compared with 82.0% in the same period a
year ago.
-7-
<PAGE>
FORD CREDIT FIRST HALF 1994 RESULTS OF OPERATIONS
For the first half of 1994, Ford Credit's consolidated net income was $667
million, up $46 million from $621 million in the first half of 1993.
Income from financing operations was $562 million, up $28 million or 5%
from the same period a year ago. Equity in net income of affiliated
companies was $105 million compared with $87 million in 1993. The
improvement in financing profits primarily resulted from higher levels of
earning assets, a one-time gain from the sale of Ford Credit's investment
in Manheim Auctions, Inc., and lower credit losses, partially offset by
lower net interest margins, and lower gains from the sale of receivables.
Depreciation expense in the first half of 1994 was $1,744 million, up $561
million or 47% compared with the first half 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 half of
1994, Ford Credit provided retail financing for 37.1% of all new cars and
trucks sold by Ford Motor Company dealers in the United States, compared
with 38.4% in the same period a year ago. Ford Credit provided U.S. retail
financing for 1,210,000 new and used vehicles compared with 1,097,000
vehicles in the first half of 1993. Ford Credit also provided wholesale
financing for 81.0% of Ford Motor Company factory sales to U.S. car and
truck dealers during the first half of 1994, compared with 80.5% in the
same period last year.
-8-
<PAGE>
Ford Credit Liquidity and Capital Resources
Ford Credit's outstanding debt at June 30, 1994 and at the end of each of
the last five years was as follows:
<TABLE>
<CAPTION>
December 31
June 30, -------------------------------------------
1994 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Commercial paper & STBA's(a) $29,033 $24,506 $21,210 $18,232 $23,371 $18,864
Other short-term debt (b) 1,020 1,001 1,785 1,642 1,411 1,467
Long-term debt (including
current portion) 35,568 33,363 26,914 28,160 25,903 26,393
------- ------- ------- ------- ------- -------
Total debt $65,621 $58,870 $49,909 $48,034 $50,685 $46,724
======= ======= ======= ======= ======= =======
1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- -------
Memo:
Total support facilities $19.7 $16.9 $13.9 $13.8 $12.7 $12.7
(billions -- as of July 1,
1994 and January 1,
1994-1990, respectively)
<FN>
- - - - - -
(a) Short-term borrowing agreements with bank trust departments
(b) Includes $2 million, $150 million, and $800 million with affiliated companies at
June 30, 1994, December 31, 1993, and December 31, 1992, respectively.
</TABLE>
Support facilities represent additional sources of funds, if required. At
July 1, 1994, Ford Credit had approximately $18.5 billion of contractually
committed facilities for use in the United States, 87% of which are
available through June 1999. These facilities included $15.7 billion of
revolving credit agreements with banks (which included $5.9 billion of Ford
bank lines that may be used either by Ford or Ford Credit at Ford's option)
and $2.8 billion of agreements to sell retail receivables. At July 1,
1994, all of these U.S. facilities were unused. Outside of the United
States, an additional $1.2 billion of facilities support borrowing
operations in Canada, Australia, and Puerto Rico, of which 84% are
contractually committed and available through June 1999. Canadian
facilities of $712 million included $184 million of Ford Motor Company of
Canada, Limited and Ford Ensite International, Inc. lines which are
available to Ford Credit Canada Limited at the option of these two
companies. Australian facilities of $429 million included $165 million of
Ford Motor Company of Australia Limited lines which are available to Ford
Credit Australia Limited at the option of Ford Motor Company of Australia
Limited. Ford Motor Credit Company of Puerto Rico, Inc. had $25 million in
support facilities at July 1, 1994. Substantially all of these facilities
were unused at July 1, 1994.
July 29, 1994
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None to report.
Item 2. Changes in Securities
Not required.
Item 3. Defaults Upon Senior Securities
Not required.
Item 4. Submission of Matters to a Vote of Security Holders
Not required.
Item 5. Other information
INFORMATION CONCERNING FORD
Following is a condensed consolidated statement of income (unaudited) of Ford
for the periods ended June 30, 1994 and 1993 (in millions except amounts per
share):
Second Quarter First Half
-------------- --------------
1994 1993 1994 1993
---- ---- ---- ----
Sales and revenues $33,772 $29,419 $64,174 $56,182
Total costs and expenses 30,906 27,988 59,561 53,583
Operating income 2,866 1,431 4,613 2,599
Automotive net interest expense 0 (47) (48) (150)
Automotive equity in net income
of affiliated companies 42 10 109 11
Income before income taxes 2,908 1,394 4,674 2,460
Provision for income taxes 1,161 570 1,986 1,038
Minority interests in net income
of subsidiaries 36 49 73 75
Net income $ 1,711 $ 775 $ 2,615 $ 1,347
Amounts Per Share of Common Stock
and Class B Stock after Preferred
Stock Dividends
Income per share $ 1.63 $ 0.72 $ 2.47 $ 1.23
Income per share
assuming full dilution $ 1.44 $ 0.65 $ 2.20 $ 1.13
Cash Dividends per share $ 0.225 $ 0.20 $ 0.425 $ 0.40
Share data have been adjusted to reflect the 2-for-1 stock split that became
effective June 6, 1994.
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<PAGE>
SECOND QUARTER 1994 RESULTS OF OPERATIONS - FORD
Overview
Ford earned $1,711 million, or $1.63 per share of Common and Class B Stock,
in the second quarter of 1994. This compares with $775 million, or $0.72
per share, in the second quarter of 1993. Fully diluted earnings per share
were $1.44 in the second quarter of 1994, compared with $0.65 a year ago.
Ford's worldwide sales and revenues were $33.8 billion, up $4.4 billion
from a year ago. Worldwide factory unit sales of cars and trucks were
1,811,000, up 136,000 units or 8%. Stockholders' equity was $18.4 billion
at June 30, 1994.
On June 6, 1994, a 2-for-1 stock split in the form of a 100% stock dividend
on Ford's outstanding Common and Class B stock became effective. Earnings
per share for prior periods have been restated to reflect the stock split.
Automotive Operations
Ford's worldwide Automotive operations earned $1,183 million in the second
quarter of 1994 on sales of $28.4 billion, compared with earnings of
$395 million on sales of $25.3 billion a year ago.
In the U.S., Ford's Automotive operations earned $907 million, compared
with $367 million a year ago. The improvement reflected higher unit volume
(as a result of higher truck sales) and improved margins.
In the second quarter of 1994, the seasonally-adjusted annual selling rate
for the U.S. car and truck industry was 15.3 million units compared with
14.6 million in the second quarter of 1993. Ford's car market share was
21.5% in the second quarter of 1994, up 1/10 of a point from a year ago.
Ford's truck share was 30%, down 2/10 of a point from a year ago. Ford's
combined car and truck share was 25%, unchanged from a year ago.
Outside the U.S., Automotive operations earned $276 million in the second
quarter of 1994, compared with $28 million a year ago. The improvement
reflected primarily higher unit volume in Europe, where Automotive
operations (excluding Jaguar) earned $244 million in the second quarter of
1994, compared with a loss of $66 million a year ago. Earnings were lower
in Latin America, where business conditions historically have been volatile
and subject to rapid change.
In the second quarter of 1994, the seasonally-adjusted annual selling rate
for the European car and truck industry was 13.1 million units, compared
with 12.3 million a year ago. Ford's car share was 11.6% in the second
quarter of 1994, up 5/10 of a point from a year ago. Ford's truck share
was 14.8%, up 2.1 points.
Financial Services Operations
Ford's Financial Services operations earned $528 million in the second
quarter of 1994, compared with $380 million in the second quarter of 1993.
The increase resulted primarily from improved results at Ford Credit and
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<PAGE>
Associates First Capital Corporation ("The Associates"), the consolidation
of results for The Hertz Corporation ("Hertz"), and non-recurrence of
losses at First Nationwide Financial Corporation ("First Nationwide").
For a discussion of Ford Credit's results of operations in the second
quarter of 1994, see Item 2. "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Ford Credit Second Quarter
1994 Results of Operations." In addition, international operations managed
by Ford Credit earned $50 million in the second quarter of 1994, equal to a
year ago.
The Associates earned $121 million in the U.S. in the second quarter of
1994, compared with $111 million a year ago. The increase reflected higher
levels of earning assets and improved net interest margins. In addition,
international operations managed by The Associates earned $21 million in
the second quarter of 1994, compared with $10 million a year ago.
On March 8, 1994, Ford purchased from Commerzbank Aktiengesellschaft, a
German bank, additional shares of common stock of Hertz aggregating 5% of
the total outstanding voting stock, thereby bringing Ford's ownership of
the total voting stock of Hertz to 54% from 49%. On April 29, 1994, Ford
acquired 20% of Hertz' common stock from Park Ridge Limited Partnership,
and Hertz redeemed the common stock (26%) and preferred stock of Hertz
owned by AB Volvo for $145 million; these transactions resulted in Hertz
becoming a wholly-owned subsidiary of Ford. In addition, a $150 million
subordinated promissory note of Hertz held by Ford Credit was exchanged for
$150 million of preferred stock of Hertz. Hertz earned $26 million in the
second quarter of 1994, compared with $6 million a year ago (reflected in
Ford's results on an equity basis).
USL Capital Corporation ("USL Capital") earned $27 million in the second
quarter of 1994, compared with $20 million a year ago. The American Road
Insurance Company ("American Road") earned $13 million in the second quarter
of 1994, compared with $16 million in the same period in 1993.
On April 14, 1994, an agreement was entered into for the sale of
substantially all of the assets of First Nationwide Bank to First Madison
Bank, referred to on page 11 of Ford Credit's Quarterly Report on Form 10-Q
for the period ended March 31, 1994 (the "First Quarter 10-Q Report"). The
transaction, which is subject to federal regulatory approvals, is expected
to be completed in the fourth quarter of 1994. In the second quarter of
1993, First Nationwide incurred a loss of $18 million.
FIRST HALF 1994 RESULTS OF OPERATIONS - FORD
Overview
Ford earned $2,615 million, or $2.47 per share of Common and Class B Stock,
in the first half 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 above). In the first half of 1993, Ford earned
$1,347 million, or $1.23 per share. Fully diluted earnings per share were
$2.20, compared with $1.13 a year ago. Ford's worldwide sales and revenues
-12-
<PAGE>
were $64.2 billion in the first half of 1994, up $8 billion from a year
ago. Worldwide factory unit sales of cars and trucks were 3,483,000, up
277,000 or 8%.
Automotive Operations
Ford's worldwide Automotive operations earned $2,138 million in the first
half of 1994, compared with $571 million in first half of 1993. In the
U.S., Ford's Automotive operations earned $1,742 million, compared with
$480 million a year ago. The improvement reflected higher unit volume (as
a result of higher industry sales) and improved margins.
In the first half of 1994, the seasonally-adjusted annual selling rate for
the U.S. car and truck industry was 15.5 million units, compared with
14 million a year ago. Ford's car share was 21.6% in the first half of
1994, down 7/10 of a point from a year ago. The decline from a year ago
reflected lower shares for Tempo and Topaz. Ford's truck share was 29.7%,
unchanged from a year ago. Ford's combined car and truck share was 24.9%,
down 4/10 of a point. For the full year, Ford projects U.S. industry sales
of about 15.5 million cars and trucks in 1994, compared with 14.2 million
units in 1993.
Outside the U.S., Automotive operations earned $396 million in the first
half of 1994, compared with $91 million a year ago. The improvement
reflected primarily higher unit volume, lower manufacturing costs, and
improved margins in Europe. Ford's European Automotive operations
(excluding Jaguar) earned $352 million in the first half of 1994, compared
with a loss of $47 million a year ago.
In the first half of 1994, the seasonally-adjusted annual selling rate for
the European car and truck industry was 13.1 million units, compared with
12.4 million units a year ago. Ford's car share was 11.8%, up 3/10 of a
point from a year ago. Ford's truck share was 14.7%, down 1/10 of a point
from a year ago. For the full year, Ford projects European industry sales
of about 13 million units in 1994, compared with 12.5 million units in
1993.
Financial Services Operations
Ford's Financial Services operations earned $477 million in the first half
of 1994, compared with $776 million in the first half of 1993. The decline
was more than explained by the charge to net income of $440 million related
to the sale of First Nationwide Bank. Higher earnings at Ford Credit and
The Associates and the consolidation of results for Hertz were partial
offsets.
For a discussion of Ford Credit's results of operations in the first half
of 1994, see Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Ford Credit First Half 1994 Results
of Operations." International operations managed by Ford Credit earned
$113 million in the first half of 1994, compared with $97 million a year
ago.
-13-
<PAGE>
The Associates earned $249 million in the U.S. in the first half of 1994,
compared with $222 million a year ago. The improvement reflected primarily
the same factors as those described in the discussion of second quarter
results of operations. In addition, international operations managed by
The Associates earned $39 million in the first half of 1994, compared with
$20 million a year ago.
Hertz earned $25 million in the first half of 1994, compared with $3 million
a year ago (reflected in Ford's results on an equity basis).
USL Capital's net income in the first half of 1994 was $48 million,
compared with $37 million a year ago. American Road earned $30 million in
the first half of 1994, compared with $39 million a year ago.
First Nationwide incurred a loss of $484 million in the first half of 1994,
including a charge of $440 million related to the sale of First Nationwide
Bank. First Nationwide incurred a loss of $35 million in the first half of
1993.
LIQUIDITY AND CAPITAL RESOURCES - FORD
Automotive Operations
Cash and marketable securities of Ford's Automotive operations were
$13.7 billion at June 30, 1994, up $3.9 billion from December 31, 1993.
The amount of cash and marketable securities is expected to decline during
the second half of the year because of normal new-model changeover and
launch and higher capital spending (discussed below). Ford paid
$569 million in cash dividends on its Common Stock, Class B Stock, and
Preferred Stock during the first six months of 1994.
Automotive capital expenditures were $3.5 billion in the first six months
of 1994, compared with $2.9 billion a year ago. Automotive capital
spending is projected to increase further during the second half of the
year as a result of increases in both product and non-product spending.
The higher product spending reflects a record pace of new-model
introductions, while non-product spending reflects efforts to improve
efficiency and quality and increase capacity for selected components and
vehicles.
Automotive debt at June 30, 1994 totaled $7.3 billion, which was 28% 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 June 30, 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, 1999. The entire $4.8 billion may be used,
at Ford's option, by either Ford or Ford Credit. As of June 30, 1994,
these facilities were unused. At July 1, 1994, these credit agreements
were increased to $5.9 billion.
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 1999; less than 1% had been
used at June 30, 1994.
Financial Services Operations
Financial Services' cash and investments in securities totaled $8.2 billion
at June 30, 1994, down $2.6 billion from December 31, 1993. The decline
reflected primarily the reclassification of First Nationwide's net assets
to "other assets" as a result of the pending sale.
Net receivables and lease investments were $120.9 billion at June 30, 1994,
up $1.4 billion from December 31, 1993. The increase reflected continued
growth in earning assets at Ford Credit and The Associates, offset
partially by the reclassification of First Nationwide's net assets.
-14-
<PAGE>
Total debt was $116.3 billion at June 30, 1994, up $12.3 billion from
December 31, 1993. The increase resulted from higher debt levels required
to finance growth in earning assets at Ford Credit and The Associates, as
well as the consolidation of Hertz; the reclassification of First
Nationwide's net assets was a partial offset.
At June 30, 1994, Financial Services had approximately $27.8 billion of
support facilities available for use in the U.S. (including $4.8 billion of
Ford bank lines that may be used by Ford Credit at Ford's option), 98% of
which were contractually committed; less than 2% of these facilities were
in use at that date. An additional $17.5 billion of support facilities
were available outside the U.S., 47% of which were contractually committed;
approximately $7.2 billion of these support facilities were in use at June
30, 1994.
LEGAL PROCEEDINGS - FORD
Product Matters
With respect to the lawsuits for damages arising out of automobile
accidents where plaintiffs claim that the injuries resulted from (or were
aggravated by) alleged defects in the occupant restraint systems in vehicle
lines of various model years, referred to in the fourth full paragraph on
page 24 of the 10-K Report and on page 14 of the First Quarter 10-Q Report,
the damages specified by the plaintiffs in these actions, including both
actual and punitive damages, aggregated approximately $905 million at June
30, 1994.
With respect to the lawsuits for damages involving the alleged propensity
of Bronco II utility vehicles to roll over, referred to in the fifth full
paragraph on page 24 of the 10-K Report and on page 14 of the First Quarter
10-Q Report, the damages specified in these actions, including both actual
and punitive damages, aggregated approximately $1.2 billion at June 30,
1994.
Environmental Matters
In addition to the notice from the government environmental enforcement
agency, potentially involving monetary sanctions exceeding $100,000,
referred to on page 14 of the First Quarter 10-Q Report, in a separate
matter potentially involving monetary sanctions exceeding $100,000, Ford
has received a notice that a government environmental enforcement agency
believes a Ford facility may have violated waste handling or disposal
requirements.
Other Matters
With respect to the challenge by a French manufacturer of the antitrust
approval by the European Commission of the joint venture between Ford of
Germany and Volkswagen AG to produce a multi-purpose vehicle, referred to
in the third paragraph on page 26 of the 10-K Report, on July 15, 1994, the
European Court of First Instance rejected the French manufacturer's
complaint against the European Commission's decision to grant antitrust
approval of the joint venture. The French manufacturer can, however,
appeal this decision to the European Court of Justice.
-15-
<PAGE>
Governmental Standards - Ford
Mobile Source Emissions Control -- The Clean Air Act requires the EPA to
promulgate a federal implementation plan ("FIP") for any state failing to
adopt a state plan compliant with Clean Air Act standards. Pursuant to a
court order, the EPA must promulgate an FIP for California by February
1995. The EPA recently proposed an FIP for California that includes more
stringent motor vehicle requirements than those now in effect and could
adversely affect Ford's sales volumes and profits. The proposed FIP
contemplates stringent motor vehicle inspection and maintenance and in-use
testing procedures which would make manufacturers responsible for certain
repairs necessitated by consumer neglect. Implementation of this FIP could
require Ford to accelerate implementation of costly and unproven low-
emission technology and incur additional recall and warranty expense. It
could preclude the sale in California of some Ford medium- and heavy-duty
truck engines.
-16-
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please refer to the Exhibit Index on page 19.
(b) Reports on Form 8-K
DATE OF REPORT ITEM FINANCIAL
STATEMENTS FILED
April 14, 1994 Item 5 - Other Events None
May 11, 1994 Item 5 - Other Events None
June 27, 1994 Item 5 - Other Events None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FORD MOTOR CREDIT COMPANY
(Registrant)
August 4, 1994 /s/ K. J. Coates
-----------------------------
Kenneth J. Coates
(Chief Financial Officer)
-17-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder
of Ford Motor Credit Company:
We have reviewed the condensed consolidated balance sheet of Ford Motor
Credit Company and Subsidiaries at June 30, 1994 and 1993, and the related
condensed consolidated statements of income and of earnings retained for
use in the business and cash flows for the periods set forth in this Form
10-Q for the quarter ended June 30, 1994. These financial statements are
the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet at December 31, 1993 and the
related consolidated statements of income and of earnings retained for use
in the business and cash flows for the year then ended (not presented
herein); and in our report dated February 1, 1994, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet at December 31, 1993 is fairly stated in all
material respects in relation to the consolidated balance sheet from which
it has been derived.
COOPERS & LYBRAND
Detroit, Michigan
July 27, 1994
-18-
<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
Sequential
Designation Description Method of Filing
- ----------- ----------- ----------------
12-A Calculation of ratio of Filed with this
earnings to fixed charges Report.
of Ford Credit
12-B Calculation of ratio of Filed with this
earnings to fixed charges Report.
of Ford.
15 Letter from Coopers & Filed with this
Lybrand dated August 4, Report.
1994, regarding unaudited
interim financial infor-
mation.
-19-
Exhibit 12-A
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CALCULATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(dollar amounts in millions)
<TABLE>
<CAPTION>
First Half For the Years Ended December 31
-------------------- -----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest expense $ 1,611.7 $ 1,452.8 $ 2,943.5 $ 3,108.3 $ 3,840.6 $ 4,307.4 $ 4,647.4
Rents 6.4 5.1 11.0 10.8 8.9 7.5 6.4
--------- --------- --------- --------- --------- --------- ---------
Total fixed
charges 1,618.1 1,457.9 2,954.5 3,119.1 3,849.5 4,314.9 4,653.8
Earnings
Income before income
taxes and cumulative
effects of changes in
accounting principles 1,029.7 945.7 1,875.0 1,323.2 1,075.1 763.2 630.0
Less equity in net income
of affiliated companies 104.8 87.4 198.3 155.2 191.0 145.0 30.8
Less minority interest
in net income of
subsidiaries 5.2 4.2 7.9 6.1 2.3 0 0
--------- --------- --------- --------- --------- --------- ---------
Earnings before fixed
charges $ 2,537.8 $ 2,312.0 $ 4,623.3 $ 4,281.0 $ 4,731.3 $ 4,933.1 $ 5,253.0
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to
fixed charges 1.57 1.59 1.56 1.37 1.23 1.14 1.13
========= ========= ========= ========= ========= ========= =========
<FN>
For purposes of the Ford Credit ratio, earnings consist of income before 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).
</TABLE>
Exhibit 12-B
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
--------------------------------------------------
(in millions)
<TABLE>
<CAPTION>
Six
Months For the Years Ended December 31
1994 1993 1992 1991 1990 1989
------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Income/(loss) before income taxes
and cumulative effects of changes
in accounting principles $ 4,674 $ 4,003 $ (127) $(2,587) $ 1,495 $ 6,030
Equity in net (income)/loss of
affiliates plus dividends from
affiliates (30) (98) 26 69 171 (137)
Adjusted fixed charges a/ 3,797 7,648 8,113 9,360 9,690 9,032
------- ------- ------- ------- ------- -------
Earnings $ 8,441 $11,553 $ 8,012 $ 6,842 $11,356 $14,925
======= ======= ======= ======= ======= =======
Combined Fixed Charges and
Preferred Stock Dividends
- --------------------------
Interest expense b/ $ 3,629 $ 7,351 $ 7,987 $ 9,326 $ 9,647 $ 8,624
Interest portion of rental expense c/ 133 266 185 124 105 103
Preferred stock dividend requirements
of majority-owned subsidiaries d/ 79 115 77 56 83 16
------- ------- ------- ------- ------- -------
Fixed charges 3,841 7,732 8,249 9,506 9,835 8,743
Ford preferred stock dividend
requirements e/ 255 442 317 26 0 0
------- ------- ------- ------- ------- -------
Total combined fixed charges
and preferred stock dividends $ 4,096 $ 8,174 $ 8,566 $ 9,532 $ 9,835 $ 8,743
======= ======= ======= ======= ======= =======
Ratios
- ------
Ratio of earnings to fixed charges 2.2 1.5 f/ g/ 1.2 1.7
Ratio of earnings to combined fixed
charges and preferred stock dividends 2.1 1.4 h/ i/ 1.2 1.7
</TABLE>
- - - - - -
a/ Fixed charges, as shown below, have been adjusted to exclude the amount
of interest capitalized during the period and preferred stock dividend
requirements of majority-owned subsidiaries.
b/ Includes interest, whether expensed or capitalized, and amortization of
debt expense and discount or premium relating to any indebtedness.
c/ One-third of all rental expense is deemed to be interest.
d/ Preferred stock dividend requirements of Ford Holdings, Inc., have been
increased to an amount representing the pre-tax earnings which would be
required to cover such dividend requirements based on Ford's effective
income tax rates for all periods except 1992. The U.S. statutory rate
of 34% was used for 1992.
e/ Preferred stock dividend requirements of Ford Motor Company, have been
increased to an amount representing the pre-tax earnings which would be
required to cover such dividend requirements based on Ford's effective
income tax rates for all periods except 1992. The U.S. statutory rate
of 34% was used for 1992.
f/ Earnings were inadequate to cover fixed charges by $237 million.
g/ Earnings were inadequate to cover fixed charges by $2,664 million.
h/ Earnings were inadequate to cover combined fixed charges and preferred
stock dividends by $554 million.
i/ Earnings were inadequate to cover combined fixed charges and preferred
stock dividends by $2,690 million.
EXHIBIT 15
Ford Motor Credit Company
The American Road
Dearborn, Michigan
Re: Ford Motor Credit Company Registration Statement No. 33-30875 on Form
S-8 and Registration Statement Nos. 33-24928, 33-50295, and 33-53101
on Form S-3
We are aware that our report dated July 27, 1994 accompanying the unaudited
interim financial information of Ford Motor Credit Company and subsidiaries
for the periods ended June 30, 1994 and 1993 and included in the Ford Motor
Credit Company Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 will be incorporated by reference in the above Registration Statements.
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of the Registration Statements prepared or certified
by us within the meaning of Sections 7 and 11 of the Act.
/s/ Coopers & Lybrand
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
August 4, 1994
