<PAGE> 1
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 March 31, 1994
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-6368
Ford Motor Credit Company
(Exact name of registrant as specified in its charter)
Incorporated in Delaware 38-1612444
- - ---------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of Incorporation or Identification
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 April 30, 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.
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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 March 31, 1994 and 1993
(in millions)
<TABLE>
<CAPTION>
First Quarter
1994 1993
---------- ----------
(Unaudited)
<S> <C> <C>
Financing Revenue
Operating leases $ 1,110.2 $ 779.4
Retail 795.1 789.8
Wholesale 186.4 158.7
Diversified 25.3 38.4
Other 57.4 55.0
---------- ----------
Total financing revenue 2,174.4 1,821.3
Investment and other income 82.8 138.8
---------- ----------
Total revenue 2,257.2 1,960.1
Expenses
Depreciation on operating leases 809.5 550.0
Interest expense 760.2 718.2
Operating expenses 213.0 178.5
Provision for credit losses 71.1 84.4
---------- ----------
Total expenses 1,853.8 1,531.1
---------- ----------
Equity in net income of affiliated
companies 53.6 48.6
Income before income taxes 457.0 477.6
Provision for income taxes 155.9 161.4
---------- ----------
Income before minority interest 301.1 316.2
Minority interest in net income of
subsidiaries 2.3 1.1
---------- ----------
Net income 298.8 315.1
Earnings retained for use in
the business
Beginning of period 4,899.9 3,956.1
Dividends 0 0
---------- ----------
End of period $ 5,198.7 $ 4,271.2
---------- ----------
---------- ----------
</TABLE>
Certain amounts for First Quarter 1993 have been reclassified
to conform with presentations adopted in subsequent periods.
The accompanying notes are part of the financial statements.
2
<PAGE> 3
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(in millions)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
----------- ----------- -----------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 382.2 $ 992.3 $ 1,685.3
Investments in securities 1,411.7 1,441.3 1,453.7
Finance receivables, net (Note 1) 54,769.4 51,162.1 47,260.3
Accounts and notes receivable from
affiliated companies 399.0 385.0 574.9
Equity in net assets of affiliated
companies 1,230.0 1,201.9 1,056.1
Net investment, operating leases 14,132.8 12,600.9 8,698.1
Other assets 1,514.8 1,816.8 1,556.7
----------- ----------- -----------
Total assets $ 73,839.9 $ 69,600.3 $ 62,285.1
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $ 1,021.1 $ 953.2 $ 766.4
Affiliated companies 596.6 261.9 376.5
----------- ----------- -----------
Total accounts payable 1,617.7 1,215.1 1,142.9
Debt (Note 2) 62,487.6 58,870.2 52,849.3
Deferred income taxes 2,087.6 2,048.7 1,583.3
Other liabilities and deferred income 1,256.3 1,394.6 1,130.4
----------- ----------- -----------
Total liabilities 67,449.2 63,528.6 56,705.9
Minority interest in net assets of
subsidiaries 368.6 297.0 371.7
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 (7.3) 17.8 21.0
Foreign-currency translation adjustments (111.6) (85.3) (27.0)
Earnings retained for use in the business 5,198.7 4,899.9 4,271.2
----------- ----------- -----------
Total stockholder's equity 6,022.1 5,774.7 5,207.5
----------- ----------- -----------
Total liabilities and stockholder's
equity $ 73,839.9 $ 69,600.3 $ 62,285.1
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Certain amounts for December and March 1993 have been reclassified
to conform with presentations adopted in subsequent periods.
The accompanying notes are part of the financial statements.
3
<PAGE> 4
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended March 31, 1994 and 1993
(in millions)
<TABLE>
<CAPTION>
First Quarter
1994 1993
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 298.8 $ 315.1
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 71.1 84.4
Depreciation and amortization 823.9 564.0
Gain on sales of finance receivables 0 (51.5)
Equity in net income of affiliates (53.6) (48.6)
Deferred income taxes (41.1) 100.4
Changes in the following items
Other assets 297.4 (155.4)
Other liabilities 321.8 (91.3)
Other 6.7 (23.9)
---------- ----------
Net cash provided by operating activities 1,725.0 693.2
---------- ----------
Cash flows from investing activities
Purchase of finance receivables (31,908.4) (25,224.0)
Collection of finance receivables 28,190.1 23,035.8
Proceeds from sales of finance receivables 0 1,426.7
Purchase of operating lease vehicles (3,038.6) (2,122.2)
Liquidation of operating lease vehicles 675.0 621.3
Other (0.8) 6.3
---------- ----------
Net cash used in investing activities (6,082.7) (2,256.1)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 3,710.3 4,216.2
Principal payments on long-term debt (2,188.4) (1,844.1)
Change in short-term debt, net 2,162.5 558.2
Other 64.1 20.7
---------- ----------
Net cash provided by financing activities 3,748.5 2,951.0
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (0.9) 2.2
---------- ----------
Net change in cash and cash equivalents (610.1) 1,390.3
Cash and cash equivalents, beginning of period 992.3 295.0
---------- ----------
Cash and cash equivalents, end of period $ 382.2 $ 1,685.3
---------- ----------
---------- ----------
Supplementary cash flow information
Interest paid $ 886.6 $ 679.6
Taxes paid 99.7 102.2
</TABLE>
Certain amounts for First Quarter 1993 have been reclassified
to conform with presentations adopted in subsequent periods.
The accompanying notes are part of the financial statements.
4
<PAGE> 5
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 1. Finance Receivables (in millions)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Retail $ 39,324.8 $ 38,609.3 $ 34,467.7
Wholesale 14,330.2 11,698.5 11,666.2
Diversified 3,081.5 3,084.0 3,442.9
Other 3,941.2 3,625.9 3,285.0
----------- ----------- -----------
Total finance receivables 60,677.7 57,017.7 52,861.8
Add loan origination costs 133.8 125.4 104.8
Less
Unearned income (5,301.7) (5,263.3) (4,968.0)
Allowance for credit losses (740.4) (717.7) (738.3)
----------- ----------- -----------
Finance receivables, net $ 54,769.4 $ 51,162.1 $ 47,260.3
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
5
<PAGE> 6
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements (continued)
Note 2. Debt (in millions)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
PAYABLE WITHIN ONE YEAR:
Commercial paper $ 26,695.5 $ 24,506.1 $ 21,067.2
Other short-term debt* 942.7 1,001.0 2,498.3
----------- ----------- -----------
Total short-term debt 27,638.2 25,507.1 23,565.5
Senior and subordinated
notes and debentures
payable within one year 7,737.2 7,882.6 6,108.7
----------- ----------- -----------
Total payable within
one year 35,375.4 33,389.7 29,674.2
----------- ----------- -----------
<CAPTION>
March 31, 1994
----------------------------
Weighted Average
Interest Rates** Maturities
---------------- ----------
<S> <C> <C> <C> <C> <C>
PAYABLE AFTER ONE YEAR:
Unsecured senior notes
Notes 6.53% 1995-2048 27,163.8 25,526.8 23,195.0
Unamortized discount (52.1) (46.8) (33.2)
----------- ----------- -----------
Total unsecured
senior notes 27,111.7 25,480.0 23,161.8
----------- ----------- -----------
Unsecured subordinated
convertible debentures 4.50% 1995-1996 0.5 0.5 2.0
----------- ----------- -----------
Other 0 0 11.3
----------- ----------- -----------
Total payable
after one year 27,112.2 25,480.5 23,175.1
----------- ----------- -----------
Total debt $ 62,487.6 $ 58,870.2 $ 52,849.3
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
* Includes $150 million and $1.6 billion with an affiliated company at
December 31, 1993 and March 31, 1993, respectively.
** Rates were variable on about 16.9% of the debt payable after one year
including the effects of interest rate swap agreements.
6
<PAGE> 7
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORD CREDIT 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, Inc. ("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.
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.
7
<PAGE> 8
FORD CREDIT LIQUIDITY AND CAPITAL RESOURCES
Ford Credit's outstanding debt at March 31, 1994 and at the end of each of
the last five years was as follows:
<TABLE>
<CAPTION>
December 31
March 31, ---------------------------------------
1994 1993 1992 1991 1990 1989
-------- ------- ------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Commercial paper
& STBA's(a) $26,696 $24,506 $21,210 $18,232 $23,371 $18,864
Other short-term
debt(b) 943 1,001 1,785 1,642 1,411 1,467
Long-term debt
(including current
portion) 34,849 33,363 26,914 28,160 25,903 26,393
------- ------- ------- ------- ------- -------
Total debt $62,488 $58,870 $49,909 $48,034 $50,685 $46,724
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
<CAPTION>
1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Memo:
Total support
facilities $16.9 $16.9 $13.9 $13.8 $12.7 $12.7
(billions -- as of
April 1, 1994 and
January 1, 1994-
1990, respectively)
</TABLE>
- - - - - - -
(a) Short-term borrowing agreements with bank trust departments
(b) Includes $150 million and $800 million with an affiliated company at
December 31, 1993 and December 31, 1992, respectively
Support facilities represent additional sources of funds, if required. At
April 1, 1994, Ford Credit had approximately $15.7 billion of contractually
committed facilities for use in the United States, 83% of which are
available through June 1998. These facilities included $12.8 billion of
revolving credit agreements with banks (which included $4.8 billion of Ford
bank lines that may be used either by Ford or Ford Credit at Ford's option)
and $2.9 billion of agreements to sell retail receivables. At April 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 83% are
contractually committed and available through June 1998. Canadian
facilities of $715 million included $185 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 $411 million included $156 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 April 1, 1994. Substantially all of these facilities
were unused at April 1, 1994.
8
<PAGE> 9
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
9
<PAGE> 10
INFORMATION CONCERNING FORD
Following is a condensed consolidated statement of income (unaudited) of Ford
for the periods ended March 31, 1994 and 1993 (in millions except amounts per
share):
<TABLE>
<CAPTION>
First Quarter
-------------
1994 1993
---- ----
<S> <C> <C>
Sales and revenues $ 30,402 $ 26,763
Total costs and expenses 28,655 25,595
Operating income 1,747 1,168
Automotive net interest expense (48) (103)
Automotive equity in net income
of affiliated companies 67 1
Income before income taxes 1,766 1,066
Provision for income taxes 825 468
Minority interests in net income
of subsidiaries 37 26
Net income $ 904 $ 572
Amounts Per Share of Common Stock
and Class B Stock after Preferred
Stock Dividends
Income $ 1.66 $ 1.02
Income assuming
full dilution $ 1.51 $ 0.95
Cash Dividends $ 0.40 $ 0.40
</TABLE>
10
<PAGE> 11
FIRST QUARTER 1994 RESULTS OF OPERATION - FORD
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 about six months.
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
11
<PAGE> 12
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.
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 Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Ford Credit 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.
Associates First Capital Corporation ("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.
The American Road Insurance Company 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 Corporation 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.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES - FORD
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 $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.
LEGAL PROCEEDINGS - FORD
Product Matters
With respect to the three private purported class action lawsuits involving the
alleged tendency of vehicles to slip from park to reverse, referred to in the
third full paragraph on page 24 of the 10-K Report, the first such suit, filed
in the Superior Court for the District of Columbia, recently was dismissed at
the plaintiff's request and the court is reviewing Ford's petition for
reimbursement of attorney fees. The second such suit, filed in the Court of
Common Pleas in Philadelphia, Pennsylvania, had been stayed pending the entry
of a final order in the first suit. A motion by Ford to lift the stay is now
pending before the court.
13
<PAGE> 14
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, the damages specified by the plaintiffs in these actions, including
both actual and punitive damages, aggregated approximately $1 billion at April
1, 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, the damages specified in these
actions, including both actual and punitive damages, aggregated approximately
$794 million at April 1, 1994.
Environmental Matters
With respect to the notices from two government environmental enforcement
agencies, each potentially involving monetary sanctions exceeding $100,000,
referred to in the second paragraph on page 25 of the 10-K Report, Ford has
settled the matters. 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 violate or have
violated limits established by regulations or permits for emissions or
discharges.
Other Matters
With respect to the private purported class action lawsuit relating to
allegations of paint peeling on unspecified vehicles, referred to in the sixth
paragraph on page 25 of the 10-K Report, in February 1994, plaintiffs amended
their petition to cover a purported class of persons who purchased certain new
or used Ford vehicles in Texas and who allegedly experienced paint delamination
as a result of Ford's use of a high build electrocoat paint primer process.
Governmental Standards - Ford
Mobile Source Emissions Control -- With respect to the European motor vehicle
emissions standards discussed in the second full paragraph on page 22 of the
10-K Report, the European Parliament adopted Directive 94/12/EC which applies
more stringent motor vehicle emission standards to vehicle homologations
beginning January 1, 1996 and to new vehicle registrations beginning January 1,
1997. These standards are of generally equivalent numerical stringency to
those which began to apply in the U.S. for the 1994 model year. The Directive
also provides for the European Commission to propose by the end of 1994
supplementary reductions in motor vehicle emissions that would take effect
beginning January 1, 2000. These supplementary reductions would be a function
of technical progress achieved between now and 2000.
Motor Vehicle Fuel Economy -- With respect to the light truck CAFE standards
discussed in the third full paragraph on page 23 of the 10-K Report, the Safety
Administration has set the light truck CAFE standard at 20.7 mpg for both model
years 1996 and 1997.
14
<PAGE> 15
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please refer to the Exhibit Index on page .
(b) Reports on Form 8-K
<TABLE>
<CAPTION>
DATE OF REPORT ITEM FINANCIAL
STATEMENTS FILED
<S> <C> <C>
January 11, 1994 Item 5 - Other Events None
February 11, 1994 Item 5 - Other Events None
February 25, 1994 Item 5 - Other Events Consolidated Financial
Statements of Ford Motor
Credit Company and Sub-
sidiaries and Consoli-
dated Financial Statements
of Ford Motor Company and
Subsidiaries, each for the
year ended December 31, 1993.
March 18, 1994 Item 5 - Other Events None
</TABLE>
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)
May 13, 1994 /s/ P. W. Lewis
P. W. Lewis, Controller
(Chief Accounting Officer)
15
<PAGE> 16
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Designation Description Method of Filing
- - ----------- ----------- ----------------
<S> <C> <C>
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 May 13, Report.
1994, regarding unaudited
interim financial infor-
mation.
</TABLE>
16
<PAGE> 17
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 March 31, 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 March 31, 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
April 27, 1994
17
<PAGE> 1
Exhibit 12-A
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CALCULATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(dollar amounts in millions)
<TABLE>
<CAPTION>
First Quarter 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 $ 763.7 $ 723.9 $ 2,943.5 $ 3,108.3 $ 3,840.6 $ 4,307.4 $ 4,647.4
Rents 2.8 2.6 11.0 10.8 8.9 7.5 6.4
--------- --------- --------- --------- --------- --------- ---------
Total fixed
charges 766.5 726.5 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 457.0 477.6 1,875.0 1,323.2 1,075.1 763.2 630.0
Less equity in net income
of affiliated companies 53.6 48.6 198.3 155.2 191.0 145.0 30.8
Less minority interest
in net income of
subsidiaries 2.3 1.1 7.9 6.1 2.3 0 0
--------- --------- --------- --------- --------- --------- ---------
Earnings before fixed
charges $ 1,167.6 $ 1,154.4 $ 4,623.3 $ 4,281.0 $ 4,731.3 $ 4,933.1 $ 5,253.0
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to
fixed charges 1.52 1.59 1.56 1.37 1.23 1.14 1.13
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
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).
18
<PAGE> 1
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>
First
Quarter 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 $ 1,766 $ 4,003 $ (127) $(2,587) $ 1,495 $ 6,030
Equity in net (income)/loss of
affiliates plus dividends from
affiliates 9 (98) 26 69 171 (137)
Adjusted fixed charges a/ 1,874 7,648 8,113 9,360 9,690 9,032
- ------- ------- ------- ------- ------- -------
Earnings $ 3,649 $11,553 $ 8,012 $ 6,842 $11,356 $14,925
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Combined Fixed Charges and
Preferred Stock Dividends
- - --------------------------
Interest expense b/ $ 1,784 $ 7,351 $ 7,987 $ 9,326 $ 9,647 $ 8,624
-
Interest portion of rental expense c/ 67 266 185 124 105 103
-
Preferred stock dividend requirements
of majority-owned subsidiaries d/ 42 115 77 56 83 16
- ------- ------- ------- ------- ------- -------
Fixed charges 1,893 7,732 8,249 9,506 9,835 8,743
Ford preferred stock dividend
requirements e/ 140 442 317 26 0 0
- ------- ------- ------- ------- ------- -------
Total combined fixed charges
and preferred stock dividends $ 2,033 $ 8,174 $ 8,566 $ 9,532 $ 9,835 $ 8,743
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Ratios
- - ------
Ratio of earnings to fixed charges 1.9 1.5 f/ g/ 1.2 1.7
- -
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.8 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., 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.
19
<PAGE> 1
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, 33-51075 and 33-
53101 on Form S-3
We are aware that our report dated April 27, 1994 accompanying the unaudited
interim financial information of Ford Motor Credit Company and subsidiaries
for the periods ended March 31, 1994 and 1993 and included in the Ford Motor
Credit Company Quarterly Report on Form 10-Q for the quarter ended March 31,
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.
COOPERS & LYBRAND
Detroit, Michigan
May 13, 1994
20
