SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1995
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 numbers 1-6368
FORD MOTOR CREDIT COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 38-1612444
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(State of Incorporation) (I.R.S. employer identification no.)
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 check mark 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, 1995.
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 1 OF 19
EXHIBIT INDEX APPEARS AT PAGE 16.
<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,
1994 (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, 1995 and 1994
(in millions)
<TABLE>
<CAPTION>
First Quarter
1995 1994
---------- ----------
(Unaudited)
<S> <C> <C>
Financing Revenue
Operating leases $ 1,661.9 $ 1,110.2
Retail 829.1 795.1
Wholesale 341.8 186.4
Diversified 33.0 25.3
Other 80.5 57.4
---------- ----------
Total financing revenue 2,946.3 2,174.4
Investment and other income 112.6 82.8
---------- ----------
Total revenue 3,058.9 2,257.2
Expenses
Depreciation on operating leases 1,184.5 809.5
Interest expense 1,156.6 760.2
Operating expenses 270.2 213.0
Provision for credit losses 77.3 71.1
---------- ----------
Total expenses 2,688.6 1,853.8
---------- ----------
Equity in net income of affiliated
companies 58.6 53.6
Income before income taxes 428.9 457.0
Provision for income taxes 137.9 155.9
---------- ----------
Income before minority interest 291.0 301.1
Minority interest in net income of
subsidiaries 3.1 2.3
---------- ----------
Net income 287.9 298.8
Earnings retained for use in
the business
Beginning of period 5,848.6 4,899.9
Dividends 0 0
---------- ----------
End of period $ 6,136.5 $ 5,198.7
<FN> ========== ==========
Certain amounts for First Quarter 1994 have been restated to reflect changes adopted in
subsequent periods.
The accompanying notes are part of the financial statements.
</TABLE> -2-
<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(in millions)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1995 1994 1994
----------- ----------- -----------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 147.6 $ 292.0 $ 382.2
Investments in securities 1,638.9 1,596.3 1,155.8
Finance receivables, net (Note 1) 59,551.6 56,946.5 54,401.9
Accounts and notes receivable from
affiliated companies 386.4 250.3 399.0
Equity in net assets of affiliated companies 1,456.9 1,346.5 1,230.0
Net investment, operating leases 21,680.1 19,993.9 14,132.8
Other assets 2,620.8 2,799.0 2,206.8
----------- ----------- -----------
Total assets $ 87,482.3 $ 83,224.5 $ 73,908.5
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $ 1,406.3 $ 1,326.5 $ 1,097.0
Affiliated companies 448.4 496.0 596.6
----------- ----------- -----------
Total accounts payable 1,854.7 1,822.5 1,693.6
Debt (Note 2) 74,133.0 70,440.4 62,480.3
Deferred income taxes 2,592.3 2,405.9 2,087.6
Other liabilities and deferred income 1,406.3 1,495.6 1,256.3
----------- ----------- -----------
Total liabilities 79,986.3 76,164.4 67,517.8
Minority interest in net assets of
subsidiaries 496.2 397.5 368.6
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 gain on marketable
securities, net of taxes (18.1) (70.0) (7.3)
Foreign-currency translation adjustments (60.9) (58.3) (111.6)
Earnings retained for use in the business 6,136.5 5,848.6 5,198.7
----------- ----------- -----------
Total stockholder's equity 6,999.8 6,662.6 6,022.1
----------- ----------- -----------
Total liabilities and stockholder's
equity $ 87,482.3 $ 83,224.5 $ 73,908.5
=========== =========== ===========
<FN>
Certain amounts for March 1994 have been restated to reflect changes 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 March 31, 1995 and 1994
(in millions)
<TABLE>
<CAPTION>
First Quarter
1995 1994
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 287.9 $ 298.8
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 77.3 71.1
Depreciation and amortization 1,232.8 823.9
Equity in net income of affiliates (58.6) (53.6)
Deferred income taxes 187.8 (41.1)
Changes in the following items
Other assets 24.6 297.4
Other liabilities (52.2) 321.8
Other 10.7 6.7
---------- ----------
Net cash provided by operating activities 1,710.3 1,725.0
---------- ----------
Cash flows from investing activities
Purchase of finance receivables (34,166.0) (31,908.4)
Collection of finance receivables 31,537.1 28,190.1
Purchase of operating lease vehicles (4,300.7) (3,038.6)
Liquidation of operating lease vehicles 1,428.9 675.0
Other (38.2) (0.8)
---------- ----------
Net cash used in investing activities (5,538.9) (6,082.7)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 3,756.2 3,710.3
Principal payments on long-term debt (2,042.1) (2,188.4)
Change in short-term debt, net 1,887.4 2,162.5
Other 83.8 64.1
---------- ----------
Net cash provided by financing activities 3,685.3 3,748.5
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (1.1) (0.9)
---------- ----------
Net change in cash and cash equivalents (144.4) (610.1)
Cash and cash equivalents, beginning of period 292.0 992.3
---------- ----------
Cash and cash equivalents, end of period $ 147.6 $ 382.2
========== ==========
Supplementary cash flow information
Interest paid $ 1,166.2 $ 886.6
Taxes paid 81.8 99.7
<FN>
Certain amounts for First Quarter 1994 have been restated to reflect changes 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>
March 31, December 31, March 31,
1995 1994 1994
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Retail $ 40,919.0 $ 40,566.6 $ 39,324.8
Wholesale 17,466.4 15,252.9 14,330.2
Diversified 2,774.9 2,738.2 2,645.4
Other 4,444.3 4,263.8 4,009.8
----------- ----------- -----------
Total finance receivables 65,604.6 62,821.5 60,310.2
Add loan origination costs 156.0 155.6 133.8
Less
Unearned income (5,561.2) (5,371.0) (5,301.7)
Allowance for credit losses (647.8) (659.6) (740.4)
----------- ----------- -----------
Finance receivables, net $ 59,551.6 $ 56,946.5 $ 54,401.9
=========== =========== ===========
</TABLE>
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<PAGE>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements (continued)
Note 2. Debt (in millions)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1995 1994 1994
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
PAYABLE WITHIN ONE YEAR:
Commercial paper $ 35,049.5 $ 33,228.9 $ 26,695.5
Other short-term debt 1,199.9 1,136.0 942.7
----------- ----------- -----------
Total short-term debt 36,249.4 34,364.9 27,638.2
Senior notes payable
within one year 4,014.7 4,712.7 7,718.9
----------- ----------- -----------
Total payable within
one year 40,264.1 39,077.6 35,357.1
----------- ----------- -----------
March 31, 1995
----------------------------
Weighted Average
Interest Rates* Maturities
---------------- ----------
<C> <C>
PAYABLE AFTER ONE YEAR:
Unsecured senior notes
Notes** 7.21% 1996-2048 33,906.3 31,411.2 27,174.8
Unamortized discount (37.4) (48.4) (52.1)
----------- ----------- -----------
Total unsecured
senior notes 33,868.9 31,362.8 27,122.7
----------- ----------- -----------
Unsecured subordinated
convertible debentures - - 0.5
----------- ----------- -----------
Total payable
after one year 33,868.9 31,362.8 27,123.2
----------- ----------- -----------
Total debt $ 74,133.0 $ 70,440.4 $ 62,480.3
=========== =========== ===========
<FN>
* Rates were variable on about 28.2% of the debt payable after one year including the
effects of interest rate swap agreements.
** Includes $394 million with an affiliated company at March 31, 1995.
</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 First Quarter 1995 Results of Operations
Ford Credit's consolidated net income for the first quarter of 1995 was
$288 million, down $11 million or 4% compared with $299 million in the
first quarter of 1994. Income from financing operations was $229
million, down $16 million or 6% from the same period a year ago. Equity
in net income of affiliated companies, primarily Ford Holdings, Inc.
("Ford Holdings"), was $59 million compared with $54 million in the same
period a year ago.
Compared with results from a year ago, the decrease in financing profits
in the first quarter of 1995 primarily reflected lower net interest
margins and higher credit losses, partially offset by higher financing
volumes. The lower net interest margins primarily reflected an increase
in U.S. portfolio borrowing rates from 5.1% to 6.3% offset partially by
higher portfolio interest rates on finance receivables and operating
leases. Interest margins were adversely affected because interest rates
earned on finance receivables, including operating leases net of
depreciation, were limited by competitive pressure in automotive
financing. Credit loss performance remains strong but losses have
increased in the first quarter of 1995 compared with a year earlier. The
increase reflects higher losses per repossessed unit and an increase in
repossession rates. The higher level of earning assets reflected
increases in operating leases, wholesale financing, and retail
installment sale receivables.
Total gross finance receivables and net investment in operating leases at
March 31, 1995 were $87.3 billion, up $12.9 billion or 17% from a year
earlier. The increase primarily reflected higher levels of operating
leases, wholesale receivables, and retail installment sale receivables.
Depreciation expense on operating leases in the first quarter of 1995 was
$1,185 million, up $375 million or 46% compared with the first quarter of
1994. The increase reflected the higher levels of operating leases and
was more than offset by higher revenue earned from the increased volume
of lease contracts.
During the first quarter of 1995, Ford Credit financed 36.0% of all new
cars and trucks sold by Ford Motor Company dealers in the United States,
compared with 38.7% in the first quarter of 1994. The decrease primarily
resulted from lower levels of retail installment sale financing
reflecting competitive pressure, offset partially by higher levels of
operating lease financing. Ford Credit provided retail financing for
572,000 new and used vehicles in the United States, down 2% from a year
ago. Ford Credit also provided wholesale financing for 77.9% of Ford
Motor Company factory sales to U.S. car and truck dealers during the
quarter, compared with 78.7% in the same period a year ago.
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<PAGE>
Ford Credit Liquidity and Capital Resources
Ford Credit's outstanding debt at March 31, 1995 and at the end of each
of the last five years was as follows:
<TABLE>
<CAPTION>
December 31
March 31, -------------------------------------------------------
1995 1994 1993 1992 1991 1990
--------- ------- ------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Commercial paper & STBA's(a) $35,118 $33,300 $24,506 $21,210 $18,232 $23,371
Other short-term debt (b) 1,131 1,065 1,001 1,785 1,642 1,411
Long-term debt (including
current portion) (c) 37,884 36,075 33,292 26,961 28,455 26,209
Total debt $74,133 $70,440 $58,799 $49,956 $48,329 $50,991
<CAPTION>
1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Memo:
Total support facilities $22.3 $22.3 $16.9 $13.9 $13.8 $12.7
(billions -- as of March 31,
1995 and January 1,
1995-1991, respectively)
</TABLE>
- - - - - -
(a) Short-term borrowing agreements with bank trust departments
(b) Includes $150 million and $800 million with affiliated companies at
December 31, 1993 and December 31, 1992, respectively
(c) Includes $394 million with an affiliated company at March 31, 1995
Support facilities represent additional sources of funds, if required.
At March 31, 1995, Ford Credit had approximately $21.1 billion of
contractually committed facilities for use in the United States with
various maturity dates through June 1999. These facilities included
$18.2 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 $2.9 billion of agreements to sell retail
receivables. At March 31, 1995, all of these U.S. facilities were
unused.
Outside of the United States, an additional $1.2 billion of contractually
committed facilities support borrowing operations in Canada, Australia,
and Puerto Rico with various maturity dates through June 1999. Canadian
facilities of $722 million included $182 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 $432 million included $166 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 March 31, 1995. Substantially all
of these facilities were unused at March 31, 1995.
-8-
<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 March 31, 1995 and 1994 (in millions except amounts per
share):
First Quarter
-------------
1995 1994
---- ----
Sales and revenues $34,783 $30,402
Total costs and expenses 32,265 28,655
Operating income 2,518 1,747
Automotive net interest income/(expense) 41 (48)
Automotive equity in net income
of affiliated companies 20 67
Income before income taxes 2,579 1,766
Provision for income taxes 988 825
Minority interests in net income
of subsidiaries 41 37
Net income $ 1,550 $ 904
Amounts Per Share of Common Stock
and Class B Stock after Preferred
Stock Dividends
Income per share $ 1.44 $ 0.83
Income per share
assuming full dilution $ 1.28 $ 0.75
Cash dividends per share $ 0.26 $ 0.20
Share data have been restated to reflect the 2-for-1 stock split that became
effective June 6, 1994.
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<PAGE>
FIRST QUARTER 1995 RESULTS OF OPERATIONS - FORD
Overview
Ford earned $1,550 million, or $1.44 per share of Common and Class B Stock, in
the first quarter of 1995. This compares with $904 million, or $0.83 per share,
in the first quarter of 1994. Ford's results a year ago included a charge of
$440 million related to the disposition of First Nationwide Bank. Fully diluted
earnings per share were $1.28 in the first quarter of 1995, compared with $0.75
a year ago. Ford's worldwide sales and revenues were $34.8 billion, up $4.4
billion from a year ago. Vehicle unit sales of cars and trucks were 1,770,000,
up 53,000 units or 3%. Stockholders' equity was $23.6 billion at March 31,
1995.
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.
In January 1995, Ford put into effect the reorganization of its Automotive
operations, called "Ford 2000". Ford 2000 is a fundamental change intended to
provide customers with a wider array of vehicles in more markets, assure full
competitiveness in vehicle design, quality and value, and substantially reduce
the cost of operating Ford's automotive business. The new structure reduces
duplication of effort and facilitates best practices around the world by merging
Ford's North American Automotive Operations, European Automotive Operations, and
Automotive Components Group into a single organization, Ford Automotive
Operations.
Automotive Operations
Net income from Ford's worldwide Automotive operations was $1,141 million in the
first quarter of 1995 on sales of $28.6 billion, compared with $973 million in
the first quarter of 1994 on sales of $26.1 billion.
In the U.S., Ford's Automotive operations earned $825 million in the first
quarter of 1995 on sales of $19.6 billion, compared with $816 million a year ago
on sales of $18 billion. The improvement reflected primarily higher volume
resulting from higher market share and favorable product mix, largely offset by
unfavorable exchange rates (primarily the German Mark and Japanese Yen) and
higher product costs. Changes in exchange rates also are expected to influence
earnings unfavorably in the balance of the year.
In the first quarter of 1995, the seasonally-adjusted annual selling rate for
the U.S. car and truck industry was 15.2 million units, compared with 15.8
million in the first quarter of 1994. Ford expects U.S. car and truck
industry sales to total 15.1 million units in the full year, compared with
15.4 million units in 1994. Ford's car market share was 22.3% in the
first quarter of 1995, up 7/10 of a point from a year ago, more than explained
by sales for Contour and Mystique. Ford's truck share was 32.3%, up 2.9 points
from a year ago, reflecting primarily higher sales for Windstar and F-Series
trucks. Ford's combined car and truck share was 26.6%, up 1.8 points from a
year ago.
Outside the U.S., Automotive operations earned $316 million in the first quarter
of 1995 on sales of $9 billion, compared with $157 million a year ago on sales
of $8.1 billion. The improvement reflected primarily higher earnings in Europe,
where Automotive operations earned $165 million in the first quarter of 1995,
compared with $53 million a year ago.
In the first quarter of 1995, the seasonally-adjusted annual selling rate for
the European car and truck industry was 13.4 million units, compared with 13.2
million a year ago. Ford's car share was 12% in the first quarter of 1995,
equal to a year ago. Ford's truck share was 15.9%, up 1.4 points from a year
ago. Ford's combined car and truck share was 12.5%, up 3/10 of a point from
1994.
Ford and Volkswagen AG have agreed on a separation process leading toward
dissolution of their Autolatina joint venture in Brazil and Argentina by
year-end 1995. It is believed the effect, if any, of the dissolution of
Autolatina on Ford's future earnings is not likely to be material.
Historically, earnings in Brazil and Argentina have represented a significant
portion of Ford's Automotive earnings outside the U.S. and Europe.
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<PAGE>
Financial Services Operations
Ford's Financial Services operations earned $409 million in the first quarter of
1995, compared with a loss of $69 million in the first quarter of 1994. The
improvement was explained by the nonrecurrence of the $440 million charge to net
income in the first quarter of 1994 for the disposition of First Nationwide
Bank, as well as increased earnings from ongoing operations of $38 million.
For a discussion of Ford Credit's results of operations in the first quarter of
1995, see Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Ford Credit First Quarter 1995 Results of
Operations." The international operations managed by Ford Credit, but not
included in its consolidated results, earned $65 million in the first quarter of
1995, compared with $63 million a year ago, reflecting primarily higher levels
of earning assets and lower credit losses.
Associates First Capital Corporation ("The Associates") earned a record $152
million in the U.S. in the first quarter of 1995, compared with $128 million a
year ago. The increase reflected higher levels of earning assets. The
international operations managed by The Associates, but not included in its
consolidated results, earned $22 million in the first quarter of 1995,
compared with $18 million a year ago, reflecting primarily higher levels of
earning assets.
USL Capital Corporation earned a record $26 million in the first quarter of
1995, compared with $21 million a year ago. The increase reflected higher
levels of earning assets and cost improvements. The American Road Insurance
Company earned $5 million in the first quarter of 1995, compared with $17
million in the same period in 1994. The decrease was more than explained by
lower underwriting results in extended service plan and floor plan products, and
lower results for the annuities business.
LIQUIDITY AND CAPITAL RESOURSES - FORD
Automotive Operations
Cash and marketable securities of Ford's Automotive operations were $13.3
billion at March 31, 1995, up $1.2 billion from December 31, 1994. Ford paid
$338 million in cash dividends on its Common Stock, Class B Stock, and Preferred
Stock during the first three months of 1995.
Automotive capital expenditures were $2.1 billion in the first three months of
1995, up $490 million from the same period a year ago. Automotive capital
spending is projected to increase during 1995 as a result of increases in both
product and nonproduct spending. The higher product spending reflects a record
pace of new-model introductions and increased capacity for selected components
and vehicles, while the higher nonproduct spending reflects continuing efforts
to improve efficiency and quality.
Automotive debt at March 31, 1995 totaled $7.1 billion, which was 23% of total
capitalization (stockholders' equity and Automotive debt), compared with
$7.3 billion, or 25% of total capitalization, at December 31, 1994.
The decrease in Automotive debt reflected primarily a transfer of debt to
a Financial Services subsidiary.
At March 31, 1995, Ford (parent company only) had long-term contractually
committed credit agreements in the U.S. under which $5.9 billion is available
from various banks at least through June 30, 1999. The entire $5.9 billion may
be used, at Ford's option, by either Ford or Ford Credit. These facilities were
unused at March 31, 1995.
Outside the U.S., Ford had additional long-term contractually committed
credit-line agreements of $2.6 billion. These facilities are available in
varying amounts from 1995 through 1999; less than 1% were in use at March 31,
1995.
Financial Services Operations
Financial Services' cash and investments in securities totaled $8.2 billion at
March 31, 1995, up $335 million from December 31, 1994.
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<PAGE>
Net receivables and lease investments were $138.2 billion at March 31, 1995, up
$7.8 billion from December 31, 1994. The increase reflected continued growth in
earning assets at Ford Credit and The Associates.
Total debt was $130.7 billion at March 31, 1995, up $7 billion from December 31,
1994. The increase resulted from higher debt levels required to finance growth
in earning assets at Ford Credit and The Associates.
At March 31, 1995, Financial Services had $34 billion of contractually committed
support facilities (including the $5.9 billion of the Ford credit agreements)
for use in the U.S.; less than 2% of these facilities, excluding the Ford credit
agreements, were in use. An additional $9.3 billion of contractually committed
support facilities were available outside the U.S. at March 31, 1995; $1.9
billion of these were in use.
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 second paragraph on page 26 of the 10-K Report,
the damages specified by the plaintiffs in these actions, including both actual
and punitive damages, aggregated approximately $947 million at March 31, 1995.
With respect to the lawsuits for damages involving the alleged propensity of
Bronco II utility vehicles to roll over, referred to in the third paragraph on
page 26 of the 10-K Report, the damages specified by the plaintiffs in these
actions, including both actual and punitive damages, aggregated approximately
$1.1 billion at March 31, 1995.
With respect to the lawsuits for damages involving asbestos, referred to in the
fifth paragraph on page 26 of the 10-K Report, the damages specified by the
plaintiffs in these actions, including both actual and punitive damages,
aggregated approximately $204 million at March 31, 1995.
In most of the actions described in the foregoing paragraphs, no dollar amount
of damages is specified or the specific amount referred to is only the
jurisdictional minimum. It has been Ford's experience that in cases that allege
a specific amount of damages in excess of the jurisdictional minimum, such
amounts, on average, bear little relation to the actual amounts of damages paid
by Ford in such cases, which generally are, on average, substantially less than
the amounts originally claimed.
Other Matters
With respect to the private purported class action lawsuits seeking economic
damages on behalf of Bronco II owners relating to the alleged propensity of such
vehicles to roll over, referred to in the fifth paragraph on page 27 of the
10-K Report, the court rejected the proposed settlements that had been reached
and dissolved the class established for settlement purposes. Ford will proceed
with its defense of the actions.
GOVERNMENTAL STANDARDS - FORD
Mobile Source Emissions Control -- With respect to the discussion on pages 21
and 22 of the 10-K Report regarding the adoption by New York and Massachusetts
of the California low emission vehicle or LEV standards, Connecticut also has
adopted such standards (but without the zero emission vehicle or ZEV
requirements), effective beginning with 1998 model-year vehicles.
The Clean Air Act generally prohibits the introduction of new fuel additives
unless a waiver is granted by EPA. In April 1995, the D.C. Court of Appeals
ordered EPA to grant such a waiver to Ethyl Corporation for the additive MMT,
over the objections of EPA and U.S. automobile manufacturers, including Ford.
Although other issues must be resolved before MMT can be
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<PAGE>
marketed, this decision greatly increases the likelihood that MMT will be sold
as a fuel additive in the near future. Ford and other manufacturers believe
that the use of MMT will impair the performance of current emissions systems and
onboard diagnostics systems. If MMT becomes available as a fuel additive, this
could increase Ford's future warranty costs and necessitate changes in Ford's
warranties for emission control devices.
Motor Vehicle Fuel Economy -- With respect to fuel economy measures in Europe
discussed on page 24 of the 10-K Report, on March 23, 1995, the German
Automobile Manufacturers Association (of which Ford Germany is a member)
undertook an industry-wide voluntary agreement with the German government for
reducing the average fuel consumption of new cars sold in Germany by 25% from
1990 levels by 2005, and the German government has agreed to improve traffic
management systems, eliminate infrastructure bottlenecks, integrate transport
modes, promote alternative fuels and improved drive systems, and introduce an
emission-based road tax system. The need for and feasibility of potential
changes to the undertaking, including subsequent further reductions in average
fuel consumption, will be reviewed before 2000.
Japan has adopted automobile fuel consumption goals that manufacturers must
attempt to achieve by the 2000 model year. The consumption levels apply only to
gasoline-powered vehicles, vary by vehicle weight, and range from 5.8 km/l to
19.2 km/l. To achieve these target fuel consumption levels for the vehicles it
exports to Japan, Ford may have to take costly actions that could have
substantial adverse effects on its sales volume and profits in Japan.
Water Pollution Control -- With respect to EPA's proposed regulations under the
Great Lakes Critical Programs Act of 1990 discussed on page 24 of the 10-K
Report, the EPA has now adopted such regulations, which impose more restrictive
standards for discharges into waters that impact the Great Lakes and which will
require Ford to add costly pollution control equipment to its facilities.
-13-
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please refer to the Exhibit Index.
(b) Reports on Form 8-K during the quarter ended March 31, 1995:
<TABLE>
<CAPTION> FINANCIAL
DATE OF REPORT ITEM STATEMENTS FILED
- -------------- --------------------- ----------------
<S> <C> <C>
January 17, 1995 Item 5 - Other Events None
February 10, 1995 Item 5 - Other Events Consolidated Financial
Statements of Ford Motor
Credit Company and Sub-
sidiaries together with
the Report of Independent
Accountants of Coopers & Lybrand
L.L.P., independent certified
public accountants and News
release dated February 1, 1995
of Ford Motor Company and
Subsidiaries for the year
ended December 31, 1994 with
attachments.
February 17, 1995 Item 5 - Other Events None
February 21, 1995 Item 5 - Other Events None
March 24, 1995 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)
/s/ Terrence F. Marrs
May 11, 1995 --------------------------
Terrence F. Marrs, Controller
(Chief Accounting Officer)
-14-
<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 March 31, 1995 and 1994, 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, 1995. 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, 1994 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 January 27, 1995, 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, 1994 is fairly stated in all
material respects in relation to the consolidated balance sheet from which
it has been derived.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
April 19, 1995
-15-
<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 L.L.P. dated Report.
May 11, 1995,
regarding unaudited
interim financial infor-
mation.
27 Financial Data Schedule. Filed with this
Report.
-16-
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
-------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest expense $ 1,176.5 $ 763.7 $ 3,557.8 $ 2,943.5 $ 3,108.3 $ 3,840.6 $ 4,307.4
Rents 3.6 2.8 14.1 11.0 10.8 8.9 7.5
--------- --------- --------- --------- --------- --------- ---------
Total fixed
charges 1,180.1 766.5 3,571.9 2,954.5 3,119.1 3,849.5 4,314.9
Earnings
Income before income
taxes and cumulative
effects of changes in
accounting principles 428.9 457.0 1,999.1 1,875.0 1,323.2 1,075.1 763.2
Less equity in net income
of affiliated companies 58.6 53.6 232.5 198.3 155.2 191.0 145.0
Less minority interest
in net income of
subsidiaries 3.1 2.3 10.7 7.9 6.1 2.3 0
--------- --------- --------- --------- --------- --------- ---------
Earnings before fixed
charges $ 1,547.3 $ 1,167.6 $ 5,327.8 $ 4,623.3 $ 4,281.0 $ 4,731.3 $ 4,933.1
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to
fixed charges 1.31 1.52 1.49 1.56 1.37 1.23 1.14
========= ========= ========= ========= ========= ========= =========
<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 includes 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>
-17-
Exhibit 12B
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------------------------------
(in millions)
First
Quarter For the Years Ended December 31
---------------------------------------------------
1995 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings
- --------
Income/(loss) before income taxes and
cumulative effects of changes in accounting
principles $2,579 $ 8,789 $ 4,003 $ (127) $(2,587) $ 1,495
Equity in net (income)/loss of affiliates
plus dividends from affiliates (14) (182) (98) 26 69 171
Adjusted fixed charges a/ 2,433 8,122 7,648 8,113 9,360 9,690
------ ------- ------- ------- ------- -------
Earnings $4,998 $16,729 $11,553 $ 8,012 $ 6,842 $11,356
====== ======= ======= ======= ======= =======
Combined Fixed Charges and
Preferred Stock Dividends
- --------------------------
Interest expense b/ $2,351 $ 7,787 $ 7,351 $ 7,987 $ 9,326 $ 9,647
Interest portion of rental expense c/ 67 265 266 185 124 105
Preferred stock dividend requirements of
majority-owned subsidiaries d/ 51 160 115 77 56 83
------ ------- ------- ------- ------- -------
Fixed charges 2,469 8,212 7,732 8,249 9,506 9,835
Ford preferred stock dividend requirements e/ 117 472 442 317 26 0
------ ------- ------- ------- ------- -------
Total combined fixed charges and
preferred stock dividends $2,586 $ 8,684 $ 8,174 $ 8,566 $ 9,532 $ 9,835
====== ======= ======= ======= ======= =======
Ratios
- ------
Ratio of earnings to fixed charges 2.0 2.0 1.5 f/ g/ 1.2
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.9 1.9 1.4 h/ i/ 1.2
</TABLE>
- - - - - -
a/ Fixed charges, as shown below, 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 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 inadequate to cover fixed charges by $237 million.
g/ Earnings inadequate to cover fixed charges by $2,664 million.
h/ Earnings inadequate to cover combined fixed charges and
preferred stock dividends by $554 million.
i/ Earnings 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 Statements Nos. 33-24928, 33-55237, 33-53101
and 33-55945 on Form S-3
We are aware that our report dated April 19, 1995 accompanying the
unaudited interim financial information of Ford Motor Credit Company and
subsidiaries for the periods ended March 31, 1995 and 1994 and included
in the Ford Motor Credit Company Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
May 11, 1995
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Ford Credit's Condensed Consolidated Balance Sheet is unclassified. Therefore,
the following tags listed below are not applicable to Ford Credit: Current
Assets and Current Liabilities. Information relating to earnings a share is not
presented because Ford Credit is a wholly owned subsidiary of Ford Motor
Company.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 148
<SECURITIES> 1,639
<RECEIVABLES> 59,510
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 87,482
<CURRENT-LIABILITIES> 0
<BONDS> 74,133
<COMMON> 25
0
0
<OTHER-SE> 6,975
<TOTAL-LIABILITY-AND-EQUITY> 87,482
<SALES> 0
<TOTAL-REVENUES> 3,059
<CGS> 0
<TOTAL-COSTS> 2,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 77
<INTEREST-EXPENSE> 1,157
<INCOME-PRETAX> 429
<INCOME-TAX> 138
<INCOME-CONTINUING> 288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 288
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
