<PAGE> 1
Pursuant to Rule 424(b)(5)
Registration No. 33-55237
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 11, 1995
$500,000,000
Ford Motor Credit Company
8 3/8% Notes Due January 15, 2000
Interest payable January 15 and July 15
------------------
The Notes may not be redeemed by Ford Credit. Interest on the Notes will be
payable on January 15 and July 15 of each year, commencing July 15, 1995. The
Notes will be represented by one or more Global Notes registered in the name
of the nominee of The Depository Trust Company (the "Depository"). Interests
in the Global Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depository and its
participants. Except as provided herein, Notes in definitive form will
not be issued. Settlement for the Notes will be made in immediately
available funds. The Notes will trade in the Depository's Same-Day
Funds Settlement System until maturity, and secondary market
trading activity for the Notes will therefore settle in
immediately available funds. See "Description of Notes--Same-Day
Settlement and Payment".
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Ford Credit(1)(2)
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per Note..................................... 99.80% .45% 99.35%
Total........................................ $499,000,000 $2,250,000 $496,750,000
</TABLE>
(1) Plus accrued interest, if any, from January 19, 1995.
(2) Before deduction of expenses payable by Ford Credit estimated at $200,000.
------------------
The Notes are offered by the several Underwriters when, as and if issued by
Ford Credit, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Global Notes will be made through the facilities of the Depository on or about
January 19, 1995, against payment in immediately available funds.
CS First Boston
Goldman, Sachs & Co.
Salomon Brothers Inc
Smith Barney Inc.
The date of this Prospectus Supplement is January 11, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus. The Notes are part of the Debt Securities registered by Ford
Motor Credit Company ("Ford Credit") in August 1994 to be issued on terms to be
determined at the time of sale. In addition to the Notes offered hereby, Debt
Securities in the aggregate principal amount of $700,000,000 previously have
been sold.
GENERAL
The Notes will be limited to $500,000,000 aggregate principal amount. The
Notes will be unsecured obligations of Ford Credit and will mature on January
15, 2000. The Notes will rank pari passu with all other unsecured and
unsubordinated indebtedness of Ford Motor Credit Company (parent company only).
The Notes will bear interest from January 19, 1995 at the rate per annum
set forth on the cover page of this Prospectus Supplement, payable on January 15
and July 15 of each year, commencing July 15, 1995, to the person in whose name
the Note was registered at the close of business on the preceding January 1 and
July 1, respectively, subject to certain exceptions. The Notes are not subject
to redemption prior to maturity.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered Global
Notes (the "Global Notes") which will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depository") and registered
in the name of Cede & Co., the Depository's nominee. Except as set forth below,
the Global Notes may be transferred, in whole and not in part, only to another
nominee of the Depository or to a successor of the Depository or its nominee.
The Depository has advised as follows: It is a limited-purpose trust
company which holds securities for its participating organizations (the
"Participants") and facilitates the settlement among Participants of securities
transactions in such securities through electronic book-entry changes in its
Participants' accounts. Participants include securities brokers and dealers
(including certain of the Underwriters), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depository's system
is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("indirect participants"). Persons who are not
Participants may beneficially own securities held by the Depository only through
Participants or indirect participants.
The Depository advises that its established procedures provide that (i)
upon issuance of the Notes by Ford Credit the Depository will credit the
accounts of Participants designated by the Underwriters with the principal
amounts of the Notes purchased by the Underwriters, and (ii) ownership of
interests in the Global Notes will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depository,
the Participants and the indirect participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
which they own. Consequently, the ability to transfer beneficial interests in
the Global Notes is limited to such extent.
So long as a nominee of the Depository is the registered owner of the
Global Notes, such nominee for all purposes will be considered the sole owner or
holder of such Notes under the
S-2
<PAGE> 3
Indenture. Except as provided below, owners of beneficial interests in the
Global Notes will not be entitled to have Notes registered in their names, will
not receive or be entitled to receive physical delivery of Notes in definitive
form, and will not be considered the owners or holders thereof under the
Indenture.
Neither Ford Credit, the Trustee, any Paying Agent nor the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Principal and interest payments on the Notes registered in the name of the
Depository's nominee will be made by the Trustee to the Depository. Under the
terms of the Indenture, Ford Credit and the Trustee will treat the persons in
whose names the Notes are registered as the owners of such Notes for the purpose
of receiving payment of principal and interest on the Notes and for all other
purposes whatsoever. Therefore, neither Ford Credit, the Trustee nor any Paying
Agent has any direct responsibility or liability for the payment of principal or
interest on the Notes to owners of beneficial interests in the Global Notes. The
Depository has advised Ford Credit and the Trustee that its present practice is
to credit the accounts of the Participants on the appropriate payment date in
accordance with their respective holdings in principal amount of beneficial
interests in the Global Notes as shown on the records of the Depository, unless
the Depository has reason to believe that it will not receive payment on such
payment date. Payments by Participants and indirect participants to owners of
beneficial interests in the Global Notes will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the Participants or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by Ford Credit within 90
days, Ford Credit will issue Notes in definitive form in exchange for the Global
Notes. In addition, Ford Credit may at any time determine not to have the Notes
represented by Global Notes and, in such event, will issue Notes in definitive
form in exchange for the Global Notes. In either instance, an owner of a
beneficial interest in the Global Notes will be entitled to have Notes equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Notes in definitive form. Notes so issued
in definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by Ford
Credit in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
will trade in the Depository's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Notes will therefore be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
S-3
<PAGE> 4
UNDERWRITING
The Underwriters named below have severally agreed to purchase from Ford
Credit the following respective principal amount of the Notes.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
---------------------------------------------------------- ----------------
<S> <C>
CS First Boston Corporation............................... $110,000,000
Goldman, Sachs & Co. ..................................... 110,000,000
Salomon Brothers Inc...................................... 110,000,000
Smith Barney Inc. ........................................ 110,000,000
Bear, Stearns & Co. Inc................................... 30,000,000
PaineWebber Incorporated.................................. 30,000,000
----------------
Total...................................... $500,000,000
=============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent. In the event of
default by one or more Underwriters, the Underwriting Agreement provides that in
certain circumstances other Underwriters may be substituted or the commitment of
each non-defaulting Underwriter may be increased up to 10%. However, if the
default involves more than one-eleventh of the aggregate principal amount of the
Notes, the Pricing Agreement relating to the Notes may be terminated by Ford
Credit or by 50% or more in interest of non-defaulting Underwriters, or, if not
so terminated, less than all the Notes may be sold.
Ford Credit has been advised by CS First Boston Corporation, as
Representative of the Underwriters, that the Underwriters propose to offer the
Notes to the public initially at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession of .30% of the principal amount of the Notes; that the
Underwriters and such dealers may allow a discount of .25% of such principal
amount on sales to certain other dealers; and that after the initial public
offering the public offering price and concession and discount to dealers may be
changed by the Representative.
The Notes are a new issue of securities with no established trading market.
The Underwriters have advised Ford Credit they intend to act as market makers
for the Notes. However, the Underwriters are not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Notes.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of Notes--Same-Day Settlement and Payment".
Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
contribute to payments which the Underwriters may be required to make in respect
thereof.
------------------------
The following information, which is being disclosed pursuant to Florida
law, is accurate as of the date of this Prospectus Supplement:
Autolatina-Comercio, Negocios e Participacoes Ltda., a Brazilian company
("Autolatina"), is a joint venture between Ford Motor Company ("Ford") and
Volkswagen AG in which Ford has a 49% ownership interest. Autolatina
occasionally sells vehicles to persons located in Cuba. Each such sale is made
pursuant to a specific license granted to Ford by the U.S. Department of
Treasury. The last such sale, which involved one medical supply vehicle, was
made to Cubanacan in April 1991. Current information concerning Autolatina's or
its Ford-related affiliates' business dealings with the government of Cuba or
with persons located in Cuba may be obtained from the State of Florida
Department of Banking and Finance at The Capitol Building, Suite 1401,
Tallahassee, Florida 32399-0350 (telephone number 940-488-0545).
S-4
<PAGE> 5
FORD MOTOR CREDIT COMPANY
DEBT SECURITIES
Ford Credit, in August 1994, registered with the Securities and Exchange
Commission $6,000,000,000 aggregate principal amount of its Debt Securities
consisting of notes and/or debentures denominated in United States dollars or
any other currency or currencies, to be offered from time to time in one or more
series, on terms to be determined at or prior to the time of sale. The
Prospectus Supplement accompanying this Prospectus sets forth, with respect to
the particular series of Debt Securities for which this Prospectus and the
Prospectus Supplement are being delivered, the specific title, the aggregate
principal amount, the authorized denominations, the currencies of issue and
payment, the initial public offering price, the maturity, the interest rate or
rates (which may be either fixed or variable), if any, and/or method of
determination thereof, the time of payment of any interest, any redemption,
extension or early repayment terms, any provision for sinking fund payments, the
net proceeds to Ford Credit, the form of Debt Securities and other specific
terms relating to such series of Debt Securities.
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to other purchasers or through
agents. See "Plan of Distribution". In addition, the Debt Securities may be sold
to dealers at the applicable price to the public set forth in the Prospectus
Supplement relating to a particular series of Debt Securities who later resell
to investors. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). If any agents
of Ford Credit, or any underwriters, are involved in the sale of any Debt
Securities, the names of such agents or underwriters and any applicable
commissions or discounts are set forth in the accompanying Prospectus
Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JANUARY 11, 1995
<PAGE> 6
AVAILABLE INFORMATION
FORD MOTOR CREDIT COMPANY ("FORD CREDIT") AND FORD MOTOR COMPANY ARE
SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934
AND IN ACCORDANCE THEREWITH FILE REPORTS AND OTHER INFORMATION WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"). AS USED HEREIN OR IN THE
PROSPECTUS SUPPLEMENT, "FORD" REFERS TO FORD MOTOR COMPANY AND ITS SUBSIDIARIES
UNLESS THE CONTEXT OTHERWISE REQUIRES. SUCH REPORTS AND OTHER INFORMATION CAN BE
INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE
COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549 AND AT THE
FOLLOWING REGIONAL OFFICES OF THE COMMISSION: 7 WORLD TRADE CENTER, 13TH FLOOR,
NEW YORK, NEW YORK 10048 AND NORTHWEST ATRIUM CENTER, 500 WEST MADISON STREET,
SUITE 1400, CHICAGO, ILLINOIS 60661. COPIES OF SUCH MATERIAL CAN BE OBTAINED
FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT 450 FIFTH STREET, N.W.,
WASHINGTON, D.C. 20549 AT PRESCRIBED RATES. SUCH REPORTS AND OTHER INFORMATION
CONCERNING FORD CREDIT AND FORD CAN ALSO BE INSPECTED AT THE OFFICES OF THE NEW
YORK STOCK EXCHANGE, INC., 20 BROAD STREET, NEW YORK, NEW YORK 10005, ON WHICH
CERTAIN OF FORD CREDIT'S DEBT SECURITIES ARE LISTED.
Ford Credit has filed with the Commission a Registration Statement under
the Securities Act with respect to the Debt Securities offered hereby. This
Prospectus and the Prospectus Supplement do not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. The information so omitted may be obtained from
the Commission's principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford Credit's Annual Report on Form 10-K for the year ended December 31,
1993 (the "1993 10-K Report"), Ford Credit's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1994 (the "First Quarter 10-Q Report"), June 30,
1994 (the "Second Quarter 10-Q Report"), and September 30, 1994 (the "Third
Quarter 10-Q Report") and Ford Credit's Current Reports on Form 8-K dated
January 11, 1994, February 11, 1994, February 25, 1994, March 18, 1994, April
14, 1994, May 11, 1994, June 27, 1994, August 22, 1994, October 17, 1994,
October 31, 1994 and December 9, 1994 are incorporated in this Prospectus by
reference. All documents filed by Ford Credit pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing such documents. Such reports include, and
such documents may include, information concerning Ford, as well as Ford Credit.
FORD CREDIT UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT HAVE BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN
OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT, OTHER THAN EXHIBITS TO SUCH DOCUMENTS. WRITTEN OR TELEPHONIC
REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO FORD MOTOR CREDIT COMPANY, THE
AMERICAN ROAD, DEARBORN, MICHIGAN 48121, ATTENTION: PUBLIC AFFAIRS DEPARTMENT
(TELEPHONE 313-594-1096).
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2
<PAGE> 7
INFORMATION CONCERNING FORD CREDIT
Ford Credit was incorporated in Delaware in 1959 and is a wholly-owned
subsidiary of Ford. As used herein "Ford Credit" refers to Ford Motor Credit
Company and its subsidiaries unless the context otherwise requires.
Ford Credit provides wholesale financing and capital loans to franchised
Ford Motor Company vehicle dealers and other dealers associated with such
dealers and purchases retail installment sale contracts and retail leases from
them. Ford Credit also makes loans to vehicle leasing companies, the majority of
which are affiliated with such dealers. In addition, wholly-owned subsidiaries
of Ford Credit provide these financing services to other vehicle dealers. More
than 85% of all new vehicles financed by Ford Credit are manufactured by Ford or
its affiliates. In addition to vehicle financing, Ford Credit makes loans to
affiliates of Ford, finances certain receivables of Ford and its subsidiaries,
and offers diversified financing services which are managed by USL Capital
Corporation ("USL Capital"), a wholly-owned subsidiary of Ford Holdings, Inc.
("Ford Holdings"). Ford Credit also manages the insurance business of The
American Road Insurance Company ("American Road"), a wholly-owned subsidiary of
Ford Holdings. Ford Credit also is a significant equity participant in Ford
Holdings whose primary activities are consumer and commercial financing
operations, insurance underwriting and equipment leasing.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.
------------------------
THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED
INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH
SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED
IN THE INCORPORATED DOCUMENTS.
------------------------
3
<PAGE> 8
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------------- YEARS ENDED DECEMBER 31
-----------------------------------
1994 1993 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total revenue.................. $ 7,500.5 $ 6,193.9 $ 8,338.4 $ 7,073.3 $ 7,002.3
Interest expense............... 2,510.6 2,176.4 2,919.3 3,076.5 3,791.8
Provision for credit losses.... 171.6 239.8 270.2 418.0 577.9
Income before income taxes and
cumulative effects of
changes in accounting
principles.................. 1,510.2 1,430.1 1,875.0 1,323.2 1,075.1
Cumulative effects of changes
in accounting principles.... -- -- -- 146.5 --
Net income..................... 982.2 895.6 1,193.8 1,038.7 748.8
Dividends
Cash........................ (250.0) (150.0) (250.0) (600.0) (650.0)
Stock of Ford Holdings...... -- -- -- (200.0) (316.0)
Memo:
Net credit losses amount....... $ 145.1 $ 157.2 $ 228.4 $ 342.6 $ 528.9
As percentage of average total
finance receivables
outstanding (annualized)*... 0.25% 0.33% 0.35% 0.60% 0.92%
BALANCE SHEET DATA
Net investment, operating
leases...................... $18,566.5 $11,310.9 $12,600.9 $ 7,747.2 $ 4,345.5
========= ========= ========= ========= =========
Finance receivables, net....... $55,098.8 $48,700.0 $50,714.1 $46,602.5 $46,481.4
========= ========= ========= ========= =========
Capital
Short-term debt............. $32,208.5 $24,479.7 $25,507.1 $22,995.7 $19,873.7
Long-term debt (including
current portion).......... 34,886.8 32,155.2 33,363.1 26,913.7 28,160.2
Stockholder's equity........ 6,434.2 5,575.5 5,774.7 4,882.9 4,689.9
--------- --------- --------- --------- ---------
Total capital............. $73,529.5 $62,210.4 $64,644.9 $54,792.3 $52,723.8
========= ========= ========= ========= =========
</TABLE>
- ---------------
* Includes net investment in operating leases.
THIRD QUARTER 1994 RESULTS OF OPERATIONS
Ford Credit's consolidated net income for the third quarter of 1994 was
$315 million, up $40 million or 15% compared with $275 million in the third
quarter of 1993. Income from financing operations was $254 million, up $32
million or 14% from the same period a year ago. Equity in net income of
affiliated companies, primarily Ford Holdings, was $61 million compared with $53
million in the same period a year ago.
Compared with results from a year ago, financing profits in the third
quarter of 1994 primarily reflected a higher level of earning assets, lower
credit losses, and non-recurrence of the effect of the 1993 U.S. tax rate
increase, partially offset by lower net interest margins and the non-recurrence
of a gain from the sale of receivables. The higher level of earning assets
reflected increases in operating leases, retail installment sale receivables,
and wholesale financing. Lower credit losses primarily reflected the continuing
trend of favorable credit loss experience and lower losses per repossessed unit.
The lower net interest margins primarily reflected the effect of higher
borrowing costs as well as lower interest rates on finance receivables and
operating leases.
4
<PAGE> 9
Total gross finance receivables and net investment in operating leases at
September 30, 1994 were $79.7 billion, up $13.9 billion or 21% from a year
earlier. The increase primarily reflected higher levels of operating leases,
retail installment sale receivables, and wholesale receivables. Depreciation
expense on operating leases in the third quarter of 1994 was $1,039 million, up
$317 million or 44% compared with the third quarter of 1993. 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 third quarter of 1994, Ford Credit financed 36.7% of all new
cars and trucks sold by Ford Motor Company dealers in the United States,
compared with 37.5% in the third quarter of 1993. The decrease primarily
resulted from lower levels of retail installment sale financing. Ford Credit
provided retail financing for 592,000 new and used vehicles in the United
States, up 2% from a year ago. Ford Credit also provided wholesale financing for
83.4% of Ford Motor Company factory sales to U.S. car and truck dealers during
the quarter, compared with 82.7% in the same period a year ago.
FIRST NINE MONTHS 1994 RESULTS OF OPERATIONS
For the first nine months of 1994, Ford Credit's consolidated net income
was $982 million, up $86 million or 10% from $896 million in the first nine
months of 1993. Income from financing operations was $816 million, up $60
million or 8% from the same period a year ago. Equity in net income of
affiliated companies was $166 million compared with $140 million in 1993. The
improvement in financing profits primarily resulted from higher levels of
earning assets, lower credit losses, the non-recurrence of the effect of the
1993 U.S. tax rate increase and a one-time gain from the sale of Ford Credit's
investment in Manheim Auctions, Inc., partially offset by lower net interest
margins, and lower gains from sales of receivables. Depreciation expense in the
first nine months of 1994 was $2,784 million, up $879 million or 46% compared
with the first nine months of 1993. 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 nine months of 1994, Ford
Credit provided retail financing for 37.0% of all new cars and trucks sold by
Ford Motor Company dealers in the United States, compared with 38.1% in the same
period a year ago. Ford Credit provided U.S. retail financing for 1,802,000 new
and used vehicles compared with 1,679,000 vehicles in the first nine months of
1993. Ford Credit also provided wholesale financing for 81.7% of Ford Motor
Company factory sales to U.S. car and truck dealers during the first nine months
of 1994, compared with 81.2% in the same period last year.
1993 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in 1993 was $1,194 million, up $155
million or 15% from 1992. Excluding a one-time gain resulting from the net
effect of the adoption of new accounting standards for income taxes and
postretirement benefits in 1992, net income was up $302 million or 34% from a
year ago. The following comparison of 1993 results with 1992 results excludes
the one-time net gain associated with the accounting changes.
Net income from financing operations was $996 million, up $259 million or
35% from the prior year. The increase in financing profits was more than
accounted for by higher financing volumes, lower credit losses and higher net
income from gains on sales of retail automotive receivables, partially offset by
the increase in U.S. income taxes and lower net interest margins.
Lower credit losses reflect lower losses per repossession and fewer
repossessions. Actual credit losses were $228 million (0.35% of average finance
receivables including net investment in operating leases) compared with $343
million (0.60%) in 1992. Ford Credit released a portion of the loss reserves
reflecting the continued improvement in actual credit loss experience. The
credit loss coverage ratio for 1993 was 4.0 compared with 2.7 in the prior year.
The decline in net interest margins, including depreciation on operating leases,
reflects primarily the decline in net U.S. borrowing
5
<PAGE> 10
rates from 6.3% in 1992 to 5.3% in 1993, more than offset by lower yields on
finance receivables and net investment in operating leases.
For 1993, equity in net income of affiliated companies (primarily Ford
Holdings) was $198 million, up $43 million from 1992. The increase reflected
higher Ford Holdings net income available to common shareholders, partially
offset by a reduction in Ford Credit's ownership of Ford Holdings common stock
in 1992. The reduction in ownership was the result of a dividend paid in 1992 to
Ford in the form of Ford Holdings common stock. At December 31, 1993, Ford
Credit owned about 45% of Ford Holdings common stock, representing about 34% of
the voting power.
Total gross finance receivables and net investment in operating leases at
December 31, 1993 were $69.6 billion, up $9.4 billion (16%) from a year earlier.
The higher financing volume reflects primarily an increase in short-term
operating leases and higher wholesale receivables. Depreciation expense on
operating leases in 1993 was $2,676 million, up $1,023 million or 62% from 1992.
The increase reflected the higher levels of operating leases and was more than
offset by higher revenue earned on the lease contracts.
For 1993, Ford Credit financed 38.5% of all new cars and trucks sold by
Ford Motor Company dealers in the U.S. compared with 37.7% in 1992. Ford Credit
provided retail financing for 2,246,000 new and used vehicles in the United
States. Ford Credit provided wholesale financing for 81.4% of Ford Motor Company
U.S. factory sales in 1993 compared with 77.6% in 1992.
LIQUIDITY AND CAPITAL RESOURCES
Ford Credit relies heavily on its ability to raise substantial amounts of
funds. These funds are obtained primarily by sales of commercial paper and
issuance of term debt. Funds also are provided by retained earnings and sales of
receivables. The level of funds can be affected by certain transactions with
Ford, such as capital contributions, interest supplements and other support
costs from Ford for vehicles financed and leased by Ford Credit under Ford
sponsored special financing and leasing programs, and dividend payments, and the
timing of payments for the financing of dealers' wholesale inventories and for
income taxes. Ford Credit's ability to obtain funds is affected by its debt
ratings, which are closely related to the outlook for, and financial condition
of, Ford, and the nature and availability of support facilities, such as
revolving credit and receivables sales agreements. In addition, Ford Credit from
time to time sells its receivables in public offerings or private placements.
For additional information regarding liquidity and capital resources, see Item
1--Business--"Business of Ford Credit--Borrowings and Other Sources of Funds" in
the 1993 10-K Report, and see the First Quarter 10-Q Report, the Second Quarter
10-Q Report and the Third Quarter 10-Q Report. For additional information
regarding Ford Credit's association with Ford, see Item 1 --Business--"Certain
Transactions with Ford and Affiliates" in the 1993 10-K Report.
RECENT DEVELOPMENT
On December 31, 1994, Ford Credit declared a $114 million cash dividend
payable to Ford.
6
<PAGE> 11
INFORMATION CONCERNING FORD
Ford is the second-largest producer of cars and trucks in the world, and
ranks among the largest providers of financial services in the United States.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the manufacture,
assembly and sale of cars and trucks and related parts and accessories. The
Financial Services segment is comprised of the following subsidiaries: Ford
Credit, Ford Credit Europe plc, Ford Holdings, Associates First Capital
Corporation ("The Associates"), American Road, The Hertz Corporation ("Hertz")
and USL Capital. The activities of these subsidiaries include financing
operations, insurance operations and vehicle and equipment leasing.
7
<PAGE> 12
SELECTED FINANCIAL DATA AND OTHER DATA OF FORD
The following table sets forth selected financial data and other data
concerning Ford:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEARS ENDED OR AT DECEMBER 31
---------------------- ------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------- -------- ---------
(IN MILLIONS EXCEPT PER SHARE AND UNIT SALES AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
INFORMATION
Automotive
Sales................................ $ 79,371 $ 68,057 $ 91,568 $ 84,407 $ 72,051 $ 81,844 $ 82,879
Operating income/(loss).............. 4,514 1,050 1,432 (1,775) (3,769) 316 4,252
Income/(loss) before cumulative
effects of changes in accounting
principles......................... 2,739 643 940 (1,534) (3,186) 99 3,175
Financial Services
Revenues............................. 15,425 12,623 16,953 15,725 16,235 15,806 13,267
Income before income taxes and
cumulative effects of changes in
accounting principles.............. 2,003 2,056 2,712 1,825 1,465 1,221 874
Income before cumulative effects of
changes in accounting principles... 1,000 1,167 1,589 1,032 928 761 660
Total Ford
Income/(loss) before cumulative
effects of changes in accounting
principles......................... 3,739 1,810 2,529 (502) (2,258) 860 3,835
Cumulative effects of changes in
accounting principles.............. -- -- -- (6,883) -- -- --
Net income/(loss).................... 3,739 1,810 2,529 (7,385) (2,258) 860 3,835
Amounts Per Share of Common Stock and
Class B Stock After Preferred Stock
Dividends***
Income/(loss) before cumulative
effects of changes in accounting
principles......................... 3.50 1.62 2.27 (0.73) (2.40) 0.93 4.11
Cumulative effects of changes in
accounting principles.............. -- -- -- (7.08) -- -- --
-------- -------- -------- -------- --------- -------- ---------
Income/(loss) assuming no dilution... 3.50 1.62 2.27 (7.81) (2.40) 0.93 4.11
Income/(loss) assuming full
dilution........................... 3.13 1.51 2.10 (7.81) (2.40) 0.92 4.06
Cash dividends....................... 0.65 0.60 0.80 0.80 0.98 1.50 1.50
CONSOLIDATED BALANCE SHEET INFORMATION
Automotive
Total assets......................... 69,081 61,502 61,737 57,170 52,397 50,823 45,819
Debt payable within one year......... 96 749 932 1,249 2,580 2,849 2,537
Long-term debt--noncurrent portion... 7,137 7,138 7,084 7,068 6,539 4,553 1,137
Financial Services
Total assets......................... 145,738 133,795 137,201 123,375 122,032 122,839 115,074
Debt................................. 119,056 99,500 103,960 90,188 88,295 88,117 81,734
Deposit accounts*.................... 0 10,844 10,549 14,030 16,882 17,893 17,642
Total Ford
Total assets......................... 214,819 195,297 198,938 180,545 174,429 173,663 160,893
Debt (incl. deposit accounts)........ 126,289 118,231 122,525 112,535 114,295 113,412 103,050
Stockholders' equity**............... 19,985 15,827 15,574 14,753 22,690 23,238 22,728
Cash dividends....................... 869 814 1,086 977 927 1,389 1,404
OTHER DATA
Total Ford
Capital expenditures................. 6,077 4,779 6,814 5,790 5,847 7,258 6,767
Depreciation and amortization of
special tools...................... 6,722 5,493 7,468 6,756 5,778 4,880 4,229
Worldwide factory unit sales
of cars, trucks and tractors
(in thousands)..................... 5,001 4,513 5,964 5,764 5,359 5,872 6,408
</TABLE>
- ------------
* Deposit accounts relate to First Nationwide.
** The cumulative effects of changes in accounting principles reduced equity
by $6,883 million in 1992.
*** Share data have been restated to reflect the 2-for-1 stock split that
became effective June 6, 1994.
8
<PAGE> 13
FINANCIAL REVIEW OF FORD
THIRD QUARTER 1994 RESULTS OF OPERATIONS
Overview
Ford earned $1,124 million, or $1.04 per share of Common and Class B Stock,
in the third quarter of 1994. This compares with $463 million, or $0.40 per
share, in the third quarter of 1993. Fully diluted earnings per share were $0.93
in the third quarter of 1994, compared with $0.38 a year ago. Ford's worldwide
sales and revenues were $30.6 billion, up $6.1 billion from a year ago.
Worldwide factory unit sales of cars and trucks were 1,526,000, up 220,000 units
or 17%. Stockholders' equity was $20 billion at September 30, 1994.
In August 1993, the Omnibus Budget Reconciliation Act was enacted in the
United States. Ford's results in the third quarter of 1993 were favorably
affected by a reduction of $140 million in the provision for income taxes to
reflect restatement of deferred tax balances.
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 $601 million in the third
quarter of 1994 on sales of $24.9 billion, compared with earnings of $72 million
on sales of $20.1 billion a year ago.
In the U.S., Ford's automotive operations earned $578 million, compared
with $333 million a year ago. The improvement reflected higher unit volume (as a
result of higher truck sales) and improved margins offset partially by the
non-recurrence of the favorable one-time effect in 1993 of tax legislation in
the U.S. ($171 million).
In the third quarter of 1994, the seasonally-adjusted annual selling rate
for the U.S. car and truck industry was 14.8 million units compared with 13.9
million in the third quarter of 1993. Ford's car market share was 21.0% in the
third quarter of 1994, down 9/10 of a point from a year ago, reflecting
primarily lower shares for Tempo and Topaz. Ford's truck share was 31.2%, equal
to a year ago. Ford's combined car and truck share was 25.2%, down 5/10 of a
point from a year ago.
Outside the U.S., Automotive operations earned $23 million in the third
quarter of 1994, compared with a loss of $261 million a year ago. The
improvement reflected primarily higher unit volume in Europe, where Automotive
operations (excluding Jaguar) earned $25 million in the third quarter of 1994,
compared with a loss of $217 million a year ago.
In the third quarter of 1994, the seasonally-adjusted annual selling rate
for the European car and truck industry was 13.1 million units, compared with
12.7 million a year ago. Ford's car share was 12.6% in the third quarter of
1994, up 2/10 of a point from a year ago. Ford's truck share was 14.3%, equal to
a year ago.
Financial Services Operations
Ford's Financial Services operations earned $523 million in the third
quarter of 1994, compared with $391 million in the third quarter of 1993. The
increase resulted primarily from improved results at Ford Credit, The
Associates, and USL Capital, consolidation of results for Hertz, non-recurrence
of losses at Granite Management Corporation (formerly First Nationwide Financial
Corporation) ("Granite") and non-recurrence of the one-time unfavorable effect
in 1993 of tax legislation in the U.S. ($31 million).
For a discussion of Ford Credit's results of operations in the third
quarter of 1994, see "Ford Motor Credit Company and Subsidiaries -- Selected
Financial Data -- Third Quarter 1994 Results
9
<PAGE> 14
of Operations." In addition, international operations managed by Ford Credit
earned $62 million in the third quarter of 1994, compared with $57 million a
year ago.
The Associates earned $151 million in the U.S. in the third quarter of
1994, compared with $121 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 $17 million in the
third quarter of 1994, compared with $2 million a year ago.
USL Capital earned $27 million in the third quarter of 1994, compared with
$16 million a year ago. The increase reflected higher earning assets and lower
operating costs. American Road earned $14 million in the third quarter of 1994,
compared with $27 million in the same period in 1993. The decrease resulted
primarily from reduced investment income.
In the first half of 1994, Ford acquired the remaining common stock of
Hertz, and Hertz became a wholly-owned subsidiary of Ford. Financial Services
results included Hertz earnings of $61 million in the third quarter of 1994.
Automotive results included Hertz earnings of $19 million a year ago (reflecting
Ford's prior equity interest in Hertz).
On April 14, 1994, an agreement was entered into for the sale of
substantially all of the assets of Granite Savings Bank (formerly First
Nationwide Bank) to First Madison Bank, referred to in the second through fourth
paragraphs on page 11 of the First Quarter 10-Q Report. The transaction was
completed on September 30, 1994. In the third quarter of 1993, Granite incurred
a loss of $7 million.
FIRST NINE MONTHS 1994 RESULTS OF OPERATIONS
Overview
Ford earned $3,739 million, or $3.50 per share of Common and Class B Stock,
in the first nine months of 1994. Results included a charge to net income of
$440 million related to the sale of Granite Savings Bank to First Madison Bank
(discussed above). In the first nine months of 1993, Ford earned $1,810 million,
or $1.62 per share, including the favorable one-time effect ($140 million) of
tax legislation in the U.S. Fully diluted earnings per share were $3.13,
compared with $1.51 a year ago. Ford's worldwide sales and revenues were $94.8
billion in the first nine months of 1994, up $14.1 billion from a year ago.
Worldwide factory unit sales of cars and trucks were 5,001,000, up 488,000 or
11%.
Automotive Operations
Ford's worldwide Automotive operations earned $2,739 million in the first
nine months of 1994, compared with $643 million in first nine months of 1993. In
the U.S., Ford's Automotive operations earned $2,320 million, compared with $813
million a year ago. The improvement reflected higher unit volume (as a result of
higher industry sales) and improved margins.
In the first nine months of 1994, the seasonally-adjusted annual selling
rate for the U.S. car and truck industry was 15.2 million units, compared with
14 million a year ago. Ford's car share was 21.4% in the first nine months of
1994, down 8/10 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 30.2%, equal
to a year ago. Ford's combined car and truck share was 25%, down 3/10 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 $419 million in the first
nine months of 1994, compared with a loss of $170 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 $377 million in the first nine months of 1994, compared with a
loss of $264 million a year ago.
10
<PAGE> 15
In the first nine months of 1994, the seasonally-adjusted annual selling
rate for the European car and truck industry was 13.2 million units, compared
with 12.5 million units a year ago. Ford's car share was 12.0%, up 2/10 of a
point from a year ago. Ford's truck share was 14.6%, equal to a year ago. For
the full year, Ford projects European industry sales of about 13.3 million units
in 1994, compared with 12.5 million units in 1993.
Financial Services Operations
Ford's Financial Services operations earned $1,000 million in the first
nine months of 1994, compared with $1,167 million in the first nine months of
1993. The decline was more than explained by the charge to net income of $440
million related to the sale of Granite Savings Bank. Higher earnings at Ford
Credit, The Associates, USL Capital, and the consolidation of results for Hertz
were partial offsets.
For a discussion of Ford Credit's results of operations in the first nine
months of 1994, see "Ford Motor Credit Company and Subsidiaries -- Selected
Financial Data -- First Nine Months 1994 Results of Operations." International
operations managed by Ford Credit earned $175 million in the first nine months
of 1994, compared with $154 million a year ago.
The Associates earned $400 million in the U.S. in the first nine months of
1994 compared with $343 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 $56 million in the first nine months
of 1994, compared with $22 million a year ago.
USL Capital's net income in the first nine months of 1994 was $75 million,
compared with $53 million a year ago. The increase reflected higher earning
assets and lower operating costs. American Road earned $44 million in the first
nine months of 1994, compared with $67 million a year ago. The decrease resulted
primarily from reduced investment income, partially offset by improved
underwriting experience in extended service plans.
Hertz earnings of $88 million in the first nine months of 1994 were
included in Financial Services results. Earnings of $22 million a year ago were
included in Automotive results (reflecting Ford's prior equity interest).
Granite incurred a loss of $484 million in the first nine months of 1994,
including a charge of $440 million related to the sale of Granite Savings Bank.
Granite incurred a loss of $42 million in the first nine months of 1993.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
Cash and marketable securities of Ford's Automotive operations were $13.9
billion at September 30, 1994, up $4.1 billion from December 31, 1993. The
amount of cash and marketable securities is expected to decline during the
fourth quarter because of normal new-model changeover and launch and higher
capital spending (discussed below). Ford paid $869 million in cash dividends on
its Common Stock, Class B Stock, and Preferred Stock during the first nine
months of 1994.
Automotive capital expenditures were $5.9 billion in the first nine months
of 1994, compared with $4.7 billion a year ago. The rate of automotive capital
spending is projected to increase during the fourth quarter 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 September 30, 1994 totaled $7.2 billion, which was 26%
of total capitalization (stockholders' equity and Automotive debt), compared
with $7.9 billion, or 33% of total
11
<PAGE> 16
capitalization, at year-end 1993. The decrease in total debt is primarily the
result of lower levels of short-term borrowings.
At September 30, 1994, Ford 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. As of September 30, 1994, these
facilities were unused.
Outside the U.S., Ford has additional long-term contractually committed
credit-line facilities of approximately $2.5 billion. These facilities are
available in varying amounts from 1994 through 1999; less than 1% was used at
September 30, 1994.
Financial Services Operations
Financial Services' cash and investments in securities totaled $8.4 billion
at September 30, 1994, down $2.4 billion from December 31, 1993. The decline
reflected primarily the reclassification of Granite's net assets to "other
assets" as a result of the sale.
Net receivables and lease investments were $124.8 billion at September 30,
1994, up $5.3 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 Granite's net assets.
Total debt was $119.1 billion at September 30, 1994, up $15.1 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 Granite's net assets was a
partial offset.
At September 30, 1994, Financial Services had approximately $33.3 billion
of support facilities available for use in the U.S. (including $5.9 billion of
Ford bank lines that may be used by Ford Credit at Ford's option), 98% of which
were contractually committed; less than 1% of these facilities were in use at
that date. An additional $20.5 billion of support facilities were available
outside the U.S., 46% of which were contractually committed; approximately $6.1
billion of these support facilities were in use at September 30, 1994.
RECENT DEVELOPMENTS
Ford and Volkswagen AG have agreed on a gradual separation process leading
toward dissolution of their Autolatina joint venture in Brazil and Argentina
within a year. It is not known at this time what effect, if any, a dissolution
of Autolatina will have on Ford's future earnings. Historically, Autolatina has
represented a significant portion of Ford's automotive earnings outside the U.S.
and Europe.
INDUSTRY DATA AND MARKET SHARE OF FORD
The following table shows the U.S. industry retail deliveries of cars and
trucks for the years indicated:
<TABLE>
<CAPTION>
U.S. INDUSTRY RETAIL DELIVERIES
(MILLIONS OF UNITS)
----------------------------------------
YEARS ENDED DECEMBER 31
----------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cars..................................................... 9.0 8.5 8.2 8.2 9.3
Trucks................................................... 6.4 5.7 4.9 4.3 4.8
</TABLE>
12
<PAGE> 17
The following table shows Ford's U.S. car and truck market shares for the
years indicated:
<TABLE>
<CAPTION>
FORD U.S. CAR AND TRUCK MARKET SHARES
----------------------------------------
YEARS ENDED DECEMBER 31
----------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cars*................................................ 21.8% 22.3% 21.8% 20.1% 21.1%
Trucks............................................... 30.1 30.4 29.7 28.9 29.3
</TABLE>
- ------------
* Includes Jaguar sales since 1990.
For additional information regarding Ford, see the 1993 10-K Report, the
First Quarter 10-Q Report, the Second Quarter 10-Q Report, and the Third Quarter
10-Q Report.
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the general funds of Ford
Credit and will be available for the purchase of receivables, for loans and for
use in connection with the retirement of debt. Such proceeds initially may be
used to reduce short-term borrowings (commercial paper, borrowings under bank
lines of credit and borrowings under agreements with bank trust departments) or
may be invested temporarily in short-term securities.
Ford Credit expects to issue additional long-term and short-term debt from
time to time. The nature and amount of Ford Credit's long-term and short-term
debt and the proportionate amount of each can be expected to vary from time to
time, as a result of business requirements, market conditions and other factors.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for Ford Credit and Ford were as
follows for the first nine months of 1994 and 1993 and each of the years
1989-1993:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30 YEARS ENDED DECEMBER 31
------------- ----------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ford Motor Credit Company................ 1.53 1.58 1.56 1.37 1.23 1.14 1.13
Ford Motor Company....................... 2.1 1.5 1.5 * ** 1.2 1.7
</TABLE>
- ------------
* Earnings were inadequate to cover fixed charges by $237 million.
** Earnings were inadequate to cover fixed charges by $2,664 million.
For purposes of the Ford Credit ratio, "earnings" consist of income before
income taxes and cumulative effects of changes in accounting principles and
fixed charges. Income before income taxes and cumulative effects of changes in
accounting principles of Ford Credit excludes the equity in net income of all
unconsolidated affiliates and minority interest in net income of subsidiaries.
"Fixed charges" consist of interest on borrowed funds, amortization of debt
discount, premium, and issuance expense and one-third of all rental expense (the
proportion deemed representative of the interest factor).
For purposes of the Ford ratio, "earnings" include the profit/(loss) before
income taxes and cumulative effects of changes in accounting principles of Ford
and its majority-owned subsidiaries, whether or not consolidated, its
proportionate share of any fifty-percent-owned companies, and any income
received from less-than-fifty-percent-owned companies and fixed charges. "Fixed
charges" consist of interest on borrowed funds, preferred stock dividend
requirements of majority-owned
13
<PAGE> 18
subsidiaries, amortization of debt discount, premium, and issuance expense, and
one-third of all rental expense (the proportion deemed representative of the
interest factor).
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued in one or more series under an
Indenture dated as of August 1, 1994, as supplemented from time to time (the
"Indenture"), between Ford Credit and First Fidelity Bank, National Association
("First Fidelity"), Trustee. The term "Trustee", as used herein, shall mean
First Fidelity and, if at any time there is more than one Trustee acting under
the Indenture, the term "Trustee" as used herein with respect to Indenture
Securities (as defined below) of any particular series shall mean the Trustee
with respect to the Indenture Securities of such series. The following
statements with respect to the Debt Securities are subject to the detailed
provisions of the Indenture, the form of which is filed as an exhibit to the
Registration Statement. Parenthetical references below are to the Indenture or
the Form of Security contained therein and, whenever any particular provision of
the Indenture or any term used therein is referred to, such provision or term is
incorporated by reference as a part of the statement in connection with which
such reference is made, and the statement in connection with which such
reference is made is qualified in its entirety by such reference.
The particular terms of each series of Debt Securities, as well as any
modification or addition to the general terms of the Debt Securities as herein
described, which may be applicable to a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities and will be set forth in a filing with the Commission. Accordingly,
for a description of the terms of a particular series of Debt Securities,
reference must be made to the Prospectus Supplement relating to such series and
to the description of Debt Securities set forth in this Prospectus.
GENERAL
The Debt Securities offered hereby will be limited to $6,000,000,000
aggregate principal amount or the equivalent thereof in any currency, although
the Indenture provides that additional debt securities may be issued thereunder
up to the aggregate principal amount, which is not limited by the Indenture,
authorized from time to time by Ford Credit's Board of Directors. So long as a
single Trustee is acting for the benefit of the holders of all the Debt
Securities offered hereby and any such additional debt securities issued under
the Indenture, the Debt Securities and any such additional debt securities are
herein collectively referred to as the "Indenture Securities". The Indenture
also provides that there may be more than one Trustee under the Indenture, each
with respect to one or more different series of Indenture Securities. See also
"Trustee" herein. At any time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture Securities" as used herein
shall mean the one or more series with respect to which each respective Trustee
is acting and the powers and trust obligations of each such Trustee as described
herein shall extend only to the one or more series of Indenture Securities for
which it is acting as Trustee. The effect of the provisions contemplating that
there might be more than one Trustee acting for different series of Indenture
Securities is that, in that event, those Indenture Securities (whether of one or
more than one series) for which each Trustee is acting would be treated as if
issued under a separate indenture.
The Prospectus Supplement which accompanies this Prospectus sets forth a
description of the particular series of Debt Securities being offered thereby,
including: (1) the designation or title of such Debt Securities; (2) the
aggregate principal amount of such Debt Securities; (3) the percentage of their
principal amount at which such Debt Securities will be offered; (4) the date or
dates on which the principal of such Debt Securities will be payable; (5) the
rate or rates (which may be either fixed or variable) and/or the method of
determination of such rate or rates at which such Debt Securities shall bear
interest, if any; (6) the date or dates from which any such interest
14
<PAGE> 19
shall accrue, or the method of determination of such date or dates, and the date
or dates on which any such interest shall be payable; (7) the terms for
redemption, extension or early repayment of such Debt Securities, if any; (8)
the denominations in which such Debt Securities are authorized to be issued; (9)
the currencies or currency units in which such Debt Securities are issued or
payable; (10) the provisions for a sinking fund, if any; (11) any additional
restrictive covenants included for the benefit of the holders of such Debt
Securities; (12) any additional Event of Default with respect to such Debt
Securities; (13) whether such Debt Securities are issuable as a Global Security;
and (14) any other term or provision relating to such Debt Securities which is
not inconsistent with the provisions of the Indenture.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement relating to any such series of Debt Securities.
The Debt Securities will be unsecured obligations of Ford Credit and will
rank prior to all subordinated indebtedness of Ford Motor Credit Company (parent
company only) and pari passu with all other unsecured and unsubordinated
indebtedness of Ford Motor Credit Company (parent company only).
Except as otherwise provided in the Prospectus Supplement, principal,
premium, if any, and interest, if any, will be payable at an office or agency to
be maintained by Ford Credit in New York City, except that at the option of Ford
Credit interest may be paid by check mailed to the person entitled thereto.
(Form of Security and Sections 10.01 and 10.02).
Except as otherwise provided in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and may
be presented for registration of transfer or exchange at the corporate trust
office of the Trustee. No service charge will be made for any transfer or
exchange of the Debt Securities, but Ford Credit may require payment of a sum to
cover any tax or other governmental charge payable in connection therewith.
(Section 3.05).
SUBSIDIARIES
The term "subsidiary of the Company" is defined in the Indenture as a
corporation a majority of the outstanding voting stock of which is owned,
directly or indirectly, by Ford Credit or by one or more subsidiaries of Ford
Credit, or by Ford Credit and one or more subsidiaries of Ford Credit. The term
"Restricted Subsidiary" is defined in the Indenture as a subsidiary of the
Company, incorporated in or conducting the major part of its business in the
United States, any of the activities of which includes insurance underwriting or
which had, at the end of its last quarterly accounting period preceding the date
of computation, assets with a value in excess of $1 million representing
accounts or notes receivable resulting from the financing of new cars, trucks,
tractors and farm and industrial equipment manufactured or sold by Ford or from
the financing of used cars, trucks, tractors and farm and industrial equipment
of the same types, whether manufactured by Ford or others. (Section 1.01). Ford
Holdings, which owns American Road and the other insurance businesses formerly
owned by Ford Credit, is not a subsidiary of the Company and therefore not a
Restricted Subsidiary, as such terms are defined in the Indenture. So long as
stock of Ford Holdings is directly owned by Ford Credit or by a Restricted
Subsidiary, such stock will be subject to the "Limitation on Liens" provision
described below. Ford Credit currently owns its stock in Ford Holdings directly
but is under no obligation to continue to do so.
LIMITATION ON LIENS
If Ford Credit or any Restricted Subsidiary shall pledge or otherwise
subject to any lien (such a pledge or lien is defined in the Indenture as a
"Mortgage") any of its property or assets, Ford Credit will secure or cause such
Restricted Subsidiary to secure the Indenture Securities equally and ratably
with (or prior to) the indebtedness secured by such Mortgage. This restriction
does not
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apply to Mortgages securing such indebtedness which shall not exceed $5 million
in the aggregate at any one time outstanding and does not apply to (a) certain
Mortgages created or incurred to secure financing of the export or marketing of
goods outside the United States, (b) Mortgages on accounts receivable payable in
foreign currencies securing indebtedness incurred and payable outside the United
States, (c) Mortgages in favor of Ford Credit or any Restricted Subsidiary, (d)
Mortgages in favor of governmental bodies to secure progress, advance or other
payments, or deposits with any governmental body required in connection with the
business of Ford Credit or a Restricted Subsidiary, (e) deposits made in
connection with pending litigation, (f) Mortgages existing at the time of
acquisition of the assets secured thereby (including acquisition through merger
or consolidation) and certain purchase money Mortgages, and (g) any extension,
renewal or replacement of any Mortgage or Mortgages referred to in the foregoing
clauses (a) through (f), inclusive. (Section 10.04).
MERGER AND CONSOLIDATION
The Indenture provides that no consolidation or merger of Ford Credit with
or into any other corporation shall be permitted, and no sale or conveyance of
its property as an entirety, or substantially as an entirety, may be made to
another corporation, if, as a result thereof, any asset of Ford Credit or a
Restricted Subsidiary would become subject to a Mortgage, unless the Indenture
Securities shall be equally and ratably secured with (or prior to) the
indebtedness secured by such Mortgage, or unless such Mortgage could be created
pursuant to Section 10.04 (see "Limitation on Liens" above) without equally and
ratably securing the Indenture Securities. (Section 8.03).
EVENTS OF DEFAULT AND NOTICE THEREOF
Except as may otherwise be provided in an indenture supplemental to the
Indenture, the following events in respect of a particular series of Indenture
Securities are defined in the Indenture as "Events of Default": (a) failure to
pay interest for 30 days after becoming due; (b) failure to pay the principal or
premium, if any, for five business days after becoming due at maturity, on
redemption or otherwise; (c) failure to make a sinking fund payment for five
days after becoming due; (d) failure to perform any other covenants for 90 days
after notice; and (e) certain events of bankruptcy, insolvency or
reorganization. (Section 5.01).
If an Event of Default in respect of a particular series of Indenture
Securities outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of the Indenture
Securities outstanding of such series may declare the principal amount (or, if
the Indenture Securities of such series are Original Issue Discount Securities
(as defined in the indenture), such portion of the principal amount as may be
specified in the terms of such series) of all of the Indenture Securities of
such series to be due and payable immediately. At any time after such a
declaration of acceleration in respect of a particular series of Indenture
Securities has been made, but before a judgment or decree for the payment of
money due upon acceleration has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of the Indenture Securities outstanding
of such series may, under certain circumstances, waive all defaults and rescind
and annul such declaration and its consequences if all Events of Default in
respect of the Indenture Securities of such series, other than the non-payment
of principal due solely by such declaration of acceleration, have been cured or
waived as provided in the Indenture. (Section 5.02).
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of a particular series of Indenture
Securities, give the holders of such series notice of all uncured defaults known
to it (the term "default" to include the events specified above without grace
periods); provided that, except in the case of default in the payment of the
principal of, or premium, if any, on, or interest on any of the Indenture
Securities of such series, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of such series. (Section 6.01).
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Pursuant to the terms of the Indenture, Ford Credit is required to furnish
to the Trustee annually a statement of certain officers of Ford Credit stating
whether or not to the best of their knowledge Ford Credit is in default in
respect of any series of Indenture Securities in the performance and observance
of the terms of the Indenture and, if Ford Credit is in default, specifying such
default and the nature thereof.
The Indenture provides that the holders of a majority in aggregate
principal amount of all Indenture Securities of a particular series then
outstanding will have the right to waive certain defaults in respect of such
series and, subject to certain limitations, to direct the time, method and place
of conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (Sections 5.12 and
5.13). No provision of the Indenture requires the Trustee to expend or risk its
own funds or otherwise incur any personal financial liability in the performance
of any of its duties thereunder, or in the exercise of any of its rights or
powers, if there are reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to the Trustee.
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture, the rights and obligations of Ford
Credit and the rights of the holders of a particular series may be modified by
Ford Credit with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of the Indenture Securities of such series then
outstanding; but no such modification may be made which would (i) extend the
fixed maturity of any Indenture Security of such series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, without the consent of the holder of each Indenture Security of such
series so affected; or (ii) reduce the above-stated percentage of Indenture
Securities of such series, the consent of the holders of which is required to
modify or alter the Indenture, without the consent of the holders of all
Indenture Securities of such series then outstanding. (Section 9.02).
TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Indenture Securities and a successor Trustee may be appointed to act with
respect to such one or more series. (Section 6.08). In the event that there
shall be two or more persons acting as Trustee with respect to different series
of Indenture Securities, each such Trustee shall be a trustee of a trust or
trusts under the Indenture separate and apart from the trust or trusts
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Indenture Securities for
which it is acting as Trustee. (Section 6.09).
CONCERNING FIRST FIDELITY
First Fidelity Bank, National Association, Trustee under the Indenture, is
a depositary of Ford Credit, has a committed credit facility available to Ford
Credit and its subsidiaries and has performed other services for Ford Credit in
the normal course of its business.
REPORTS
Ford Credit publishes annual reports, containing certified financial
statements, and quarterly reports, containing interim unaudited financial
statements. Copies of such reports will be available upon request.
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PLAN OF DISTRIBUTION
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to one or more other purchasers or
through agents.
The Prospectus Supplement sets forth the terms of the offering of the
particular series of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
Ford Credit has entered into arrangements with respect to the sale of such
series of Debt Securities, (ii) the initial public offering or purchase price of
such series of Debt Securities, (iii) any underwriting discounts, commissions
and other items constituting underwriters' compensation from Ford Credit and any
other discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to Ford Credit, and (vi) the securities exchanges, if any, on which
such series of Debt Securities will be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Debt Securities, the obligations of the underwriters to
purchase such series of Debt Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of Debt
Securities will be obligated to purchase all of the Debt Securities of such
series allocated to it if any such Debt Securities are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Debt Securities may be offered and sold by Ford Credit directly or
through agents designated by Ford Credit from time to time. Unless otherwise
indicated in the Prospectus Supplement, any such agent or agents will be acting
on a best efforts basis for the period of its or their appointment. Any agent
participating in the distribution of the Debt Securities may be deemed to be an
"underwriter", as that term is defined in the Securities Act, of the Debt
Securities so offered and sold. The Debt Securities also may be sold to dealers
at the applicable price to the public set forth in the Prospectus Supplement
relating to a particular series of Debt Securities who later resell to
investors. Such dealers may be deemed to be "underwriters" within the meaning of
the Securities Act.
If so indicated in the Prospectus Supplement relating to a particular
series of Debt Securities, Ford Credit will authorize underwriters or agents to
solicit offers by certain institutions to purchase Debt Securities of such
series from Ford Credit pursuant to delayed delivery contracts providing for
payment and delivery at a future date. Such contracts will be subject only to
those conditions set forth in the Prospectus Supplement and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Underwriters and agents may be entitled, under agreements entered into with
Ford Credit, to indemnification by Ford Credit against certain civil
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
The legality of the Debt Securities offered hereby will be passed on for
Ford Credit by J. D. Bringard, Esq., Vice President--General Counsel of Ford
Credit, or other counsel satisfactory to any underwriters or agents, and for any
underwriters or agents by Shearman & Sterling, 599 Lexington Avenue, New York,
N.Y. Mr. Bringard is a full-time employee of Ford Credit and owns and holds
options to purchase shares of Common Stock of Ford. Shearman & Sterling act as
counsel to the Compensation and Option Committee and the Audit Committee of the
Board of Directors of Ford and occasionally act as counsel to Ford and Ford
Credit in connection with certain transactions.
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EXPERTS
The financial statements which are incorporated in this Prospectus by
reference to the 1993 10-K Report have been audited by Coopers & Lybrand L.L.P.
("Coopers & Lybrand"), 400 Renaissance Center, Detroit, Michigan 48243,
independent certified public accountants, to the extent indicated in their
report therein, and have been so incorporated in reliance upon the report of
that firm, given on their authority as experts in accounting and auditing, which
report includes an explanatory paragraph indicating Ford Credit changed its
methods of accounting for postretirement healthcare benefits and income taxes in
1992.
With respect to the unaudited interim financial information of Ford Credit
for the periods ended March 31, 1994 and 1993, June 30, 1994 and 1993, and
September 30, 1994 and 1993, included in the First Quarter 10-Q Report, the
Second Quarter 10-Q Report and the Third Quarter 10-Q Report, respectively,
incorporated by reference in this Prospectus, Coopers & Lybrand have reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their reports included in
the First Quarter 10-Q Report, the Second Quarter 10-Q Report and the Third
Quarter 10-Q Report state that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the Securities Act for
their reports on the unaudited interim financial information because each such
report is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of such
Act.
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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY FORD CREDIT OR ANY UNDERWRITER. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE
ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A SOLICITATION TO BUY
ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FORD CREDIT OR FORD MOTOR
COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Description of Notes.................. S-2
Underwriting.......................... S-4
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Information Concerning Ford Credit.... 3
Ford Motor Credit Company and
Consolidated Subsidiaries--Selected
Financial Data...................... 4
Information Concerning Ford........... 7
Selected Financial Data and Other Data
of Ford............................. 8
Financial Review of Ford.............. 9
Industry Data and Market Share of
Ford................................ 12
Use of Proceeds....................... 13
Ratio of Earnings to Fixed Charges.... 13
Description of Debt Securities........ 14
Plan of Distribution.................. 18
Legal Opinions........................ 18
Experts............................... 19
</TABLE>
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(LOGO)
Ford Motor
Credit Company
$500,000,000
8 3/8% Notes Due January 15, 2000
PROSPECTUS SUPPLEMENT
CS First Boston
Goldman, Sachs & Co.
Salomon Brothers Inc
Smith Barney Inc.
- ------------------------------------------------------
