SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ----------------
Commission file numbers 1-6368
FORD MOTOR CREDIT COMPANY
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-1612444
- -------------------- -----------------------------------
(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 July 31, 1996.
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 24.
EXHIBIT INDEX APPEARS AT PAGE 19.<PAGE>
<PAGE 2>
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,
1995 (the "10-K Report"). Information relating to earnings per share is not
presented because the registrant, Ford Motor Credit Company ("Ford
Credit"), is an indirect wholly owned subsidiary of Ford Motor Company
("Ford" or the "Company").
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Statement of Income
and of Earnings Retained for Use in the Business
For the Periods Ended June 30, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>
Second Quarter First Half
1996 1995 1996 1995
--------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Financing Revenue
Operating leases $ 1,951.8 $ 1,717.2 $ 3,848.0 $ 3,379.1
Retail 997.0 892.8 1,928.0 1,721.9
Wholesale 291.0 401.0 605.2 742.8
Diversified 41.2 36.9 74.3 69.9
Other 90.9 84.7 182.9 165.2
---------- ---------- ---------- ----------
Total financing revenue 3,371.9 3,132.6 6,638.4 6,078.9
Insurance premium earned 82.9 0 82.9 0
Investment and other income 212.4 121.6 350.3 234.2
---------- ---------- ---------- ----------
Total revenue 3,667.2 3,254.2 7,071.6 6,313.1
Expenses
Depreciation on operating leases 1,315.2 1,255.9 2,618.7 2,440.4
Interest expense 1,296.4 1,245.1 2,566.1 2,401.7
Operating expenses 288.8 200.1 554.8 470.3
Provision for credit losses 176.6 79.2 360.4 156.5
Loss and loss adjustment expense 57.7 0 57.7 0
Amortization of policy acquisition cost 18.5 0 18.5 0
---------- ---------- ---------- ----------
Total expenses 3,153.2 2,780.3 6,176.2 5,468.9
---------- ---------- ---------- ----------
Equity in net income of affiliated
companies 1.0 48.4 49.8 107.0
Income before income taxes 515.0 522.3 945.2 951.2
Provision for income taxes 177.7 177.4 309.6 315.3
---------- ---------- ---------- ----------
Income before minority interest 337.3 344.9 635.6 635.9
Minority interest in net income of
subsidiaries 5.5 3.7 10.6 6.8
---------- ---------- ---------- ----------
Net income 331.8 341.2 625.0 629.1
Earnings retained for use in
the business
Beginning of period 6,937.0 6,137.1 6,643.8 5,849.2
Dividends (324.0) 0 (324.0) 0
---------- ---------- ---------- ----------
End of period $ 6,944.8 $ 6,478.3 $ 6,944.8 $ 6,478.3
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
/TABLE
<PAGE>
<PAGE 3>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(in millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1996 1995 1995
----------- ----------- -----------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 1,143.2 $ 1,355.9 $ 630.8
Investments in securities 1,405.9 1,914.1 1,737.1
Finance receivables, net (Note 1) 65,501.7 61,043.8 61,193.2
Net investment, operating leases 27,514.1 24,810.8 22,637.5
Accounts and notes receivable from
affiliated companies (Note 3) 799.3 420.7 399.5
Equity in net assets of affiliated
companies (Note 3) 93.9 1,728.0 1,553.1
Other assets 3,035.0 3,293.4 2,510.4
----------- ----------- -----------
Total assets $ 99,493.1 $ 94,566.7 $ 90,661.6
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $ 1,738.9 $ 1,579.4 $ 1,466.1
Affiliated companies 845.6 608.7 527.1
----------- ----------- -----------
Total accounts payable 2,584.5 2,188.1 1,993.2
Debt (Note 2) 82,231.4 79,167.1 76,215.0
Deferred income taxes 3,500.3 3,027.0 2,799.3
Other liabilities and deferred income 2,047.1 1,913.6 1,685.5
Unearned insurance premiums 368.0 0 0
----------- ----------- -----------
Total liabilities 90,731.3 86,295.8 82,693.0
Minority interest in net assets of
subsidiaries 946.4 717.2 575.1
Stockholder's Equity
Capital stock, par value $100 a share,
250,000 shares authorized, issued and
outstanding 25.0 25.0 25.0
Paid-in surplus (contributions by
stockholder) (Note 3) 2,777.3 917.3 917.3
Note receivable from affiliated
company (Note 3) (1,917.0) 0 0
Unrealized gain/(loss) on marketable
securities, net of taxes 44.2 30.9 29.7
Foreign-currency translation adjustments (58.9) (63.3) (56.8)
Earnings retained for use in the business 6,944.8 6,643.8 6,478.3
----------- ----------- -----------
Total stockholder's equity 7,815.4 7,553.7 7,393.5
----------- ----------- -----------
Total liabilities and stockholder's
equity $ 99,493.1 $ 94,566.7 $ 90,661.6
=========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
/TABLE
<PAGE>
<PAGE 4>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended June 30, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>
First Half
1996 1995
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 625.0 $ 629.1
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 360.4 156.5
Depreciation and amortization 2,755.7 2,564.5
Equity in net income of affiliates (49.8) (107.0)
Changes in the following items
Other assets 996.3 78.5
Other liabilities 372.4 397.6
Deferred income taxes 437.7 393.7
Other (40.2) 110.1
---------- ----------
Net cash provided by operating activities 5,457.5 4,223.0
---------- ----------
Cash flows from investing activities
Purchase of finance receivables (other than wholesale) (17,768.9) (15,493.3)
Collection of finance receivables (other than wholesale) 12,402.0 13,022.8
Purchase of operating lease vehicles (10,154.4) (8,683.7)
Liquidation of operating lease vehicles 4,784.2 2,974.1
Proceeds from sales of receivables 2,763.9 0
Cash received from donation of TARIC 181.8 0
Net change in wholesale receivables (1,168.4) (1,849.9)
Other (140.0) 498.1
---------- ----------
Net cash used in investing activities (9,099.8) (9,531.9)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 6,168.2 6,056.0
Principal payments on long-term debt (3,581.4) (2,808.3)
Change in short-term debt, net 577.8 2,300.7
Other 264.5 98.2
---------- ----------
Net cash provided by financing activities 3,429.1 5,646.6
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents 0.5 1.1
---------- ----------
Net change in cash and cash equivalents (212.7) 338.8
Cash and cash equivalents, beginning of period 1,355.9 292.0
---------- ----------
Cash and cash equivalents, end of period $ 1,143.2 $ 630.8
========== ==========
Supplementary cash flow information
Interest paid $ 2,437.2 $ 2,250.3
Taxes (refunded)/paid (299.0) 73.9
<FN>
Certain amounts for First Half 1995 have been restated to reflect changes adopted in
subsequent periods.
The accompanying notes are an integral part of the financial statements.
/TABLE
<PAGE>
<PAGE 5>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 1. Finance Receivables, Net (in millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1996 1995 1995
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Retail $ 42,348.1 $ 38,350.0 $ 37,875.6
Wholesale 15,783.8 16,506.9 17,123.1
Diversified 3,175.7 2,225.4 2,260.9
Other 4,891.3 4,630.6 4,574.5
----------- ----------- -----------
Total finance receivables 66,198.9 61,712.9 61,834.1
Less allowance for credit losses (697.2) (669.1) (640.9)
----------- ----------- -----------
Finance receivables, net $ 65,501.7 $ 61,043.8 $ 61,193.2
=========== =========== ===========
/TABLE
<PAGE>
<PAGE 6>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements (continued)
Note 2. Debt (in millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1996 1995 1995
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
PAYABLE WITHIN ONE YEAR:
Commercial paper $ 35,491.7 $ 34,978.3 $ 35,379.8
Other short-term debt* 1,609.7 1,523.1 1,299.5
----------- ----------- -----------
Total short-term debt 37,101.4 36,501.4 36,679.3
Senior notes payable
within one year 6,422.1 6,626.9 5,435.6
----------- ----------- -----------
Total payable within
one year 43,523.5 43,128.3 42,114.9
----------- ----------- -----------
June 30, 1996
----------------------------
Weighted Average
Interest Rates** Maturities
---------------- ----------
<C> <C>
PAYABLE AFTER ONE YEAR:
Unsecured senior notes
Notes*** 6.78% 1997-2048 38,633.3 36,003.6 34,096.0
Debentures 2.82 2001-2005 72.9 29.1 0
Unamortized
premium 1.7 6.1 4.1
----------- ----------- -----------
Total payable
after one year 38,707.9 36,038.8 34,100.1
----------- ----------- -----------
Total debt $ 82,231.4 $ 79,167.1 $ 76,215.0
=========== =========== ===========
<FN>
* Includes $43.5 million, $35.9 million, and $0 million with an affiliated company at
June 30, 1996, December 31, 1995, and June 30, 1995, respectively.
** Rates were variable on about 22.0% of the debt payable after one year including the
effects of interest rate swap agreements.
*** Includes $1,185.4 million, $1,174.4 million, and $1,059.4 million with an affiliated
company at June 30, 1996, December 31, 1995, and June 30, 1995, respectively.
/TABLE
<PAGE>
<PAGE 7>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 3. Equity Investment in Ford Holdings
On February 28, 1996, Ford Holdings, Inc. ("FHI") purchased substantially all
of Ford Credit's common stock interest in FHI. The final valuation was
determined as $2,949.0 million. FHI issued a promissory note to Ford
Credit for the purchase amount. On April 2, 1996, Ford Credit received a
cash payment on the note of $1,032.0 million. The excess of the market
value of the FHI investment over the book value ($1,296.2 million) is
included in paid in surplus. The unpaid portion of the promissory note
($1,917.0 million) is reflected as a reduction to stockholder's equity.
Additionally, The American Road Insurance Company ("TARIC") was contributed
to Ford Credit on March 29, 1996. The transaction was recorded by Ford
Credit at Taric's book value and is included in paid in surplus. A
reconciliation of paid in surplus is as follows:
<TABLE>
<CAPTION>
Paid in Surplus
---------------
(in millions)
<S> <C>
Balance at December 31, 1995 $ 917.3
Add:
Excess of market value over
book value of FHI common stock 1,296.2
Contribution of TARIC 563.8
----------
Balance at June 30, 1996 $ 2,777.3
==========
</TABLE>
Note 4. Transactions with Affiliated Companies
On June 28, 1996, Ford Credit transferred Budget Rent a Car Corporation
("BRAC") preferred stock to Ford FSG, Inc. ("FFSGI") as a dividend. Also,
Ford Credit wrote down a portion of the BRAC receivables and received
payment from FFSGI on July 11, 1996, the guarantor of the receivables.<PAGE>
<PAGE 8>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORD CREDIT SECOND QUARTER 1996 RESULTS OF OPERATIONS
Ford Credit's consolidated net income for the second quarter of 1996 was $332
million, down $9 million or 3% compared with $341 million in the second quarter
of 1995. Compared with results from a year ago, the decrease in net income
reflects primarily an increase in credit losses, and lower income resulting
from the repurchase in the first quarter by Ford Holdings, Inc. ("FHI") of
substantially all of the shares of FHI common stock owned by Ford
Credit. Higher portfolio net interest margins and a higher level of earning
assets were a partial offset.
The deterioration in credit losses reflects an increase in repossession rates
and an increase in losses per repossession reflecting a weaker used vehicle
market. Credit losses as a percent of average net finance receivables
including net investment in operating leases were 0.60% in the second quarter
of 1996 compared with 0.37% in the second quarter of 1995.
The higher net interest margins reflect higher portfolio yields on finance
receivables and operating leases and a decrease in U.S. portfolio borrowing
rates from 6.7% to 6.4%. The increase in earning assets reflects a higher
level of operating leases and retail installment sale receivables, offset
partially by a lower level of wholesale receivables, primarily resulting from
lower dealer stock levels. Total net finance receivables and net investment in
operating leases at June 30, 1996 were $93.0 billion, up $9.2 billion or 11%
from a year earlier. Depreciation expense on operating leases in the second
quarter of 1996 was $1,315 million, up $59 million or 5% compared with the
second quarter of 1995. The increase in depreciation expense reflects the
higher levels of operating leases and is more than offset by higher revenue
earned from the increased volume of lease contracts.
During the second quarter of 1996, Ford Credit financed 40.8% of all new cars
and trucks sold by Ford Motor Company dealers in the United States, compared
with 36.1% in the second quarter of 1995. The increase resulted from higher
levels of retail installment sale financing and operating lease financing,
partially offset by lower levels of lease financing extended to leasing
companies and daily rental companies. Ford Credit provided retail financing
for 786,000 new and used vehicles in the United States, up 19% from a year ago.
Ford Credit also provided wholesale financing for 81.0% of Ford Motor Company
factory sales to U.S. car and truck dealers during the quarter, compared with
80.6% in the same period a year ago.
FORD CREDIT FIRST HALF 1996 RESULTS OF OPERATIONS.
For the first half of 1996, Ford Credit's consolidated net income was $625
million, down $4 million or 1% from $629 million in the first half of 1995.
The factors affecting financing profits during the first half of 1996 were the
same as those affecting second quarter results discussed above.
During the first half of 1996, Ford Credit provided retail financing for 39.7%
of all new cars and trucks sold by Ford Motor Company dealers in the United
States, compared with 36.3% in the same period a year ago. The increase
resulted from higher levels of retail installment sale financing partially
offset by lower levels of lease financing extended to leasing companies and
daily rental companies. Ford Credit provided U.S. retail financing for
1,464,000 new and used vehicles compared with 1,235,000 vehicles in the first
half of 1995. Ford Credit also provided wholesale financing for 79.2% of Ford
Motor Company factory sales to U.S. car and truck dealers during the first half
of 1996, equal to the share during the same period last year.
NEW ACCOUNTING STANDARD
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities , effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996. Ford Credit will adopt this accounting
standard on January 1, 1997. The impact of the adoption of this accounting
standard on Ford Credit's results has not been determined.
<PAGE>
<PAGE 9>
FORD CREDIT LIQUIDITY AND CAPITAL RESOURCES
Ford Credit's outstanding debt at June 30, 1996 and at the end of each of
the last five years was as follows:
<TABLE>
<CAPTION>
December 31
June 30, -------------------------------------------
1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Commercial paper & STBA's(a) $35,492 $35,038 $33,300 $24,506 $21,210 $18,232
Other short-term debt (b) 1,610 1,463 1,065 1,001 1,785 1,642
Long-term debt (including
current portion)(c) 45,130 42,666 36,075 33,292 26,961 28,455
------- ------- ------- ------- ------- -------
Total debt $82,232 $79,167 $70,440 $58,799 $49,956 $48,329
======= ======= ======= ======= ======= =======
1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
Memo:
Total support facilities $26.8 $27.4 $22.3 $16.9 $13.9 $13.8
(billions -- as of
July 1, 1996 and
December 31, 1995-1991,
respectively)
<FN>
- - - - - -
(a) Short-term borrowing agreements with bank trust departments.
(b) Includes $43.5 million, $36 million, $150 million, and $800 million with affiliated
companies at June 30, 1996, December 31, 1995, December 31, 1993, and
December 31, 1992, respectively.
(c) Includes $1,185 million and $1,174 million with affiliated companies at June 30, 1996
and December 31, 1995, respectively.
</TABLE>
Support facilities represent additional sources of funds, if required. At
July 1, 1996, Ford Credit had approximately $26.8 billion of contractually
committed facilities for use (which included $7.5 billion of Ford bank
lines that may be used either by Ford Credit or Ford at Ford's option).
These facilities have various maturity dates through June 2001. Up to $19.3
billion ($26.8 billion with Ford's approval) may be used, at Ford Credit's
option, by its subsidiaries in Canada, Australia, Mexico, Japan
and Puerto Rico. Any such borrowing will be guaranteed by Ford Credit.
<PAGE>
<PAGE 10> PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None to Report.
Item 2. Changes in Securities
Not required.
Item 3. Defaults Upon Senior Securities
Not required.
Item 4. Submission of Matters to a Vote of Security Holders
Not required.
Item 5. Other information
INFORMATION CONCERNING FORD
Following is a condensed consolidated statement of income (unaudited) of Ford
for the periods ended June 30, 1996 and 1995 (in millions except amounts per
share):
Second Quarter First Half
------------- ----------------
1996 1995 1996 1995
---- ---- ---- ----
Sales and revenues $37,937 $36,389 $74,198 $71,172
Total costs and expenses a/ 36,033 33,766 71,167 66,031
Operating income 1,904 2,623 3,031 5,141
Automotive net interest income 7 42 19 83
Automotive equity in net income
of affiliated companies 77 19 25 39
Gain on sale of The Associates'
Common Stock b/ 650 - 650 -
Income before income taxes 2,638 2,684 3,725 5,263
Provision for income taxes 694 1,053 1,107 2,041
Minority interests in net income
of subsidiaries 41 59 62 100
Net income $ 1,903 $ 1,572 $ 2,556 $ 3,122
Amounts Per Share of Common Stock
and Class B Stock after Preferred
Stock Dividends
Income per share $ 1.60 $ 1.45 $ 2.15 $ 2.89
Income per share
assuming full dilution $ 1.56 $ 1.30 $ 2.10 $ 2.59
Cash Dividends per share $ 0.35 $ 0.31 $ 0.70 $ 0.57
a/ Includes write-down of investment in Budget Rent a Car Corporation
($700 million before taxes and $437 million after taxes).
b/ The gain was not subject to income taxes.
<PAGE>
<PAGE 11>
SECOND QUARTER 1996 RESULTS OF OPERATIONS - FORD
Overview
Ford earned $1,903 million, or $1.56 per share of Common and Class B Stock
(fully diluted), in second quarter 1996. This compares with $1,572 million,
or $1.30 per share (fully diluted), in second quarter 1995. Results in second
quarter 1996 included a one-time net gain of $213 million, or $0.18 per share,
relating to gain on sale of Associates First Capital Corporation's ("The
Associates") common stock and write-down of Ford's investment in Budget
Rent a Car Corporation ("BRAC") (discussed below). The Company's worldwide
sales and revenues were $37.9 billion, up $1.5 billion from a year ago.
Vehicle unit sales of cars and trucks were 1,810,000, down 1,000 units.
Stockholders' equity was $25.8 billion at June 30, 1996, compared with
$24.5 billion at December 31, 1995.
Automotive Operations
Ford's worldwide Automotive operations earned $1,108 million in second quarter
1996 on sales of $30.7 billion, compared with $1,100 million in second quarter
1995 on sales of $29.9 billion. After-tax return on sales was 3.7% in second
quarter 1996, equal to a year ago.
In the U.S., Automotive operations earned $697 million in second quarter 1996
on sales of $19.5 billion, compared with $663 million a year ago on sales of
$19.4 billion. Despite a small decline in unit sales, the increase in
earnings was explained by higher margins (reflecting improved sales mix) and
increased operating cost efficiencies; higher product costs were a partial
offset.
In second quarter 1996, the seasonally-adjusted annual selling rate for the
U.S. car and truck industry was 15.5 million units, compared with 14.7 million
units in second quarter 1995. Ford's combined car and truck market share was
24.8% in second quarter 1996, down 1.4 points from a year ago, and down 8/10
of a point from full year 1995, reflecting primarily planned lower sales to
daily rental companies.
Outside the U.S., Automotive operations earned $411 million in second quarter
1996 on sales of $11.2 billion, compared with $437 million a year ago on sales
of $10.5 billion. The decline reflected primarily lower results in Europe and
a loss in Brazil, offset partially by increased earnings at most other
activities.
European Automotive operations earned $196 million in second quarter 1996,
compared with $319 million in second quarter 1995. The decline reflected
primarily a leaner product line mix and higher product costs.
In second quarter 1996, the seasonally-adjusted annual selling rate for the
European car and truck industry was 14.3 million units, compared with 13.7
million units in second quarter 1995. Ford's combined car and truck market
share was 12% in second quarter 1996, down 2/10 of a point from a year ago,
and down 3/10 of a point from full year 1995.
In the Asia Pacific region, Ford earned $174 million in second quarter 1996,
compared with $78 million a year ago. The improvement reflected primarily
Ford's equity in net income of Mazda. In South America, Ford had a loss of
$69 million in second quarter 1996, compared with a profit of $19 million a
year ago. The lower results reflected primarily a loss for operations in
Brazil, which continued to be affected by the lack of a domestically produced
small car. The Company has reestablished manufacturing capacity in Brazil for
small cars and, during May 1996, began producing a version of the Ford Fiesta.
This should assist in improving Ford's performance in Brazil in second half
1996, compared with first half 1996.
Financial Services Operations
The Company's Financial Services operations earned $795 million in second
quarter 1996, compared with $472 million in second quarter 1995. Results in
second quarter 1996 included a one-time net gain of $213 million relating to
gain on sale of The Associates' common stock and write-down of Ford's
investment in BRAC (discussed below). Excluding the one-time net gain,
Financial Services operations earned a record $582 million. The improvement
also reflected record earnings at The Associates, USL Capital Corporation
("USL Capital") and The Hertz Corporation ("Hertz"), offset partially by
lower results at Ford Credit.<PAGE>
<Page 12>
For a discussion of Ford Credit's operations in second quarter 1996,
see Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Ford Credit Second Quarter 1996 Results of
Operations." In addition, International operations managed by Ford Credit,
but not included in its consolidated results, earned $61 million in second
quarter 1996, compared with $66 million a year ago.
The Associates earned a record $200 million in second quarter 1996 (Ford's
share was $177 million), compared with $162 million a year ago. The increase
reflected higher levels of earning assets, improved operating cost performance
and improved net interest margins, offset partially by higher credit losses.
USL Capital earned a record $41 million in second quarter 1996, compared with
$30 million a year ago. The increase reflected higher levels of earning
assets, higher gains on asset sales and improved net interest margins.
Hertz earned a record $40 million in second quarter 1996, compared with $20
million a year ago. The increase reflected rate increases in car rental
operations, higher volume in car rental and construction equipment rental and
sales operations, and lower interest costs.
One-Time Actions
The Company recorded a pre-tax charge in second quarter 1996 totaling $700
million ($437 million after taxes) to recognize the estimated value of its
outstanding notes receivable from, and preferred stock investment in, BRAC.
The write-down resulted from conclusions reached in a recent study of Ford's
rental car business strategy. In accordance with SFAS 114, the notes
receivable write-down reflected primarily the unsecured portion of financing
provided to BRAC by Ford. The preferred stock write-down reflected
recognition of the fair value of Ford's investment. Subject to governmental
review, the Company also intends to acquire all of the outstanding common
stock of BRAC at a future date.
During May 1996, The Associates completed an initial public offering of its
common stock representing a 19.3% economic interest in The Associates (the
"IPO"). The Company recorded in second quarter 1996 a non-operating gain of
$650 million resulting from the IPO, to recognize the excess of the net
proceeds from the IPO over the proportionate share of the Company's investment
in The Associates. The gain was not subject to income taxes.
On July 1, 1996, USL Capital sold its vehicle fleet leasing business to The
Associates for $901 million and, on July 31, 1996, sold its rail services
business to First Union Rail Corp. for $957 million (subject to post-
closing adjustments). In addition, during July 1996, USL Capital sold
assets in its municipal and corporate financing business valued at
about $1.2 billion, and assets valued at about $1 billion were sold
from Ford Credit's portfolio of municipal and corporate securities that
had been managed by USL Capital. Also, Ford and BankAmerica
Corporation recently announced that an agreement had been reached (1) for the
sale of all the assets of USL Capital's transportation and industrial
financing business to BankAmerica Leasing and Capital Corporation for
approximately $1.8 billion and (2) for affiliates of Ford Credit, USL Capital
and BankAmerica to enter into a partnership to which will be contributed
approximately $1.7 billion of nonautomotive financing assets currently owned
by Ford Credit and managed by USL Capital. During second half 1996, USL
Capital intends to sell its remaining businesses. The effect of these
transactions, including the sale of USL Capital's remaining businesses, on the
Company's consolidated financial statements is not expected to be material.
The Company recently announced plans to offer special early retirement and
voluntary separation packages to selected U.S. salaried employees over the
next several months. These programs are voluntary -- no layoffs of salaried
employees are planned. There will be a charge to earnings in second half 1996
for these programs; the amount will depend on the number and timing of
acceptances but is presently estimated to range from $200 million to $300
million after taxes.
<PAGE>
<Page 13>
Outlook
Results for second quarter 1996 are higher compared with the year ago period
for the first time in four quarters. Results were dampened in second half
1995 and first half 1996 primarily by costs associated with high-volume
product launches and the effect of dealer inventory rebalancing. At this
point, the peak in launch costs has passed, ongoing cost reductions are taking
effect, and dealer inventories are in line with industry demand. It is
expected that the economy will continue to be healthy, with a sustainable rate
of growth and moderate inflation. The Company expects U.S. car and truck
industry sales to total 15.5 million units in the full year, compared with
15.1 million units in 1995. In Europe, car and truck industry sales are
expected to total 14 million units, compared with 13.4 million units in 1995.
Stable external factors, in combination with the continued success of a strong
product line-up and ongoing efforts to improve profitability, are expected to
result in earnings for the second half and full year that are higher than the
year ago period.
Factors that could affect these projections unfavorably include an unexpected
decline in the U.S. economy (or other major markets) resulting in lower
industry volumes, a significant increase in interest rates, significant
changes in currency exchange rates, or work stoppages resulting from the
failure to negotiate new labor agreements with the United Automobile Workers
or the Canadian Automobile Workers.
FIRST HALF 1996 RESULTS OF OPERATIONS - FORD
Overview
Ford earned $2,556 million, or $2.10 per share of Common and Class B Stock
(fully diluted), in first half 1996. This compares with $3,122 million, or
$2.59 per share (fully diluted), in first half 1995. Results in first half
1996 included a one-time net gain of $213 million relating to gain on sale of
The Associates' common stock and write-down of Ford's investment in BRAC
(discussed above). The Company's worldwide sales and revenues were $74.2
billion, up $3 billion from a year ago. Vehicle unit sales of cars and trucks
were 3,448,000, down 133,000 units or 4%.
Automotive Operations
Ford's worldwide Automotive operations earned $1,250 million in first half
1996 on sales of $60.1 billion, compared with $2,241 million in first half
1995 on sales of $58.5 billion. After-tax return on sales was 2.1% in first
half 1996, down 1.8 points from a year ago.
<PAGE>
<Page 14>
In the U.S., Automotive operations earned $745 million in first half 1996 on
sales of $38.3 billion, compared with $1,488 million a year ago on sales of
$38.9 billion. The decline in earnings was explained by lower unit volume
(reflecting dealer inventory rebalancing) and costs associated with
introducing high-volume new products; increased operating cost efficiencies
were a partial offset.
In first half 1996, the seasonally-adjusted annual selling rate for the U.S.
car and truck industry was 15.6 million units, compared with 14.9 million
units a year ago. Ford's combined car and truck market share was 25.3% in
first half 1996, down 1.2 points from a year ago, and down 3/10 of a point
from full year 1995, reflecting primarily planned lower sales to daily rental
companies.
Outside the U.S., Automotive operations earned $505 million in first half 1996
on sales of $21.8 billion, compared with $753 million a year ago on sales of
$19.6 billion. The decline reflected primarily lower results in Europe and a
loss in Brazil.
European Automotive operations earned $269 million in first half 1996,
compared with $484 million in first half 1995. The decline reflected
primarily a leaner product line mix and costs associated with introducing
high-volume new products.
In first half 1996, the seasonally-adjusted annual selling rate for the
European car and truck industry was 14.2 million units, compared with
13.6 million units a year ago. Ford's combined car and truck market share was
12.1% in first half 1996, down 2/10 of a point from a year ago and full year
1995.
Outside the U.S. and Europe, Automotive operations earned $236 million in
first half 1996, compared with $269 million a year ago. The decrease
reflected primarily a loss for operations in Brazil, as described in the
discussion of second quarter results of operations.
Financial Services Operations
The Company's Financial Services operations earned $1,306 million in first
half 1996, compared with $881 million in first half 1995. Results in first
half 1996 included a one-time net gain of $213 million relating to gain on
sale of The Associates' common stock and write-down of Ford's investment in
BRAC (discussed above). The improvement also reflected record earnings at The
Associates and USL Capital, and higher earnings at Hertz, offset partially by
lower results at Ford Credit.
For a discussion of Ford Credit's operations in first half 1996, see
Item 2. "Managements Discussion and Analysis of Financial Condition and
Results of Operations - Ford Credit First Half 1996 Results of Operations."
In addition, International operations managed by Ford Credit, but not included
in its consolidated results, earned $129 million in first half 1996, compared
with $131 million a year ago.
The Associates earned a record $392 million in first half 1996 (Ford's share
was $369 million), compared with $330 million a year ago. USL Capital earned
a record $81 million in first half 1996, compared with $56 million a year ago.
Hertz earned $48 million in first half 1996, compared with $19 million a year
ago. These changes reflected primarily the same factors as those described in
the discussion of second quarter results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
Automotive cash and marketable securities were $15.2 billion at June 30, 1996,
up $2.8 billion from December 31, 1995. The amount of cash and marketable
securities is expected to decline during third quarter 1996 because of planned
lower production volume, reflecting normal seasonal factors. The Company paid
$857 million in cash dividends on its Common Stock, Class B Stock and
Preferred Stock during first half 1996.
Automotive capital expenditures were $3.6 billion in first half 1996, down
$382 million from the same period a year ago. For full year 1996, Ford's
spending for product change is projected to be about the same compared with
1995; however, as a percent of sales, such spending is expected to be at lower
levels.<PAGE>
<Page 15>
Automotive debt at June 30, 1996 totaled $6.8 billion, which was 20% of total
capitalization (stockholders' equity and Automotive debt), compared with
$7.3 billion, or 22% of total capitalization, at December 31, 1995.
At July 1, 1996, Ford had long-term contractually committed global credit
agreements under which $8.3 billion is available from various banks through
June 30, 2001. The entire $8.3 billion may be used, at Ford's option, by any
affiliate of Ford; however, any borrowing by an affiliate will be guaranteed
by Ford. In addition, Ford has the ability to transfer on a nonguaranteed
basis the entire $8.3 billion in varying portions to Ford Credit and Ford
Credit Europe. These facilities were unused at July 1, 1996.
Financial Services Operations
Financial Services cash and investments in securities totaled $6.3 billion at
June 30, 1996, down $987 million from December 31, 1995.
Net receivables and lease investments were $162.5 billion at June 30, 1996, up
$12.8 billion from December 31, 1995. The increase reflected continued growth
in earning assets at Ford Credit and The Associates.
Total debt was $151.9 billion at June 30, 1996, up $10.5 billion from December
31, 1995. The increase resulted from higher debt levels required to finance
growth in earning assets at Ford Credit, The Associates and Hertz, and to fund
the payment to holders of FHI's voting preferred stock; the preferred
stock was canceled in December 1995.
At July 1, 1996, Financial Services had a total of $49.8 billion of
contractually committed support facilities. Of these facilities, $23.6
billion (excluding the $8.3 billion of Ford's credit facilities) are
contractually committed global credit agreements under which $19.3 billion and
$4.3 billion are available to Ford Credit and Ford Credit Europe,
respectively, from various banks; 62% and 76%, respectively, of such
facilities are available through June 30, 2001. The entire $19.3 billion may
be used, at Ford Credit's option, by any subsidiary of Ford Credit, and the
entire $4.3 billion may be used, at Ford Credit Europe's option, by any
subsidiary of Ford Credit Europe. Any borrowings by such subsidiaries will be
guaranteed by Ford Credit or Ford Credit Europe, as the case may be. At July
1, 1996, none of the Ford Credit global facilities were in use; $669 million
of the Ford Credit Europe global facilities were in use. Other than the
global credit agreements, the remaining portion of the Financial Services
support facilities at July 1, 1996 consisted of $23.6 billion of contractually
committed support facilities available to various affiliates in the U.S. and
$2.6 billion of contractually committed support facilities available to
various affiliates outside the U.S.; at July 1, 1996, approximately $1.8
billion of these facilities were in use.
LEGAL PROCEEDINGS - FORD
With respect to the patent infringement lawsuit in federal court in Nevada in
which an individual patent owner (Lemelson) is seeking damages and an
injunction for alleged infringement of four U.S. patents characterized as
covering machine vision inspection technologies, including bar code reading,
referred to in the 10-K Report in Ford Credit's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996, on June 5, 1996, Lemelson
filed a motion for reconsideration of the district court judge's entry of
an order which adopted the magistrate judge's recommendation and granted
Ford's motion to dismiss the case.
With respect to the purported class action lawsuits seeking economic damages
that have been brought on behalf of all Bronco II owners in the U.S., referred
to in the 10-K Report, there are currently ten such suits pending. The
federal Panel on Multidistrict Litigation has consolidated seven of the
lawsuits. Of the three cases that have not been consolidated, one of the
cases remains pending in state court in Alabama, one of the lawsuits is
pending in a Texas state court, and the remaining case is on appeal in
Eleventh Circuit U.S. Court of Appeals.
<PAGE>
<Page 16>
With respect to the seven purported class action lawsuits involving an alleged
defective ignition switch equipped on numerous Ford vehicle lines, referred to
in the 10-K Report, six additional such suits have been filed. Two of the
lawsuits purport to include a statewide class, and the remaining eleven
lawsuits are nationwide in scope. Six of the lawsuits have been consolidated
for class certification proceedings in federal court in Camden, New Jersey.
Five of the cases are pending in various federal courts around the country,
and Ford has moved to have them consolidated with the six cases pending
in the New Jersey federal court. One of the cases is pending in state
court in Texas after being remanded from a federal Texas court and one
is pending in state court in Alabama.
Six purported class action lawsuits, one filed in February 1996 and five in
June 1996, have been brought on behalf of purchasers or lessees of Ford
manufactured vehicles with distributor-mounted thick film ignition (TFI)
modules. The plaintiffs allege that vehicles with the distributor-mounted TFI
modules are defective due to a propensity to fail when subjected to
overheating, which causes the engine to stumble, stall, or not start. The
lawsuits were filed in state courts in Tennessee, California, Washington,
Illinois, Maryland, and Alabama. The lawsuits in Washington, Illinois,
Maryland and Alabama have been removed to federal court. The California
lawsuit was removed, but was subsequently remanded to state court. The
plaintiffs seek pre- and post-judgment interest, attorney fees, disgorgement
of all "ill gotten profits", compensatory damages, punitive damages and the
recall and retrofit of all vehicles with the allegedly defective TFI modules.
If the plaintiffs were to prevail in these lawsuits, Ford could be required to
pay substantial damages.
GOVERNMENTAL STANDARDS - FORD
Mobile Source Emissions Control -- European Requirements. With respect to the
discussion of European vehicle emission control standards in the
10-K Report, the European Commission published a draft Stage III Directive on
June 19, 1996. This draft includes a new framework for emission-related
fiscal incentives for the early introduction of vehicles capable of meeting
Stage III standards before 2000 and vehicles capable of meeting newly proposed
and even more stringent indicative limit values before 2005. The draft
directive provides that prior to December 31, 1998 a technical feasibility and
cost-effectiveness study will be conducted to determine appropriate mandatory
standards for 2005.
Motor Vehicle Fuel Economy. With respect to the international concerns over
global warming due to the emission of "greenhouse gasses", such as carbon
dioxide ("CO2") emitted by motor vehicles, discussed in the 10-K
Report, during a July 1996 meeting of the parties to the U.N. Climate Control
Convention, the U.S. indicated its conceptual support for amending the
agreement among the parties to incorporate binding emission reduction levels.
If such an amendment were adopted, it could require Ford to curtail or
eliminate the production and sale of large and luxury cars and most truck
models, which would have a substantial adverse effect on Ford's sales volumes
and profits.
With respect to the discussion of European proposals to reduce the average CO2
emissions from new cars in the 10-K Report, the Council of
Environmental Ministers of June 25-26, 1996 declared that an agreement with
the automobile industry in combination with market incentives and consumer
information should be priority actions for reducing CO2 emissions. The
Council affirmed as a medium-term objective an average of CO2-emission value
for new cars of 120 grams per kilometer. Recognizing that this may not be
achievable by 2005, the Council directed the European Commission to consider
intermediate objectives for 2005 and extension of the 120 grams per kilometers
target until 2010. The Council also directed the European Commission to
report back by the end of 1996 on the progress of discussions with the
automobile industry about a possible agreement for reducing average new car
CO2 emissions limit values.
With respect to the discussion of the voluntary pledge offered by French
automobile manufacturers for the reduction of average CO2 emissions from new
cars in the 10-K Report, the French government has not accepted the
pledge offered by the French automobile manufacturers, but is continuing
discussions with them on appropriate strategies for CO2 reductions. <PAGE>
<PAGE 17>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please refer to the Exhibit Index on page 18.
(b) Reports on Form 8-K during the quarter ended June 30, 1996:
FINANCIAL
DATE OF REPORT ITEM STATEMENTS FILED
- -------------- --------------------- ----------------
April 17, 1996 Item 5 - Other Events Consolidated Financial
Statements and Management's
Discussion and Analysis of
Financial Condition and
Results of Operations for
the first quarter of 1996
of Ford Motor Credit Company
and News release dated April
17, 1996 of Ford Motor
Company and subsidiaries
for the quarter ended
March 31, 1996, with
attachments.
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/ Kenneth J. Coates
August 2, 1996 --------------------------
Kenneth J. Coates
Executive Vice President - Finance
(Chief Financial Officer)
<PAGE>
<PAGE 18>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder
of Ford Motor Credit Company:
We have reviewed the condensed consolidated balance sheet of Ford Motor
Credit Company and Subsidiaries at June 30, 1996 and 1995, and the
related condensed consolidated statements of income and of earnings
retained for use in the business and cash flows for the periods set forth
in this Form 10-Q for the quarter ended June 30, 1996. 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, 1995 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 26, 1996, 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, 1995 is fairly stated in all
material respects in relation to the consolidated balance sheet from which
it has been derived.
/s/ Coopers & Lybrand
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
July 15, 1996
<PAGE>
<PAGE 19>
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.
August 2, 1996,
regarding unaudited
interim financial infor-
mation.
27 Financial Data Schedule. Filed with this
Report.
Exhibit 12-A
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CALCULATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(dollar amounts in millions)
<TABLE>
<CAPTION>
First Half For the Years Ended December 31
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest expense $ 2,564.1 $ 2,427.5 $ 4,946.7 $ 3,557.8 $ 2,943.5 $ 3,108.3 $ 3,840.6
Rents 8.4 7.6 15.7 14.1 11.0 10.8 8.9
--------- --------- --------- --------- --------- --------- ---------
Total fixed
charges 2,572.5 2,435.1 4,962.4 3,571.9 2,954.5 3,119.1 3,849.5
Earnings
Income before income
taxes and cumulative
effects of changes in
accounting principles 945.2 951.2 1,945.3 1,999.1 1,875.0 1,323.2 1,075.1
Less equity in net income
of affiliated companies 49.8 107.0 255.4 232.5 198.3 155.2 191.0
Less minority interest
in net income of
subsidiaries 10.6 6.8 14.2 10.7 7.9 6.1 2.3
--------- --------- --------- --------- --------- --------- ---------
Earnings before fixed
charges $ 3,457.3 $ 3,272.5 $ 6,638.1 $ 5,327.8 $ 4,623.3 $ 4,281.0 $ 4,731.3
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to
fixed charges 1.3 1.3 1.3 1.5 1.6 1.4 1.2
========= ========= ========= ========= ========= ========= =========
<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>
<TABLE>
<CAPTION>
Exhibit 12-B
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------------------------------
(in millions)
First For the Years Ended December 31
Half --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Income/(loss) before income taxes
and cumulative effects of changes
in accounting principles $3,725 $ 6,705 $ 8,789 $ 4,003 $ (127) $(2,587)
Equity in net (income)/loss of
affiliates plus dividends from
affiliates (2) 179 (182) (98) 26 69
Adjusted fixed charges a/ 5,493 10,556 8,122 7,648 8,113 9,360
------ ------- ------- ------- ------ -------
Earnings $9,216 $17,440 $16,729 $11,553 $8,012 $ 6,842
====== ======= ======= ======= ====== =======
Combined Fixed Charges and
Preferred Stock Dividends
Interest expense b/ $5,273 $10,121 $ 7,787 $ 7,351 $7,987 $ 9,326
Interest portion of rental expense c/ 198 396 265 266 185 124
Preferred stock dividend requirements of
majority owned subsidiaries and trusts d/ 28 199 160 115 77 56
------ ------- ------- ------- ------ -------
Fixed charges 5,499 10,716 8,212 7,732 8,249 9,506
Ford preferred stock dividend
requirements e/ 50 459 472 442 317 26
------ ------- ------- ------- ------ -------
Total combined fixed charges
and preferred stock dividends $5,549 $11,175 $ 8,684 $ 8,174 $8,566 $ 9,532
====== ======= ======= ======= ====== =======
Ratios
Ratio of earnings to fixed charges 1.7 1.6 2.0 1.5 f/ g/
Ratio of earnings to combined fixed
charges and preferred stock dividends 1.7 1.6 1.9 1.4 h/ i/
</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 and trusts.
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. (applicable
for 1991 through 1995) 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.
<PAGE>
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 Nos. 33-62973,
33-24928, 33-55237, 33-64237, 33-64263 and 33-55945 on Form S-3
We are aware that our report dated July 15, 1996 accompanying the
unaudited interim financial information of Ford Motor Credit Company and
subsidiaries for the periods ended June 30, 1996 and 1995 and included
in the Ford Motor Credit Company Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 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
August 2, 1996
<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 per share is not
presented because Ford Credit is an indirect wholly owned subsidiary of Ford
Motor Company.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,143
<SECURITIES> 1,406
<RECEIVABLES> 65,502
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 99,493
<CURRENT-LIABILITIES> 0
<BONDS> 82,231
0
0
<COMMON> 25
<OTHER-SE> 7,790
<TOTAL-LIABILITY-AND-EQUITY> 99,493
<SALES> 0
<TOTAL-REVENUES> 7,072
<CGS> 0
<TOTAL-COSTS> 6,176
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 360
<INTEREST-EXPENSE> 2,566
<INCOME-PRETAX> 945
<INCOME-TAX> 310
<INCOME-CONTINUING> 625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 625
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
